Liberty Mutual 401(k) Plan Summary Plan Description (For U.S. Employees Only) Effective January 1, 2018 Section K

Transcription

1 Liberty Mutual 401(k) Plan Summary Plan Description (For U.S. Employees Only) Effective January 1, 2018 Section K

2 K 401(k) PLAN (U.S. Employees Only) ABOUT THIS SUMMARY PLAN DESCRIPTION K - 4 INTRODUCTION K - 4 ELIGIBILITY AND ENTRY DATES K - 7 Eligibility Participation Right to Withdraw Automatic Contributions Participation upon Re-employment Special Rules for Military Service EMPLOYEE CONTRIBUTIONS K - 10 Before-Tax Contributions Roth Contributions Catch-up Contributions Traditional After-Tax Contributions Contribution Percentages Changes in Contribution Percentages Contribution Spillover Feature Limits Applicable to Certain Employees Disability Rollover Contributions to the 401(k) Plan COMPANY MATCHING CONTRIBUTIONS K - 13 Vesting Forfeitures SECTION 404(C) STATUS... K - 14 INVESTMENT OPTIONS K - 15 Valuation of Investment Options and Account Fee Account Balances Changes in Investment Direction Transfer of Account Balances Trading Restrictions on Funds Investing Your Rollover Contributions BEN 67 K-1

3 DISTRIBUTION OF BENEFITS - TERMINATION, RETIREMENT, AND DEATH K - 16 Termination of Employment Other Than by Retirement, Death, or Permanent and Total Disability Retirement/Permanent and Total Disability Additional Distribution Options for former Safeco Employees Death Beneficiary Transfer of Account Balances by Former Participant or Beneficiary LOANS K - 19 Overview Security Maximum and Minimum Loans Interest Rate Repayments Number of Loans Hierarchy for Loan Withdrawals and Repayments Five-Year Limit Disposition of Loan upon Retirement, Termination, Transfer, or Death Loan Rules Subject to Federal and State Law IN-SERVICE WITHDRAWALS K - 21 Withdrawal of After-Tax Contributions Withdrawal of Before-Tax and Roth Contributions Withdrawal of Company Matching Contributions Withdrawal of Rollover Contributions Withdrawal Option for former Safeco Employees Withdrawal Options for former Ohio Casualty Employees Withdrawal Procedure TAXATION OF DISTRIBUTIONS K - 25 Withdrawals and other Non-annuity Distributions Premature Distribution Penalty 20% Tax Withholding Other QUALIFIED DOMESTIC RELATIONS ORDERS (QDRO) K - 26 MISTAKE CONCERNING PARTICIPATION K - 27 CORRECTION OF PAYMENT MISTAKES K - 27 RIGHTS OF PLAN PARTICIPANTS K - 28 CLAIMS AND APPEALS PROCEDURES K - 29 Claims Procedures for Permanent and Total Disability Benefits Legal Proceedings NON-ALIENTATION OF BENEFITS K - 33 BEN 67 K-2

4 ADMINISTRATION OF THE PLAN K - 33 Liberty Mutual Retirement Committee Trustee Amendments Termination of the Plan Authority of the Retirement Committee Interpretation of the Plan ADDITIONAL PROVISIONS K - 34 GENERAL INFORMATION K - 35 BEN 67 K-3

5 About this Summary Plan Description The following Summary Plan Description ( SPD ) describes the important features of the Liberty Mutual 401(k) Plan ( Plan ) as of January 1, 2018, except where specifically indicated, and supersedes any previous SPD. It is intended to answer most of your questions about the Plan; however, it is only a summary. If there is any conflict between this SPD and the terms of the Plan, the terms of the Plan will govern. For purposes of this SPD, the following terms shall have the following meaning: Company means Liberty Mutual Group Inc. (or any successor to all or substantially all of its assets or business, or any affiliated employer within the Company s controlled group that assumes the obligation of the Company under the Plan); Company Matching Contribution means matching contributions by the Company. Employer means the Company and any affiliated employers within the Company s controlled group; Participating Employer means the Company and any affiliated employers within the Company s controlled group that have adopted the Plan with Company approval; and Compensation generally means all regular salary (including short-term disability benefits paid by the Company), regular wages (including salary differentials and differential wage payments), eligible shortterm incentive bonuses, commissions and overtime pay received by you from Liberty Mutual and its related participating affiliates during the year, plus any amounts that you would have received but for any salary deferral agreement or any other election under Sections 125, 132 or 401(k) of the Internal Revenue Code. Eligible short-term bonuses include the Liberty Mutual Management Incentive Compensation Plan bonus, the Liberty Mutual Variable Incentive Plan bonus, and similar short-term incentive bonuses, provided that such bonus is paid no later than the year following the year in which the services resulting in such payments were performed. Compensation only includes compensation paid in U.S. dollars from United States sources. Your annual Compensation for purposes of the Plan is limited under IRS rules. For 2018, no more than $275,000 of Compensation may be taken into account under the Plan for any employee. This dollar limit amount is tied to the Federal Consumer Price Index and may change each year. Note: Compensation that is paid to you after termination for services you provided while employed will not be treated as eligible compensation for the Plan if it is paid after the later of (i) 2-1/2 months following your termination of employment or (ii) the end of the calendar year in which your termination occurred. In the event that a terminated Participant receives a short-term incentive bonus within 2-1/2 months of termination of employment, and subject to the rule more fully described in the section Contribution Percentages, that payment will be eligible for deferral to the Plan, based on the contribution percentage in effect on the date of a Participant s termination and will also be eligible for a Company Matching Contribution, provided the Participant has not received a distribution of his or her entire 401(k) account balance prior to the date of the short-term incentive payment. Introduction The Plan is a program in which employees can share in the financial growth of the Company while saving for retirement. By contributing to the Plan and taking advantage of Company Matching Contributions, you can accumulate savings over time while reducing your tax obligations today. BEN 67 K-4

6 The Plan s major advantages are: Regular savings by payroll deduction. A substantial guaranteed Company Matching Contribution. Participation in the investment and income opportunities available through a variety of investment options. Low administrative and investment costs. Please see the section Investment Options for additional information. Tax savings. There are tax advantages associated with participation in the Plan. Some of the important features of the Plan include: Eligibility The Plan is open to most full-time and part-time employees classified as regular or non-temporary employees. Employees scheduled to work 30 hours or more per week who meet eligibility requirements may enter the Plan on their hire date. Employees scheduled to work less than 30 hours per week who meet eligibility requirements may enter the Plan after working 1,000 hours during a consecutive twelve month period following their hire date. Automatic Enrollment Newly eligible employees may choose to participate in the Plan or to not participate in the Plan. If you do not make an active election, you will be automatically enrolled in the Plan. Newly eligible employees who are automatically enrolled in the Plan will enter the Plan at a before-tax contribution rate of 8% unless they elect otherwise within 30 days of their hire date. If you are automatically enrolled but do not wish to contribute to Plan, you may request a withdrawal of your before tax contributions, including any earnings and losses on those contributions. The request must be made no later than 90 days after the first automatic contribution is deducted from your pay. Employee Contributions Each payroll period, you can contribute to the Plan on a before-tax basis through convenient payroll deductions, before any federal, state and local income taxes are imposed. You may also elect to make Roth contributions on an after-tax basis. Before-tax and Roth contributions are subject to an IRS annual limit ($18,500 in 2018). Employees age 50 or older may make additional before-tax contributions, called Catch-up contributions to the Plan, which enable you to save even more money for retirement. Catch-up contributions are subject to an IRS annual limit ($6,000 in 2018). You also have the ability to make additional contributions on a traditional after-tax basis through convenient payroll deductions. BEN 67 K-5

7 Employer Contributions Vesting Guaranteed Company Matching Contributions - Liberty Mutual will make a guaranteed Company Matching Contribution each pay period equal to 50% of your contributions of up to 8% of your eligible pay. You are always 100% vested (owned by you) in your contributions to the Plan, as well as related investment earnings. You will become 50% vested in the Company Matching Contributions and applicable investment gains and losses after completing one year of vesting service and 100% vested after completing two years of vesting service. Investment Options The Plan offers access to a wide range of low cost investment options which are grouped as follows: Core Fund Options These funds offer access to major asset classes such as money market, fixed income, domestic equity, and international equity. Target-Date Portfolios Diversified funds which gradually become more conservative as the target retirement date approaches. If you are enrolled in the Plan and do not specify an investment option, you will be invested in the target-date fund based on your age 65 retirement date. In addition, the Plan offers access to professional investment services through Financial Engines, which include online advice and, if you choose, professional account management for a fee charged to your account. Rollovers Loans and In-service Withdrawals Accessing your account You are allowed to rollover amounts from a previous employer s tax-qualified retirement plan into the Plan. Loans are available through the Plan for general purpose and/or purchase of your primary residence. There is a 30-day waiting period between the date you pay off an outstanding loan and the date you may request a new loan. You may also withdraw a portion of your account while still employed in the event of hardships and in certain other circumstances. You may access your account through the Your Total Rewards web site or Benefits Express. The web site is accessible either through the Liberty Mutual Intranet via the Employee Center or at Representatives are available Monday - Friday, 9:00 a.m. - 5:00 p.m., Eastern Time to personally assist you and you may obtain your account balance through the Benefits Express automated voice system, which is available 24 hours a day, 7 days a week with the exception of 2:00 a.m. through 1:00 p.m. Eastern Time on Sunday. The toll-free number for Benefits Express is (TDD# ; International # ) BEN 67 K-6

8 Eligibility and Entry Dates Eligibility The Plan is available to eligible employees of Participating Employers. Employees scheduled to work 30 hours or more per week who meet eligibility requirements may enroll in the Plan following their hire date. Employees scheduled to work less than 30 hours per week who meet eligibility requirements may enroll in the Plan after working 1,000 hours during a consecutive twelve month period following their hire date. An eligible employee is any employee who is employed by a Participating Employer. Eligible Employees do not include the following: A leased employee; A person classified by the Employer as an independent contractor or agency employee, or a person whose compensation is paid by the Employer other than through its payroll system, or a person whose total compensation from an Employer is reflected on a Form 1099 regardless of how the IRS, any governmental agency or court classifies the person; A person covered by a collective bargaining agreement, unless such agreement specifically provides for eligibility in the Plan; A person employed in Puerto Rico; or Any person classified in a job classification designated in writing by the Chief Executive Officer of the Company, at his or her sole discretion, as ineligible to participate in the Plan, including but limited to persons designated on the Participating Employer s payroll system or internal personnel records as internship/co-op, internship/co-op graduate, law clerk, INROADS student, or non-degree student, regardless of how the IRS, any governmental agency or court classifies the person. Employees who are non-resident aliens of the United States and who are not excluded as listed above are also eligible to participate in the Plan to the extent they have Compensation paid in United States dollars from the Participating Employer s United States payroll system. If an employee ceases to be an eligible employee, at that time, participation in the Plan will end. Each eligible employee is immediately eligible to participate in the Plan. Subject to the automatic enrollment provisions discussed below, an eligible employee will become a participant on the Entry Date immediately following the date of enrollment in the Plan (in the case of an Eligible Employee enrolling in the Plan on or after the fifth business day of the then current payroll cycle) or the immediately preceding Entry Date (in the case of an Eligible Employee enrolling in the Plan before the fifth business day of the then current payroll cycle). The Entry Date is the first day of a payroll period. Participation If you are an eligible employee you will be automatically enrolled in the Plan at a before-tax rate of 8%. Your contributions, as well as Company Matching Contributions, will be entirely invested in the Plan s Qualified Default Investment Alternative (QDIA), which is a Target-Date portfolio based on the number of years until an age-65 retirement date, unless you elect otherwise by accessing your account through the Your Total Rewards web site or by calling Benefits Express within 30 days of your hire date. By accessing your account through Your Total Rewards or contacting Benefit Express, you may choose BEN 67 K-7

9 an investment option other than the QDIA or you may elect to contribute more or less than 8% of your Compensation subject to Plan limits. Automatic contributions will generally begin as soon as administratively practicable after the end of the 30-day period, unless you have elected not to contribute or elect to contribute a different percentage. If you wish to enroll yourself, your contributions may begin earlier than the end of the 30-day period. If you decide not to contribute when first eligible, you may elect to participate at a later date by enrolling through the Your Total Rewards web site or by calling Benefits Express. Contributions will then begin as soon as administratively practicable after you enroll. Right to Withdraw Automatic Contributions If you are automatically enrolled in the Plan but do not wish to contribute to the Plan, you may request a withdrawal of your before-tax contributions, including associated earnings and losses on those contributions. By requesting this withdrawal, you will also lose any Company Matching Contributions on the amount you contributed. You must make this election by calling Benefits Express at no later than 90 days after the first automatic contribution is deducted from your pay. If you elect to withdraw your automatic contribution, no future automatic contribution will be made again on your behalf. You will pay income tax on the distributed amount, but you will not be subject to the 10% Early Distribution penalty. Participation upon Re-employment If your employment terminates, but you return to work on or before the first anniversary of your termination date, the following rules apply: If you were a participant previously and again become an eligible employee, your contributions will automatically resume in accordance with your most recent designated before-tax percentage, Roth percentage, after-tax percentage, and investment direction (or, if there were no such designation at the time of your prior employment termination, in accordance with the Plan s automatic enrollment provisions upon returning to work). If you were not a participant previously, and you are an eligible employee, you may participate immediately. You will be automatically enrolled in the Plan at a before-tax rate of 8% of your Compensation and invested entirely in the Plan s QDIA unless you elect otherwise by accessing the Your Total Rewards web site or by calling Benefits Express within 30 days of you hire date. If you would like to choose investment elections other than the QDIA and/or contribute more or less than 8% of your Compensation, you must make those changes through the Your Total Rewards web site or by calling Benefits Express. These changes can be made at any time. If you return to work on or after the first anniversary of your termination date, the following rule applies: Upon becoming an eligible employee, you will be automatically enrolled in the Plan at a before-tax rate of 8% of your Compensation and your contributions made on and after re-employment will be invested entirely in the Plan s QDIA, unless you elect otherwise by accessing the Your Total Rewards web site or by calling Benefits Express within 30 days. If you would like to choose investment elections other than the QDIA and/or contribute more or less than 8% of your Compensation, you must make those changes through the Your Total Rewards web site or by calling Benefits Express. Special Rules for Military Service The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) created certain rights for employees who are away from work due to qualified military service. The rules that BEN 67 K-8

10 apply to the Plan are discussed in this section. In general, qualified military service means service in the uniformed services, including the Army, Navy, Marines, Air Force, Coast Guard, Reserves, and National Guard. Service is not qualified military service if you were a temporary employee prior to your period of military service, or if your period of military service exceeds 5 years (subject to certain exceptions). You must provide your Employer with advance notice of your military service, unless military necessity prevents giving notice, or giving notice is otherwise impossible or unreasonable. Under USERRA, if you return to employment within specified time frames after your period of qualified military service, you have the right to make additional contributions equal to the before-tax and aftertax contributions you could have made to the Plan during your period of qualified military service. The amount of make-up contributions you can make will be based on the amount of Compensation you would have otherwise received during your period of qualified military services. You must make up these contributions during a specified grace period. The grace period begins on the date of your return to employment and ends after the earlier of (a) your period of qualified military service multiplied by 3, or (b) five years from your reemployment date. You will receive Company Matching Contributions on these make-up contributions to the same extent as if they were made during your period of qualified military service. If you have a Plan loan outstanding, your loan payments will be suspended during any period in which you are performing service in the uniformed services, whether or not qualified military service, but interest will accrue during the period of suspension. Under the Company policy, if your military service is less than 31 days, you must report for reemployment on the first business day after completing your military service. If your military service is more than 30 days and less than 2 years, you must submit your application for reemployment within 30 days following your completion of military service. If your military service is for a period of more than 2 years, up to and including 5 years, you must submit your application for reemployment within 90 days following your completion of military service. The Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART) created rights for employees who are away from work due to qualified military service or die while performing qualified military service. The rules that apply to the Plan are described in this section. Withdrawal Provision If you are on active duty in the uniformed services for a period of more than 30 days you will be treated as separated from service for purposes of being able to receive a distribution from the Plan. If you elect to receive such a distribution, you will be restricted from making contributions to the Plan for a period of six months from the date of the distribution. Exception to 10% Early Distribution Penalty If you are a reservist who is ordered or called to active duty for more than 179 days or for an indefinite period, and receive a distribution thereafter during your period of active duty attributable to your before-tax contributions, current laws provides an exemption from the 10% Early Distribution Penalty. Differential Wage Payments Differential wage payments will be considered eligible Plan Compensation when determining the contributions made to the Plan. Death During Qualified Military Service If you die while performing qualified military service, you will become 100% vested in your Company Matching Contributions. BEN 67 K-9

11 Employee Contributions The Plan allows you to make three types of payroll contributions from Compensation: before-tax, Roth, and traditional after-tax. It is important that you understand the distinction between the three types of contributions. Before-Tax Contributions Before-tax contributions are deducted from each paycheck and reduce your gross income for federal and most state income tax purposes, resulting in an immediate income tax savings. However, these monies will be taxed when distributed from the Plan. (See the section Taxation for Distributions for other tax information.) FICA tax and Social Security benefits are unaffected by before-tax contributions because they are based on your unreduced gross income. Generally, compensation increases and all other employee benefits are based on your unreduced gross income. Federal law limits the amount you can contribute to the Plan on a before-tax basis in any tax year. For the tax year beginning in 2018 that limit is $18,500. If you participate in the 401(k) plans of more than one employer, or contribute to a simplified employee pension plan, SIMPLE or tax-sheltered annuity under a salary reduction agreement, the total contributions to such plans for 2018 cannot exceed $18,500. Roth Contributions Roth contributions are deducted from each paycheck and credited to your 401(k) account after income taxes are calculated. Unlike traditional after-tax contributions, you re not taxed on their earnings, as long as earnings are paid as a qualified distribution. Federal law limits the amount you can contribute to the 401(k) Plan on a Roth basis in any tax year. For the tax year beginning in 2018 that limit is $18,500. If you participate in the 401(k) plans of more than one employer, or contribute to a simplified employee pension plan, SIMPLE or tax-sheltered annuity under a salary reduction agreement, the total contributions to such plans for 2018 cannot exceed $18,500. Catch-Up Contributions All eligible 401(k) Plan participants who will be age 50 or older by December 31, 2018 are eligible to make additional contributions, called Catch-up Contributions, of up to $6,000 for the tax year beginning in Catch-up contributions are before-tax or Roth contributions that exceed either the annual before-tax dollar limit ($18,500 in 2018) or any plan-imposed before-tax or Roth limits. Contributions must be in whole dollar amounts. Catch-up contributions are not eligible for Company Matching Contributions. Catch-up contributions may be elected, changed or stopped at any time during the year. Please note that when the Catch-up contribution limit has been satisfied, Catch-up payroll deductions will automatically stop. Catch-up contributions elections will carry forward automatically from year to year unless you make a different election. Important Note: It is possible to exceed the legal limits with the combination of your contributions to the Plan and contributions you may have also made in that same year to a prior employer s plan. Monitoring this limit and the Catch-up contribution limit (if applicable) for the year in which you change jobs is your individual responsibility. If you exceed this limit for a calendar year, the excess contributions must be included in your taxable income for that year. You can request that the excess contributions be returned to you from the Plan as long as you file your request with the Plan Administrator by March 1 following the calendar year in BEN 67 K-10

12 which the excess contribution occurred. The Plan will return the excess amount adjusted for gain or loss, to you by April 15. If you do not request a withdrawal of your excess contributions by March 1, then the Plan will not be able to distribute the excess amount to you until the rest of your vested account balance is distributed to you. As a result of delaying receipt of your excess contributions, under current tax rules, you will pay tax on the excess contributions twice first in the year of the excess contribution and secondly when the excess is finally distributed to you. Traditional After-Tax Contributions After-tax contributions are deducted from your paycheck and credited to your Plan account after income taxes are calculated. You are always 100% vested in your contributions to the Plan, including any associated earnings and losses on those contributions. The difference between before-tax, Roth and traditional after-tax contributions is illustrated in the following chart. Contribution Percentages Your before-tax and after-tax contributions are made by payroll deduction. The Plan allows you to choose three contribution percentages: before-tax, Roth and traditional after-tax. There are only two basic rules: Total contributions cannot exceed 50% of your Compensation. In addition, you have the opportunity to make a separate deferral election of up to 100% of your eligible short-term incentive bonus (for a total of 100% of your eligible short-term incentive bonus). Refer to Limits Applicable to Certain Employees for special restrictions with respect to highly compensated employees. Contributions must be in multiples of 1% of your Compensation. Changes in Contribution Percentages You may change your before-tax percentage, Roth, and/or your traditional after-tax percentage by accessing your account through the Your Total Rewards web site or by calling Benefits Express. Changes may not be retroactive and will take effect as soon as administratively feasible. Changes must be in multiples of 1% (1-50% for before-tax contributions; 1-50% for Roth contributions; 1-50% for after-tax contributions; total not to exceed 50%). If your Compensation changes, the dollar amount of your payroll deduction will be adjusted automatically to reflect this change. BEN 67 K-11

13 Contribution Spillover Feature The spillover feature automatically continues your contributions on a traditional after-tax basis if you reach the before-tax contribution limit and Roth contribution limit (i.e., $18,500 in 2018) during the year. When you reach the before-tax contribution limit and Roth contribution limit, contributions will automatically continue on a traditional after-tax basis to maximize any company match unless you elect to stop this feature. Limits Applicable to Certain Employees Federal law imposes certain limits on the amount that "highly compensated employees" can contribute to the Plan. You are considered to be a highly compensated employee in 2018 if in 2017 you earned more than $120,000. The dollar limit is tied to the Federal Consumer Price Index and may change each year. The Liberty Mutual Retirement Committee ( the Retirement Committee ) will periodically review these limits and restrict the amount that highly compensated employees can contribute accordingly. Currently, highly compensated employees can contribute up to 17% of Compensation (excluding eligible short-term incentive plan bonus) to the Plan, with no more than 13% of Compensation on either a before-tax, Roth or traditional after-tax basis. Please note highly compensated employees may not contribute more than 13% of Compensation on a combined before-tax and Roth basis. Highly compensated employees may contribute up to 40% of their eligible short-term incentive plan bonus on a before-tax plus Roth basis. These limits are subject to change at any time during the year. The Retirement Committee is authorized to do whatever is necessary, subject to applicable law and regulation, in order to comply with federal limits. Disability Your Plan contributions continue uninterrupted if you become disabled and you receive benefits under the Liberty Mutual Short-Term Disability Plan (or any self-insured short-term disability plan of a Participating Employer). However, any benefits you receive from the Liberty Mutual Long-Term Disability Plan (or from any other insured or self-insured long-term disability plan of a Participating Employer) are not eligible for Plan contributions. In the event of permanent and total disability, please see the section "Retirement/Permanent and Total Disability." If you return to active employment following a Long-Term Disability, your participation will be handled in the same manner as described in the section "Participation upon Re-employment. Rollover Contributions to the 401(k) Plan Subject to the approval of the Plan Administrator, and if you meet the Plan s eligibility requirements, you may make a rollover contribution to the 401(k) Plan. A "rollover" is a transfer of monies from another employer s qualified retirement plan (i.e., a Section 401(a) plan), Section 403(b) plan, Section 457(b) government plan, or a Conduit IRA or Traditional IRA to the Plan. By rolling over this money, it stays sheltered from federal income taxes and the IRC 10% early distribution tax penalty that may apply if you receive a distribution before age 59-1/2. You are immediately 100% vested in your rollover contributions. Additionally, certain periodic payments (payable for your life or life expectancy, the joint life or joint life expectancies of you and your designated beneficiary, or for a fixed period of at least 10 years), hardship distributions and required payments after age 70-1/2 are not eligible for rollover. You must make sure that rollover monies are deposited into the Plan within 60 days after you receive the money from either another eligible retirement plan or an IRA. (Refer to the "Investing Your Rollover Contributions" section for additional details.) If you are interested in making a rollover into BEN 67 K-12

14 the Plan, please request an application through the Your Total Rewards web site or call Benefits Express at You may also make direct rollovers to the Plan from another eligible retirement plan or an IRA. See the section Investing Your Rollover Contributions for more information on direct rollovers. Roth and after-tax dollars can be rolled over from another eligible retirement plan to the Plan and from the Plan to another eligible retirement plan or an IRA only by means of a direct rollover, provided the recipient eligible retirement plan agrees to separately account for those contributions and applicable investment gains and losses. After-tax dollars and designated Roth rollover contributions cannot be rolled over from an IRA to the Plan. Contact Benefits Express for information on making direct rollovers to the Plan. To the extent authorized by the Company on a nondiscriminatory basis, the Plan Administrator shall permit the direct rollover of loan notes from another qualified plan (excluding those secured by mortgages) that are included as a part of an eligible rollover distribution. Company Matching Contributions Each payroll period the Participating Employers will make a Company Matching Contribution of $0.50 for each $1.00 you contribute up to 8% of Compensation. If you make before-tax, Roth and traditional after-tax contributions, the Company Matching Contribution will be allocated in the following order: before-tax, Roth, traditional after-tax. Your contributions from each paycheck in excess of 8% of Compensation are not eligible for a Company Matching Contribution. Rollover contributions and Catch-up Contributions are not eligible for a Company Matching Contribution. Vesting You are always 100% vested (owned by you) in your before-tax contributions, Roth contributions, traditional after-tax contributions, and rollover contributions, including associated earnings and losses on those contributions. Unless you are 100% vested, the Company's Matching Contributions are not immediately yours, even though they are credited to your Company Contribution Account. You will become 50% vested in the Company Matching Contributions and applicable investment gains and losses on those contributions after completing one year of vesting service and you will become fully vested after completing two years of vesting service. Vesting service begins when you commence employment and ends when you terminate employment. If you first began employment before 2010, terminated employment with the Employer and were subsequently rehired, your period of vesting service includes any period between employment termination and your rehire date. Otherwise, the period in which you are not employed by the Employer is not included as vesting service unless it is less than twelve consecutive months and your prior vesting service will be aggregated with any new vesting service under the Plan, provided that your rehire date was not more than 6 years after your prior employment termination date. Under certain other conditions, the Company's Matching Contributions and applicable investment gains and losses become vested immediately. Those conditions are retirement, termination of employment due to permanent and total disability, termination of employment due to death or while on qualified military service, and attainment of age 65 while employed by the Employer. "Retirement" for this purpose means termination of employment with the Employer after age 55, with at least 5 years of continuous service (measured from your most recent hire date). Also, for this purpose, see the section Retirement/Permanent and Total Disability for the meaning of the term permanent and total disability. BEN 67 K-13

15 Forfeitures If you terminate employment before your first anniversary date for any reason except retirement, termination of employment due to permanent and total disability, termination of employment due to death, while on qualified military service, or attainment of age 65 while employed by the Employer, then you will not be entitled to a distribution of the Company Matching Contributions and applicable gains and losses credited to your Company Contribution Account, and your Company Contribution Account balance will be forfeited on the sixth anniversary of your employment termination. If you terminate at any other time, but before the second anniversary of your employment date, 50% of the Company Matching Contributions and applicable investment gains and losses credited to your Company Contribution Account for the month of termination and all preceding months will be forfeited upon the earlier of receiving a distribution of your vested Company Matching Contribution Sub-Account or the sixth anniversary of your employment termination. If you are re-employed by the Employer before the sixth anniversary of your termination date, the amount forfeited will be reinstated to your Company Contribution Account, and for vesting purposes you will be treated as never having interrupted your employment. Any amount reinstated will not receive credit for investment gains (or losses) for the period you were not employed by the Employer. If you are employed after the sixth anniversary of your termination date, the forfeited amount will not be reinstated. Forfeitures reduce the amount the Participating Employers must contribute to the Plan. If you were previously employed by the Ohio Casualty Insurance Company and had a fully vested interest in an account under The Ohio Casualty Insurance Company Employee Savings Plan ( ESP ), your transferred ESP account balance remains fully vested under the Plan, and the transferred amounts will not be subject to forfeiture. If you were previously employed by Safeco Corporation and had a fully vested interest in an account under the Safeco 401(k) Plan, your transferred Safeco 401(k) Plan account balance remains fully vested under the Plan, and the transferred amounts will not be subject to forfeiture. Section 404(c) Status Your Plan investment directions are intended to be covered under 404(c) of the Employee Retirement Income Security Act of 1974, as amended (ERISA), and 29 C.F.R (c)-1. As such, the fiduciaries of the Plan may be relieved of liability for any losses that are the direct and necessary result of investment directions you make under the Plan. Neither the Participating Employers nor the Trustee warrants or represents in any way that the value of your account will increase or will not decrease. By participating in the Plan, you assume the risks applicable to the types of investments offered as listed below. Compliance with Section 404(c) of ERISA entitles participants and beneficiaries to receive, upon request to the Retirement Committee, the following: Information regarding the value of their account; Copies of any prospectuses, financial statements and reports, and any other materials relating to the investment options available under the Plan, to the extent such material is provided to the Plan; Information concerning the value of shares or units in the investment options available under the Plan, as well as the past and current investment performance of each option, determined net of expenses and on a reasonable and consistent basis; A list of the assets in each of the investment options that are plan assets within the meaning of 29 C.F.R , the value of each asset (or the proportion of the Fund that it comprises), and, for any fixed rate investment contracts issued by banks or insurance companies held by any of the options, the name of the contract issuer and the rate of return on the contract; and BEN 67 K-14

16 A description of the annual operating expenses of each of the investment options (such as investment management fees, administrative fees, and transaction costs) that reduce the rate of return to plan participants and beneficiaries, and the aggregate amount of such expenses expressed as a percentage of average net assets of each option. Investment Options Your contributions and the Company Matching Contributions are deposited with the Plan's Trustee. You must specify how these contributions are to be invested in one or more of the twenty-one available investment options. You assume the risk of any changes in the value of your account arising from investment options you choose. Your investment direction must be in multiples of 1%. Detailed fund information, including fund profile or prospectus is available under the savings and retirement tab on the Your Total Rewards website or by calling Benefits Express. Valuation of Investment Options and Account Fee The investment options are valued on each day on which the New York Stock Exchange is open for business and all options will be credited with accrued investment gains and losses at the end of each day. The current value of the account is reflected by changes in daily prices. Any security that does not have a determinable market value will be valued on a reasonable basis by the Retirement Committee. The Plan shall use fair value pricing for securities in the international investment portfolios when certain U.S. market movements have occurred. Operating expenses (such as investment management fees, administrative fees and transaction costs) are allocated to participants through an adjustment to the Net Asset Value (NAV). The Company pays all Plan-level administrative expenses for the Plan, except for 5 basis points (0.05%) charged to participant accounts on a daily prorated basis and reflected in the NAV. The 5 basis points cover a portion of recordkeeping and administrative fees. Account Balances You may access your account through the Your Total Rewards web site or call Benefits Express and request information on your account balance. You can also request that a statement of your account be mailed to you. In addition, as soon as administratively practicable after the end of each calendar quarter, you will receive a statement of your account. The quarterly statement will show the previous quarter's activity in your account, contribution rate and investment elections, non-taxable contribution balances, and outstanding loan amounts. Changes in Investment Direction You may change the investment direction of your contributions (and Participating Employer contributions made on your behalf) through the Your Total Rewards web site or by calling Benefits Express and speaking with a representative. Changes will be effective as soon as administratively feasible. Transfer of Account Balances You may change the allocation of your account balance among investment options through the Your Total Rewards web site or by calling Benefits Express and speaking with a representative. If you request the reallocation before 4 p.m. Eastern Time (ET), the change will be effective with the closing market price on that day. Otherwise, the change will be effective the following business day. You will receive a statement confirming your transaction when your request is processed by speaking with a Benefits Express representative. BEN 67 K-15

17 Trading Restrictions on Funds The Retirement Committee has the authority to impose restrictions on redemptions as the Retirement Committee determines is necessary or advisable in the best interest of the Plan and participants to further restrict excessive transfer or reallocation activity. Investing Your Rollover Contributions When your rollover or direct rollover check is received by Benefits Express and credited to your account, it will be invested in the Plan investment options according to your rollover investment election within 2 business days. Your rollover monies must be contributed timely to avoid any adverse tax consequences see the section Rollover Contributions for further details. Distribution of Benefits - Termination, Retirement, and Death (Also see the sections on "Forfeitures" and "Taxation of Distributions".) Termination of Employment Other Than by Retirement, Death, or Permanent and Total Disability If your employment with the Employer terminates before age 65 (normal retirement age) and if you are not eligible for either retirement or permanent and total disability benefits (see the next section), your vested account balance will be distributed as follows: If your vested account balance at termination is $1,000 or less, you will receive a lump sum payout as soon as administratively practicable. If your vested account balance at termination is between $1,001 and $5,000 and you do not elect a distribution from the Plan, your account balance will be automatically rolled over to an Individual Retirement Account (IRA) provider. In accordance with the U.S. Department of Labor regulations, the Plan has designated Millennium Trust Company, LLC as an IRA provider to receive automatic rollover distributions from the Plan. If an automatic rollover distribution is made on your behalf to Millennium Trust, you will no longer be a Plan Participant, but will be the owner of the IRA, have investment direction over the IRA proceeds, and may enforce the terms of the IRA. Until you direct the investment of the IRA proceeds, the money will be invested in the FDIC Insured Bank Money Market Demand Account. The investment is designed to preserve principal and provide a reasonable rate of return while maintaining liquidity. A $25.00 account set-up fee will be deducted from the IRA following the automatic rollover distribution, and prospective fees will be deducted from the IRA pursuant to the rollover IRA fee schedule of Millennium Trust Company, LLC. For further information on automatic rollover rules or additional information regarding Millennium Trust Company, LLC, the FDIC Insured Bank Money Market Demand Account and IRA fees you may contact: Millennium Trust Company, LLC Automatic Rollover Department 2001 Spring Road, Suite 700 Oak Brook, Illinois BEN 67 K-16

18 If your vested account balance at termination is greater than $5,000, you can take a lump sum payment as soon as administratively practicable or leave your money in the Plan. If you leave your money in the Plan, the following rules apply: - You may transfer all or part of your account balance among investment options through the Your Total Rewards web site or by calling Benefits Express. If you complete your transaction by 4:00 p.m. (ET), the transfer will be effective with the closing market price on that day. Otherwise, the transfer will be effective the following business day. You will receive a statement confirming your transaction when your request is processed by calling Benefits Express. - You may not make partial withdrawals from your account. - Your account balance will be paid to you in a lump sum as soon as administratively practicable following the first day of the month in which you attain age 65. You can receive an earlier lump sum payout of your entire balance by calling Benefits Express. If you are a former Ohio Casualty employee with an account balance under the Ohio Casualty Employee Savings Plan as of December 31, 2007, or a former Safeco employee with an account balance under the Safeco 401(k) Plan as of May 22, 2009, you may defer payment of your account balance to a later date, but no later than April 1 of the calendar year following the year in which you attain age 70-1/2. At that time payments will be distributed in accordance with IRS required distribution rules. Retirement/Permanent and Total Disability You are considered to be permanently and totally disabled if you have a medically determinable physical or mental impairment that has existed for at least six months and that is likely to result in death or to be of long-continued and indefinite duration, which prevents you from engaging in any substantial gainful activity, as determined on the basis of medical evidence satisfactory to the Plan Administrator or a designated party. Please see the section Claims Procedures for Permanent and Total Disability Benefits for additional information. You are considered retired if you terminate employment with the Employer after attaining age 55 with at least 5 years of continuous service (since your most recent hire date). If you satisfied the retirement provisions at termination and are re-hired on or after January 1, 2011, you will be considered retired at your future termination date. If you leave active service because of retirement or permanent and total disability, you may choose to receive payment of your account under the Plan s normal form of benefit, which is one hundred and twenty (120) level monthly installments, or any one or a combination of the options listed below: 1. A full or partial lump sum payment; and/or 2. Monthly installments for a period other than 10 years (either a fixed amount, or payments for a fixed period), please note that once elected, your installment amount cannot be changed; 3. Quarterly installments; and 4. Annual installments. You may also defer payment of all or part of your account to a later date, but not later than April 1 of the calendar year following the year in which you attain age 70-1/2. At that time, you must begin receiving payments in accordance with IRS required distribution rules as provided in the Plan. Installment payments are subject to the following limitations: BEN 67 K-17

19 1. The minimum installment payment is $50 or the balance of your account, whichever is less, or any lower minimum amount as may be required by federal law. 2. The maximum period of time in which periodic payments will be made may not exceed your life expectancy or that of you and your designated beneficiary. 3. The present value of benefits payable to you must be more than 50% of the present value of the total payments to be made to you and your beneficiary. Additional Distribution Options for former Safeco Employees If you are a former Safeco employee whose account balance transferred to the Plan on May 22, 2009, you will also be eligible for the following distribution options if your vested Safeco account balance is more than $5,000 as of your termination date. Quarterly Fixed-Term Installments Under this form of benefit, you will receive installments every three months over a fixed term of up to 20 years (but not to exceed your life expectancy under the Life Expectancy Table used by the Plan Administrator). For additional information regarding the Life Expectancy Table, please contact Benefits Express at Quarterly Life Expectancy Installments Under this option, you will receive payments every three months. Because payments are based on your life expectancy, they may continue longer than 20 years (if your life expectancy exceeds 20 years). Installments will be adjusted as necessary if you are affected by the IRS required minimum distribution rules. Death After your death, the remaining vested balance of your account will be paid in a lump sum to your beneficiary. You may choose a different method of distribution for your beneficiary, or you may let your beneficiary choose. Federal law, however, imposes several restrictions: In general, your beneficiary must begin receiving benefit payments no later than the end of the calendar year following the year of your death, over a period not exceeding your beneficiary s life expectancy, as determined under IRS tables. If you die before your Required Beginning Date, and your beneficiary is your surviving spouse, your spouse can defer the start of distributions until the date you would have attained age 70-1/2. If you die before your Required Beginning Date and your beneficiary is not your surviving spouse or some other individual designated by you, then the entire balance in your Account must be paid within five years after your death. Beneficiary Federal law requires in general that your vested account balance at your death be paid to your surviving spouse. With the consent of your surviving spouse (in writing and witnessed by a notary public), you may choose a different beneficiary or beneficiaries. If you are not married at your death, payment will be made to your designated beneficiary or beneficiaries. All distributions are made in accordance with the latest beneficiary designation on file. Any change in beneficiary designation shall not be effective until received by the Plan Administrator, and the Plan Administrator and Trustee shall be fully protected in making distributions in accordance with the latest beneficiary designation on file. In the event no beneficiary is designated or your designated beneficiary is deceased, the Plan Administrator shall direct that payment be made to your surviving spouse, if any, otherwise to your surviving children in equal parts or if you have no surviving children, to your father or mother or both in equal parts or if none of the above survives to your executors or administrators. Any such payment will be a complete discharge of the liabilities of the Plan. BEN 67 K-18