FINRA SAVINGS PLUS 401(K) PLAN SUMMARY PLAN DESCRIPTION 2017

Transcription

1 FINRA SAVINGS PLUS 401(K) PLAN SUMMARY PLAN DESCRIPTION 2017

2 TABLE OF CONTENTS INTRODUCTION: THE FINRA SAVINGS PLUS PLAN... 1 This Booklet is Only a Summary... 1 Administrative Information... 1 Not a Contract of Employment (k) Plan Checklist... 1 PARTICIPATING IN THE 401(k) PLAN... 3 General Eligibility Criteria... 3 Who is Not Eligible... 3 Enrolling, Making Changes, or Reviewing Your Account Information at Vanguard... 4 Changes in Employment Status and Reemployment... 4 Enrollment Procedures for Salary Deferral or Payroll Reduction Contributions... 4 Enrollment Procedures for SPP Retirement Contributions... 5 CONTRIBUTIONS TO THE 401(k) PLAN... 5 Plan Contributions... 6 One-Step Program... 6 Types of Contributions You Can Make to the 401(k) Plan... 6 Pre-Tax Contributions... 6 Roth Contributions... 7 Catch-up Contributions If You are Age 50 and Older... 7 Pre-Tax and Roth IRS Limits... 7 After-Tax Contributions (Other than Roth Contributions)... 7 Percentage Limit... 7 IRS Nondiscrimination Limits... 7 Rollover Contributions... 8 FINRA s CONTRIBUTIONS TO THE 401(k) PLAN... 8 Matching Contributions... 8 SPP Retirement Contributions... 9 Transition Credits...10 IRS Total Annual Contribution Limit Return of Contributions and Forfeitures When Participation Ends for Purposes of Making and Receiving Additional Contributions VESTING Period of Severance (k) PLAN INVESTMENTS Investment Elections...12 Default Investments...12 Fund Prospectuses...12 Three Investment Approaches Are Provided by the Plan Approach #1: Target Retirement Fund Approach...12 Approach #2: The Do-It-Yourself Approach Approach #3: The Vanguard Managed Account Program...13 Changing Your Investment Selections Money Already in Your Account...13 i

3 General Information About Investing...13 Risk and Return...13 Resources on Investing...13 Section 404(c)...14 Your 401(k) Account Statement (k) ACCOUNT DISTRIBUTIONS In-Service Withdrawals...15 Loans...16 Loan Amount...16 Loan Frequency...16 Loan Interest Rate...16 Repaying a Loan...16 Applying for a Loan...17 Hardship Withdrawals...17 If you leave FINRA and are age 70½ or older...18 If you are younger than age 70½ when you leave FINRA...18 If your vested account balance is $1,000 or less...18 If your vested account balance is greater than $1,000 but less than $5, If your vested account balance is greater than $5, If You Become Disabled...19 If You Die Before Receiving Your 401(k) Plan Account Balance...19 Reemployment...19 TAX CONSIDERATIONS...20 Rollover of Lump-Sum 401(k) Payments...21 OTHER IMPORTANT INFORMATION ABOUT YOUR 401(K) PLAN Updating Your Benefit Records...21 Qualified Domestic Relations Orders...22 Obtaining More Information about the 401(k) Plan...22 Amendment and Termination...22 Funding (k) Plans Are Not Insured...22 Top-Heavy Plan Rules...23 Claims Procedures...23 ADMINISTRATIVE INFORMATION Name of Plan...24 Type of Plan...24 IRS Plan Number...24 Vanguard Plan Number...24 Plan Sponsor...24 Employer Identification Number...24 Plan Administrator...24 Plan Trustee...25 Plan Agent for Service of Legal Process...25 Plan Year...25 ii

4 YOUR RIGHTS UNDER ERISA GLOSSARY iii

5 INTRODUCTION: THE FINRA SAVINGS PLUS PLAN The Financial Industry Regulatory Authority, Inc. ( FINRA ) sponsors the FINRA Savings Plus Plan, a 401(k) and profit-sharing defined contribution plan (the 401(k) Plan ), for the benefit of its employees. The main purpose of the 401(k) Plan is to help you save for your retirement. You may elect to contribute to the 401(k) Plan on a pre-tax, Roth, or after-tax basis. FINRA matches a portion of your contributions to the 401(k) Plan and you are always fully vested in both your and FINRA s Matching Contributions to the Plan. You choose how your contributions and FINRA s contributions are invested. Under certain conditions, you may also be able to withdraw part of your 401(k) investments while you are actively employed. This Booklet is Only a Summary This booklet is designed to provide you with a non-technical summary of the main features of the 401(k) Plan as in effect on January 1, You should read this summary plan description carefully, because some important changes to the Plan go into effect in 2017, such as a change to the 401(k) Plan s Matching Contribution formula, additional participants becoming eligible for SPP Retirement Contributions, and the introduction of Transition Credits for certain participants. We have tried to describe the 401(k) Plan as clearly and concisely as possible. However, the description is in non-technical terms, and it does not cover every aspect of the 401(k) Plan or every situation that may arise under the 401(k) Plan. If anything in this booklet conflicts with the official 401(k) Plan document, the terms of the 401(k) Plan document will prevail. The most current 401(k) Plan Document is available to you in the Benefits section on FINRA s intranet FINRAnet. If you have questions, please contact FINRA HR-Benefits. You should describe your question in an and send it to hrbenefits@finra.org. Words that have defined meanings in the 401(k) Plan or in this booklet are underlined and are defined in the Glossary at the back of the booklet. You can click on the term to be linked directly to its definition in the Glossary. Administrative Information We encourage you to read this booklet and share it with other members of your family affected by your benefit coverage. You may want to keep it in your personal files so you can refer to it when you have questions about the 401(k) Plan. The most current version of this booklet is available to you in the Benefits section on FINRAnet. Not a Contract of Employment Participation in the 401(k) Plan does not constitute a contract for employment, nor a guarantee of continued or future employment, with FINRA. The 401(k) Plan s provisions also do not limit FINRA s ability to change the terms of your employment. 401(k) Plan Checklist The At-A-Glance Checklist below shows, in summary format, what actions you need to take to enroll and participate in the 401(k) Plan and what you should do when you are ready to retire. 1

6 To Enroll/Participate At-a-Glance Checklist What You Need to Do... If you are a newly hired employee or a rehired employee who is eligible to participate in the 401(k) Plan, you will be automatically enrolled to contribute 6% of your pay on a pretax basis to the 401(k) Plan unless you affirmatively opt out of participating or you elect a different contribution percentage. You are also automatically enrolled in the One-Step Program, which automatically increases the percentage of your contribution by 1% (up to a maximum of 15%) annually unless you elect otherwise. Your contribution will be invested in the Vanguard Target Retirement Fund option based on the year you will reach normal retirement age (generally 65), but you can always select another investment. Whether you are a new employee or have participated for years, as long as you are eligible to participate, you can always make your own election to contribute Pre-tax, Roth, and/or After-tax Contributions at the level you select. If you do not make an affirmative election and you are a new employee, you will be automatically enrolled in the 401(k) Plan, as discussed below. If you are hired or rehired after 2010 (or you elected to receive a SPP Retirement Contribution during the 2011 Decision Period), then FINRA will automatically make SPP Retirement Contributions for you. If you are not a Grandfathered Participant and your benefit accruals under the ERP were frozen on December 31, 2016, FINRA will make SPP Retirement Contributions to your Account for your service beginning on January 1, 2017, and you may also be eligible for Transition Credits. You can make investment elections for the money in your Account. There are a variety of investment options in various asset classes from which to choose. For more information about these options and to make your selections, log on to Vanguard at You may opt out of automatic enrollment, change the amount of your contribution amount or change your investment elections at any time by contacting Vanguard at (800) or online at You must opt out of automatic enrollment within 30 days of hire or re-hire to avoid having any contributions made through automatic enrollment, although you can change the amounts you want to contribute prospectively at any time. Your Beneficiary to receive your vested benefit when you die is automatically your Spouse or Domestic Partner, as applicable, unless you elect another Beneficiary under the Plan s procedures. You can designate your Beneficiary on the Vanguard website and enter your Beneficiary directly, or Vanguard can also provide you with a paper form. You may update this information at any time. FINRA does not keep a separate paper record of your Beneficiary designation. If you are married, your Spouse must agree in order for your designation of a different Beneficiary to be effective. Notify HR-Benefits of your year-to-date contributions with your previous employer so that you do not exceed the annual pre-tax limit set by law during the first calendar year of your employment with FINRA. 2

7 Periodically Review your quarterly statements or review your Account more frequently online. Review your investments. Review your Beneficiary designations if you have a life status change. Contact Vanguard at (800) or to: Change your contribution level and/or investment choices, as desired. Enroll or change your participation in the One-Step program that automatically increases your contributions on an annual basis. Take the risk assessment questionnaire. When You Want to Retire or Otherwise Leave Employment with FINRA Learn about the tax implications of rollovers, loans, and withdrawals at different ages. How: Review this document, contact Vanguard or review information on FINRAnet. You may also want to consult a tax or financial advisor. Request a distribution of your Account by contacting Vanguard. PARTICIPATING IN THE 401(k) PLAN General Eligibility Criteria If you are a Regular Employee of FINRA (or any subsidiary that adopts the 401(k) Plan), unless you are in an ineligible classification (see below), you become an eligible participant in the 401(k) Plan on your date of hire. If you are not a Regular Employee on your date of hire, then you will generally become eligible to participate in the 401(k) Plan as of the earlier of the date (a) you become a Regular Employee or (b) on the January 1 or July 1 on or next following the date you earn a Year of Eligibility Service. If you are not a Regular Employee and need to determine if you have earned a Year of Eligibility Service, special rules apply if you are (i) a former employee of AMEX and eligible to participate in the Plan as of July 1, 2000, (ii) a former employee of NYSE Group, Inc., NASDAQ OMX PHLX or CBOE who became a FINRA employee as a result of FINRA s acquisition of these entities or their assets. If these rules apply to you, some or all of your service with those entities will count for purposes of determining whether you have a Year of Eligibility Service. Who is Not Eligible You are not eligible to participate in the 401(k) Plan if you are: A non-resident alien who is receiving compensation for work performed outside the United States; An employee covered by a collective bargaining agreement, unless the collective bargaining agreement provides for your participation in the 401(k) Plan; Treated as an independent contractor or leased employee; or 3

8 Not treated as an employee on the regular payroll, such as FINRA temporary employees, interns, externs, and expatriates working on a non-us payroll. Note: If you are classified as an independent contractor or leased employee, you will not be treated as retroactively eligible for participation in the 401(k) Plan for any period of time that a court, the Internal Revenue Service, or any government agency or other entity determines that you should have been classified as an employee. Enrolling, Making Changes, or Reviewing Your Account Information at Vanguard To open your Account, go to and select Personal Investor. Click LOG ON and follow the steps. You will need to know your Vanguard plan number You will be able to: make your investment choices; change your contribution percentage; enter and update your Beneficiary information; enroll in or change your auto increase election in the One-Step program; review fund information; and sign up for special features such as: Financial Engines, which is a free service available to you to help you with your investment strategy, the Managed Account program, where you give permission for Vanguard to invest your funds on your behalf, and if you are age 50 or over, you can also sign up for free financial planning. Changes in Employment Status and Reemployment Once you become eligible to participate in the 401(k) Plan, you will remain eligible as long as you remain employed by FINRA, even if you cease to be a Regular Employee. If you cease to be a FINRA employee and you are reemployed by FINRA as a Regular Employee, you will be able to resume participation in the 401(k) Plan upon commencing your reemployment. However, you cease to be a FINRA employee before you became eligible to participate in the 401(k) Plan and are later rehired as other than a Regular Employee, you will become eligible to participate in the 401(k) Plan as of the earlier of (a) the date you become a Regular Employee, or (b) the later of your employment date or the January 1 or July 1 occurring on or after the date you earn a Year of Eligibility Service, as defined above. Enrollment Procedures for Salary Deferral or Payroll Reduction Contributions If you satisfy the eligibility criteria, there is generally no waiting period to participate in the 401(k) Plan. As an eligible new hire or rehire, you are automatically enrolled in the 401(k) Plan and salary deferral contributions are made for you unless you affirmatively elect otherwise. Under automatic enrollment, 6% of your 401(k) Plan Eligible Earnings will be deducted from your paycheck on a pre-tax basis and invested in the Vanguard Target Retirement Fund on your behalf as soon as administratively possible. If you do not wish to be automatically enrolled to contribute 6%, within 30 days of your date of hire, you must notify Vanguard at (800) 4

9 or change your contribution percentage through your online account at Vanguard. After that, you may opt out of automatic enrollment at any time, change the amount you contribute, or change your investment elections. Log in to your Account online at Vanguard ( to change your contribution amount, choose other funds in which to invest, or discontinue contributions. Be sure to name a Beneficiary. To do this, log in to your Account at Vanguard and complete the Beneficiary designation under the My Profile tab. Also be sure to review your Beneficiary designation periodically, especially if you have a change in life status (for example, if you get married or divorced). If you are married or have a Domestic Partner in accordance with FINRA policy, your Spouse or Domestic Partner (as applicable) is automatically your Beneficiary unless you designate someone else using the Plan s Beneficiary designation procedures. If you are married, your Spouse must consent in writing to you designating another person as your Beneficiary in order for your election to be effective. Enrollment Procedures for SPP Retirement Contributions If you are hired after December 31, 2010, you will automatically receive SPP Retirement Contributions under the Plan. These contributions are made by FINRA for you beginning on the first pay date after you are hired, whether or not you elect to make your own contributions to the Plan. If you were hired before January 1, 2011 and elected to receive SPP Retirement Contributions during the 2011 Decision Period, you will also receive SPP Retirement Contributions. If you elected to continue to participate in the Pension Plan during the 2011 Decision Period and are not a Grandfathered Participant, you begin receiving SPP Retirement Contributions (and you may also be eligible to receive Transition Credits) on January 1, See page 9 for more details on the amount of those contributions. If you are a Grandfathered Participant, you will not receive SPP Retirement Contributions. You are a Grandfathered Participant if you did not elect to participate in SPP Retirement Contributions in the 2011 Decision Period and, as of December 31, 2016, you were an active participant in the ERP and (a) has attained at least age 55 and earned at least 10 years of vesting service under the ERP, or (b) the sum of whose combined age plus years of vesting service under the ERP is equal to or greater than 70. When determining age and years of ERP vesting service for this purpose, a fractional year of vesting service as of December 31, 2016 is rounded up to the nearest whole year of vesting service, and age is determined as of the birthday occurring on or next following December 31, These two numbers are then added together. You are also a Grandfathered Participant if you are Disabled as of December 31, If you terminate employment with FINRA and are subsequently re-hired, you will not be a Grandfathered Participant for the period after you are re-hired. CONTRIBUTIONS TO THE 401(k) PLAN You and FINRA both contribute to the 401(k) Plan. You make contributions to the 401(k) Plan through salary reduction (i.e., on a pre-tax basis) and/or payroll deduction (i.e., on an after-tax basis) as explained below, and FINRA makes Matching Contributions and for certain participants, SPP Retirement Contributions and Transition Credits. Contributions are made based on your Eligible Compensation. 5

10 Plan Contributions Your automatic enrollment percentage depends on the year you were hired and is subject to the changes under the One-Step Program, described below. If you were hired on or after January 1, 2008, 6% of your Eligible Compensation will automatically be contributed to the 401(k) Plan as Pre-tax Contributions. If you were hired on or after February 14, 2006, but before January 1, 2008, 4% of your Eligible Compensation will automatically be contributed to the 401(k) Plan as Pre-tax Contributions. If you were hired on or after September 1, 2004, but before February 14, 2006, 3% of your Eligible Compensation will automatically be contributed to the 401(k) Plan as Pre-tax Contributions. If you were hired before September 1, 2004, 2% of your Eligible Compensation will automatically be contributed to the 401(k) Plan as Pre-tax Contributions. One-Step Program As a new hire or re-hired employee, you are automatically enrolled in the One-Step Program with Vanguard. This program includes the following default elections made on your behalf, any and all of which you may change at any time: Automatic enrollment in Pre-tax Contributions at a contribution rate of 6% of your Eligible Compensation; Investment of your automatically contributed funds into the Target Retirement Fund closest to the year in which you attain your normal retirement age (age 65); And, an automatic increase in your Pre-tax Contribution percentage of 1% in the month of March each following calendar year up, to a maximum contribution of 15%. If you were hired after 1998 and prior to September 30, 2007, you were enrolled in One-Step for the first time on March 1, You may make changes to your One-Step enrollment at any time directly with Vanguard. Once you make a change to your One-Step enrollment, the Plan does not make any subsequent automatic changes to your One-Step enrollment. Types of Contributions You Can Make to the 401(k) Plan Pre-Tax Contributions When you contribute to the 401(k) Plan on a pre-tax basis, you defer paying federal and, in most cases, state and local income taxes, on your contributions. You do not pay income taxes on your Pre-tax Contributions or their earnings until they are distributed from the 401(k) Plan. Saving on a pre-tax basis reduces the amount of pay that is subject to current income tax. So, you pay less in taxes now, and your savings and investment earnings accrue on a tax-deferred basis. Although you defer federal, and most state and local, income taxes on Pre-tax Contributions to the 401(k) Plan, FICA and Medicare taxes will be deducted from the pay that you contribute to the 401(k) Plan. This prevents a reduction in your Social Security benefits when you receive them. Other benefits that are calculated as a percentage of base pay (e.g., pension, life insurance, long-term disability, and accidental death and dismemberment benefits) are also not reduced as a result of making contributions to the 401(k) Plan. 6

11 Roth Contributions Roth Contributions are elective contributions that, unlike Pre-tax Contributions, are currently includible in gross income. Roth Contributions are maintained in a separate account within the 401(k) Plan. If you meet certain requirements described on page 20 below, you will not pay taxes on any earnings that accrued on you Roth Contributions when you take a distribution of your Account. Catch-up Contributions If You are Age 50 and Older You may make additional pre-tax and/or Roth Catch-up Contributions to the 401(k) Plan starting the calendar year you reach age 50. For 2017, the maximum Catch-up Contribution is $6,000. The limit may increase annually. Therefore, once you have reached the $18,000 annual contribution limit for the year, your contributions will continue as Catch-up Contributions, up to a total of $24,000. The Matching Contribution limits do not change because of Catch-up Contributions. Pre-Tax and Roth IRS Limits The sum of your Pre-tax and Roth Contributions may not exceed the annual maximum imposed by the IRS, which is adjusted each year for the cost of living. The maximum for 2017 is $18,000, or $24,000 with Catch-up Contributions available to those who are age 50 or older by the end of the year. This dollar limit applies to all 401(k) Plans that you may have contributed to during the calendar year. For example, during the year you are hired, if you had made contributions to your prior employer s plan, it is your responsibility to make sure that your combined pre-tax and Roth contributions (under the FINRA 401(k) Plan and your former employer s 401(k) Plan) do not exceed maximum IRS limits. All you need to do is notify HR-Benefits of the amount that you contributed to your previous employer s plan for that calendar year and that amount can be entered into the system to offset your limit for the year. If, after the end of the year, you find that your total 401(k) contributions exceed the limit, you should contact Vanguard by March 1 to request a refund of the excess 401(k) deferrals. The excess will be refunded by the following April 15. If you made both pretax and Roth deferrals, your Roth deferrals will be refunded first unless you request otherwise. You will forfeit any Matching Contributions made on the deferrals that are refunded to you. After-Tax Contributions (Other than Roth Contributions) When you make After-tax Contributions, you pay income taxes on the money you contribute to the 401(k) Plan before it is deposited into your Account. Therefore, when you withdraw the money later, you will only pay taxes on any investment earnings in your Account. After-tax Contributions do not count towards the maximum contribution limit ($18,000 in 2017) that applies to Pre-tax and Roth Contributions. Percentage Limit You may not contribute to the Plan more than 50% of your Eligible Compensation on a pay period basis (up to IRS limits) in Pre-tax Contributions, Roth Contributions, After-tax Contributions, or any combination of the three. Catch-up Contributions are included in determining this 50% limit. IRS Nondiscrimination Limits In some cases, IRS nondiscrimination rules, which prevent contributions from disproportionately benefiting the Highly Compensated Employees, could require that 7

12 your contributions to the 401(k) Plan be limited. You will be informed if these limitations apply to you. In order for employees to maximize their contributions to the 401(k) Plan, the FINRA payroll system has a special feature that applies to your Pre-tax Contributions and Roth Contributions. If you save enough to reach the maximum Pre-tax and Roth Contributions (and Catch-up Contributions if you are at least age 50) amounts for a given year, if elected, the system can continue your Pre-tax Contributions and Roth Contributions as After-tax Contributions. This allows you to continue to save each pay period and maximize your Matching Contributions. If you split your contributions between Pre-tax Contributions and Roth Contributions, once you reach the annual limit, both your Pre-tax Contribution and Roth Contribution percentages will be converted to an After-tax Contribution percentage for the remainder of the year if you elect to take advantage of this feature. Check your paystubs on a regular basis to make sure you understand how much you are contributing to the 401(k) Plan so you can maximize your Matching Contributions. Rollover Contributions If you participated in a plan with a former employer and you join FINRA s 401(k) Plan, you may be eligible to roll over the money you received from your previous plan into FINRA s 401(k) Plan. To qualify for rollover treatment, the contributions must be from a qualified tax-deferred plan, such as a 401(k) plan, a Section 457 government plan, a Section 403(b) annuity or a traditional or conduit individual retirement account (IRA), and the distribution must be eligible for rollover -- that is, it cannot be part of a series of payments made over 10 or more years, a hardship distribution or a required distribution after you have reached age 70½. The Plan will also accept a rollover of Roth Contributions from another qualified plan or a Roth IRA. You will not receive Matching Contributions on any amounts you roll over from another plan. Rollover Contributions do not count against annual contribution limits. The 401(k) Plan generally does not allow you to roll over any outstanding 401(k) loans to the 401(k) Plan. However, the 401(k) Plan may accept an outstanding loan in a direct rollover by an employee who was an employee of CBOE from the 401(k) plan that was sponsored by CBOE. The 401(k) Plan will accept a Roth rollover contribution only if it is a direct rollover from another Roth 401(a) or 403(b) plan. As with any retirement issue, you should contact a financial advisor before making a decision about Rollover Contributions. FINRA s CONTRIBUTIONS TO THE 401(k) PLAN FINRA makes Matching Contributions to the 401(k) Plan on your behalf when you make Pretax, Roth or After-tax Contributions. FINRA also makes a SPP Retirement Contributions and Transition Credits for certain eligible individuals. Matching Contributions FINRA adds to your savings by matching a portion of your 401(k) Plan contributions. The FINRA Matching Contribution is equal to 100% of the first 6% of Eligible Compensation that you contribute for any given pay period (before 2017, the maximum regular Matching Contribution was up to 4% of Eligible Compensation). The Matching Contribution applies to your contributions whether they are Pre-tax, Roth, or After-tax Contributions. Your Account will 8

13 receive the Matching Contributions each pay period that you contribute. The discretionary and retiree medical matching contributions that were provided under the Plan before 2017 were eliminated with the increase of the regular matching contribution to a maximum of 6% of Eligible Compensation. True-Up Matching Contribution Matching Contributions are made each pay period, based on your contributions for that pay period. If, at the end of the year, you have not received the maximum Matching Contribution you could have received on your contributions (for example, if you contributed more than 6% of your Eligible Compensation early in the year, but reduced or stopped your contributions after a few months), FINRA may make an additional trueup Matching Contribution to bring you up to the maximum match based on your actual contributions. In order to receive a true-up Matching Contribution you must be an Eligible Employee on the last day of the year for which the match is made or you must have retired in the prior year after being eligible for early or normal retirement under the ERP (generally, age 55 with 10 years of service, age 65, or 5 years of service if you became a participant after you reached age 60). Unless you elect to allocate them differently, Matching Contributions are allocated to the investment funds you select in the same percentages as contributions that you are making to the 401(k) Plan. For example, if your own contributions are split evenly between two funds, the Matching Contributions also will be invested evenly in those two funds unless you elect a different allocation for your Matching Contributions. SPP Retirement Contributions If you were hired after December 31, 2010, or if you elected to cease accruals under the ERP during the 2011 Decision Period, FINRA will make SPP Retirement Contributions to your Account. In addition, any non-grandfathered Participant whose benefit accruals under the ERP were frozen on December 31, 2016 begins receiving SPP Retirement Contributions effective January 1, The SPP Retirement Contribution is equal to a percentage of your Eligible Compensation, according to a formula that is based on your age and complete years of Benefit Service with FINRA as of December 31 of the prior year: Contribution as a Sum of Your Age + Years of Service as of December 31 Percentage of Eligible Compensation for the Following Year Up to 34 3% % % 75 or more 9% You will not be eligible to receive the SPP Retirement Contribution for periods during which your service is counted for benefit accruals under the ERP. This includes any period during which you are receiving accruals under the ERP on account of your disability. SPP Retirement Contributions are made on a payroll-by-payroll basis. These contributions are accounted for separately and the contributions and their earnings (if any) will vest (become nonforfeitable) over 6 years in accordance with the schedule described on page 11. 9

14 Transition Credits from 2017 through 2021 If you are a non-grandfathered Participant whose benefit accruals under the ERP were frozen as of December 31, 2016, and as of that date you had at least 10 years of vesting service under the ERP and the sum of your age and years of ERP vesting service was at least 50, you will receive Transition Credits beginning on January 1, In determining whether your combined age and ERP vesting service is at least 50 as of December 31, 2016, your age and years of vesting service as of that date are each rounded up to the nearest whole number and are then added together. If you are eligible for Transition Credits, the amount of the credit is 6% of your Eligible Compensation for the year. To receive a Transition Credit for a calendar year, you must be employed by FINRA on the last day of the calendar year to which the Transition Credits relate or have terminated employment during the year due to death, Disability, or retirement after attaining age 55. Transition Credits are made to your Account during the first quarter after the year to which the contributions relate, are credited to your SPP Retirement Contributions subaccount in the Plan and will be treated the same way as SPP Retirement Contributions for vesting and distribution purposes. Transition Credits may continue until December 31, If you are eligible for Transition Credits but leave FINRA, you will not be eligible to again receive Transition Credits if you return to FINRA, even if you return before December 31, IRS Total Annual Contribution Limit There is an annual limit on the aggregate amount of elective Pre-tax, Roth, and After-tax Contributions and employer contributions (both Matching Contributions and SPP Retirement Contributions) that you can receive in any year. The limit for 2017 is the lesser of (i) $54,000 ($60,000 with Catch-up Contributions); and (ii) 100% of your total compensation. If you are eligible for Transition Credits, and your Transition Credits, when combined with the other contributions allocated to your Account for the year, would exceed the annual limit, your Transition Credits will be limited to the amount that will not cause your total contributions to exceed the limit. If you are affected by this limitation, FINRA will provide you with separate information about your eligibility for contributions in a non-qualified plan called the FINRA Excess Plan. Return of Contributions and Forfeitures Because of IRS limits, in certain cases, Highly Compensated Employees may not be able to save as much as they would otherwise. In that case, the excess amount plus earnings must be returned to the employee, and any Matching Contributions (plus any income from the Matching Contributions) based on the excess amounts will be forfeited. When Participation Ends for Purposes of Making and Receiving Additional Contributions Once you enroll in the 401(k) Plan, your participation for purposes of making and receiving additional contributions continues until the earlier of when you: Terminate employment with FINRA; Become Disabled; Are no longer an Eligible Employee; or Die. 10

15 Matching Contributions will cease if you stop making participant contributions eligible for the match. Note: You may not contribute to the 401(k) Plan if you are on leave without pay. VESTING Vesting is your right to the value of the money in your Account. You are 100% vested at all times in all of your Pre-tax, Roth, After-tax and Rollover Contributions (and their gains or losses) and in Matching Contributions (and their gains or losses). You will vest in (earn) the right to receive the SPP Retirement Contributions (including Transition Credits) and their gains and losses based on your years of Vesting Service with FINRA, as follows: fewer than 2 years of Vesting Service: 0% vested 2 years of Vesting Service: 20% vested 3 years of Vesting Service: 40% vested 4 years of Vesting Service: 60% vested 5 years of Vesting Service: 80% vested 6 or more years of Vesting Service: 100% vested You will also be 100% vested in your SPP Retirement Contributions (including Transition Credits) if you reach age 65 prior to your termination of employment or if you die prior to your termination of employment. In addition, employees who terminated employment in the 2013 Voluntary Retirement Program are 100% vested in their SPP Retirement Contributions. Period of Severance A Period of Severance affects whether you forfeit any SPP Retirement Contributions in your Account that were not vested when you terminate employment. For purposes of determining whether a Period of Severance has occurred, you receive credit for up to 501 Hours of Service for an absence due to your pregnancy, the birth of your child, the placement in connection with the adoption of a child, or the need to care for your child during a period immediately following the child s birth or placement. This credit may prevent you from incurring a Period of Severance in the year your absence begins or the following year to which your absence extends. If you have a Period of Severance of 5 years or more, or you terminate employment with FINRA and elect to take a distribution of your Account, before you have become vested in any portion of your SPP Retirement Contributions, any unvested SPP Retirement Contributions will be forfeited from (taken out of) your Account. However, if you are rehired, your years of Vesting Service and any forfeited SPP Retirement Contributions allocated to your Account before you left may be restored, depending on your vested status and the length of your absence. If you left FINRA before you were vested, and you are rehired before incurring a 5-year Period of Severance, your service earned and your forfeited SPP Retirement Contributions will be restored to your Account if you repay the amount of previously distributed SPP Retirement Contributions. If you have a Period of Severance of 5 years or more, however, you will forfeit any unvested SPP Retirement Contributions allocated to your Account before you left and they will not be restored. 11

16 401(k) PLAN INVESTMENTS Investment Elections The 401(k) Plan provides a variety of funds for the investment of your Account. You select how to invest the contributions to your Account (both your contributions and FINRA s contributions). This gives you significant control over the investment of your retirement income. The number and types of investment funds in the 401(k) Plan are subject to change. Default Investments If you do not provide affirmative investment directions with respect to any amounts contributed to the 401(k) Plan including your own future Pre-tax, Roth, and After-tax Contributions, as well as all FINRA contributions these amounts will automatically be invested in a Qualified Default Investment Alternative ( QDIA ). The QDIA under the 401(k) Plan is the Vanguard Target Retirement Fund based on the year in which you turn 65. If you were a participant or Beneficiary with respect to the 401(k) Plan on or before August 1, 2005 and did not provide affirmative investment directions with respect to any amounts contributed on your behalf before August 1, 2005, these amounts were automatically invested in the Vanguard Retirement Savings Trust Fund. You have the right to change how the amounts in your Account are invested. To make an affirmative investment election, please call Vanguard at (800) or visit Vanguard s website at Fund Prospectuses Fund prospectuses contain information on risks, advisory fees, distribution charges, and other expenses. You should read these carefully before you invest. You may obtain a prospectus directly from Vanguard by calling (800) Participant Services Associates are available Monday through Friday, 8:30 a.m. to 9:00 p.m., Eastern Time. You can also download Vanguard fund prospectuses from Three Investment Approaches Are Provided by the Plan These are for example purposes only. You may use any of these approaches or a combination of these approaches. It s your choice. The three different approaches are described below. Approach #1: Target Retirement Fund Approach With this approach, you invest your Account in one Vanguard fund, based on your investment goals. Each fund has a pre-set mix of investments, including stocks, bonds, and short-term investments. Professional money managers designated by Vanguard do the mixing of investments for you, based on the Target Retirement Fund you choose. Using five-year bands, each Target Retirement Fund has a different mix depending on the designated year of assumed retirement. For example, if you reach age 65 in 2030 and have a goal to retire that year, you might choose the Target Retirement Fund 2030 as your investment option. This is where your contributions are invested if you have not selected a different investment. Approach #2: The Do-It-Yourself Approach With this approach, you select the fund or funds that meet your investment goals. When you control your investments, you must decide how to divide your investments in increments of whole percentages from 1% up to 100%. The funds available to you from time to time are described when you log into your Vanguard Account. 12

17 Approach #3: The Vanguard Managed Account Program The Vanguard Managed Account Program provides ongoing professional management of your retirement savings - from fund selection to periodic rebalancing - for a fee. You can receive personalized advice based on your specific circumstances, including your intended retirement age, tolerance for investment risk, and consideration of other investments. Changing Your Investment Selections To make or change your investment allocations (including with respect to amounts invested in a qualified default investment alternative), call Vanguard at (800) or visit Vanguard s website at You can also change the way future contributions are invested daily. You may make these changes in increments of 1% or more. Money Already in Your Account You can exchange money that you have already invested in the 401(k) Plan among the different fund options. Exchanges can be made daily in share and dollar amounts, and in increments of 1% or more. However, the number and frequency of your exchanges may be limited, and a redemption fee may be assessed on certain funds as outlined in the fund prospectuses. The fee, which is paid directly to the fund, is generally imposed by a fund to discourage market timing and protect the interest of long-term fund investors. To learn which funds are subject to restrictions or fees, contact Vanguard at (800) General Information About Investing Risk and Return Participating in the 401(k) Plan requires that you make some decisions about investing your money. When you invest, you hope to get back more money than you originally put in, but it is possible you will lose money. The additional amount is called the return on your investment. Risk is the possibility that the value of your investment will decrease or not increase at the expected rate due to investment losses or changes in the amount of the return. Generally, the higher the risk, the higher your potential returns in the long run. Lower-risk investments, with their lower potential for loss, often result in a lower return. There is also a risk of inflation loss. Inflation represents the increase in the price of items you purchase every day, as the purchasing power of your Account can be reduced if your return on investments does not outpace inflation in the long run. The investment funds offered under FINRA s 401(k) Plan vary in the degree of risk and the amount of investment return you may expect for your money. In general, stocks have historically offered the greater potential return and higher short-term risk. Cash reserve funds and bonds are generally more conservative. However, keep in mind that past performance is never a guarantee of future performance. For more information about investing, visit FINRA s site for investors at or talk with a representative at Vanguard. Resources on Investing There are several resources available to investors online and at your library. In addition, participants in the 401(k) Plan have the following resources available to obtain education and advice on investing: 13

18 our own website with tips and investing information Financial Engines access via your Account on Managed Accounts when you re too busy or don t want to manage your investments, you can invest in a target date retirement fund, or for a fee Vanguard will do it for you. For more information on the Managed Account Program, go to or contact your Vanguard Managed Account specialist at , Monday through Friday 8:00 a.m. to 9:00 p.m. Eastern Time. For more information about any fund, including investment objectives, risks, charges, and expenses, call Vanguard at to obtain a prospectus. The prospectus contains this and other important information about the fund. Read and consider the prospectus information carefully before you invest. You can also download Vanguard fund prospectuses at An investment in a money market fund or a stable value fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the funds seek to preserve the value of your investment at $1 per share, it is possible to lose money by investing in either fund. Section 404(c) The 401(k) Plan is subject to a federal law known as ERISA (the Employee Retirement Income Security Act of 1974). The plan gives participants the right to direct how their money is invested. FINRA s 401(k) Plan is a Section 404(c) plan, and therefore the fiduciaries involved in the administration of the plan may be relieved of liability for investment losses that result from your investment instructions. FINRA s Pension/401(k) Committee is the Plan s 404(c) Fiduciary, which is responsible for providing Plan investment information to a participant or Beneficiary. The address of the 404(c) Fiduciary is: FINRA Pension/401(k) Plan Committee Financial Industry Regulatory Authority, Inc Key West Ave Rockville, MD Neither the Pension/401(k) Plan Committee nor employees of FINRA (other than you, of course), controls or is responsible for the decisions you make about how your 401(k) Plan contributions are invested. You will receive detailed disclosures regarding the investment options available to you in the Plan and the historical returns on those investments, along with information about the fees that are charged against those investments. In addition, you will receive information regarding the other fees that may be charged against your Account (for example, loan initiation fees). Your quarterly benefit statements will also reflect the fees actually charged to your Account during the quarter. Your 401(k) Account Statement The value of your Account is adjusted daily to reflect any withdrawals, distributions, earnings, or losses. Contributions are credited to your Account when funds are received by Vanguard. You will receive a statement each quarter showing the activity in your 401(k) Plan Account as of the last business day of the quarter. When you receive your statement, you should review it 14

19 carefully and contact Vanguard if you have any questions. You can also access information on your Account and direct investments at any time by going to In conjunction with FINRA Green Initiatives, you are encouraged to enroll in the paperless statement option provided by Vanguard. This option allows you to receive your statement via each quarter to the address of your choice. Your quarterly statements are always visible to you when you enroll in your Account at 401(k) ACCOUNT DISTRIBUTIONS In-Service Withdrawals Because the 401(k) Plan is intended for long-term investing for retirement, withdrawals while you are still working at FINRA are not encouraged by FINRA and are restricted by government regulations. Access to the money in your Account is restricted based on various sources of contributions, as shown below. Special rules may apply to transferred accounts; contact the Plan Administrator for more information. For more information on the taxes and penalties associated with withdrawals before age 59½, please see the Tax Considerations section of this document on page 20. Source of Funds Your Pre-tax Contributions (plus certain earnings) Your Roth Contributions (plus earnings) Your After-tax Contributions that are subject to match (plus earnings) Your After-tax Contributions that are not subject to match (plus earnings) Matching Contributions (plus earnings) Rollover Contributions (plus earnings) SPP Retirement Contributions (plus earnings) Transition Credits (plus earnings) When In-Service Withdrawals are Allowed Before Age 59½* At or After Age 59½* (Or if Disabled at Any Age) Financial hardship only For any reason (contributions only, not post earnings) Financial hardship only For any reason (contributions only, not earnings) Allowed for any money that For any reason has been in the Plan for twelve months; or financial hardship For any reason For any reason Not allowed For any reason Not allowed Not allowed For any reason For any reason Not allowed until age 70½ Not allowed until age 70½ See Taxes below for more information about tax consequences, including tax withholding requirements. Withdrawal Considerations. There are several reasons to use caution when making a withdrawal from your Account: 15

20 Saving for retirement is very important to a secure retirement. Withdrawing money from your Account may jeopardize your financial security in the future; Unlike a loan, a withdrawal cannot be repaid into your Account; and You may pay a tax penalty, in addition to income taxes, for an early withdrawal. Loans The 401(k) Plan offers a loan feature that allows you to borrow from your Account, other than your SPP Retirement Contributions and Transition Credits. If you take a 401(k) loan, you pay yourself back, with interest. This gives you the flexibility to use your own money and postpone paying taxes, while still building a fund for the future. However, even though you are paying yourself back, keep in mind that taking money out of your Account may reduce your long-term savings. Loan Amount The minimum loan amount is $1,000. The maximum is the lesser of: Up to 50% of your vested Account balance (other than your SPP Retirement Contributions and Transition Credits); or $50,000 minus the highest outstanding loan balance in the previous 12 months. Loan Frequency You may have no more than two outstanding loans at any time. The loan amount limitation described above applies to the sum of all loans from the Plan. After a loan is paid off, you must wait at least 30 days before applying for a new loan if you have another loan outstanding. Loan Interest Rate When you take a loan, you will be charged a rate of interest equal to the prime rate in effect on the first of the month in which the loan is taken, plus 1%. The interest you pay will be reinvested in your Account. Repaying a Loan Loan repayments are deducted from your paycheck in equal amounts on an after-tax basis. You may choose a repayment period between six months and five years, unless the loan is used to buy your primary residence. In this case, you may take up to ten years to repay the loan. If you request this longer repayment period, you must provide a copy of the sales contract or other documentation. Except as provided in the Plan s loan rules for certain leaves of absence, if you are on leave without pay, or if for any other reason there is not enough money in a paycheck to make the loan payment, you must make arrangements to pay the portion of the loan payment that is not paid by payroll deduction. Generally, if missed loan payments are not made on or before the last day of the calendar quarter after the calendar quarter in which otherwise due, the loan will be defaulted, resulting in a taxable deemed distribution of the outstanding loan. It is your responsibility to ensure that loan repayments are made on a timely basis. Check your pay stub to ensure deductions are taken in accordance with your repayment schedule. 16