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 $12,753, $11,364 and $10,450 for the years ended December 31, 2015, 2014 and 2013, respectively.

Defined Benefit and Post-Retirement 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 “Supplemental Plan”). 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, Toledo and Chalmette 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, amended in 2014 to include Delaware City and Toledo employees and amended in 2015 to include Chalmette 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, 2015 and 2014 were as follows:



	Pension Plans						Post-Retirement Medical Plan
	2015			2014			2015			2014
Change in benefit obligation:
Benefit obligation at beginning of year	$	81,098		$	53,350		$	14,740		$	8,225
Service cost	24,298			19,407			967			1,099
Interest cost	2,974			2,404			558			520
Plan amendments	—			529			1,533			3,911
Benefit payments	(2,231		)	(2,634		)	(381		)	(215		)
Actuarial loss (gain)	(6,128		)	8,042			312			1,200
Projected benefit obligation at end of year	$	100,011		$	81,098		$	17,729		$	14,740
Change in plan assets:
Fair value of plan assets at beginning of year	$	40,956		$	25,050		$	—		$	—
Actual return on plan assets	(13		)	1,822			—			—
Benefits paid	(2,231		)	(2,634		)	(381		)	(215		)
Employer contributions	18,790			16,718			381			215
Fair value of plan assets at end of year	$	57,502		$	40,956		$	—		$	—
Reconciliation of funded status:
Fair value of plan assets at end of year	$	57,502		$	40,956		$	—		$	—
Less: benefit obligations at end of year	100,011			81,098			17,729			14,740
Funded status at end of year	$	(42,509	)	$	(40,142	)	$	(17,729	)	$	(14,740	)

The accumulated benefit obligations for the Company’s Pension Plans exceed the fair value of the assets of those plans at December 31, 2015 and 2014. The accumulated benefit obligation for the defined benefit plans approximated $80,897 and $66,576 at December 31, 2015 and 2014, 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
2016	$	11,125	$	843
2017	8,271		1,141
2018	9,403		1,296
2019	10,694		1,580
2020	13,429		1,788
Years 2021-2025	88,044		8,835

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 $16,700 to the Company’s Pension Plans during 2016.

The components of net periodic benefit cost were as follows for the years ended December 31, 2015, 2014 and 2013:



	Pension Benefits									Post-Retirement Medical Plan
	2015			2014			2013			2015		2014			2013
Components of net period benefit cost:
Service cost	$	24,298		$	19,407		$	14,794		$	967	$	1,099		$	726
Interest cost	2,974			2,404			992			558		520			334
Expected return on plan assets	(3,422		)	(2,156		)	(550		)	—		—			—
Amortization of prior service cost	53			39			11			326		258			—
Amortization of actuarial loss (gain)	1,228			1,033			421			—		(4		)	—
Net periodic benefit cost	$	25,131		$	20,727		$	15,668		$	1,851	$	1,873		$	1,060

The pre-tax amounts recognized in other comprehensive income (loss) for the years ended December 31, 2015, 2014 and 2013 were as follows:



	Pension Benefits									Post-Retirement Medical Plan
	2015			2014			2013			2015			2014			2013
Prior service costs (credits)	$	—		$	529		$	—		$	1,533		$	3,911		$	(860	)
Net actuarial loss (gain)	(2,220		)	8,151			8,235			312			1,201			(1,654		)
Amortization of losses and prior service cost	(1,281		)	(1,072		)	(432		)	(326		)	(255		)	—
Total changes in other comprehensive loss (income)	$	(3,501	)	$	7,608		$	7,803		$	1,519		$	4,857		$	(2,514	)

The pre-tax amounts in accumulated other comprehensive loss as of December 31, 2015 and 2014 that have not yet been recognized as components of net periodic costs were as follows:



	Pension Benefits						Post-Retirement Medical Plan
	2015			2014			2015			2014
Prior service (costs) credits	$	(529	)	$	(582	)	$	(3,999	)	$	(2,793	)
Net actuarial (loss) gain	(19,841		)	(23,762		)	(391		)	(78		)
Total	$	(20,370	)	$	(24,344	)	$	(4,390	)	$	(2,871	)

The following pre-tax amounts included in accumulated other comprehensive loss as of December 31, 2015 are expected to be recognized as components of net period benefit cost during the year ended December 31, 2016:



	Pension Benefits			Post-Retirement Medical Plan
Amortization of prior service costs (credits)	$	(53	)	$	(436	)
Amortization of net actuarial loss (gain)	(775		)	—
Total	$	(828	)	$	(436	)

Effective December 31, 2015, we changed the method we use to estimate the service and interest components of net periodic benefit cost for the Qualified Plan, the Supplemental Plan and the Post-Retirement Medical Plan. Historically, we estimated these service and interest cost components utilizing a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation for each of these plans at the beginning of the period. Additionally, we historically combined the disclosures of assumptions for the Qualified Plan and the Supplemental Plan in one category we called “Pension Benefits”. We have elected to utilize a full yield curve approach in the estimation of these components by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows for each plan separately. We have made this change to provide a more precise measurement of service and interest costs by improving the correlation between projected benefit cash flows to the corresponding spot yield curve rates. This change does not affect the measurement of our total benefit obligations or our annual net periodic benefit cost as the change in the service and interest costs is completely offset in the actuarial (gain) loss reported. We have accounted for this change as a change in accounting estimate that is inseparable from a change in accounting principle and accordingly have accounted for it prospectively.

The weighted average assumptions used to determine the benefit obligations as of December 31, 2015 and 2014 were as follows:



	Qualified Plan				Supplemental Plan				Post-Retirement Medical Plan
	2015		2014		2015		2014		2015		2014
Discount rate - Benefit obligations	4.17	%	3.70	%	4.22	%	3.70	%	3.76	%	3.70	%
Rate of compensation increase	4.81	%	4.96	%	5.50	%	4.96	%	—	%	—	%

The weighted average assumptions used to determine the net periodic benefit costs for the years ended December 31, 2015, 2014 and 2013 were as follows:



	Qualified Plan						Supplemental Plan						Post-Retirement Medical Plan
	2015		2014		2013		2015		2014		2013		2015		2014		2013
Discount rate:
Service Cost	4.25	%	4.55	%	3.45	%	4.30	%	4.55	%	3.45	%	4.32	%	4.55	%	3.45	%
Effective rate for interest cost	3.31	%	4.55	%	3.45	%	3.16	%	4.55	%	3.45	%	3.09	%	4.55	%	3.45	%
Effective rate for interest on service cost	3.51	%	4.55	%	3.45	%	3.37	%	4.55	%	3.45	%	4.04	%	4.55	%	3.45	%
Expected long-term rate of return on plan assets	7.00	%	6.70	%	3.50	%	—	%	—	%	—	%	—	%	—	%	—	%
Rate of compensation increase	4.81	%	4.64	%	4.00	%	5.50	%	4.64	%	4.00	%	—	%	—	%	—	%

The assumed health care cost trend rates as of December 31, 2015 and 2014 were as follows:



	Post-Retirement Medical Plan
	2015		2014
Health care cost trend rate assumed for next year	6.1	%	6.7	%
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	2038		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 post-retirement benefits:



	1% Increase		1% Decrease
Effect on total of service and interest cost components	$	21	$	(20	)
Effect on accumulated post-retirement benefit obligation	413		(388		)

The tables below present the fair values of the assets of the Company’s Qualified Plan as of December 31, 2015 and 2014 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,
	2015		2014
Equities:
Domestic equities	$	17,660	$	12,682
Developed international equities	8,320		5,600
Emerging market equities	4,017		2,629
Global low volatility equities	4,930		3,478
Fixed-income	22,495		16,517
Cash and cash equivalents	80		50
Total	$	57,502	$	40,956

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, 2015, 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.