SUMMARY PLAN DESCRIPTION FOR THE CHRISTENSEN FARMS & FEEDLOTS, INC. 401(K) PROFIT SHARING PLAN. (Updated July 2010)

Transcription

1 SUMMARY PLAN DESCRIPTION FOR THE CHRISTENSEN FARMS & FEEDLOTS, INC. 401(K) PROFIT SHARING PLAN (Updated July 2010) KCP

2 INTRODUCTION Christensen Farms & Feedlots, Inc. (the Plan Sponsor ) maintains the Christensen Farms & Feedlots, Inc. 401(k) Profit Sharing Plan (the Plan ) for the purpose of allowing eligible employees of the Company and its participating affiliates to save additional funds for retirement. The Plan may also provide benefits in the event of death or disability or in the event of your termination of employment prior to normal retirement. This document provides you with a summary of the more important provisions of the Plan. If there is any conflict between a statement in this summary and the actual Plan document itself, the terms of the official Plan will control. A copy of the official Plan document is available upon request. Under the Plan, there is no fixed dollar amount of benefits. Your actual benefit will depend on the balance of your account balance at the time of retirement or termination of employment. Your account balance will reflect the amount of your contributions, the period of time you participate in the Plan and your success in investing and re-investing the assets credited to your account. If you have any questions after reading this summary, please contact the Plan Administrator. ELIGIBILITY TO PARTICIPATE To become a participant, you must be an eligible employee and complete the age and service requirements specified below. Following satisfaction of those requirements, you may elect to participate in Plan as of any entry date. Eligible Employees. Eligible employees include all employees other than the following: union employees unless the terms of the collective bargaining agreement specifically provide for participation in the Plan; independent contractors; and nonresident aliens with no U.S. source income. Age Requirement. An eligible employee must be at least age 19 to participate in the Plan. Service Requirement. An eligible employee may join the Plan after completing a 6-month period of service. year. Plan Entry Date. A Plan entry date means January 1, April 1, July 1 and October 1 of each Rehired Employees. If you terminate employment after satisfying the age and service requirements, you may rejoin the Plan as soon as administratively practicable following your date of rehire or, if later, the Plan entry date you would have joined the Plan had you not terminated employment. If you terminate employment before satisfying the age and service requirements of the Plan, you will be treated as a new employee upon your date of rehire unless you are re-employed before incurring a one year break in service. If you are rehired before incurring a one year break in service, then your original date of hire will continue to be used to determine your eligibility for the plan. A one year break in service means a 12-month period in which you do not perform any service. CONTRIBUTIONS Employee Elective Contributions. The Plan authorizes each participant to enter into a salary reduction agreement pursuant to which a portion of his compensation (both base salary and bonus) will be contributed to the Plan. A participant may increase, decrease or suspend his contributions at any time upon proper notice to the Plan Administrator. You have 30 days following receipt of any payroll stub or other statement confirming a change in your elective contributions to notify the Plan Administrator of any KCP

3 error in your rate of contributions. If you fail to notify the Plan Administrator within this timeframe, then you will be deemed to have made the rate of contribution then in effect. The Plan Administrator reserves the right to change or limit the portion of your compensation that you actually contribute to the Plan and to establish such other rules and procedures as it determines are necessary for the proper administration of the Plan. Any such rules and procedures will be separately communicated to you. In addition to any limitations imposed by the Plan Administrator, your contributions under this Plan (and any other plan in which you participate) may not exceed a specific dollar amount determined by the IRS for each calendar year ($16,500 for 2009). If your contributions for a particular calendar year exceed the applicable contribution limit, the Plan will refund the excess amount to you, plus any earnings (or loss) allocated to that excess amount. If you participate in another employer s 401(k) plan and your total contributions under this Plan and your other employer s plan exceed the contribution limit for any calendar year, then you must decide which plan you wish to designate as the plan with the excess amount. If you designate this Plan as holding the excess amount for a calendar year, you must notify the Plan Administrator of that designation by March 1 of the following calendar year. The Plan will then distribute the excess amount to you, plus earnings (or loss) allocated to that excess amount. Pre-Tax or After-Tax (Roth) Contributions. Each participant must designate prior to the beginning of each plan year or other permissible period whether his own elective contributions will be contributed on a pre-tax basis or after-tax basis. Pre-tax contributions are deducted from your paycheck before applicable income taxes are withheld. Your pre-tax contributions (and related earnings) will be taxed at the time they are distributed to you. After-tax Roth contributions are deducted from your paycheck after applicable income taxes are withheld. If your after-tax Roth account is maintained for at least five years and is paid pursuant to one or more qualifying distributable events, neither your after-tax Roth contributions nor related earnings will be subject to applicable income tax. Age 50 Catch-up Elective Contributions. If you reach age 50 before the close of a plan year, you will be eligible to make a catch-up contribution. A catch-up contribution is an amount you may defer in excess of the IRS limit otherwise applicable to employee elective contributions. The catch-up limit is $5,500 for 2009 and is subject to adjustment from time to time for cost of living increases. Matching Contributions. The Company may make a matching contribution on your behalf equal to a specified percentage of your elective contributions for the plan year, up to a certain limit. The Company has the discretion to decide each year whether to make a matching contribution on catch-up contributions as well as regular elective contributions. The actual rate of match (if any) for each plan year will be determined by your employer. Matching contributions, if any, will be contributed each payroll. The Plan does not impose any minimum hours or other service condition to receive a match. All employees who contribute to the Plan will be eligible to receive a match. Discretionary Profit Sharing Contributions. For each plan year, the Company may make a discretionary contribution to be allocated among eligible participants in proportion to their respective Plan compensation. Only participants who are employed on the last day of the plan year with respect to which any discretionary contribution is made will be eligible to share in the profit sharing allocation. Rollover Contributions. Subject to the Plan Administrator s approval, you may make rollover contributions to this Plan by a transfer or rollover of an eligible rollover distribution from another KCP

4 eligible plan. contributions. Please contact the Plan Administrator for additional information regarding rollover Limit on Contributions. The law limits the amount of additions (other than trust earnings) which may be allocated to your account for each plan year under this Plan and any other Company sponsored qualified plan in which you participate. The Plan may need to reduce this limitation if you participate (or have participated) in any other plans maintained by your Company. If you are a highly compensated employee, the Plan may also impose limitations on the amount of your contributions in order to satisfy applicable non-discrimination rules under the Internal Revenue Code. BENEFITS UPON SEPARATION FROM SERVICE The benefit you are entitled to receive upon termination of employment depends upon your vested interest in your account balance. The term vesting refers to the portion of your account balance that is non-forfeitable. You are always 100% vested in your own elective and rollover contributions. Company contributions vest in accordance with the following schedule: Years of Service for Vesting Vested (Non-forfeitable) Percentage Less than 1 0% 1 0% 2 25% 3 50% 4 75% 5 or more 100% Accelerated Vesting. Your vested in your employer contributions will be accelerated and you will automatically become 100% vested if you terminate employment on or after attaining normal retirement age, or you terminate employment due to death or permanent disability as defined by the Plan. Normal retirement age means age 65. Year of Vesting Service. A year of vesting service generally means each plan year in which you work at least one (1) hour of service. Years of service prior to attaining age 18 are excluded. Forfeiture of Non-Vested Amounts. The portion of your account balance that is not vested upon your termination of employment will be forfeited and applied to reduce the Company s contributions. Reinstatement of Forfeited Amounts. If you terminate employment and experience a forfeiture and are rehired before incurring a five-year break in service, you may have the forfeited amount reinstated by paying to the Plan the amount of your previously vested account balance that was distributed to you. If you were 0% vested at the time you terminated employment and therefore did not receive any distribution, the Plan will assume that upon your rehire you have repaid the 0% vested amount, and the previously non-vested portion of your account balance that was forfeited will be reinstated. Reinstatement of forfeited balances will not reflect increases for earnings (or decreases for losses) from the time of the forfeiture to the time of reinstatement. KCP

5 Repayment of a prior distribution must be made before the earlier of (1) five years after your rehire date; or (2) the close of the first period of five consecutive one-year breaks-in-service beginning after your termination of employment. You may repay the amount of your previously vested account balance that was distributed to you using pre-tax dollars (for example, amounts rolled over from an IRA or another employer sponsored plan) or after-tax dollars. If you repay the amount of your distribution using after-tax dollars, you will have a tax-basis in the amount of repayment. This means you will not be required to pay taxes on the portion of a subsequent distribution from your account in which you have a tax-basis. It is your responsibility to keep track of any tax-basis you may have in the Plan, and you are encouraged to seek the guidance of a competent tax professional regarding your tax-basis. Example: You separate from service on May 1, 2010, with a Company matching contribution account balance of $1,000, an employee contribution account of $5,000, and one year of service for vesting. As a result, you are 20% vested in your Company matching contribution account. Subsequently, you take a distribution on July 1, 2011, and receive the entire $5,000 balance of your employee contribution account, and the vested portion of your Company matching contribution account ($200). If you are rehired, but have had five consecutive one-year breaks in service after the date of your distribution, your non-vested portion is permanently forfeited. If you are rehired without having five consecutive one-year breaks in service after the date of your distribution, and you repay your $5,200 distribution to the Plan s trust within five years from your rehire date, the balance of your Company matching contribution account ($800) will be restored and your future service will be counted to vest that restored amount. If you repay the $5,200 with after-tax dollars, your Company matching contribution account will be restored to $800, and you will have a tax-basis of $5,200. If you repay the $5,200 with pre-tax dollars, your Company matching contribution account will be restored to $800, but you will not have a tax-basis in your Company matching contribution account. PAYMENT OF BENEFITS Payment of Benefits After Termination of Employment. Upon termination of employment, you may elect to receive distribution of your benefits at any time. Distribution will be made as soon as reasonably practicable following the receipt of your properly completed distribution forms. You must consent to any distribution of your Plan benefits unless your vested account balance does not exceed $1,000, in which case, payment may be made without your consent. Forms of Benefit Payment. All payments from the Plan will be made in a single lump sum, subject to your right to elect a direct rollover. Direct Rollover Election. A payment from the Plan that is eligible for rollover can be taken in two ways. You can have all or any portion of your distribution either (i) paid in a direct rollover or (ii) paid directly to you. A rollover is a payment of your account balance to your individual retirement arrangement (IRA) or to another qualified retirement plan that accepts your rollover. This choice will affect the tax you owe. Generally, any distribution from the Plan will be eligible for rollover. If you choose a direct rollover, then your payment will not be taxed in the current year and no income tax will be withheld; your payment will be made directly to your IRA or to another employer plan KCP

6 that accepts your rollover; and your payment will be taxed later when you take it out of the IRA or the employer plan. Payment of Benefits Prior to Termination of Employment. distributions to active employees except as follows: The Plan does not authorize Once you attain age 59½, you may elect to withdraw all or any portion of your account (to the extent vested) even though you are still employed. As discussed below, if you have a financial hardship, you may request a distribution of your account to the extent necessary to meet your hardship need. Qualifying members of the United States reserves may request a qualified reservist distribution in the form of a single lump sum equal to all or part of their employee and catch-up contributions from the date they are ordered to active duty to the last day of active duty. A participant may qualify for a qualified reservist distribution if he is a member of a United States reserves component of the military and is ordered or called to active duty for either (i) an indefinite period; or (ii) a period in excess of 179 days. The Plan Administrator will determine whether your request satisfies the requirements after receiving your written request for a qualified reservist distribution with the Plan Administrator. Payment of Benefits upon Death. If you die prior to receiving all of your benefits under the Plan, the Plan will pay the balance of your account to your designated beneficiary in a single lump sum. If you are married, your spouse must consent to the designation of any non-spouse beneficiary. Federal Income Taxation of Benefits Paid. Existing Federal income tax laws do not require you to report as income any contribution allocated to your account. However, when the Plan later distributes your account balance to you, such as upon your retirement, you must report as income the Plan distributions you receive. It may be possible for you to defer Federal income taxation of a distribution by making a rollover contribution to your own rollover individual retirement account or to another qualified plan as described above. If you receive a direct distribution from the Plan before you attain age 59½, the law may impose a 10% penalty on the amount of the distribution you must include in your gross income, unless you qualify for an exception from this penalty. Please consult your own tax adviser with respect to the proper method of reporting any distribution you receive from the Plan. Lost Participants. If your Plan benefits become payable after termination of employment and the Plan Administrator is unable to locate you at your last address of record, you may forfeit your benefits under the Plan. Therefore, it is very important that you keep the Plan Administrator apprised of your mailing address even after you have terminated employment. Finally, if the Plan is terminated, your benefits under the Plan would be paid to you based on your account balance accumulated to the date of the termination of the Plan. Termination of the Plan could occur before you attain normal retirement age. PARTICIPANT LOANS Participants may borrow from their account balances in accordance with the Plan s Loan Policy. A copy of the Loan Policy is available from the Plan Administrator, free of charge. KCP

7 HARDSHIP DISTRIBUTIONS You may be eligible to receive a hardship withdrawal from the Plan, if your request for the distribution is for one or more of the following reasons: To purchase your principal residence; To pay college tuition and related educational fees for the next 12 months (including room and board) for you, your spouse or your dependents; To pay unreimbursed medical expenses for you, your spouse or your dependents; To prevent eviction or foreclosure on your principal residence; To pay for burial or funeral expenses of a deceased parent, spouse, child or other dependent; or To repair damage to your principal residence to the extent you would be entitled to a casualty deduction under Section 165 of the Internal Revenue Code. Any amounts that are withdrawn as a hardship may not be repaid to the Plan or rolled over to an IRA or other qualified plan. Before receiving a hardship withdrawal, you must first exhaust any other available funds under the Plan (for example, age 59½ distributions or participant loans) unless distribution of those funds would further increase your financial hardship. Once you receive a hardship, you will be prohibited from making contributions to the Plan for a minimum period of six months and you must complete a new deferral election form to restart your contributions. Hardship withdrawals are only available from your own contributions (not including earnings). The Plan Administrator may establish additional rules and procedures that it deems necessary for the proper administration of the Plan and you may be charged a processing fee. INVESTMENT OF YOUR ACCOUNT BALANCES The Plan is a self-directed plan which means that you are responsible for directing the investment of your account balances among the investment funds offered under the Plan. All investment elections made with respect to participant-directed accounts will be made in accordance with section 404(c) of the Employee Retirement Income Security Act of 1974 and Title 29 of the Code of Federal Regulations, section c-1. Your investment elections must be made in accordance with the rules and procedures established by the Plan Administrator, which will be separately communicated to you along with the investment funds offered under the Plan. Once made, your most recent investment elections will remain in effect until modified by you. If you do not provide any instructions, the trustee will automatically invest your account balance in the fund designated by the Plan Administrator. In accordance with section 404(c) of ERISA, you have the right to receive the following information upon request to the Plan Administrator or its designee. A narrative of the annual operating expenses of each investment alternative under the Plan, including investment manager fees, administrative fees, and transaction costs, which reduce the rate of return to the participant. Copies of prospectuses, financial statements and reports, and other materials related to the investment alternatives to the extent the information is provided to the Plan. KCP

8 With respect to each investment alternative under the Plan, a list of assets comprising the portfolio of the alternative that includes Plan assets and the value of the assets; and if the asset is a fixed rate investment contract, the name of the issuer of the contract, the term of the contract, and the rate of return on the contract. The value of shares or units and past and current investment performance of each available alternative, net of expenses. The value of the shares or units held in your account. ASSIGNMENT OF ACCOUNT BALANCES As required by law, the Plan contains a spendthrift clause which prevents you from assigning, borrowing against, pledging or otherwise encumbering your interest in the Plan. In addition, your creditors (except in the case of alimony, child support payments or certain judgments or settlements) cannot reach your interest in the Plan to satisfy your debts. An exception to this rule is that the Plan Administrator must honor a qualified domestic relations order which is a decree or order issued by a court that obligates you to pay child support or alimony or otherwise allocates a portion of your assets in the Plan to your spouse, former spouse, child or other dependent. A copy of the Plan s procedures for handling qualified domestic relations orders is available from the Plan Administrator, free of charge. PLAN AMENDMENT OR TERMINATION The Company reserves the right to amend, suspend or terminate the Plan at any time and in any manner that it deems expedient or proper without prior notice to participants. However, no amendment may vest or re-vest in the Company or any other participating employer any interest in, or ownership or control of, any part of the Plan s assets, or make possible the diversion of any part of the Plan s assets or the use thereof for any purpose other than the exclusive purpose of providing benefits to participants under the Plan and incurring the reasonable expenses of Plan administration. PLAN INTERPRETATION The Plan grants the Plan Administrator the exclusive power and authority to interpret and construe all provisions of the Plan and to decide all questions that may arise in connection with the administration of the Plan. The Plan Administrator s determination shall be binding and conclusive on all persons. CLAIMS PROCEDURES You need not file a formal claim with the Plan Administrator in order to receive your benefits under the Plan. When an event occurs which entitles you to a distribution of your benefits under the Plan, the Plan Administrator automatically will notify you regarding your distribution rights. However, if you disagree with the Plan Administrator s determination of the amount of your benefits or with any other decision the Plan Administrator may make regarding your interest in the Plan, the Plan contains the appeal procedure you should follow. If the Plan Administrator of the Plan determines it should deny benefits to you, the Plan Administrator will give you written notice of the specific reasons for the denial. The notice will refer you to the pertinent provisions of the Plan supporting the Plan Administrator s decision. If you disagree with the Plan Administrator, you, or a duly authorized representative, must appeal the adverse determination in writing to the Plan Administrator within 90 days (or 45 days in the case of disability claim) after the KCP

9 receipt of the notice of denial of benefits. If special circumstances warrant an extension, the Plan Administrator will have an additional 90 days (or 30 days in the case of disability claim) to respond to your claim. If you appeal to the Plan Administrator, you, or your duly authorized representative, must submit the issues and comments you feel are pertinent to permit the Plan Administrator to re-examine all facts and make a final determination with respect to the denial. As part of your appeal, you may review and/or copy (without charge) all documents pertinent to the claim, submit issues and comments in writing; and demand a written response to particular questions submitted in writing. The Plan Administrator, in most cases, will make a decision within 60 days (or 45 days in the case of disability claim) of a request on appeal unless special circumstances would make the rendering of a decision within such time period unfeasible. In any event, the Plan Administrator must render a decision within 120 days (or 45 days in the case of disability claim) after its receipt of a request for review. The same procedures apply if, after your death, your beneficiary makes a claim for benefits under the Plan. If the determination involves a claim of disability, the following additional rules apply to an appeal. First, the review will be conducted by a Plan fiduciary who did not make the original determination on the claimant s claim and is not the subordinate of that person. Second, the claimant shall be provided the identity of any medical or vocational experts whose advice was obtained in connection with the determination, whether or not the advice was relied on by such Plan fiduciary. Third, any health care professional who is engaged for a consultation on appeal will be a different person from and not subordinate to any health care professional who the Plan Administrator consulted for the initial determination. A PARTICIPANT S RIGHTS UNDER ERISA As a participant in the Plan, you are entitled to certain information and have certain rights and protections under the Employee Retirement Income Security Act (ERISA). ERISA provides that you are entitled to: Examine, without charge (by contacting the Plan Administrator) all Plan documents and copies of all documents governing the Plan and a copy of the latest annual report (Form 5500 series) filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration. Obtain copies of all Plan documents and other Plan information upon written request to the Plan Administrator. A reasonable fee may be charged for these copies. Receive a summary of the Plan s annual financial report. The Plan Administrator is required to furnish each participant with a copy of this summary annual report. Obtain a statement showing your account balance. This statement will be provided once a year, and will be furnished without charge. In addition to creating rights for Plan participants, ERISA imposes duties upon the persons who are responsible for the operation of the Plan. The persons who operate the Plan are called fiduciaries and have a duty to operate the Plan prudently and in the interest of you and other Plan participants and beneficiaries. No one, including the Company, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a benefit or exercising your rights under ERISA. If your claim for a benefit is denied in whole or in part you must receive a written explanation of the reason for the denial. You have the right to have the Plan Administrator review and reconsider your claim. KCP

10 Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request any of the materials listed above from the Plan Administrator and do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not provided because of reasons beyond the control of the Plan Administrator. If your claim for benefits is denied or ignored, either in whole or in part, you may file suit in a state or federal court. In the event that Plan fiduciaries misuse the Plan s funds, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or file suit in a federal court. In addition, if you disagree with the Plan s decision or lack thereof concerning the qualified status of a domestic relations order or a medical child support order, you may file suit in federal court. The court will decide who should pay court costs and legal fees. If you are successful the court may order the person you have sued to pay these costs and fees. But if you lose, the court may order you to pay these costs and fees if, for example, it finds your claim is frivolous. Any questions concerning the Plan should be directed to the Plan Administrator. Additional information about this statement or your rights under ERISA may be obtained from the nearest Office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration. KCP

11 GENERAL PLAN INFORMATION PLAN NAME AND NUMBER: Christensen Farms & Feedlots, Inc. 401(k) Profit Sharing Plan (001) A list of other participating employers is available upon request from the Plan Administrator. TYPE OF PLAN: PLAN SPONSOR & FEDERAL TAX IDENTIFICATION NUMBER: PLAN ADMINISTRATOR: NAME AND ADDRESS OF PERSON FOR SERVICE OF LEGAL PROCESS: Discretionary Profit Sharing Plan with cash or deferred arrangement. For this reason, the benefits of the Plan are not insured by the Pension Benefit Guaranty Corporation under Title IV of ERISA. Christensen Farms & Feedlots, Inc County Rd. 10 Sleepy Eye, MN EIN: Christensen Farms & Feedlots, Inc. Attention: 401(k) Profit Sharing Plan Administrator County Rd. 10 Sleepy Eye, MN Christensen Farms & Feedlots, Inc. Attention: 401(k) Profit Sharing Plan Administrator County Rd. 10 Sleepy Eye, MN TRUSTEE: Service of process may also be made on the Plan trustee. Capital Bank & Trust Company 135 S. State College Blvd. Brea, California PLAN YEAR: January 1 to December 31 KCP