SUMMARY PLAN DESCRIPTION FOR CARLE PROFIT SHARING PLAN

Transcription

1 SUMMARY PLAN DESCRIPTION FOR CARLE PROFIT SHARING PLAN April, 2010

2 PREAMBLE Carle Holding Company, Inc. (hereinafter referred to as the Company ) is pleased to inform you that it is sponsoring a profit sharing plan to help you provide for your retirement needs. (Previously, this Plan was sponsored by Carle Clinic Association, P.C. As of April 1, 2010, Carle Clinic Association, P.C. underwent a name change and is now known as Carle Holding Company, Inc.) This profit sharing plan contains a 401(k) feature which permits you to make pre-tax, as well as post-tax Roth 401(k), contributions to the Plan. This is a summary of the Plan to reflect the 2009 restatement of the Plan, plus three subsequent amendments. This summary answers questions you may have about your Plan. If you have additional questions, please contact the Benefits Department at or via at Benefits@Carle.com. Your Plan is maintained by a group of related employers with Carle Holding Company, Inc. acting as the Plan sponsor. Currently, the employers participating in the Plan are shown on page 17. The information in this summary will apply to the employees of all participating or adopting companies. References to the Company contained in this summary will include all companies that have adopted the Plan except where noted otherwise. This summary gives you a general description of the way your Plan works. However, the rules and governmental regulations that apply to your Plan are very complicated. Because this is only a general summary of a complicated legal plan document, every possible situation that could arise under the Plan is not explained in this summary. Also, you should be aware that if there are any differences between the information in this summary plan description and the actual Plan document, the Plan document will be followed. Note: This summary reflects a new plan design structure that becomes effective January 1, It is a significant benefit enhancement for those employees hired or rehired on or after January 1, In addition, this summary explains the Plan s new Roth 401(k) feature that became effective in For these reasons, we strongly encourage you to read this summary carefully. This summary is also available on the Company s intranet site.

3 TABLE OF CONTENTS Page Participation... 1 Making Your Contributions... 2 The Company s Contributions... 4 Vesting... 5 Investing the Contributions... 6 Distributions... 9 Applying for Payment Loans and Withdrawals Miscellaneous Information Your Rights Administrative Information... 16

4 PARTICIPATION Can I participate in this plan? Yes. All employees of Carle Holding Company, Inc. and any adopting for-profit entity are eligible to participate in the Plan. In addition, if you were actively participating in this Plan at March 31, 2010 but have transferred employment to a not-for-profit entity (Carle Health Care, Inc., The Carle Foundation, or Carle Foundation Hospital) as of April 1, 2010, you will remain an active participant in this Plan. Leased employees and independent contractors are not eligible to participate in this Plan. When can I participate in this plan? Solely for the purpose of making 401(k) contributions, you will become a participant in the Plan as of your date of hire, provided you are age 18. If you are hired before age 18, you will become a participant in the Plan as of your 18th birthday. For purposes of the Company contributions under the Plan, however, your participation date is different. You will become a participant in the Plan on the January 1 or July 1 coincident with or next following the date you have completed one year of service with the Company and attained age 21. For this purpose, a "year of service" means a 12-month period measured from your date of hire, regardless of hours worked. Example: You are hired by the Company on July 15, 2009, and you are age 25. You can start making 401(k) contributions as of the first payroll period beginning on or after July 15, However, you will not be eligible for the Company s employer contributions until January 1, If you were hired by the Company on June 1, 2009 and are age 25, you would be eligible for the Company s employer contributions as of July 1, If you work for an organization or medical practice group that was acquired by Carle Clinic Association, your prior service will generally be counted for purposes of your eligibility to participate in the Plan. Also, if you are hired by the Company on or after April 1, 2010 and previously worked for Carle Clinic Association, Carle Health Care, Inc., The Carle Foundation, or Carle Foundation Hospital, such prior service will generally be counted. What will happen if I quit working for the Company and then am reemployed by the Company? Once you become a participant, you will remain a participant until you retire or quit working for the Company and receive your entire vested account balances. If you are later rehired by the Company, you will immediately become a participant again. All prior service with the Company is recognized on rehire by the Company. If you are rehired by the Company within 90 days of being discharged from the military, the Uniformed Services Employment and Reemployment Rights Act of 1994 now mandates certain additional benefits for you. The Company will make up any profit sharing contribution that was allocated while you were gone as well as the safe harbor contribution. Also, you may make up your pre-tax or Roth 401(k) deferrals that you could not make while you were in the military. Page 1

5 If you are a veteran who has been rehired, please contact the Benefits Manager for more information about your rights. Can I make pre-tax contributions to the Plan? MAKING YOUR CONTRIBUTIONS Yes. You can make pre-tax contributions to the Plan, also known as 401(k) contributions. Can I make Roth 401(k) contributions to the Plan? Yes, you can make Roth 401(k) contributions. These are post-tax contributions and are deducted from your pay after all applicable withholding taxes have been made. How do I elect to make 401(k) contributions to the Plan? When you become a participant in the Plan, you will be mailed an enrollment kit from Fidelity. To enroll, you will need to call or log on to the internet ( At that time, you can specify the amount you want to contribute to the Plan and choose your investment mix. Your completed beneficiary form should be forwarded to Fidelity. If you do not enroll online or via the call center, then you are automatically enrolled to make pre-tax 401(k) contributions at 3% approximately 30 days from your date of hire. That is, your paycheck will automatically reflect a 3% pre-tax 401(k) contribution to the Plan each pay period. However, you can change your election at any time, including reducing it to 0%, by calling Fidelity at or by logging on to their website at This 3% contribution will be invested in a fund designated by the Committee (currently, the Fidelity Freedom Funds) until you make a different investment election. This automatic enrollment feature will also apply to those employees hired prior to January 1, You will receive a 30-day advance notification before your paycheck is reduced to reflect this 3% pre-tax contribution. How much can I contribute as a 401(k) contribution? You can elect to contribute any whole percentage of your compensation each payroll period up to 50% of your pay. This limit applies to both your pre-tax 401(k) contributions as well as any post-tax Roth 401(k) contributions. For purposes of making any deferrals, compensation does not include severance pay, nor does it include any phantom income, such as taxable life insurance, grossed up long-term disability premiums, taxable gifts, and forgiven loans. The pre-tax 401(k) contributions you make will not be subject to federal income tax until they are actually paid to you. These amounts will, however, be subject to Social Security (FICA) taxes like all other compensation from the Company. This means that less money goes to pay current income taxes if you elect to save through the Plan. With respect to any post-tax Roth 401(k) contributions, you will pay employment and income taxes on those contributions. Page 2

6 No current federal income taxes are due on any earnings (and contributions) on your pre-tax 401(k) account until they are paid to you from the Plan. In addition, with respect to your posttax Roth 401(k) account (if any), your contributions are paid out on a tax-free basis since taxes have already been paid; any earnings that are distributed to you on termination of employment will not be taxed provided it is a qualified distribution. A qualified distribution is one that occurs after you attain age 59-1/2, die or become disabled. In addition, there must be a five-year participation period under the Roth 401(k) feature. For example, if you make Roth 401(k) contributions starting in 2008, your five-year participation period will end on December 31, You do not need to make Roth 401(k) contributions in each of the five years. Rather, you just need to start contributing in order to initiate the five-year participation period. There is a dollar limit (adjusted each year for cost-of-living increases) on the amount of 401(k) deferrals (both pre-tax 401(k) and Roth 401(k)) you may make in each calendar year. For 2010, the limit is $16,500. Please note that Company automatically stops your deferrals when you reach this limit for the year. This dollar limit applies to all salary deferrals you make under all plans in which you participate during the calendar year. If you exceed the dollar limit for a calendar year, you should notify the Benefits Manager before the following March 1. If the excess amount is not returned to you by April 15, you will be subject to certain tax penalties. If you are age 50 by December 31, 2010 (or any year thereafter), you will also have the ability to make catch-up contributions. Catch-up contributions can be either pre-tax 401(k) contributions and/or post-tax Roth 401(k) contributions. For 2010, the catch-up contribution limit is $5,500. Catch-up contributions are made in whole percentages only. There are also other rules that limit the amount of 401(k) contributions that highly compensated employees can make. However, beginning in 2004, the Company now makes a safe-harbor contribution to the Plan so that highly compensated employees are no longer restricted in their 401(k) contributions. A highly compensated employee is generally any employee whose gross pay for the prior calendar year exceeds $110,000. (This dollar amount will be adjusted periodically by the IRS to reflect cost-of-living increases.) How often can I change my 401(k) election? You can change your 401(k) election at any time. You can call Fidelity at to change your election or use the internet ( This change will become effective as soon as practicable. Can I make a rollover contribution to the Plan? Yes. You can make a rollover contribution regardless of whether you have satisfied the eligibility requirements (as explained on page 1). This means if you receive a distribution from another qualified plan, 403(b) plan, a government 457(b) plan, or IRA, you can roll over that distribution to this Plan. Your rollover contribution will be held in a separate rollover account under this Plan until you qualify for a distribution from this Plan. Generally, a rollover contribution must be made within 60 days after you receive the distribution. You should contact Fidelity for more information about the procedures to make a rollover contribution. Page 3

7 THE COMPANY S CONTRIBUTIONS What kinds of contributions may the Company make to the Plan? The Company will make a safe-harbor contribution to certain eligible participants. Also, beginning in 2009, the Company will make a mandatory contribution for employees hired or rehired on or after January 1, 2004 by the Company. Both of these contributions are explained in more detail below. The Company's contributions are recorded in an individual account for you. What is the safe-harbor contribution? The safe-harbor contribution is an IRS-prescribed 3% contribution that enables the Plan to pass complicated IRS testing. Generally, to share in the 3% safe-harbor contribution, you must have completed one year of employment and attained age 21 as of the July 1 or January 1 entry date of that plan year (following completion of the eligibility requirements outlined on page 1). The safe-harbor contribution is equal to 3% of your compensation for the year. Your compensation for a calendar year is generally equal to your total taxable wages or salary (including any overtime or bonuses) from the Company for that year, plus any deferrals that you make under the Company's Section 125 cafeteria plan, deferrals under the Company s pre-tax parking program, and deferrals under this Plan. However, compensation prior to your January 1 or July 1 entry date is not counted. In addition, severance pay and nonqualified deferred compensation is not counted as compensation. Also, Federal law limits the amount of annual compensation that can be counted for some highly compensated employees. For the 2010 plan year, the compensation limit is $245,000. What is the mandatory contribution? The mandatory contribution is a new contribution that became effective January 1, It replaces the prior 3% Board discretionary contribution. It will be allocated to your discretionary account, now renamed the 4% Annual Contribution Account. Like the prior Board discretionary contribution, the mandatory contribution is limited to those employees who are hired, or rehired, on or after January 1, 2004, and who have completed one year of employment and attained age 21 as of the July 1 or January 1 entry date of that plan year. In addition, you must be employed on December 31 of that year to share in the contribution; however, if you die or become disabled while employed by the Company or you terminate employment as a result of your job function being transferred to Carle Foundation Hospital, your account will share in any mandatory contribution for the calendar year in which your death or disability or such job function transfer occurred. The mandatory contribution will be allocated based on a percentage of your eligible compensation for the year. Your compensation for a calendar year is the same definition of compensation used for the safe-harbor contribution (see above definition). Page 4

8 Here is how the mandatory contribution is calculated. First, if eligible, you are allocated a contribution equal to 4% of your eligible compensation (not to exceed the IRS compensation limit). Second, a 2% excess contribution will be made to the extent you have compensation in excess of the Social Security wage base ($106,800 for 2010). For example, if your compensation is $200,000 for 2010, you would first receive an $8,000 contribution (4% of $200,000), plus an additional contribution of $1,864 (calculated as 2% multiplied times the difference between $200,000 and $106,800). One additional note. The Summary Plan Description refers to this contribution as mandatory because the Plan is now written to require this contribution. However, you need to be aware that the Company has the right to amend the Plan at any time, which means that that the Company can decide to stop this mandatory contribution. You will be notified when and if this mandatory contribution is changed. How do I become vested? VESTING Vested means you have a legal right to the money that can never be taken away. (But remember, the Plan has other rules that control when the money can actually be paid to you from the Plan.) You are always 100% vested in your 401(k) contributions (both pre-tax and post-tax Roth 401(k) contributions), rollover contributions, the safe-harbor contribution, and the pre-2004 profit sharing contributions (and any earnings on those amounts) recorded in your accounts under the Plan. You become vested in the pre-2009 Board discretionary contributions and the new mandatory employer contributions allocated to your employer contribution account (and any earnings on those amounts) when you satisfy any of the Plan s retirement requirements or you terminate your employment because your job function has been transferred to Carle Foundation Hospital. You can also become vested in a percentage of the pre-2009 Board discretionary contributions and the new mandatory employer contributions based on the number of years of vesting service you complete, as follows: Years of Vesting Service Vested Percentage Less than 3 years 0% 3 or more years 100% The above vesting schedule is new and only applies to those employees credited with an hour of service on or after January 1, (Prior to 2007, the Plan required five years of vesting service.) Page 5

9 When will I satisfy the Plan s retirement requirements? You will satisfy the Plan s retirement requirements, and become 100% vested in your employer contribution account, if you retire from the Company after the later of (a) reaching age 65 or (b) five years of Plan participation. You will also satisfy retirement if you incur a disability while employed by the Company. A disability is a condition resulting from injury, sickness or mandate from an appropriate medical authority which prevents you from performing the important duties of your occupation, profession or medical specialty. Whether you satisfy the disability definition is determined by the Company. How is my vesting service determined? You will be credited with one year of vesting service for each one-year period of employment (measured from your date of hire) with the Company. Partial years of nonconsecutive periods of employment are aggregated on the basis of 365 days being equal to 1 year. An interruption in your employment may have an effect on the total vesting service with which you are eventually credited. However, any interruption in your employment that is less than one year (such as leave of absence or a quit and rehire situation) will be counted as a period of employment for purposes of vesting service. Will employment with a related employer be counted as vesting service? Yes. Beginning April 1, 2010, because the Company is a member of a controlled group of corporations, your employment with all of the related companies is treated as employment with the Company in determining your vesting service under the Plan. Such service will also be credited to you for purposes of determining your eligibility to participate in the Plan. However, if you were an active participant in this Plan at March 31, 2010, prior service with Carle Health Care, Inc., The Carle Foundation, or Carle Foundation Hospital will not be counted in determining your eligibility and vesting service under the Plan as of April 1, 2010 and thereafter unless you terminate your employment and are rehired as an eligible employee. What happens to the nonvested portion? If you are not credited with three years of vesting service, then your employer contribution account will be lost. This loss is called a forfeiture. The forfeited amount is used to reduce that Company s contributions in the future. If you are reemployed by the Company before you have incurred five consecutive breaks in service, you can have the forfeited amount (if any) restored. This restoration will only occur if you have not incurred five consecutive breaks in service (as measured from your date of termination). Who invests the Plan assets? INVESTING THE CONTRIBUTIONS Fidelity Management Trust Company, Boston, Massachusetts is the directed trustee. However, participants are responsible for directing how their accounts are invested based on the funds Page 6

10 made available by the Plan's trustee (which investment funds are chosen by the Company s investment committee). Can I direct how my accounts are invested? Yes. You can select from several investment funds made available by the trustee (such as an income, balanced, equity and international funds, and several others). Alternatively, as long as your total account balances exceed $2,500, you can direct the trustee to invest in any investment funds (referred to as an Individually Directed Account or IDA ) that are made available through Fidelity. Through Fidelity s self-directed brokerage option, you can also direct the purchase of most corporate and government bonds or stocks listed on the New York, American, and NASDAQ Stock Exchanges. Any purchases/exchanges under the self-directed brokerage option must be for a minimum of $1,000. If you want to start a self-directed brokerage option, please contact Fidelity at Investments in the investment funds can be made in any whole percentage. If you choose a selfdirected brokerage option, then your accounts may be wholly or partially invested in such. If you make no investment election, your accounts are invested in the Fidelity Freedom Funds, which are a series of funds that are based on your expected retirement year. The Fidelity Freedom Funds invest in a diversified portfolio of other Fidelity mutual funds to provide moderate asset allocation. They are designed for investors who want a simple yet diversified approach to investing for their retirement. The allocation strategy for the underlying equity, fixed-income, and short-term mutual funds is based on the number of years until the Freedom Funds reach their target retirement dates. Each Freedom Fund with a target retirement date will gradually adopt a more conservative asset allocation as it approaches its target retirement date. Therefore, each fund's target asset allocation percentages will change over time to become more conservative, by gradually reducing allocations to equity funds and increasing allocations to fixed-income and short-term funds. Fund Name Freedom Income Fund Fidelity Freedom 2000 Fund Fidelity Freedom 2005 Fund Fidelity Freedom 2010 Fund Fidelity Freedom 2015 Fund Fidelity Freedom 2020 Fund Fidelity Freedom 2025 Fund Fidelity Freedom 2030 Fund Retirement Date Range Retired before 1997 Target Years Target Years Target Years Target Years Target Years Target Years Target Years Fund DOB Range 1/1/ /31/1932 1/1/ /31/ /01/ /31/ /01/ /31/ /01/ /31/ /01/ /31/ /01/ /31/ /01/ /31/1967 Page 7

11 Fidelity Freedom 2035 Fund Target Years /01/ /31/1972 Fidelity Freedom 2040 Fund Target Years /01/ /31/1977 Fidelity Freedom 2045 FundSM Target Years /01/ /31/1982 Fidelity Freedom 2050 FundSM Target Years /01/ /31/1987 Strategic Advisers, Inc., a subsidiary of FMR Corp., manages the Fidelity Freedom Funds. The investment expenses for the Freedom Funds range from.55% to.84%, depending on the actual fund. Investment elections can be made separately for your prior account balances and future contributions. However, the elections can only be made in increments of 1%. Each mutual fund has certain restrictions on excessive trading or short-term exchanges in the same fund. These rules and limitations can be found in the prospectus. You can exchange funds or redirect future contributions by calling Fidelity at You need a touch tone phone, your Social Security Number and your Personal Identification Number (PIN). You should always receive written or online confirmation of any exchange of funds or change in how future contributions are invested. If you do not, please contact Fidelity. Please keep in mind that any transfers you make via the voice response unit or internet can only be initiated that same day if it is received before 4:00 p.m. (eastern time). Transactions phoned in after 4:00 p.m. will be made the next business day. If you have an IDA, then your account will be charged $50 a year (pro-rated and deducted quarterly) plus a transaction fee for each transaction. There may be other fees and commissions that are assessed with respect to an IDA depending on your investments. The Company intends that this Plan comply with ERISA 404(c) regulations which make you, the participant, responsible for your own directed investments (even if you are defaulted into the Fidelity Freedom Funds). Compliance with these regulations shifts investment responsibility from the Company and Trustee to you, the participant. From time to time, you will be given information about the available investment funds so that you can make an informed decision about how you want your accounts invested. Contact Fidelity if you have questions about directed investments under the Plan or if you need additional information about the investment funds. How are my accounts credited with trust gain or loss? The investment gain or loss of each investment fund under the trust fund is determined on a daily basis. Gain or loss will be credited to your accounts based on the performance of the funds in which your accounts are invested. The Plan benefit you receive after you retire or otherwise quit working will be your vested account balances determined as of a reasonable date immediately Page 8

12 prior to the date of distribution. If you have an IDA, then you will receive the entire value of your account as of the date distribution is actually made. How will I know the amount in my accounts? You will receive a quarterly statement of your accounts. This statement will tell you the balance at the beginning of the quarter, your share of contributions for the quarter, your share of trust earnings (or loss) for the quarter and your ending balance for the quarter. If you are using an IDA, you will receive monthly statements. In addition, you can call Fidelity at to obtain an up-to-date value of your account balance. You need a touch tone phone, your Social Security Number and your Personal Identification Number (PIN). You can also obtain your account balance via the internet ( When can I be paid? DISTRIBUTIONS Payment can generally only be made after you stop working for the Company (and all related entities) or after the Committee determines you are disabled. Upon your request, payment of your accounts under the Plan will be made. Your payment will be based on your balance as of the date the distribution is processed by Fidelity. In order to initiate payment, you should call Fidelity at You may elect to defer your payment, but generally not beyond the April 1 of the calendar year following the later of 1) the calendar year in which you attain age 70-1/2, or 2) the calendar year in which you quit. If you do not request payment when you terminate your employment, then your inaction will be deemed to be an election to defer payment. You can then request payment by contacting Fidelity at at any later date. How will I be paid? If your vested account balance does not exceed $1,000, your account balance will automatically be paid in a single payment via check. If you make a timely election, you can also elect a direct rollover to an IRA (individual retirement account) or to another qualified employer retirement plan, 403(b) plan, or government 457(b) plan. If your account balance exceeds $1,000, the Company cannot force you to take a distribution. You have three payment options: cash payment (via check), or direct rollover to an IRA (or to another qualified employer retirement plan (including a 403(b) plan or government 457(b) plan)), or installments. With respect to any cash payment, 20% will be withheld and sent to the IRS as income tax withholding. Page 9

13 What happens to my money if I die before I am paid? If you die, your account balance will be paid to your designated beneficiary or beneficiaries. If you have not properly named a beneficiary, or you fail to name someone, then the Plan will pay your account balance to your surviving spouse. If you do not have a spouse, then it will be paid to your descendants. Your surviving spouse (and not other beneficiaries) can elect a direct rollover to an eligible retirement plan or IRA after you die. Under new IRS rules, a nonspouse beneficiary can now make a direct rollover, but only to an IRA. If you want to name a non-spouse beneficiary, your spouse must give his or her written consent. Beneficiary designation forms are available from Fidelity. Whom may I name as my beneficiary? If you are single, you may name anyone as your beneficiary, including a trust or a charity. If you are married, your spouse is automatically your beneficiary. However, you may name a nonspouse beneficiary provided your spouse consents in writing. Your spouse's consent must be witnessed by a notary public or Plan representative. If you divorce, your designation of a former spouse as beneficiary will generally remain in effect until you revoke it or remarry. Can I elect a direct rollover? Yes. You may elect to have any payment to you made in the form of a direct rollover to an eligible retirement plan (including a 403(b) plan or a government 457(b) plan) or an individual retirement account or annuity (IRA). Fidelity will provide you with complete details at the time you are eligible to receive an eligible rollover distribution. APPLYING FOR PAYMENT What steps should I (or my beneficiary) take to receive payment from the Plan? If you retire or terminate employment, you should contact Fidelity. If you die, your beneficiary should contact Fidelity. If you disagree with the Benefits Manager's determination of your entitlement to a benefit, you should then file a claim with the Benefits Manager. That claim should state what benefits to which you feel you are entitled along with supporting information. You will be notified in writing if your claim for a benefit is denied, normally within 90 days (180 days if special circumstances apply and you are notified of the extension in writing within the initial 90-day period). (In the event of a disability claim, the notification period is 45 days.) You may appeal the initial decision by requesting a review by the Company, provided your request is made in writing within 60 days of receipt of notice that your claim was denied. You will be given written notice of the results of the Company's review generally within 60 days. It is important that you notify the Company of any change in your address (or name) as long as you have a vested benefit under the Plan. This will allow the Company to forward information to you regarding your Plan benefit. Failure to notify the Company of address (or name) changes Page 10

14 could result in loss of future trust earnings on your balance if the Company is unable to locate you to distribute your benefit from the Plan when it becomes payable. Where can I get information about the tax consequences of a distribution from the Plan? You will be given some general information at the time you receive a distribution from the Plan. However, you should contact your own tax advisor for more specific information about your situation. Distributions from the Plan are subject to income taxes. Any distribution (including withdrawals while you are employed) before you reach age 59-1/2 may be subject to a penalty tax (currently 10%) in addition to regular income taxes. You may avoid current income taxes and any penalty tax by rolling the distribution to an IRA or another qualified plan. General information about eligibility for rollover will be available when you receive a distribution. Your own tax advisor can give you more detailed information. Any lump sum payment or installments paid for a period of less than 10 years will be subject to 20% mandatory withholding of federal income tax unless you elect a direct rollover to an IRA or another qualified plan. (No withholding will be made with respect to your post-tax Roth 401(k) contributions since they have already been taxed. Withholding will also not be made on the earnings on such contributions provided it is a qualified distribution.) More information about this requirement will be given to you at the time you elect distribution. Can I request a loan from the Plan? LOANS AND WITHDRAWALS Yes, provided you are an active participant in the Plan. However, you may only have one outstanding loan at any time. You can apply for a loan for any reason if you are borrowing solely from your 401(k) account. In the event of financial necessity, you can also apply for a loan from all your vested accounts by calling Fidelity at Financial necessity is limited to the following situations: (1) major illness or disability expenses for you, your spouse or your dependents; (2) purchase, major repair or improvement of your principal residence; (3) college (or other post-secondary education) for you, your spouse or dependents; (4) avoidance or termination of litigation by a creditor against you, your spouse or your dependents; (5) financial hardship to you caused by sickness or accident in your immediate family (as evidenced by medical bills that are more than three months past due); (6) financial hardship to you caused by death in your immediate family; or (7) other conditions which the Plan Administrator may determine constitutes a financial necessity. You should know that financial necessity is strictly construed under the Plan so as to ensure that you retirement funds remain intact under the Plan. The Plan Administrator has complete discretion to determine financial necessity. Any loan (together with your highest outstanding balance in the last 12 months of any unpaid plan loan) cannot be more than the lesser of $50,000 or 50% of your vested account balances if it is a loan that qualifies as a financial necessity. If your loan is not for a financial necessity, then your loan amount is further limited to the value of your 401(k) account. The interest rate for any loan is based on the prime rate of interest as published in The Wall Street Journal. As security for the loan, you will have to pledge your account balances. Page 11

15 If you are an employee, all loan repayments must be made by payroll deduction. You are expected to repay the loan within 5 years in most instances, or 10 years, if the purpose of the loan is for the purchase of your home. Failure to make payments on time will have adverse tax consequences. You can prepay your loan in full at any time, but partial prepayments are not allowed. When you terminate employment, you will be given the opportunity to continue to make loan payments by automatic withdrawals from your checking or savings account to Fidelity. If you terminate employment with an outstanding loan, you will automatically be contacted by Fidelity to determine if you want to continue making payments on your loan. If you elect to continue making payments after termination of employment, you will not be able to request a distribution. If you later request payment of your vested account balance, then your auotmatic loan payments will cease, and the outstanding balance of your loan will become taxable to you. There is a $35 set-up fee for each loan, plus an annual maintenance fee of $15 (deducted quarterly in the amount of $3.75). The loan set-up fee is deducted from your account. For more information on loans, please call Fidelity ( ). Can I make withdrawals while I am still employed by the Company? Yes. You may make withdrawals from your after-tax contribution account by calling Fidelity at However, you cannot make more than one such withdrawal each plan year, and you cannot withdraw the income on your after-tax contributions. In the event of disability, you can make a withdrawal of all, or any part of, your account balance. You can also request a distribution of all or any part of your vested accounts provided you are at least age 59-1/2. If you want to request an in-service distribution, you need to contact Fidelity at MISCELLANEOUS INFORMATION Is there any overall limit on contributions to my accounts? Yes. The Internal Revenue Code places an overall limit on the total amount of contributions that can be made to defined contribution plans. Simply stated, the overall annual limit on contributions (and forfeitures) for any participant is the lesser of (1) $46,000 or (2) 100% of his or her taxable compensation. For more information about these limitations and their effect, if any, on your benefit, contact the Benefits Manager. Can my benefit be affected by a divorce decree? Yes, if the Company determines the domestic relations order to be a qualified order. If the Company receives a domestic relations order requiring payment of all, or any portion, of your vested account balances to a former spouse, a child, or other dependent, the Company will decide whether the order is qualified under complicated IRS rules. You will be notified of the Company s determination. Generally, an order will be qualified if the order clearly identifies the name, address, and social security number of the participant and alternate payee, Page 12

16 the percentage or amount of the vested account balance to be paid to the alternate payee, and the name of the plan. Any amounts paid under a qualified domestic relations order will be subtracted from your vested account balances. You should contact the Benefits Manager immediately if you have any questions about a potential order or want additional information about the plan s domestic relations order procedures. The Company does have a sample form that your attorney can use which will help ensure that the order is qualified. It is provided free of charge. The Company encourages you, or your attorney, to submit any potential order to the Benefits Manager for pre-approval before it is formally submitted to the court. Can the Plan be amended or terminated? The Company has the right to amend or terminate the Plan at any time. However, amendment or termination will not take away amounts already credited to your individual accounts. Of course, the value of your accounts at any time is affected by trust gain or loss. Benefits under this Plan are not insured by the Pension Benefit Guaranty Corporation (PBGC) if the Plan terminates because your Plan benefit is determined solely by the amount in your individual accounts. You will be entitled to 100% of the value of your accounts if you are employed on the date of Plan termination. Amounts already forfeited are not subject to restoration if distribution of vested amounts has been made or five consecutive breaks in service have already occurred. After any IRS approval of the termination requested by the Company is received, all participants are entitled to receive the full vested value of their accounts. Do I have any protections under the Plan? YOUR RIGHTS Yes. As a participant in the plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all plan participants shall be entitled to: Receive Information About Your Plan and Benefits Examine, without charge, at the plan administrator s office and at other specified locations, such as worksites, all documents governing the plan, including insurance contracts, and a copy of the latest annual report (Form 5500 Series) filed by the plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration. Obtain, upon written request to the plan administrator, copies of documents governing the operation of the plan, including insurance contracts and collective bargaining agreements, and copies of the latest annual report (Form 5500 Series) and updated summary plan description. The administrator may make a reasonable charge for the copies. Page 13

17 Receive a summary of the plan s annual financial report. The plan administrator is required by law to furnish each participant with a copy of this summary annual report. Obtain a statement telling you whether you have a right to receive a benefit at normal retirement age (later of age 65 or 5 years of Plan participation) and if so, what your benefits would be at normal retirement age if you stop working under the plan now. If you do not have a right to a benefit, the statement will tell you how many more years you have to work to get a right to a benefit. This statement must be requested in writing and is not required to be given more than once every 12 months. The plan must provide the statement free of charge. Prudent Actions by Plan Fiduciaries In addition to creating rights for plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your plan, called fiduciaries of the plan, have a duty to do so prudently and in the interest of you and other plan participants and beneficiaries. No one, including your employer, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a pension benefit or exercising your rights under ERISA. Enforce Your Rights If your claim for a pension benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of plan documents or the latest annual report from the plan and do not receive them within 30 days, you may file suit in a Federal court. In such a case, the court may require the plan administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court, provided you have exhausted all your administrative remedies and filed an appeal with the Company as described on page 10. In addition, if you disagree with the plan s decision or lack thereof concerning the qualified status of a domestic relations order, you may file suit in Federal court, provided you have exhausted all your administrative remedies and filed an appeal with the Company as described on page 10. If it should happen that plan fiduciaries misuse the plan s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous. Assistance with Your Questions If you have any questions about your plan, you should contact the Benefits Manager. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the plan administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone Page 14

18 directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration or by logging onto their website at Where can I get more information about my Plan? You should contact the Benefits Department with any questions you may have. The Benefits Department can be reached at or by at Benefits@Carle.com. Page 15

19 ADMINISTRATIVE INFORMATION Name of Plan: Carle Profit Sharing Plan Plan Number: 002 Type of Plan: Defined Contribution Profit Sharing Plan with a 401(k) feature; ERISA 404(c) Plan Plan Year: Each January 1 through the following December 31 Fidelity Phone System: Fidelity Web Site: Plan Sponsor and Plan Administrator: Carle Holding Company, Inc. 602 West University Avenue Urbana, Illinois Plan Sponsor's Employer Identification Number (EIN): Benefits Manager: Trustee: Agent for Legal Process: Ms. Melody Henegar melody.henegar@carle.com Fidelity Management Trust Company 82 Devonshire Street Boston, Massachusetts Mr. Dennis Hesch Senior Vice President & Chief Financial Officer Carle Foundation Hospital 602 West University Avenue Urbana, Illinois Service of legal process may also be made upon the Plan Administrator or the Trustee. Page 16

20 Participating employers as of April 1, 2010: Carle Health Care, Inc. Carle Holding Company, Inc. The Carle Foundation Carle Foundation Hospital Page 17