Summary Plan Description. Save Actively Plus Macy s, Inc. Deferred Compensation Plan

Transcription

1 Summary Plan Description Save Actively Plus Macy s, Inc. Deferred Compensation Plan

2 Introduction This booklet describes the Macy s, Inc. Deferred Compensation Plan ( Save Actively Plus ), a non-qualified deferred compensation program for certain eligible executives. Save Actively Plus is maintained by Macy s, Inc. ( Macy s ). For purposes of this booklet, (1) Macy s is referred to as the Plan Employer and (2) Macy s and all of its subsidiary companies are referred to as the Company. Save Actively Plus is administered by a committee that is appointed by Macy s (the Pension and Profit Sharing Committee ). This booklet provides a summary of how Save Actively Plus will be administered on and after January 1, 2014 (subject to later amendments, if any, to the Save Actively Plus Plan), and constitute a Summary Plan Description of Save Actively Plus ( Plan ). There are references to the Macy s, Inc. 401(k) Retirement Investment Plan ( 401(k) Plan ) throughout this booklet. For information about the 401(k) Plan, refer to the 401(k) Plan Summary Plan Description. Note that an election in Save Actively Plus does not automatically enroll you in the 401(k) Plan. Deferrals in the 401(k) Plan must be elected separately from any deferral under Save Actively Plus. Details of Save Actively Plus are set forth in an official plan document. However, if there are any inconsistencies between this booklet and the official plan document, the official plan document will control. Summary Plan Description of Save Actively Plus P. 2

3 Table of Contents 1 Overview Plan Summary Save Actively Plus is a Non-Qualified Plan Additional Key Benefits of the Plan Save Actively Plus and the 401(k) Plan Eligibility Eligibility Criteria Special Eligibility Rule for New Employees Enrollment General Annual Enrollment Quarterly Enrollment Re-participation Making Elections Deferrals Your Deferral Base Salary Deferrals Annual Incentive Award Payment Deferrals Company Contributions Maximize Your Company Match Allocation of Savings and Match Special Note Regarding Catch-Up Contributions in the 401(k) Plan Company Match in Save Actively Plus When Not Actively Deferring Vesting Vesting Service General Time and Application of Forfeitures Distribution Retirement Account In-Service Account Payment of Company Match Hardship Withdrawal Cessation of Deferral Distribution Accelerated Distribution Death Benefit Investments Tax Consequences Funding & Risks Claims/Appeals Additional Information Quarterly Statements Payment to Someone Else Section 409A of the Internal Revenue Code Plan Continuation No Guarantee of Employment Plan Administration Plan Year Service for Legal Process Further Information and Documents Assistance with Your Questions...14 P. 3 Summary Plan Description of Save Actively Plus

4 1 Overview 1.1 Plan Summary The Company provides two retirement plans for certain executives: The Macy s, Inc. 401(k) Retirement Investment Plan is offered to all employees who meet the eligibility criteria, but contains a contribution limit and a qualified compensation limit, both determined by the Internal Revenue Service (IRS). Distributions from the 401(k) Plan may be eligible to be rolled over to an IRA or another employer s qualified plan and will be taxed when paid. Save Actively Plus is not subject to the same compensation and contribution limits, but must be fully taxed when paid and may not be rolled over into an IRA or another employer s qualified plan. As a non-qualified plan, Save Actively Plus is an unfunded, unsecured general obligation of the Company. 1.2 Save Actively Plus is a Non-Qualified Plan Save Actively Plus is a non-qualified, deferred compensation plan, which means: the Plan is an unfunded, unsecured general obligation of the Company; your investments are hypothetical for the purpose of calculating your accrued value; however, you are not actually invested in the underlying investment vehicles; deferrals are not eligible compensation for the qualified 401(k) Plan; distributions from the Plan are not eligible to be rolled over into a 401(k) Plan, IRA, or any other qualified plan; and distributions are fully taxable when you take them. 1.3 Additional Key Benefits of the Plan The Plan is designed to afford you increased flexibility in your income, cash flow, and tax planning; The Plan allows you to defer above the IRS 401(k) limits; Returns on your account are based on the investment options you choose and are tax deferred; The Company contributes of 100 percent on your first one percent of pay, and 50 percent on two percent to six percent of your pay, which equals a 58.3 percent (or 3.5 percent of total pay) match when you contribute six percent of your total pay to your 401(k) Plan in combination with Save Actively Plus. 1.4 Save Actively Plus and the 401(k) Plan Save Actively Plus provides an opportunity for a Company match on compensation above the maximum IRS contribution amount. When you defer in Save Actively Plus, the amount you elect to defer is taken from your pay before federal income tax is calculated. Additionally, some deductions, such as your contribution to the 401(k) Plan, if any, are calculated after your Save Actively Plus deferral. This may reduce your 401(k) contribution or match (see Company Contribution ). Keep in mind, however, that any deferral amount, up to six percent of your pay, which does not receive a Company match in the 401(k) Plan, is eligible for a Company match in Save Actively Plus. 2 Eligibility 2.1 Eligibility Criteria You are eligible for Save Actively Plus on January 1 of a given year if: you are eligible for the 401(k) Plan; AND as of September 1 of the preceding year, your total compensation base salary plus your target annual incentive exceeds the IRS annual compensation limit currently in effect for qualified plans for that year. Attainment of eligibility status in any given plan year does not guarantee future eligibility. If, in a future year, the IRS limit exceeds your eligible compensation you will not be eligible to defer. Any contributions you have made or pledged while eligible must remain in the plan until your distribution election takes effect Special Eligibility Rule for New Employees If, on your first day of employment you met the compensation threshold and, if on your first anniversary of employment you are eligible for the 401(k) Plan, you will be given an opportunity to enroll in Save Actively Plus on the first day of the calendar quarter following your anniversary. All executives who qualify are given the opportunity to defer effective every January 1. Information will be sent to you in advance of your enrollment effective date. Summary Plan Description of Save Actively Plus P. 4

5 2.2 Enrollment General The date of your enrollment in Save Actively Plus is either the beginning of a given Plan Year (January 1), or in specific circumstances (see Eligibility Criteria ), the first day of a calendar quarter. While your eligibility for enrollment is determined as of a qualifying date, your participation in the Plan is effective on the enrollment date, and not before. When you enroll, you elect to defer your pay from base salary, annual incentive, or both. An election to defer cannot be changed or revoked after the beginning of the deferral period, which is the Plan Year Annual Enrollment You will be sent an annual enrollment packet in the fall to make deferral elections, which are effective January 1 through December 31 of the following year. Elections must be renewed each year in order for the deferrals to continue Quarterly Enrollment Generally, quarterly enrollment will only be offered to newly hired executives who have met the income requirement and attained eligibility in the 401(k) Plan. Quarterly enrollments will take place on January 1, April 1, July 1, and October 1. The January 1 quarterly enrollment coincides with annual enrollment (see Annual Enrollment ). To enroll in a given calendar quarter, you must meet all eligibility criteria by the qualifying date. Below are the enrollment dates and their corresponding qualifying date. Quarterly Enrollment Date Qualifying Date January 1 September 1 (of the year prior) April 1 February 1 July 1 May 1 October 1 August Re-participation ELIGIBILITY If your employment with the Company ends, and you are rehired in a subsequent Plan Year, you will have to re-qualify in order to defer in Save Actively Plus during the new Plan Year. DEFERRAL ELECTION As described below (See Deferrals ), an election to defer in a given year is irrevocable once that Plan Year has begun. If your employment with the Company ends during a Plan Year, and you rehire within that same year, any deferral election made at the start of the Plan Year will re-commence upon your rehire. The deferral will continue at the same percentage rate you elected during the enrollment period Making Elections To make annual enrollment deferral elections, name a beneficiary, choose an investment direction, or otherwise maintain your account, log onto the Merrill Lynch Benefits OnLine (benefits.ml.com) or via My IN-SITE. Once you have logged on, go to the Deferred Compensation Plan tab to make your compensation deferral and investment elections. 3 Deferrals Through payroll deduction, you can generally elect to contribute from your pay to Save Actively Plus. All deferrals in Save Actively Plus are calculated on a pretax basis. Pre-tax deferrals are not included in your income for federal income tax purposes when made from your pay to the Plan. Instead, those amounts (plus earnings) will be included in your income for federal income tax purposes when paid to you from Save Actively Plus. Although generally excluded from federal income tax purposes when deferred into the Plan, your deferrals are subject to the Federal Insurance Contributions Act (FICA) (Social Security and Medicare) tax, and may be subject to local tax, if applicable, to the same extent as if such deferrals had been paid to you. You may defer from your annual incentive only during annual enrollment. If you become eligible and elect to defer during any quarterly enrollment opportunity, you will not be permitted to defer from your annual incentive for that year, as non-qualified deferral elections must be made prior to the date you begin earning the compensation being deferred. Base salary elections are deferred from your compensation beginning in the Plan Year. P. 5 Summary Plan Description of Save Actively Plus

6 3.1 Your Deferral When you participate in Save Actively Plus, you defer compensation before it is received; thereby reducing your taxable income in the year the income is deferred. An election in Save Actively Plus is a deferral agreement that cannot be revoked after the start of the Plan Year. Your election expires at the end of the Plan Year, and must be re-affirmed at each annual enrollment if it is to continue. Your deferrals may come from one or both of the following sources of your income: Base Salary Deferrals Base salary deferrals are deducted from your base salary each pay period. You may elect to defer none, or between one percent and 50 percent of your base salary. Note that if your base salary increases during the year, your per-pay period deferral amount will also increase, though the percentage being deferred remains the same Annual Incentive Award Payment Deferrals Annual Incentive Award Payment deferrals ( Incentive Deferrals ) are deducted from your annual incentive award. You may elect to defer none, or between one percent and 90 percent of your annual incentive award. Your election must be made prior to the year in which the award is earned; therefore, you may make an incentive deferral election only at annual enrollment. It is important to understand that an election to defer from an annual incentive payment applies to the incentive you earn in the fiscal year, and that it is paid to you in March or April of the year following. All deferral elections are irrevocable and cannot be changed after the start of the Plan Year. Once compensation is deferred, you will have no access to these funds until the end of your deferral period (i.e., the date on which you schedule distribution). Canceling your deferral election and/or withdrawing funds prior to the end of your deferral period is allowed only in situations of extreme financial hardship. (See Hardship Withdrawal ). Note that, for both base salary and annual incentive deferrals the percentage of your contribution to the Company sponsored 401(k) Plan (if any), is calculated after your Save Actively Plus deferral. 3.2 Company Contributions The Save Actively Plus Company match is designed to operate in conjunction with the qualified Macy s, Inc. 401(k) Plan. The 401(k) Plan is a secured, fully funded investment vehicle, which also provides tax-deferral until the time of withdrawal. Any savings election you make in the 401(k) Plan is a separate election from your Save Actively Plus deferral. Match dollars on any of your own savings that do not exceed either the IRS compensation limit or the IRS contribution limit will be directed to your 401(k) Plan account. Your savings above the IRS limits, and match on those amounts, are directed to Save Actively Plus. The IRS contribution and compensation limits are reviewed annually by the IRS and are subject to change. If you elected base or annual incentive deferrals in Save Actively Plus, you are generally eligible to receive a Company match in your Save Actively Plus account on the portion of your deferrals in Save Actively Plus that do not exceed six percent of your eligible plan compensation for the year in which match dollars are earned. You are also able to earn a Company match in Save Actively Plus if you contributed to the 401(k) Plan at a rate not greater than six percent of your pay, but above the amount that could be matched under IRS qualified plan compensation limits. Assuming that you are eligible for a Company match for the 2014 or any later Plan Year, the Company matching contribution made to your account for the year will be equal to 100 percent of the first one percent of pay you contribute, and 50 percent any additional deferrals up to six percent of pay. A breakdown of such Company matching contribution is represented below as a percentage of pay. Your Contribution Percent of Pay Cumulative Match Percent of Pay 1% 1.0% 2% 1.5% 3% 2.0% 4% 2.5% 5% 3.0% 6% 3.5% The Company matching contribution for any given Plan Year is generally credited to Save Actively Plus in the first quarter of the year following your deferral. Note that if you defer from your annual incentive, that deferral occurs in the fiscal year following the fiscal year in which you earned the annual incentive. Summary Plan Description of Save Actively Plus P. 6

7 The Company match on this amount will be credited to your account the Plan Year following the actual payment of your annual incentive. For example, the annual incentive award for the fiscal year that begins on February 1, 2015 and ends on January 31, 2016 is paid in April, Deferrals from the incentive payment will be credited to your account in April, The match on those deferrals will be credited to your match account in the first quarter, Maximize Your Company Match The Company match structure in Save Actively Plus is designed to provide you with a 58.3 percent Company match when you save six percent of your pay, whether those savings are directed to the qualified Macy s, Inc. 401(k) Plan, or to the nonqualified Save Actively Plus. Any savings based on income over the IRS compensation limit ($260,000 in 2014), may be eligible for a Company match in Save Actively Plus. Below is an illustration: Pay 3.4 Allocation of Savings and Match Savings $300,000 Salary 6% = $18,000 $50,000 Incentive 6% = $3,000 $350,000 Total Pay $21, % Company Match: $12,250 Total Contribution: $33,250 The Company match in the qualified 401(k) Plan is based on your income up to the IRS compensation limit. The portion of your Company match that cannot be attributed to the qualified plan will be allocated to your Save Actively Plus account, as illustrated below, using the $21,000 total Plan contribution and the total $12,250 Company match demonstrated (See above). 401(k) Save Combined Plan Actively Plus Savings: $17,500 $3,500 $21,000 Match: $ 9,100* $3,150 $12,250 Total: $26,600 $6,650 $33,250 *Company match in the 401(k) Plan: ($260,000 x 6%) = $15,600 x 58.3% = $9,100 Company match in Save Actively Plus: ($350,000-$260,000) = $90,000 x 6% x 58.3% = $3,150 Remember that the amount you elect to defer is taken from your gross pay before the 401(k) contribution is calculated. In some cases, deferring in Save Actively Plus will lower your 401(k) Plan contribution; however, the difference in the total contribution (your deferral and the Company match) is re-allocated to Save Actively Plus. Income Savings Rate Amount $260,000 Salary 10% in Save $26,000 Actively Plus $10,000 Incentive 10% in Save $1,000 Actively Plus $270,000 Total Your Deferral to $27,000 Save Actively Plus To determine the amount of your 401(k) Plan contribution, first deduct the Save Actively Plus deferral amount from your total compensation: Total Pay $270,000 Save Actively Plus Deferral $27,000 Basis for 401(k) Contribution = $243,000 If you contribute six percent to the 401(k) Plan, your contribution would use the following formula: Your 401(k) Plan ($243,000 x 6%) = $14,580 contribution Company match ($14,580 x 58.3%) = $8,505 Total 401(k) $23,085 Contribution 401(k) Save Combined Plan Actively Plus Savings/ $14,580 $27,000 $41,580 Deferral: Company $8,505 $9,450 $17,955 Match: Total: $23,085 $36,450 $59, Special Note Regarding Catch-Up Contributions in the 401(k) Plan For each tax year in which you are or will attain age 50 by the end of such year, you may elect to make additional pre-tax contributions ( catch-up contributions ) to the 401(k) Plan. The catch-up contributions are pre-tax contributions that exceed any 401(k) Plan limit or legal limit. As a result, they are not subject to any of the plan contribution limits (50 percent for all participants), or the legal pre-tax/roth limit ($17,500 for 2014). P. 7 Summary Plan Description of Save Actively Plus

8 If you are eligible to make catch-up contributions, the maximum catch-up contribution that can be made in any tax year is set by the IRS and is subject to change annually. The maximum catch up contribution in 2014 is $5,500. The catch up limit is re-evaluated by the IRS for every tax year. The catch-up contribution is a separate pre-tax contribution election that can be made, or changed by you at any time during the year, and is in addition to your regular contribution election in the 401(k) Plan. Neither your regular 401(k) contribution, nor your save Actively Plus deferral is affected by this election. When you make a catch-up contribution to the 401(k) Plan, you are making an allowable contribution above the IRS limit. Under the Save Actively Plus Company match formula outlined above, you are eligible to have your catch-up contribution matched in Save Actively Plus, if your catch-up contribution combined with your 401(k) contribution and Save Actively Plus deferral (if any) does not exceed six percent of your total pay. 3.6 Company Match in Save Actively Plus When Not Actively Deferring If you do not elect to defer in Save Actively Plus, but do contribute to the 401(k) Plan, you may still have Company match dollars allocated in Save Actively Plus. For example, if you earn $275,000 and save six percent in the 401(k) Plan ($16,500), only your pay up to the IRS limit ($260,000 in 2014) can be considered for a Company match in the 401(k) Plan, even though your total contribution ($16,500) is below the IRS contribution limit ($17,500). In this example, your contributions stay in the 401(k) Plan, because you are still within the $17,500 contribution limit. However, the amount that the Company cannot match in the qualified plan will be matched in Save Actively Plus. 4 Vesting 4.1 Vesting Service For purposes of Save Actively Plus, you generally receive one year of vesting service for each Plan Year (a calendar year) in which you complete at least 1,000 hours of service. You will be credited with vesting service in Save Actively Plus for any years credited to you under the 401(k) Plan. Further, if you are already vested in the Macy s, Inc. 401(k) Plan, you are automatically vested in Save Actively Plus. 4.2 General Vesting in any portion of your account in Save Actively Plus means that you cannot forfeit such portion for any reason. The value of such portion may decline or increase depending on investment performance. Also, although you cannot forfeit your vested balance, you generally cannot receive it until your scheduled distribution, which is elected at enrollment. You are always fully vested in the portion of your Save Actively Plus account that reflects your deferrals and the Plan s net earnings on all of such contributions. Under Save Actively Plus, you will become 100 percent vested in your Company matching contribution after earning two years of vesting service. A breakdown of such vesting schedule is represented below: Completed Vesting Service Vesting Percent 1 Year 0% 2 Years 100% You will be fully vested in your Company match account if you separate from the Company on or after your Normal Retirement Age under the Plan, (usually, age 65) or because of your total disability or death. In the event that there is a change in control of the Company prior to your separation from service, you will be 100 percent vested in your Company match as of the date of the change in control. If you were to leave the Company before the end of the Plan Year, then you generally would be eligible to have your account under the 401(k) Plan receive a Company match on your contributions made during the period worked that year. Also, you are considered to have incurred a total disability only if it is determined by the Pension and Profit Sharing Committee that you have a permanent and continuous physical or mental inability to perform the duties and responsibilities of any job. Generally, to be considered totally disabled: Your total disability must be confirmed in writing by a licensed physician or psychiatrist; and You must qualify for disability benefits from Social Security. Summary Plan Description of Save Actively Plus P. 8

9 4.3 Time and Application of Forfeitures If you separate from the Company without being fully vested in your Company match, you will generally forfeit the portion of your Company match in which you are not vested on the date that you separate from the Company. The forfeited portion of your Company match will not be restored, even in the case of your re-employment with the Company. 5 Distribution When you make a deferral election, you must also make an election for how you want these funds distributed to you before you earn the compensation that is deferred. At each enrollment period, you will be able to choose the distribution method for your deferrals for that Plan Year. Once you have made a distribution election, a change can only be implemented if filed more than 12 months prior to your separation from the Company; in such case, distribution(s) will be postponed to 5 years after the original commencement date. Under no circumstance may funds be transferred from a retirement account to an in-service account. Lump Sum Distribution A lump sum may be distributed as follows: In-service deferrals will be distributed on a date that you specify. If you separate from service with Macy s, Inc. prior to the specified date, your distribution will be made in the March following your separation. Retirement deferrals will be distributed, in accordance with your election: o Immediately following your separation from the Company; or o On the March 1 following the year in which you separate from the Company. When you take payment the year following your separation from service, you have the opportunity to defer taxes until the first full year of retirement. Subsequent deferrals or Company match contributions that post to your Save Actively Plus account after your lump sum payment has been made to you will be distributed (also in the form of a lump sum), as soon as administratively possible. Annual Installment Distribution An installment payment can be elected as part of a retirement or in-service account. When you choose to receive distribution of your retirement account in annual installments, the first distribution will occur in March of the year following your separation from the Company. Thus, if your employment with the Company ends in January or February of a given year, your distribution will occur a full year after your separation. When you choose to receive distribution of your in-service account in annual installments, the first distribution will occur in March of the year you specify. The distribution cannot begin fewer than five years after the last date you deferred into the account. The amount of your installment is equal to the balance in the account being distributed divided by the number of remaining payments, including the distribution being calculated. If a contribution, either in the form of your own deferral or a Company match, posts to your account following the beginning of a distribution period, that contribution is added to the account balance and therefore distributed over the remaining payment period. When a deferral or Company match posts to your account following your last installment payment, that amount is distributed to you as soon as administratively possible as a lump sum. 5.1 Retirement Account A retirement distribution account is a deferral account intended to be paid to you when you separate from the Company. At each enrollment period, you will be able to choose the distribution method of the income being deferred for that Plan Year. Once you have elected one payment method, you generally cannot elect another. A distribution option can only be changed if you do so at least 12 months prior to your separation of service, and defer payment to 5 years after the original commencement date. You may elect to receive a retirement distribution in a single lump sum, or in 2-15 annual installments. Lump sum payments can be made immediately, or the March 1 following the Plan Year in which you separate from service with the Company. Specified employees must wait six months following their separation from service before taking distribution of their own deferrals or any Company match. When you take payment the year following your separation, you defer taxes until first full year of retirement. P. 9 Summary Plan Description of Save Actively Plus

10 Annual installment distributions occur in March, with the first distribution being March of the year following your separation from service. Under no circumstance may you move funds from a retirement account to an in-service account. In the absence of a distribution election, you will be defaulted to a lump sum in the March following your separation from service, or, if you are a specified employee, six months following separation whichever is later. 5.2 In-Service Account An in-service distribution account is intended to be paid to you in a year that you specify while still employed, but no less than 5 years after the beginning date of your deferrals. You may elect to establish up to three in-service accounts. Distribution of in-service accounts is contingent on your election and can begin on different cycles within the guidelines outlined below. You may elect to receive an in-service distribution in a single lump sum or in 2-5 annual installments to begin no fewer than 5 years from the date the income was deferred. Distributions for each account will begin in the year you specify, or if you separate from the Company prior to your elected distribution date, in March of the calendar year following your separation from the Company. 5.3 Payment of Company Match You have the following options for payment of your Save Actively Plus Company match: Effective for the 2014 Plan Year Only Lump sum in March following the year in which you separate from the Company; or 2-15 installments, the first of which is payable in March of the year following separation from the Company. Effective for the 2015 Plan Year and Forward Lump sum in March following the year in which you separate from the Company; or Lump sum immediately following separation from the Company; or 2-15 installments, the first of which is payable in March of the year following separation from the Company. The amount of your annual installment is equal to the balance in the account being distributed divided by the number of remaining payments, including the distribution being calculated. Note that, in some circumstances, payment of a portion of your Company match may occur later than your initial payment timing. If you have Company match dollars post to your account after your distribution has been made, such as when you defer from a final annual incentive payment, which may be matched in the year following your separation of service, the additional amount will be paid to you as soon as administratively possible, or added to a Company match installment account balance, if any, for future distribution. Default Distribution If you fail to make a distribution election for your Company match, the default payment type is a lump sum in March following the year in which you separate from the Company. 5.4 Hardship Withdrawal In situations of extreme, unforeseen emergency, you may request a hardship withdrawal from the Plan. Examples of such an emergency are: your illness or accident; the illness or accident of your spouse or dependent(s); loss of property due to casualty; or funeral expenses of a spouse or dependent(s). Hardship withdrawals must generally occur for reasons that would constitute a hardship under section 409A of the Treasury Regulations. Hardship withdrawals must be approved by the Pension and Profit Sharing Committee. To be eligible for a hardship withdrawal, you must demonstrate a financial need that cannot be satisfied by other means, including but not limited to: assets of spouse and children to which you have access, or any insurance that could be collected, etc. If you have funds available for loan or hardship withdrawal in the qualified 401(k) Plan, those funds must be accessed before a hardship within Save Actively Plus could be considered. You must also demonstrate that the amount of financial need will be met by the withdrawal, taking into account the cessation of deferral, which must occur first (see Cessation of Deferral ) Cessation of Deferral Before a hardship withdrawal can be distributed from your deferral account(s), you must first cease all deferrals into Save Actively Plus. If the cessation of the deferral(s) satisfies the financial need demonstrated, then the hardship withdrawal distribution will not be permitted. Summary Plan Description of Save Actively Plus P. 10

11 5.4.2 Distribution When the above criteria are met, a distribution of your funds can be facilitated by the Plan Administrator. The distribution amount can also include any domestic or foreign taxes you may reasonably be expected to incur as a result of the hardship withdrawal. If you have been defined by the Plan as a specified employee, additional restrictions apply. Specified employees who have separated from service are not eligible for hardship distribution unless they have been separated for a minimum of six months Accelerated Distribution In the event that, upon separation from service with Company, your vested balance in the Save Actively Plus is under $15,000, a single lump-sum distribution will be made, regardless of your prior distribution election(s). Note that for all distribution options, your Save Actively Plus account is not eligible for rollover into an IRA or other qualified, tax deferred account. Your funds are fully taxable when distributed. 5.5 Death Benefit In the event of your death prior to the complete distribution of your Save Actively Plus account, all scheduled distributions will continue, if distributions have already begun, or commence, if distributions have not yet begun; payment will be made to the beneficiary, who you named when the deferral election was made. If you did not name a beneficiary prior to your death, the entire deferral account(s) will be distributed as a single lump sum to your estate, as soon as is practicable after your death. 6 Investments When you participate in Save Actively Plus, you may invest your deferrals in one or more diversified hypothetical investment options. Hypothetical investments are designed to mirror the performance of publicly traded mutual funds. Earnings will be based on the hypothetical investment, as if your deferrals were invested in the publicly reported mutual funds. Returns may vary; any earnings based on your investment elections are tax deferred. You may change your investment fund elections at any time. Fund Prime Money Market Fund Short Term Bond Index Fund S&P 500 Stock Index Fund Small/ Mid Cap Stock Index Fund International Stock Index Description You can access the Merrill Lynch Benefits OnLine (benefits.ml.com) site via the Benefits page on My IN-SITE. Once you have logged on, go to the Deferred Compensation Plan tab to make your investment elections. Investment elections may be changed at any time via Benefits OnLine. 7 Tax Consequences Invests in high-quality, shortterm money market instruments with maturities of one year or less. Invests in high-quality, fixed income securities with maturities from 1-5 years. Invests in the stocks of larger, well-established companies that make up the S&P 500 Index. Invest in stocks of medium-sized and smaller, less recognized companies. Invests in stocks of companies located in developed and emerging markets, excluding the United States. Participation in Save Actively Plus provides pretax compounding of investment earnings on your deferrals and any Company match you earn. The compensation you defer under the Plan is not taxable as income for federal or state income taxes in the year you defer. Deferred compensation is taxable upon distribution to you and your beneficiaries. Your base salary compensation is subject to FICA (Social Security and Medicare) and certain local taxes. These taxes are based on compensation as it is earned. Additionally, your annual incentive is also subject to FICA and certain local taxes. You may be required to pay these taxes directly to the Company if withholding is insufficient, such as if you defer 90 percent of your annual incentive. P. 11 Summary Plan Description of Save Actively Plus

12 8 Funding & Risks Save Actively Plus is a non-qualified deferred compensation plan under the Internal Revenue Code and rules and regulations issued by the IRS; it is exempt from most of the rule and regulations under the Employee Retirement Income Security Act ( ERISA ). The Plan is an unfunded and unsecured general obligation of the Company. Amounts deferred under the Plan are not protected like funds in the Macy s, Inc. 401(k) Plan or funds in an insured savings account. In the event Macy s, Inc. becomes insolvent, your contributions and any related match would be considered a general obligation of the Company. Any funds set aside to pay benefits are subject to claims by the Company s creditors, which means you would become an unsecured creditor of the Company. You have no rights to any assets other than as a general unsecured creditor. Investing involves risks, including the possible loss of principle. Investments in foreign securities or sector funds, including technology or real estate stocks, are subject to substantial volatility due to adverse political, economic, or other developments and may carry additional risks resulting from lack of industry diversification. Funds that invest in small- or midcapitalization companies experience a greater degree of market volatility than those of large-capitalization stocks and are riskier investments. There are ongoing fees and expenses associated with investing. Bear in mind that higher return potential is generally accompanied by higher risk. 9 Claims/Appeals If you feel that you, or your beneficiaries, are entitled to a benefit which has not been paid, if you dispute the amount of benefit paid by the Plan, or if you have some other dispute with the Plan, you or your beneficiaries may file a written claim as to such matter with the Pension and Profit Sharing Committee. This Committee (or agents it appoints for this purpose) will decide the merits of the claim. If a claim of yours is denied, either in whole or in part, you will generally receive from the Committee (or agents it appoints for this purpose) a written notice of the denial within 90 days (or, if the existence of your disability is material to the claim, 45 days) after the filing of the claim. In certain cases additional time may be needed to determine whether a claim is to be approved or denied. In this event, you will generally be given a written notice, within the 90 day (or 45 day) period, that an extension of not more than an additional 90 days (or, if the existence of your disability is material to the claim, an additional 30 days) is required. The notice will set forth the reason for the extension and will set a date by which a decision is expected. The final notice of the denial, whenever issued, will set forth: (1) a specific reason for the denial; (2) specific references to the pertinent Plan provisions on which the denial is based; (3) a description of any additional material or information necessary for you to perfect the claim and an explanation of why such material or information is necessary; (4) a description of the proper procedure you can follow to appeal the denial and the time limits applicable to such procedure; and (5) if your claim involves a claim for benefits under the Plan, a statement of your right to bring a civil action under section 502(a) of ERISA in the event you appeal the denial of your claim and such appeal is denied. If your claim is denied, either in whole or in part, you have the right within 60 days (or, if the existence of your disability is material to the claim, 180 days) of the claim denial to appeal the denial. To make such appeal, you must request a review of the denial of the claim by filing a written application with the Pension and Profit Sharing Committee. The Committee (or agents it appoints for this purpose) will make a decision on your appeal. In this regard, if the existence of your disability is material to the claim, the Committee will appoint persons other than those who decided your initial claim or their subordinates to rule on your appeal. In connection with this review, you will be provided, upon request and free of charge, reasonable access to, and copies of, documents, records, and other background information relating to your claim. In addition, you may submit written comments, documents, records, and other information to the Committee, which information will be considered by the Committee (or agents it appoints for this purpose) when making a decision on your appeal regardless of whether or not it had been submitted or considered in the initial denial of your claim. The Committee (or agents it appoints for this purpose) may but is not required to hold a hearing as to the claim. Please note that your review must be requested within 60 days (or, if the existence of your disability is material to the claim, 180 days) after your receipt of the initial denial of your claim. Within 60 days from the date of the receipt of the written request for an appeal of your claim denial, Summary Plan Description of Save Actively Plus P. 12

13 the decision of the Committee (or agents it appoints for this purpose) will be given to you in a writing or a written notice will be given that additional time, not more than 60 days (or, if the existence of your disability is material to the claim, 45 days), is needed to reach a decision. If the claim is denied on appeal, the final notice of the denial will set forth: (1) specific reasons for the denial; (2) a reference to the plan provisions on which the denial is based; (3) a statement that you are entitled, upon request and free of charge, reasonable access to, and copies of, documents, records, and other background information relevant to the claim; and (4) if your claim involves a claim for benefits under the Plan, a statement of your right to bring a civil action under ERISA section 502(a). In the event of your disability is material to the claim, if an internal rule, guideline, protocol, or other similar criterion was relied upon in making an adverse determination on the initial claim or on an appeal, then the applicable written notice (as to the denial of the initial claim or the appeal) shall contain either the specific rule or a statement that such rule was relied upon in making the adverse determination or the decision and that a copy of that rule will be provided to the claimant free of charge upon request. In addition, if an adverse determination on the initial claim or on the appeal is based on a medical necessity or experimental treatment or similar exclusion or limit, then the applicable written notice (as to the denial of the initial claim or as to the decision on the appeal) shall contain either an explanation of the scientific or clinical judgment for the determination, applying the terms of the Plan to your medical circumstances, or a statement that such explanation will be provided to you free of charge upon request. If your disability is material to an appeal of a denied claim made, then the claim shall be reviewed on the appeal without deference to the initial adverse benefit determination. The review shall be conducted by an appropriate fiduciary of the Plan who is neither the individual who made the initial adverse benefit determination that is the subject of the appeal nor the subordinate of the individual. In the event the initial adverse benefit determination was based in whole or part of medical judgment, an appropriate Plan fiduciary shall, in considering such medical judgment under the appeal, consult with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment (and who is neither an individual who was consulted in connection with the initial adverse benefit determination that is the subject of the appeal nor the subordinate of any such individual). Any medical or vocational experts whose advice was obtained on behalf of the Plan in connection with the initial adverse benefit determination shall be identified, without regard to whether the advice was relied upon in making the benefit determination. You may appoint a representative to act on your behalf in making or pursing a claim or an appeal of a claim. In addition, the Committee may prescribe additional rules which are consistent with the other provisions in order to carry out the claim procedures of this Plan. 10 Additional Information 10.1 Quarterly Statements A statement of your Save Actively Plus account will be sent to you each calendar quarter, included with your Macy s, Inc. 401(k) Plan statement Payment to Someone Else If anyone entitled to benefits is a minor or is judged to be physically or mentally incapable of receiving payments, the Committee may direct payments to someone else for the benefit of the recipient (for example, to a legal guardian) Section 409A of the Internal Revenue Code Section 409A of the Internal Revenue Code addresses how deferred compensation plans are administered and how distributions may be made under such plans. Section 409A stipulates that you make a yearly distribution election, indicating the number of annual installments, before you start to earn any of the compensation that is to be deferred. If no election is made, your distribution will be made as a single lump sum amount Plan Continuation The Plan Employer intends to continue the Macy s, Inc. Deferred Compensation Plan indefinitely. However, the Plan Employer reserves the right to amend or discontinue all or any part of the Plan, and any of the Plan s policies, including but not limited to the Plan s matching contribution formula and the Plan s investment options, at any time. P. 13 Summary Plan Description of Save Actively Plus

14 10.5 No Guarantee of Employment The establishment and maintenance of the Plan does not give you or any other person the right to be continued as an employee, and the Plan will not interfere with the Company s ability to discharge any employee Plan Administration The Plan Administrator is responsible for making sure that the Plan operates according to the terms of applicable law and the appropriate Plan documents or contracts, interpreting the Plan, deciding claims under the Plan, and taking all other actions necessary to the administration of the Plan. The Plan Administrator is: Macy s, Inc. 7 West Seventh Street Cincinnati, OH (513) The Plan Administrator may delegate certain of its responsibilities to other persons or committees. In this regard, the Board of Directors of Macy s, Inc. has appointed a committee, known as the Pension and Profit Sharing Committee, to act on half of the Plan Administrator in administrating the Plan. The Committee can be reached at the same address as is used for the Plan Administrator. The Plan Administrator and the Committee (and any agents appointed by the administrators or committee in connection with any aspects of the Plan s administration) have complete discretion and authority to decide all matters (within their scope of authority) that involve the administration of the Plan. Subject to the appeal rights (see Claims/Appeals ), the determination of the Plan Administrator or the Committee (or any of their authorized agents) as to the interpretation of the Plan or any disputed question will be conclusive on all interested parties Service for Legal Process If you feel you must take legal action for any reason regarding your benefits, the agent for serving legal process is: Secretary Macy s, Inc. 7 West Seventh Street Cincinnati, OH Further Information and Documents If you want further information concerning the Plan and its administration, you should contact the Committee at the follow address and phone number: Macy s, Inc. 7 West Seventh Street Cincinnati, OH Attention: Pension and Profit Sharing Committee (513) You may review the official Plan documents at Macy s, Inc. corporate office during normal working hours. In addition, if you do not work in such office, you can, generally within ten days of your request, have copies of these official plan documents sent for your review to the Company facility where you work. Also, upon payment of copying costs, you may obtain a copy of such documents Assistance with Your Questions If you have questions about the Plan, you should contact the Plan Administrator Plan Year The Plan Year of the Plan is the annual period on which Plan records are kept. The Plan operates on a Plan Year starting each January 1 and ending each December 31. Thus, the Plan Year is a calendar year. Summary Plan Description of Save Actively Plus P. 14

15 Notes P. 15 Summary Plan Description of Save Actively Plus

16 10/2014