TCS 401(k) PLAN SUMMARY PLAN DESCRIPTION. TATA America International Corporation 379 Thornall Street, 4th Floor Edison, New Jersey 08837

Transcription

1 TCS 401(k) PLAN SUMMARY PLAN DESCRIPTION TATA America International Corporation 379 Thornall Street, 4th Floor Edison, New Jersey

2 TCS 401(k) PLAN SUMMARY PLAN DESCRIPTION TABLE OF CONTENTS 1. INTRODUCTION PURPOSE OF THE PLAN ELIGIBILITY REQUIREMENTS CONTRIBUTIONS TO THE PLAN PLAN ACCOUNTS; ALLOCATIONS TO ACCOUNTS INVESTMENT OF CONTRIBUTIONS VESTING IN ACCOUNTS WITHDRAWALS AND DISTRIBUTIONS FROM THE PLAN DEATH BENEFITS TAX CONSIDERATIONS ADMINISTRATION OF THE PLAN CIRCUMSTANCES AFFECTING PLAN BENEFITS PLAN PARTICIPANTS RIGHTS MISCELLANEOUS INFORMATION... 23

3 TCS 401(k) PLAN SUMMARY PLAN DESCRIPTION 1. INTRODUCTION This summary plan description ( SPD ) provides a brief description of the TCS 401(k) Plan (the Plan ), which was originally established effective as of January 1, The Plan was most recently amended and restated effective as of January 1, This SPD describes the important terms of the Plan in effect as of February 1, Inside, you will find an explanation of your rights, obligations and benefits under the Plan, including the requirements for eligible employees of TATA America International Corporation and certain of its affiliates (collectively, the Employer ) to participate in the Plan. The Plan may in the future be changed by an amendment adopted by the Employer. If any such change is material, you will be notified of the change. The benefits provided by the Plan also could be affected by changes in Federal tax law and regulations. If this happens, you will be notified. Please note that this SPD is not the actual Plan. The actual Plan is contained in a detailed legal document, a copy of which is available from the Plan Administrator for review and copying by any employee who wishes to do so. In the event of a conflict between any statement in this SPD and the provisions of the Plan, the provisions of the Plan will govern. If you have any questions about the Plan after reading this SPD, please contact the Plan Administrator. You may access your account information by telephone at , or online at 2. PURPOSE OF THE PLAN The Plan is designed to accomplish several goals. First, the Plan provides a means for you to save a portion of your earnings from the Employer without paying current income tax on those earnings; income taxation is deferred until you eventually receive a distribution from the Plan. This feature of the Plan is also sometimes referred to as a Section 401(k) Plan, after the section of the Internal Revenue Code that contains the rules governing qualified plans that allow employees to make contributions on a pre-tax basis. Alternatively, you may choose to make contributions on an after-tax basis; these are known as Roth contributions. Roth contributions do not reduce your taxable income, and federal and state income taxes will be withheld on amounts you designate as Roth contributions, but Roth contributions, and any associated earnings on those amounts, will not be taxable to you if the money is paid out of the Plan after you have attained age 59½ and at least five years have expired since you first made Roth contributions to the Plan. Roth contributions are treated in the same way as salary deferral contributions in most respects under the Plan.

4 Second, the Plan enables you to realize an immediate return on your contributions because the Employer will make safe harbor matching contributions based upon your contributions. You will receive a notice from the Employer before each plan year for which safe harbor matching contributions will be made. 3. ELIGIBILITY AND PARTICIPATION REQUIREMENTS You are eligible to participate in the Plan if you are a common law employee of the Employer. You are not eligible to participate in the Plan if you are: an employee whose employment is governed by a collective bargaining agreement; an independent contractor, leased employee or other individual who is not characterized as a common law employee even if the Internal Revenue Service or another governmental agency characterizes or re-characterizes you as a common law employee; a part time, temporary or seasonal employee whose regularly scheduled service is less than 1,000 hours per year; or a nonresident alien with no U.S.- source earned income. If you are an eligible employee, you will become a participant on the latest of: (i) the first day of the second payroll period following your date of hire; (ii) the first day of the second payroll period after you have completed and submitted all administrative, ministerial forms required and approved by the Employer; (iii) the first day of the second payroll after you have obtained a valid Social Security number and provided completed forms, and (iv) the first day of the payroll period following your 21 st birthday. If you are a part time, temporary or seasonal employee, you may become a participant if you complete a year of eligibility service. A year of eligibility service is a 12-consecutive month period beginning on your date of hire during which you are credited with at least 1,000 hours of service. You are credited with an hour of service for every hour you actually work and for most paid non-working hours, such as vacation, holidays and sick days. If you do not complete 1,000 hours of service during such 12-month period, a year of eligibility service is a plan year during which you are credited with at least 1,000 hours of service. If you complete a year of eligibility service, you will become a participant as of the first day of the payroll period coinciding with or next following the later of the date on which you attain age 21 and the date on which you complete a year of eligibility service, provided you are an eligible employee and have attained age 21 on such date. Generally, if you terminate employment with the Employer after becoming a participant in the Plan and you are later reemployed by the Employer as an eligible employee, you will reenter the Plan immediately upon your reemployment. 4. CONTRIBUTIONS TO THE PLAN Contributions to the Plan come from participants and from the Employer. The types of contributions to the Plan are described in this section. 2

5 Participant Salary Deferral and Roth Salary Deferral Contributions Salary deferral contributions are contributions you make to the Plan instead of receiving those amounts in the form of taxable cash compensation. You may elect to make contributions to the Plan in the form of pre-tax salary deferral contributions or post-tax Roth contributions. Pre-tax salary deferral contributions are deducted from your paycheck before federal or state income taxes are withheld, which reduces your taxable income and your current taxes. Pretax salary deferral contributions are, however, subject to Social Security taxes. Pre-tax salary deferral contributions (and any associated earnings) become taxable when the money is paid out of the Plan to you. Roth contributions are contributions you make to the Plan on an after-tax basis; as a result, Roth contributions do not reduce your taxable income, and federal and state income taxes will be withheld on amounts you designate as Roth contributions. However, Roth contributions, and any associated earnings on those amounts, will not be taxable to you if the money is paid out of the Plan to you after you have attained age 59½ and at least five years have expired since you first made Roth contributions to the Plan. If Roth contributions are paid to you before you have attained age 59½ or if at least five years have not expired since you first made Roth contributions to the Plan, the contributions will not be taxable but the associated earnings will be taxable to you and an additional penalty tax may apply. Although amounts you designate as Roth contributions will be accounted for separately from other amounts under the Plan, Roth contributions are treated in the same way under the Plan as pre-tax salary deferral contributions in most respects. You may elect to make contributions in a specified dollar amount or any whole percentage from 1% to 50% of your compensation payable for any payroll period (subject to the limitations discussed below). Compensation means the earnings you receive from the Employer for services during the plan year that are reportable as income in Box 1 on Form W-2, with certain adjustments. Compensation includes deferrals under this Plan and any cafeteria plan and amounts that would otherwise be treated as compensation even though you receive the amount after you have terminated employment (such as sick leave and vacation leave cashouts). Compensation excludes a variety of irregular or additional amounts, such as: reimbursements or other expense allowances, cash and noncash fringe benefits, moving expenses, deferred compensation and/or severance benefits, and welfare benefits. Compensation also excludes all or any portion of irregular or additional compensation, which may include, but is not limited to, the following items: (A) joining and/or retention bonuses; (B) relocation bonuses and/or settling allowances; (C) assured bonuses received each year for a fixed number of years; (D) role-based allowances and shift differentials; (E) employee referral bonuses; (F) client-initiated performance awards; (G) employee service and appreciation rewards; (H) employer grants; (I) the value of group term life insurance for a Participant s spouse; (J) lawsuit settlements; (K) amounts required to be paid to an individual (such as a gratuity ) in accordance with Indian law; (L) reimbursements of pre- 3

6 paid health insurance premiums and any other Employer-subsidized welfare benefit plan amounts; (M) short term business travel tax reimbursements; (N) long term travel expenses; and (O) any other irregular or additional compensation items specified by the Employer. Compensation taken into account for Plan purposes is subject to a federal limit that is indexed for inflation each year; for 2017, the limit is $270,000. You may elect to make pre-tax salary deferral contributions or Roth contributions to the Plan upon first becoming eligible to participate or at any later time by going online to or calling the Retirement Service Center at After you have made your election, your future compensation will be reduced by the amount you have elected to contribute to the Plan. You also may change the rate of your pre-tax salary deferral contributions or Roth contributions, or discontinue your contributions altogether, by going online to or calling the Retirement Service Center at Your contributions are subject to some legal limits that may restrict the maximum amount you can contribute to the Plan. One such limit is that your salary deferral contributions and Roth contributions cannot exceed a federal limit that is subject to annual adjustment for cost of living increases; for 2017 the federal limit is $18,000. Salary deferral contributions and Roth contributions also are subject to an overall limit on the amount of contributions that may be made for any participant for a plan year. The Plan Administrator will tell you if any of these limits affects you for a particular plan year. If your contributions would exceed any of these limits, the Plan may refund the amount of salary deferral contributions or Roth contributions (as you designate, plus applicable earnings) needed to stay within the limit or, if you satisfy the requirements to make catch-up contributions (which are described below), the Plan may recharacterize the excess amount as a catch-up contribution. Catch-up Contributions If you are, or will reach, age 50 during a calendar year, you may elect to make catch-up contributions to the Plan in the form of additional salary deferral contributions or Roth contributions in excess of the limits described above. If your contributions would exceed one or more of the limits described above, the extra amount of salary deferral contributions or Roth contributions will automatically be recharacterized as catch-up contributions if you satisfy the eligibility requirements for catch-up contributions. Catch-up contributions cannot exceed a federal limit that is indexed for inflation each year; for 2017 the federal limit is $6,000. Safe Harbor Matching Contributions For the 2017 plan year and such other plan years as the Employer may elect, the Employer will make safe harbor matching contributions on your behalf based on your salary deferral contributions and/or Roth contributions and catch-up contributions in order to allow the Plan to automatically pass certain nondiscrimination tests that apply to 401(k) plans. Under the safe harbor, matching contributions will be made each payroll period in an amount equal to the sum of 100% of your contributions up to 3% of your compensation for the payroll period and 50% of your contributions between 3% and 5% of your compensation for the payroll period. 4

7 Thus, the maximum matching contribution for a payroll period is 4% of your compensation if you make salary deferral contributions and/or Roth contributions of at least 5% of your compensation for the payroll period. The Employer may amend the Plan during the plan year to reduce or suspend safe harbor matching contributions. If the Employer decides to do so, you will receive a supplemental notice explaining the reduction or suspension of the safe harbor matching contribution at least 30 days before the change is effective. The employer will contribute any safe harbor matching contributions you have earned up to that point. Matching Contributions The Employer, in its discretion, may make matching contributions for a plan year. Any such matching contributions may be made periodically during the plan year or at the end of each plan year by the Employer and will be allocated to your account only if you have made salary deferral contributions and/or Roth contributions during the plan year. If the Employer makes matching contributions at the end of a plan year, you will receive an allocation if you are an employee of the Employer on the last day of the plan year and completed 1,000 hours of service during the plan year. Any matching contributions will be based on the amount of your contributions, but may be limited to a maximum percentage or dollar amount of your compensation. Matching contributions may be subject to a legal limit that affects only highly compensated employees (generally, for 2017 employees whose annual earnings for 2016 exceeded $120,000, subject to adjustment for cost of living increases). If this limit applies, discretionary matching contributions made for highly compensated employees may have to be restricted to enable the Plan to pass a special nondiscrimination test each plan year. The Plan Administrator will tell you if you are affected by this limit for any plan year. Rollover Contributions If you receive a distribution from a qualified retirement plan of your previous employer, you may be eligible to roll over that distribution to the Plan. A rollover contribution may be made as a direct rollover from your previous employer s plan or as a transfer within 60 days after you receive the distribution from the previous employer s plan. You may also be eligible to roll over a distribution from a 403(b) annuity, an eligible governmental plan, or an individual retirement account and certain other arrangements, as well as a designated Roth account from another 401(k) or 403(b) plan. You may make a direct rollover of an outstanding loan balance from an eligible retirement plan, and continue making repayments under that loan to the Plan, as long as you have not defaulted on such loan, you make up any missed repayments, with interest, that may occur from the time loan repayments to the other plan cease and loan repayments to the Plan commence, and you assign the promissory note in favor of the Plan. Additional requirements may apply to such a rollover, such as reamortization of the outstanding repayments over the remaining term of the loan, as determined by the Plan Administrator. 5

8 The Plan Administrator must approve all rollover contributions in advance. If you wish to make a rollover contribution, the Plan Administrator may require you to demonstrate that the legal requirements for a rollover contribution are satisfied. You should not withdraw funds from any other plan or account until you have received written approval from the Plan Administrator for the rollover into the Plan. In Plan Roth Conversions You may elect to irrevocably convert all or a part of the vested balance of your account, including the balance of any outstanding loan, as an in-plan Roth conversion. The amount converted within the Plan will be currently taxable to you, and following the conversion that amount will be separately accounted for under the Plan and will remain subject to the same distribution restrictions that applied to the amount prior to the in-plan Roth conversion. Overall Limit on Contributions The limit on the total contributions (excluding catch-up contributions and rollover contributions) that may be made to the Plan and any other qualified defined contribution plan maintained by the Employer for any participant for any plan year is the lesser of 100% of the participant s compensation for the plan year and a dollar limit that is adjusted annually for cost of living increases (for 2017, the federal limit is $54,000). Special Compliance Provision In an effort to keep retirement plans from favoring key employees, the Internal Revenue Code includes a complicated set of rules that apply to any top-heavy retirement plan. Stated simply, the Plan will be top-heavy if the value of the accounts belonging to key employees (generally certain officers and shareholders) exceeds 60% of the value of the accounts for all participants. Each year the Plan will be tested to determine if it is, in fact, top-heavy. In the unlikely event the Plan becomes top-heavy, special rules will become effective that could increase the contributions the Employer makes to your account. 5. PLAN ACCOUNTS; ALLOCATIONS TO ACCOUNTS All participant and Employer contributions to the Plan are transferred to a trust fund, which is held by the Plan s trustee for the exclusive benefit of the participants. A separate account is established for you that reflects the contributions that have been made by you or on your behalf, any investment income (or loss) allocable to your account, and any distributions or withdrawals from your account. All of your salary deferral contributions, Roth contributions, safe harbor matching contributions, rollover contributions and Roth rollover contributions are allocated to your account within the trust fund. In addition, any discretionary matching contributions made on 6

9 your behalf are allocated to your account. Your account is divided into sub-accounts to keep track of each type of contribution. You will receive periodic statements showing the amounts held in your account and in the various sub-accounts. If you were a participant in the CMCA Americas, Inc. 401(k) Profit Sharing Plan (the CMCA Plan ), your balance in that plan was merged into the Plan, effective January 1, 2016, and additional subaccounts were created under the Plan for transferred amounts from your employer contributions account and matching contributions account under the CMCA Plan. 6. INVESTMENT OF CONTRIBUTIONS You are responsible for directing how your Plan account balance is invested among the Plan s available investment alternatives. Information concerning the investments alternatives is provided to you in a separate brochure, which is available from the Plan Administrator, online at or by calling the Retirement Service Center at Default Investment Fund You make your initial investment election when you enroll in the Plan. Your account will remain invested in accordance with your election until you change your investment election in the manner described below. If you fail to make an investment election, your account will automatically be invested in an investment option that has been designated by the Plan Administrator as the default investment option, which may be a money market fund or similar short-term fixed income fund or a qualified default investment option that satisfies the requirements of Section 404(c)(5) of ERISA and Section (c)-5 of the Department of Labor regulations. Election Changes You may change your investment election with respect to future contributions made to your accounts and/or change how your existing account balance is invested in accordance with procedures established by the Plan Administrator. You should review these procedures carefully before you give investment directions. In addition, you can obtain other important information from the Plan Administrator on directed investments as described below. Investment Options The Employer and the Plan Administrator will select a menu of investment alternatives into which you may direct the investment of your account balance. Further, the Employer and the Plan Administrator reserve the right, in their sole discretion, to change the investment alternatives. You will be notified of any such changes. Investment Responsibility When you direct investments, you are entirely responsible for any investment selections that you make. In directing your investments, you should remember that the amount of your benefits under the Plan will depend in part upon your choice of investments. If you choose investments that produce gains and other earnings, your benefits will tend to increase in value over time. Conversely, if you choose investments that have losses, your benefits will tend to decrease in value over time. Losses can occur and there are no guarantees of performance. The Employer, the Plan Administrator, the Trustee, and their representatives, will not provide you with investment advice, nor do they insure or otherwise guarantee the value or performance of any investment you choose. 7

10 Note: There may be circumstances under which limitations on transfers among investment alternatives are imposed (e.g., in the event of excessive mutual fund trading). Please refer to the various investment prospectuses, as amended from time to time, for more information on any trading restrictions that may apply. Separate Accounting When you direct investments, your account is segregated for purposes of determining the gains, earnings or losses on these investments. Your account does not share in the investment performance for other participants who have directed their own investments. ERISA Section 404(c) Compliance The Plan is intended to meet the requirements of Section 404(c) of the Employee Retirement Income Security Act of 1974 ( ERISA ) and the Department of Labor regulations implementing that provision. This means that the fiduciaries of the Plan, such as the Employer and the trustee, may be relieved of liability for any losses that are the direct and necessary result of investment instructions given by a participant. Certain information is given to you automatically in connection with the investment of your account balance under the Plan. In addition, the following information can be obtained upon request from the Plan Administrator or its representative: (a) copies of prospectuses, short-form or summary prospectuses, financial statements and reports, and other materials relating to the investment alternatives under the Plan; (b) copies of any financial statements or reports, such as statements of additional information and shareholder reports, and of any other similar materials relating to the Plan s investment alternatives to the extent such materials are provided to the Plan; (c) a statement of the value of a share or unit in each specific investment alternative as well as the date of the valuation; and (d) a list of the assets comprising the portfolio of each investment alternative, the value of such assets (or the proportion of the investment option that it comprises) and, with respect to each asset that is a fixed rate investment contract issued by a bank, savings and loan association or insurance company, the name of the issuer of the contract, the term of the contract and the rate of return of the contract. The Plan fiduciary responsible for providing the above information is as follows: TATA America International Corporation 379 Thornall Street, 4th Floor Edison, New Jersey You also can obtain this information online at or by calling the Retirement Service Center at

11 There is generally a prospectus for each of the investment funds available through the Plan. The prospectus describes the fund s investment objectives, strategies and risks, presents historical performance figures for the fund, and details the fund s operating expenses. You are encouraged to read all of the prospectuses carefully so that you can choose which investment funds are best suited for you. You can get updated prospectuses and investment information for these funds by contacting the Plan Administrator or by going online to or calling the Retirement Service Center at Each of the investment funds made available through the Plan may have certain operating expenses, such as fund management fees, brokerage commissions, transfer taxes and other expenses. The expenses of each fund are generally deducted from the assets of the fund and are therefore reflected in each fund s share price. As a result, each fund s expenses are borne by the participants investment in that fund. Not all of the funds have the same type or amount of expenses. More specific information about the expenses incurred by each fund will be automatically provided to you annually. 7. VESTING IN ACCOUNTS When you vest in your account, you have a nonforfeitable right to that portion of your account in which you are vested. You are always 100% vested in your salary deferral contributions, Roth contributions, safe harbor matching contributions, rollover contributions and Roth rollover contributions sub-accounts. This means that you will always be entitled to receive 100% of the value of these sub-accounts, even if you terminate employment before retirement. You will become 100% vested in your discretionary matching contributions sub-account, if any, when you attain age 65 (your normal retirement date), die or become disabled while you are a participant in the Plan. You are disabled under the Plan if a licensed physician chosen by the Plan Administrator determines that you are suffering from a physical or mental condition resulting from bodily injury, disease or mental disorder that renders you incapable of engaging in any substantial gainful activity. The Administrator may rely on the receipt of a Social Security disability award as proof of disability. If you terminate employment with the Employer for any other reason, you will vest in your discretionary matching contributions sub-account in accordance with the following schedule: Number of Years of Service Vested Percentage Less than 1 0% 1 but less than 2 20% 2 but less than 3 40% 3 but less than 4 60% 4 but less than 5 80% 5 or more 100% 9

12 For any employee who was transferred by JP Morgan Chase to TCS America on February 1, 2004, under the Intelenet Operations Agreement, or any employee of CMC Americas, Inc. who became a participant in the Plan, years of service will include the period of employment with such companies. You will be credited with a year of vesting service for each 12-month period (as measured from your date of hire and any anniversary of that date) during which you are employed by the Employer or any Participating Employer. If you terminate employment and return to work within one year, you will be considered to have remained an employee for that period and will receive vesting service for the time that elapsed between your date of termination and the date you are rehired. If you terminate employment during a period of absence of 12 months or less, however, your period of absence will only be counted as years of vesting service if you return to work within one year of your first day of absence. Should you transfer from one Participating Employer to another, you will retain your vested status under the Plan. You may also earn service credit during an approved leave of absence or under a prior plan in the event of the plan's merger with and into the Plan. An employee or former employee of CMC Americas, Inc. who participated in the CMCA Plan was credited with his years of service under the CMCA Plan, and an employee of CMC Americas, Inc. who became a Participant in the Plan receives credit for additional years of service as determined under the Plan. Participants in the CMCA Plan who terminate employment for any reason other than retirement, death or disability will vest in their CMCA Plan employer contributions and matching contributions subaccounts in accordance with the following schedule: Number of Years of Service Vested Percentage Less than 2 0% 2 but less than 3 40% 3 but less than 4 60% 4 but less than 5 80% 5 or more 100% A participant or former participant in the CMCA Plan will be 100% vested in his employer contributions and matching contributions accounts as of the later of the date he attains age 55 and the ninth anniversary of the date he commenced participation in the CMCA Plan provided he is an employee on such date. If you are re-hired prior to incurring five consecutive breaks in service and prior to receiving a distribution of your account, any nonvested portion of your account will be restored. In general, if you terminate employment after you have become at least partially vested in any matching contributions allocated to your account and are re-hired prior to incurring five consecutive breaks in service but after you have received a distribution of the vested portion of your account, the nonvested portion of your account will be restored only if you repay to the Plan an amount equal to the amount you previously received in a lump sum within five years of your reemployment. For this purpose, you will be considered to have incurred a one-year break in service if you do not complete at least one hour of service in any 12-month period. Thus, in 10

13 order to have five consecutive breaks in service, you must be away from the Employer for five years from the date you terminated employment. 8. WITHDRAWALS AND DISTRIBUTIONS FROM THE PLAN Because the Plan is regarded under the Federal tax laws as a program to provide retirement benefits, withdrawals or distributions of money from the Plan before retirement are restricted and may be subject to penalty taxes (as well as regular income taxes) in certain circumstances. You should therefore treat the Plan as a means to accumulate tax-advantaged savings and to invest for the long term and should not use the Plan to make short-term investments. Withdrawals From Accounts While Actively Employed While you are an active employee of the Employer, withdrawals or distributions from the Plan can be made only under the following circumstances. Generally, amounts in your salary deferral contributions sub-account, Roth contributions sub-account and safe harbor matching contributions sub-account cannot be withdrawn or distributed before the earliest of your retirement or death, severance from service, reaching age 59½, or termination of the Plan. Withdrawals from Rollover Contribution and Roth Rollover Contribution Sub-Accounts You may withdraw all or part of the balance in your rollover contribution and Roth rollover contribution sub-accounts under the Plan at any time. You will be required to pay a processing fee to cover the cost to make such a withdrawal as determined by the Plan Administrator. Withdrawals After Age 59½ or Upon Disability Once you reach age 59½ or if you become disabled, you may withdraw all or part of the vested balances of your sub-accounts in the following order: salary deferral contributions and Roth contributions sub-accounts, as you designate; discretionary matching contributions sub-account; and, safe harbor matching contributions sub-account. If you were a participant in the CMCA Plan and your balance in that plan was merged into the Plan, you also may withdraw amounts from your vested CMCA Plan employer contributions and matching contributions subaccounts following payment from the above subaccounts. You will be required to pay a processing fee to cover the cost to make such a withdrawal as determined by the Plan Administrator. Financial Hardship Withdrawal If you are actively employed and suffer a financial hardship for one of the reasons described below, you may receive a financial hardship withdrawal from your salary deferral contributions sub-account or, to the extent you designate, your Roth contributions sub-account, up to the amount needed to meet your financial obligations resulting 11

14 from the hardship. Any investment income allocated to your salary deferral contributions account or Roth contributions sub-account may not be withdrawn on account of financial hardship. A financial hardship, as defined in the Plan, can result only from: (a) medical expenses for you or members of your immediate family not covered by insurance; (b) post-secondary education expenses for you or a member of your immediate family; (c) purchase of a principal residence for yourself; (d) payments necessary to prevent your eviction from your principal residence or to prevent foreclosure on the mortgage on that residence; (e) payments for funeral expenses of your immediate family members; or (f) expenses for the repair of damages to your principal residence that qualifies as a casualty deduction on your federal income tax return (regardless of income limitations). Medical and educational expenses for a non-custodial child will support a hardship withdrawal. For purposes of items (a), (b) and (e) above, expenses for your primary beneficiary under the Plan will be treated as expenses for your spouse or dependent, and the death of your primary beneficiary will be treated as the death of your spouse or dependent, even if your primary beneficiary is not a spouse, child, or dependent. A primary beneficiary means a beneficiary who has an unconditional right to receive all or a portion of your Plan accounts upon your death. Upon incurring a financial hardship, you must apply in writing to the Plan Administrator describing the nature of the hardship and the amount that you want to withdraw. The amount of any hardship withdrawal may be increased to provide for anticipated taxes and penalties. The Plan Administrator may authorize the hardship withdrawal, but only upon the following conditions: (a) you must first have obtained all other distributions and loans available under the Plan and all other retirement plans maintained by the Employer (provided such action would not be counterproductive or increase the amount of the financial need); and (b) your salary deferral contributions and Roth contributions to the Plan and all other retirement plans of the Employer will be suspended for a period of six months after the withdrawal. Hardship withdrawals may not be rolled over to another plan or to an individual retirement arrangement. Because these withdrawals may not be rolled over, they are not subject to income tax withholding. A hardship withdrawal is, however, subject to income taxes as well as a 10% penalty tax if received before age 59½. If any portion of a hardship withdrawal includes Roth contributions, income taxes will not apply to that amount, but the 10% penalty tax will apply if the withdrawal is received before age 59½. Loans to Participants The Plan Administrator may authorize a loan to you from your account in an amount not to exceed the lesser of 50% of your vested account balance or $50,000 (reduced by the amount of the highest outstanding loan balance during the immediately preceding 12- month period). The loan must be repaid in regular installments (by payroll withholding) over a period no longer than five years, unless the loan is made for the purpose of purchasing a principal residence in which case the term of the loan may be up to 10 years. The loan will ordinarily bear interest at a fixed rate equal to 1% above the prevailing prime rate when the loan is made. The minimum amount of any loan is $1,000, and you may have two loans outstanding at any time. To obtain a loan, you must demonstrate to the satisfaction of the Plan Administrator 12

15 that you can repay the loan in accordance with its terms, and you must sign a promissory note in favor of the Plan. Your account balance must be pledged as security for the loan. Any amount loaned to you under the Plan s loan provision is treated within the Plan s trust fund as a separate investment made exclusively by your account. As a result, all of your loan repayments, including interest on the loan, are allocated only to your account. If you fail to repay the loan, only your account will suffer any loss. To cover the cost of administering your loan, you may be required to pay a loan processing and/or maintenance fee, as may be established by the Plan Administrator, which will be deducted from your account. A loan to you from the Plan is not regarded as a distribution subject to income tax. However, if you default in the repayment of the loan, you could then be treated as receiving a distribution for tax purposes, which would be subject to income tax, including the penalty tax if applicable. Subject to the terms of the promissory note, if you stop working for the Employer before your loan is repaid, your loan will immediately become due and payable. If you do not repay the outstanding balance in full by the end of the calendar quarter following the calendar quarter in which you stop working for the Employer and you do not receive a distribution of your account, the outstanding loan balance will automatically be deducted from your account and will be reported for tax purposes as a distribution. If you receive a distribution of your account, any outstanding loan balance will automatically be deducted from your account before it is distributed to you. Loan repayments may be suspended during a period of military leave. Contact the Plan Administrator or go online to or call the Retirement Service Center at for additional information about loans. Distributions Following Retirement or Termination of Employment If you terminate employment with the Employer on or after attaining age 65, your normal retirement age, or due to your becoming disabled, you are entitled to receive a distribution of your entire account balance, regardless of the number of years of service you have completed. If you terminate employment for any other reason (other than death), you are entitled to receive a distribution of the vested portion of your account balance. In either event, the amount payable under the Plan will be distributed or commence to be distributed as soon as administratively feasible following receipt of your written request for payment. Generally, distributions do not occur until after you have terminated employment with the Employer. Thus, if you continue to work for the Employer after your normal retirement date, you generally may defer receiving a distribution until April 1 of the calendar year following the later of the calendar year in which you attain age 70½ and the calendar year in which you terminate employment. However, in the case of a 5% owner of the Employer, distributions must 13

16 begin no later than April 1 of the calendar year following the calendar year in which the participant attains age 70½, even if the participant is still an employee of the Employer. Forms of Benefit Distribution If the value of your vested account balance does not exceed $1,000, distribution will be made in a lump sum payment as soon as practicable following the date on which your termination of employment occurs, even if you do not request payment. If the value of your vested account balance exceeds $1,000, you must file the appropriate form with the Plan Administrator to receive a distribution of your account. The determination of the value of your account for these purposes will include the value of any rollover contributions and Roth rollover contributions you have made to the Plan. The Plan provides for the following forms of benefit distribution: Option A: Option B: Option C: A single lump sum payment in cash. Payments in annual or more frequent installments over a specified period of years, not to exceed your life expectancy (or the joint and survivor life expectancy of you and your designated beneficiary; the period of the payout may be limited to comply with certain tax law requirements). Any reasonable combination of the foregoing. If the value of your vested account balance does not exceed $5,000, you may only elect to receive a distribution in a simple lump sum payment (Option A). If your vested account balance exceeds $5,000, you are entitled to elect any of these options for paying out your vested account balance. If you elect to receive installment payments (Option B), you may subsequently elect to convert the remaining installments into a single lump sum payment in cash. You elect the method for paying out your vested account balance by filing the appropriate form with the Plan Administrator. If you are married, spousal consent is not required to request a distribution. In the absence of an election to defer the commencement of benefit payments, the amount payable under the Plan will be distributed within sixty (60) days following the close of the plan year in which the latest of: (i) your normal retirement date, (ii) your termination of employment date with the Employer, or (iii) the 10 th anniversary of the date on which you began participation in the Plan. If you have any questions regarding distributions, please contact the Plan Administrator or go online to or call the Retirement Service Center at DEATH BENEFITS If you die while you are an employee of the Employer, the death benefit payable under the Plan is your full account balance, regardless of the years of service you have completed. In all other cases, the death benefit is your vested account balance. 14

17 Designating a Beneficiary In general, you are entitled to designate a beneficiary. If you are married, however, you may not designate any beneficiary other than your spouse unless your spouse consents in writing to the designated beneficiary and your spouse s consent is witnessed by a notary public or a representative of the Plan. If you do not designate a beneficiary in the proper manner before you die or if your designated beneficiary predeceases you, your account balance will be paid in the following order: (1) to your surviving spouse, (2) if no surviving spouse, in equal shares to your children per stirpes, or (3) if no surviving children, to your parents in equal shares, or if only one parent is living to such parent. If you have no surviving spouse, children or parents, any death benefit will be paid to your estate. If you have any questions concerning the rules for designating a beneficiary, please contact the Plan Administrator or go online to or call the Retirement Service Center at Payout of Death Benefits If the value of your vested account balance does not exceed $1,000, distribution will be made to your beneficiary in a lump sum payment as soon as practicable following your death, even if your beneficiary does not request payment. If the value of your vested account balance exceeds $1,000, your beneficiary must file the appropriate form with the Plan Administrator to request a distribution, and the amount payable under the Plan will be distributed as soon as administratively feasible following the Plan Administrator s receipt of your beneficiary s written request for payment. Your beneficiary may elect to receive your account in a single lump sum or in one of the other payment options described above (subject to restrictions in certain circumstances as noted earlier). However, if the vested portion of your account does not exceed $1,000, your vested account balance will be paid only in a single lump sum payment. Your entire account generally must be paid to your beneficiary within five years after your death. However, if your beneficiary is a person (rather than a trust or your estate), payment must commence no later than the last day of the calendar year in which occurs the first anniversary of your death, if payments are to be made over the life expectancy of the beneficiary. If your spouse is the beneficiary, payments may be delayed until the last day of the calendar year in which you would have attained age 70-1/ TAX CONSIDERATIONS The discussion in this section is intended to provide general guidance with respect to the tax rules affecting you as a result of your participation in the Plan. Because of the complexity of these rules, the frequency with which they are changed and the fact that each person s 15

18 circumstances are unique, you are urged to consult with a personal tax adviser regarding the tax aspects of your participation in the Plan and receipt of benefits under the Plan. Tax Treatment of Contributions In general, all of your salary deferral contributions (including catch-up contributions) when made to your Plan account are excluded from your income for Federal income tax purposes, but these contributions are included in your income for Social Security tax purposes. Salary deferral contributions (including catch-up contributions) when made to your Plan account are also excluded from your income for state income tax purposes. Roth contributions (including catch-up contributions made as Roth contributions) are included in your income for Federal and state income tax purposes and for Social Security tax purposes. The Employer s safe harbor matching contributions and discretionary matching contributions are not subject to any tax when made to your Plan account. Rollover contributions and Roth rollover contributions are not subject to tax when made to your Plan account. Tax Treatment of Investment Accounts The trust that holds all Plan investments and your Plan account is exempt from Federal and state income taxes. Therefore, any interest and dividends paid to, as well as capital gains and appreciation in value realized by, the trust are not subject to taxation as long as the assets remain in the trust. Tax Treatment of Distributions to Participants A distribution of benefits from the Plan to you or your beneficiary generally is subject to both Federal and state income tax, but not Social Security tax. Several exceptions and special rules may apply, however, either with regard to the taxability of these amounts or with respect to the rate or method of computing the tax. Here are some of the more important rules and exceptions: Pre-Age 59½ Distribution Penalty Tax. Subject to certain exceptions, distributions from the Plan made before you attain age 59½ are subject to regular income taxes plus a 10% Federal penalty tax. If all or a portion of a pre-age 59½ distribution consists of Roth contributions made to the Plan or rolled over from another 401(k) plan, only the earnings on such amounts will be subject to regular income taxes, but the entire amount of the distribution will be subject to the 10% penalty tax. The exceptions to the penalty tax (but not to the income tax) include distributions on account of your death, disability or separation from service after age 55. Rollover of Distribution. If the distribution you receive from the Plan qualifies as an eligible rollover distribution, you may be able to roll over all or part of the distribution to an individual retirement account ( IRA ), 403(b) annuity contract or 16

19 the retirement plan of a new employer. The amount rolled over will not be subject to income taxes or to the 10% penalty tax. An eligible rollover distribution generally includes any lump sum payment other than a hardship withdrawal. If you are married, your surviving spouse also may roll over a death benefit to an IRA, 403(b) annuity contract or the retirement plan of a new employer, but a death benefit payable to your non-spouse designated beneficiary may only be rolled over to an IRA that has been established to receive the rollover. The amount rolled over will not be subject to income taxes or the 10% penalty tax. You, your surviving spouse or your designated beneficiary may also be able to roll over all or part a lump sum payment to a Roth IRA. The amount rolled over will be subject to income taxes at the time of the rollover, but both the amount rolled over and future earnings on that amount will not be subject to income taxes or to the 10% penalty tax if they are distributed from the Roth IRA after you have attained age 59½ and if at least five years have expired since the Roth IRA was established. Otherwise (with limited exceptions), the earnings that are distributed from the Roth IRA will be subject to regular income taxes, and the entire amount of the distribution could potentially be subject to an early withdrawal penalty. Roth contributions, any amount you rolled over to the Plan that consists of Roth contributions from another retirement plan and the associated earnings may not be rolled over to a traditional IRA, but they may be rolled over to a Roth IRA or to another qualifying employer plan that will accept such a direct rollover, which might be desirable if you wish to continue to have the earnings accrue on a tax-deferred (or tax-free) basis. Moreover, when you roll over your Roth contributions from one retirement plan to another retirement plan, the entire account under the second retirement plan will be treated as if you started making Roth contributions in the earliest year of the two retirement plans when determining whether you have satisfied the five-year requirement to avoid income taxes and potential penalties on a withdrawal or distribution of earnings. Tax Withholding. Most distributions of benefits from the Plan are subject to mandatory tax withholding, unless you elect to have a direct rollover of the benefit amount to an IRA, 403(b) annuity contract or the retirement plan of a new employer. Before you receive a distribution, the Plan Administrator will provide a written notice explaining the rules under which you may elect to have a payment from the Plan transferred in a direct rollover as well as a description of your right to defer receipt of the distribution and the consequences of deferring or failing to defer receipt of the distribution. Roth contributions, any amount you rolled over to the Plan that consists of Roth contributions from another retirement plan and the associated earnings may be distributed to you tax-free, provided you have attained age 59½ at the time of the distribution and the distribution does not occur earlier than the fifth year after the year in which your Roth contributions first started (under the Plan or, if you rolled over 17