TRADITIONAL FORMULA CSX PENSION PLAN SUMMARY PLAN DESCRIPTION

Transcription

1 TRADITIONAL FORMULA CSX PENSION PLAN SUMMARY PLAN DESCRIPTION January 1, 2016 NAI v5 Final

2 CSX PENSION PLAN Summary Plan Description Table of Contents 1. Your CSX Pension Plan Plan Participation and Cost What Service Means Vesting How Your Benefit is Calculated When You Can Retire Benefit Payment Options Available When You Retire Examples of Benefit Calculations If You Die Prior to Retirement If You Leave Prior to Retirement Applying for Your Pension Circumstances That Could Affect Your Benefit General Administrative Information Plan Administration If A Claim is Denied Your Rights Under ERISA Appendix I: Special Rules Applying to Members of Predecessor Plans Appendix II: Special Rules Applying to Certain Former Employees Appendix III: Special Rules Applying to Former Members of the Sea-Land Corporation Pension Plan who accrued benefits under the Plan prior to February 22, NAI v5 Final

3 1. Your CSX Pension Plan The CSX Pension Plan is designed to help you build financial security for the future. The CSX Pension Plan (also referred to as the Plan ) became effective January 1, The Plan was established to provide retirement income to supplement your Social Security and Railroad Retirement benefits, and your personal savings and salary deferrals under other Company plans, as applicable. This summary reflects the major provisions of the Plan as amended and restated January 1, Although CSX Corporation (CSX) intends to maintain the Plan indefinitely, CSX, by action of its Board of Directors (or its delegate), retains the right to make additional amendments to the Plan or to terminate the Plan at any time and for any reason in any manner not prohibited by applicable law, as described further in the section of this summary entitled Amendment Of The Plan. This summary plan description summarizes in non-technical language how the Plan works and how you become eligible to receive benefits from the Plan. This description is only a summary of the main provisions of the Plan. It does not take the place of the Plan document. The explanations in this summary plan description cannot alter, modify or otherwise change the controlling Plan document nor can any rights accrue by reason of any statement or omission herein. If there is a conflict between the provisions of the Plan and this description, the Plan provisions will control in all cases. Any amendment to the Plan to comply with a change in the law, and therefore the provisions in this summary describing those changes, is subject to the approval of the Internal Revenue Service. The Plan Administrator is the Committee and its Members elected by the CSX Corporation Fiduciary Oversight Committee (the Plan Administrator ). The Plan Administrator has delegated the day-to-day ministerial administration of the Plan to the CSX Benefits Department. The Plan Administrator has the absolute and exclusive authority to interpret the provisions of the Plan and the Plan s rules pertaining to eligibility, qualification for benefits, the accrual of benefits and this summary plan description. In interpreting this summary plan description, the Plan Administrator will rely on the governing Plan document. The Plan Administrator has complete discretion concerning all matters related to the operation of the Plan (except where that authority has been delegated to another like the Investment Committee) and its decisions regarding the interpretation of the Plan document and summary plan description are conclusive and binding on all persons. The actual text of the Plan document is available for your examination during normal business hours. If you would like a copy of the Plan document or if you have any questions about the Plan or this summary plan description, please contact the CSX Pension Center at NAI v5 1 Final

4 2. Plan Participation and Cost Generally, you were eligible to become a Member of the CSX Pension Plan and entitled to the benefits described in this summary if prior to December 31, 2002 you were either (i) a salaried non-union employee of a participating company and working in an eligible classification as set forth in the Plan or (ii) an hourly non-union employee of a participating company whose employer elected to cover you and other similarly situated persons. The Company pays the full cost of the Plan. Participating Companies A participating company is a subsidiary or affiliated company of CSX that has adopted the Plan for the benefit of its eligible employees, subject to the authorization of the CSX Board of Directors or its delegate. Any participating company may discontinue its participation in the Plan and discontinue accruals under the Plan with respect to its otherwise eligible employees by action of its board of directors or its delegate. Once you become eligible, you may participate in the CSX Pension Plan if you are employed by a participating company. A list of these companies is maintained by the CSX Benefits Department. If you would like a copy of the most current list, contact the CSX Pension Center at Eligibility You are an eligible employee if prior to December 31, 2002 you were either (i) a salaried nonunion employee of a participating company and working in an eligible classification as set forth in the Plan or (ii) an hourly non-union employee of a participating company whose employer elected to cover you and other similarly situated persons. Rehired Employees. If you are a non-vested former Member of the Plan and are rehired before you have a five-year break in service, you may become vested in the Plan benefit you accrued before your rehire date. If you are rehired into an eligible employee classification after December 31, 2002, you will be eligible to immediately accrue benefits under the cash balance benefit provisions of the Plan as described herein, unless you have an accrued benefit under the traditional benefit portion of the Plan. Transferred Employees. If you transfer to CSX or a participating company from an affiliated CSX company that has not adopted the Plan, or you are transferred or promoted from a position not eligible for coverage under the Plan to a position that is eligible for coverage after December 31, 2002, you will be eligible to accrue benefits under the cash balance portion of the Plan on the effective date of your transfer. Union Employees. If you are a union employee of CSX or a participating company who is covered by a collective bargaining agreement that does not provide for Membership in the Plan and you are transferred or promoted to a position after December 31, 2002, that is eligible for NAI v5 2 Final

5 Plan Membership, you will be eligible to accrue benefits under the cash balance portion of the Plan from the effective date of your transfer. Ineligible Employees. You are not an eligible employee if you are treated as an independent contractor (whether or not the classification is determined to be correct as a matter of law), or you are classified as a leased employee, an employee covered under a collective bargaining agreement (unless such agreement provides for your participation in the Plan), an employee transferred to employment with the Company from employment with a foreign affiliate (and you continue to accrue benefits under the retirement plan of the foreign affiliate), a nonresident alien who receives no income from sources within the United States, or an employee who is paid on an hourly basis unless your employer has elected to cover you and other similarly-situated persons, or any person who is accruing pension benefits under a non-governmental retirement plan in a country other than the United States or Canada to which CSX contributes. Any employee of SL Service, Inc. or any of its subsidiaries or affiliates will not be an eligible employee for Plan participation purposes. Once you have satisfied the eligibility requirements, you automatically become a Member of the Plan. Enrollment by you is not required. Reemployment If you leave the employment of CSX or its participating affiliates after becoming a Member of the Plan, the following rules will apply to your Membership if you later return to the employment of CSX or a company participating in the Plan in an eligible classification: If you are vested in your accrued benefit (see the section Vesting), you will become a Member immediately upon your reemployment. If you are not vested in your accrued benefit, but you have not incurred five consecutive one year breaks in service (see the section Vesting), you will become a Member immediately upon your reemployment; or If you are not vested in your accrued benefit, and you have incurred five or more consecutive one-year breaks in service, you will become a Member in the cash balance portion of the Plan (described in a separate summary plan description) after you again meet the eligibility requirements. Member immediately upon your reemployment, but your pre-break accrued benefit are permanently forfeited (lost) for all purposes (see the section Vesting). Plan Cost CSX and its participating affiliates pay the full cost of the Plan by making contributions to a trust fund that is held for the benefit of Members. You are not required or permitted to contribute to the Plan, nor may you have money transferred to this Plan from another retirement Plan or IRA. An actuary annually determines the amount that must be contributed to the trust fund to provide for current and future pension benefits. The money in the trust fund is held for the exclusive benefit of Members and their beneficiaries and to discharge certain Plan administration expenses. NAI v5 3 Final

6 Amounts held in the trust fund cannot be returned to the Company until all benefits earned by Members have been paid. 3. What Service Means Your eligibility to receive a pension benefit and the amount of your benefit are determined in part by your service. Service is counted two different ways under the Plan vesting service and credited service. How is Service Counted? In general, service means the length of time you work for the Company, from the day you are first employed and complete one hour of service to the day you leave the Company for any reason, including your retirement, death, discharge, or voluntary termination (your severance date). There are two different types under the Plan vesting service and credited service. What does Company mean for purposes of calculating service? Generally, with respect to vesting service, unless otherwise specifically provided, Company means any entity that is part of CSX Corporation s controlled group, under the Internal Revenue Code, from the date the entity became a Member of the controlled group. For benefit accrual or credited service purposes, unless otherwise specifically provided, Company includes only members of CSX s controlled group of companies while participating in the Plan from the effective date of such entity s participation until such participation ends if applicable. Military Duty You will receive vesting service and credited service for active military duty in the United States armed forces or in the Armed Forces of Canada, in the case of a Canadian citizen, if you return to Company employment while your reemployment rights are protected by the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) or Canadian law, as applicable. Vesting Service Vesting service is the length of your employment with the Company as a common law employee. Your vesting service determines your right to receive a benefit under the Plan. Vesting service is counted in years and months; twelve months of vesting service equals a year of service. If you work one hour in a month, you receive credit for the entire month. All service with the Company is recognized for vesting purposes but may not be counted for benefit value purposes. Credited Service This is the length of service used to calculate your pension amount. Like vesting service, it is counted in years and months. Credited service is the same as vesting service, except that it NAI v5 4 Final

7 excludes any period between a severance date and a date of rehire. Credited service does not include any period in which you are an ineligible employee for Plan purposes. Full and partial years of service (based on full or partial months of service) are recognized for this purpose. If you were hired before January 1, If you were hired into or promoted to a salaried position before January 1, 1989, you began to earn credited service in the Plan effective the first day of the month following the later of your date of hire or promotion to a salaried position. There are special rules for determining credited service prior to July 1, These rules are summarized in Appendix I. If you were hired after December 31, 1988, and before January 1, If you were hired into or promoted to a salaried position after December 31, 1988, and before January 1, 2003, you began to earn credited service after you fulfilled the eligibility requirements described in Eligibility. You were credited with service retroactive to your date of hire or promotion to a salaried position. If you transferred to CSX or a participating company from a salaried position with an affiliated company that had not adopted the Plan before January 1, 2003, and you otherwise met the eligibility rules, you began to earn credited service in the Plan on the effective date of your transfer. You may also earn vesting service and credited service for some periods you are not actually at work. For instance, you will be entitled to vested and credited service if you receive benefits under the Salary Continuance and Long-Term Disability Plan of the Company and you became disabled and started receiving benefits before February 1, Subject to the earlier cessation of accruals, your credited service ends when your salaried employment with CSX or a participating company terminates. However, if you transfer to an affiliated company that has not adopted the Plan, you will retain your credited service under the Plan. When you subsequently retire or terminate employment with the affiliated company, any benefit you may be entitled to under the Plan will be determined under the provisions of the Plan in effect when you ceased to be an employee of CSX (or a participating company) on the basis of your credited service and average compensation before your transfer. Special Credited Service Provisions Former employees of CMX Trucking, Inc. If you were an employee of CMX Trucking, Inc. (CMX) on January 1, 1989, and you otherwise meet the eligibility rules, you began to earn credited service as of that date. Your vesting service includes any service earned with CMX, both before and after January 1, Employees of Total Distribution Services, Inc. If you were an employee of Total Distribution Services, Inc. (TDSI) on January 1, 1989, your credited service and vesting service are based on your date of hire by TDSI. Former employees of Rockresorts, Inc. Special rules apply to any former employee of Rockresorts, Inc. who participated in the Retirement Income Plan for Employees of Rockresorts, Inc. These rules are summarized in Appendix II. NAI v5 5 Final

8 Former employees of the Richmond, Fredericksburg and Potomac Railway Company. Special rules apply to any former employee of Richmond, Fredericksburg and Potomac Railway Company (RF&P) who was a member of the Richmond, Fredericksburg and Potomac Railway Company Employees Supplemental Retirement Plan. These rules are summarized in Appendix II. Former employees of Consolidated Rail Corporation. If you were an active member of the Consolidated Rail Corporation Supplemental Pension Plan or the Retirement Plan of Consolidated Rail Corporation (the Conrail Plans) on May 7, 1997, and became a member in this Plan as a result of your direct employment from Conrail or an affiliate on or before December 31, 1999, your credited service and vesting service will include all service credited under the Conrail Plans. If you were an active member of the Conrail Plans and became a Member of the Plan after December 31, 1999, however, your benefit under the Plan will be reduced by your accrued benefit under the Conrail Plans. 4. Vesting You earn a non-forfeitable right to a pension benefit through service with the Company. This is called vesting. You become vested in the Plan when you accumulate five years of vesting service. An exception to the five-year requirement applies if you attain age 65 while working for the Company; at that point you are automatically vested if you satisfy all eligibility requirements, even if the vesting service you have earned is less than five years. If you terminate employment and are then later are rehired by the Company, service accumulated prior to leaving the Company may count toward your vesting and credited service depending on how long you have been working or someone else. This is determined under the Plan s break in service rules. Break In Service A break in service occurs when you are not credited with an hour of service for the one year period after you have a severance from service from the Company. Hours of Service. You can get credit under the Plan for two kinds of hours of service -- work hours and paid non-work hours. Work hours are the hours you are paid by the Company for performing your job. Paid non-work hours include military and jury duty, vacations, illnesses, holidays, and absences for short-term disability. However, notwithstanding the above, you will not have a break in service because either you: Are on an authorized leave of absence approved by the Plan Administrator. For participation and vesting purposes only, this includes an unpaid leave of absence under the Family or Medical Leave Act; or Are on active military duty and return to work within the time set by law. NAI v5 6 Final

9 Generally, if you have a break in service but it occurs after becoming vested (for example, you have accumulated five years of vesting service), all your prior vesting and credited service will be counted if you return to work for the Company. This will not occur, however, if you receive a distribution of your vested benefit prior to returning to work. In this case, you must repay the distribution within five years of your return to work to reinstate your prior service. You should contact the CSX Pension Center at if this circumstance applies to you. If you have a break in service before becoming vested in your Plan benefit, your vesting service and credited service are treated as indicated below: If you are rehired by the Company in any position, all past vesting and credited service under the Plan will be restored if the break in service period does not exceed five years. If that is the case, the vesting service and, any accrued credited service you earn from your rehire date will be added to your pre-break vesting service and any accrued credited service. If your break in service period is longer than five years, your earlier vesting and credited service are permanently forfeited (lost). If you are rehired later by Company, you will be treated as a new employee under the Plan. Special rules apply to authorized absences not to exceed one year due to Parental Leave because of your pregnancy, the birth of your child or adoption, and unpaid leave of absence under the Family Medical Leave Act and generally will not cause a break in service. The Plan Administrator can provide you with more information if this applies to you. 5. How Your Benefit is Calculated Your pension benefit is based on your average compensation, years of credited service and Social Security or Railroad Retirement benefit. The Plan is a defined benefit plan. This means the benefit you receive at retirement is defined, or determined by a formula in the Plan. The formula takes into account your credited service, your average compensation and your estimated Social Security or Railroad Retirement benefits. The formula produces a monthly benefit amount which assumes retirement at your attainment of age 65 and is payable for life. If you have 10 years of vesting service, you may retire from active service on or after your 60 th birthday with no reduction in your benefit amount for early retirement or you may retire between ages 55 and 60, but your benefit amount will be adjusted, as described or illustrated in the sections When You Can Retire and Examples of Benefit Calculations. If you are married at the time of your retirement and you remain married to the same person until your death, 50% of your benefit is payable to your surviving spouse for life. Alternative payment options are also available; for more information, refer to the sections How You Receive Plan Benefits and If You Become Disabled Or Die Prior To Retirement. NAI v5 7 Final

10 The Benefit Formula At age 65, your monthly benefit will be calculated as follows: 1.5% times your years of credited service, times your average compensation, minus 40% of primary Social Security benefit, and/or 60% of Railroad Retirement benefit See Example 1, Examples of Benefit Calculations for an illustration of how the formula works. Factors Affecting Your Benefit The amount of your pension benefit is determined by your average compensation, primary Social Security and/or Railroad Retirement benefits and credited service. Credited Service. The determination of credited service is described in the section What Service Means. Average Compensation. This is the average of your monthly earnings for your 60 consecutive highest-paid months (or, for all of your months of credited service if you have less than 60 months of service) with CSX or a participating affiliated company in a salaried position. For the purpose of determining your average compensation, your earnings include: Monthly base pay, including any salary deferral pursuant to a pre-tax contribution election for the Company s health or other welfare benefit programs, to the CSX 401(k) Plan (CSXtra), or to a non-qualified deferred compensation plan, program, or arrangement maintained by the Company or to purchase vacation; Plus Awards of Excellence, Management Incentive Compensation Plan (MICP) bonuses, retroactive pay adjustments, lump sum merit awards, and, effective July 1, 2005, sales commission with respect to Members in the Critical Capacity sales group under the Intermodal Sales Commission Plan. MICP bonuses paid with respect to a Plan Year shall be deemed to have been paid ratably over such Plan Year; and If applicable, differential wage payments made to you by the Company during any period of more than 30 days that you are on active duty in the uniformed services. Earnings does not include: Overtime pay, spot awards and sales commissions (except provided above), and all other forms of special pay, such as (but not limited to) cash or non-cash, amounts received from Company disability or health plans, company-paid insurance premiums, stay and signing bonuses, financial planning services, suggestion awards, tuition refunds and NAI v5 8 Final

11 scholarships, moving expenses and other special payments or amounts, and severance pay; Plus employee discounts allowed on stock purchases, stock, income derived from, and stock appreciation rights, restricted shares, performance shares, phantom stock payments and other equity-based compensation, the imputed value of fringe benefits derived from the use of Company assets, or income derived from the exercise of stock options or stock appreciation rights, and awards paid under the CSX Long Term Incentive Program or similar plans of the Company. Earnings Limitation. The Internal Revenue Code limits the amount of annual compensation the Plan can consider in calculating your accrued benefit under the Plan. The current limitation is $265,000 for This limitation is adjusted periodically based on changes in the cost-ofliving. This limitation, however, cannot reduce your benefit below the amount of your accrued benefit as of December 31, 1993, based on the limitations then in effect. Social Security and Railroad Retirement Benefit Offset. Your pension is reduced by a percentage of the benefits you are eligible to receive under Social Security and Railroad Retirement benefits, including disability benefits. The Railroad Retirement benefit is the annuity for either age and service, or disability, under the Federal Railroad Retirement Act, inclusive of any benefits payable for service covered by the Social Security Act, in effect on your severance date. A Railroad Retirement benefit does not include any spousal benefits. The offset under this Plan by a portion of your Social Security and Railroad Retirement benefits reflects the fact that the Company pays a portion of the cost to provide these benefits to you. The offset does not affect the amount of those benefits. You collect in full any Social Security or Railroad Retirement benefits to which you are entitled. If your benefits under Social Security or Railroad Retirement increase after retirement, your pension benefit will not be reduced. You will receive for life the full Plan benefit calculated for you at retirement plus any Social Security or Railroad Retirement benefit, including subsequent increases. The amount of the offset is calculated in two steps. First, your Social Security and Railroad Retirement benefits are estimated. The estimate uses (1) your actual work and salary history while you were an employee of the Company, and (2) for periods prior to your employment by the Company, assumes service back to age 21 (or 1951, if later) and an assumed salary history based on the actual yearly change in national average wages. Second, the estimated benefits are prorated for the period of time you were covered under the Plan. So, for example, if you ve been working for 40 years, but only 30 of those years were at the Company, the offset would be equal to your estimated benefit multiplied by three-quarters (¾) (30 years of credited service/40 years of work). Reduction for your Social Security and Railroad Retirement benefits is made when you first qualify for these payments, or would have qualified except for death or voluntary NAI v5 9 Final

12 disqualification. In the event of your death, the same offset that would have been applied to your benefit will be applied to calculate any survivor s benefit. Actual Versus Estimated Social Security or Railroad Retirement Benefits Normally, the Plan uses estimates of your earnings history to calculate your Social Security and Railroad Retirement benefits. However, you have the right to have your actual earnings history used in calculating the amount of the offset. When your actual earnings history is used instead of the estimated history, the Social Security or Railroad Retirement benefit amount may be higher or lower, which would affect your pension benefit. If you supply your actual earnings history, your Social Security or Railroad Retirement benefit will be recomputed, and that amount will be used to recalculate your CSX pension benefit. An appropriate adjustment will be made for any past under- or over-payment. You may request your actual salary history from the Social Security Administration or the Railroad Retirement Board at no charge. Minimum Pension Benefit The monthly minimum retirement benefit paid to you and your surviving spouse under the Plan will not be less than $6.50 multiplied by your years (and fractions of years to the nearest 1/12th) of credited service up to a maximum of 10 years. USERRA You have the right to continued participation in the Plan during a period of qualified military leave, in accordance with the Uniformed Services Employment and Reemployment Rights Act of This right is dependent on your return to service with CSX following an honorable military discharge within the time required by law. USERRA assures a returning employee the pension benefit rights that would have accrued if the employee had not had a uniformed service leave of absence. Military service is considered service with the Company for vesting and benefit accrual purposes. 6. When You Can Retire Normal retirement under the Plan is at age 65. You may continue working for the Company after age 65 and delay retirement. Or, if you meet certain service requirements, you can retire as early as age 55 and begin receiving benefits immediately. Normal Retirement In general, your normal retirement date is the day following the date you reach age 65. If, however, you were hired as a pilot in the CSX Corporation Aviation Department prior to May 1, 2010, your normal retirement date is the day following the day you reach age 62. NAI v5 10 Final

13 If you file your request to retire on a timely basis, your pension will commence effective on the day following your last day of active employment. Your first payment will be made as soon as practicable, and subsequent payments will be made on the first day of each month thereafter based on the payment option selected by you. Delayed Retirement Retirement at age 65 is not mandatory. If you continue working past your normal retirement date, you will continue to receive credited service under the Plan. Your delayed retirement date will be the first day of the month following your termination of employment and the Plan Administrator s receipt of your application to retire. You may not commence your benefit until you actually retire. Generally, if you delay your retirement beyond age 65, your pension will be based on your credited service and average compensation as of your actual retirement date or, if greater, the actuarial equivalent of the benefit you had accrued as of your normal retirement date. Your Required Beginning Date. Payment of your pension benefit must begin no later than your required beginning date. Generally, your required beginning date is April 1 following the later of (1) the calendar year in which you reach age 70½, or (2) the calendar year in which you terminate employment. If you were age 70½ and still employed and when you started to receive minimum distributions from the Plan prior to January 1, 1997, those minimum distributions will continue. If you work past age 70½ and begin receiving pension benefits, your pension will be adjusted once a year to reflect the additional credited service earned and the value of the benefits received. Early Retirement If you have 10 years of vesting service, you may choose to retire as early as age 55. If you file your request to retire on a timely basis, your pension will be paid as described in the section Normal Retirement. If you are under age 60 when you retire from active service and you elect to begin receiving your early retirement pension immediately upon your retirement, your normal pension benefit will be reduced 1/360th for each month you are under age 60 to adjust for the longer period of time you will be receiving a pension. If you are age 60 or older when you retire, this reduction does not apply. (See Examples 2A and 2B, Examples of Benefit Calculations). No Social Security or Railroad Retirement offset in the benefit formula will apply until you first become entitled to Social Security benefits or Railroad Retirement benefits. If you are vested in the Plan (that is, you have at least five years of vesting service) but in total you have less than 10 years of vesting service, you are not eligible to receive a benefit until age 65. If You Return to Work after you Retire If you retire from the Company and are receiving pension benefits in the form of an annuity and are later rehired by the Company or an affiliate as an eligible employee participating in the Plan as a Member for at least eight days a month, your annuity, your pension payments will be NAI v5 11 Final

14 suspended after you receive written notice. The suspension will start as of the first day of the month coinciding with or next following your receipt of such notice reemployment. The optional form of benefit you previously elected payment form will be voided. When your reemployment ends, your pension annuity payments will resume after you make a new election, but your benefit will be recalculated to include any additional credited service earned and the form of benefit you elect but reduced for pension payments already received by you from the Plan. In no case will your pension benefit be less than the actuarially equivalent pension benefit you accrued before you were rehired reemployed. To the extent required by law, no payment will be suspended by the Plan unless you are notified by first class mail or personal delivery during the first calendar month or payroll period in which the Plan suspends your benefit payments. The notice will describe the specific reasons why your benefit payments are being suspended, a general description of the Plan provisions relating to the suspension of benefits and a copy of such provisions. Your benefits will begin again no later than the first day of the third calendar month after the calendar month in which you again retire. 7. Benefit Payment Options Available When You Retire The Plan generally assumes that you will receive a monthly benefit commencing at age 65 which continues for the remainder of your life. If you are married, however, the Plan assumes that you and your Spouse will receive a monthly benefit amount during your life and if you pre-decease your Spouse, she will receive 50% of this amount. You may also elect to provide your Spouse a 75% or 100% level. Alternatively, you may, with your spouse s consent, designate a person other than your Spouse to receive your survivor benefit. Before you receive any benefits from the Plan, the Plan Administrator will provide you with a description of the forms of payment and their relative values. Under the normal form of payment, the Plan assumes you will receive a monthly benefit commencing at age 65 for life. If you are married at the time of your retirement, you and your spouse receive a joint benefit during your lifetime and your surviving spouse will receive a lifetime monthly benefit equal to one-half of the amount you were receiving immediately prior to your death. Generally, for your spouse to qualify as a surviving spouse, you and your spouse must have been married throughout the one-year period ending on your annuity starting date or your date of death, if earlier. If you were married within the one-year period preceding your annuity starting date and are married for at least a one-year period ending on or before your death, your spouse will be treated as your surviving spouse. NAI v5 12 Final

15 75% and 100% Survivor Options As optional forms of payment, you may elect instead to have your spouse receive a survivor s benefit equal to 75% or 100% of the monthly benefit payable to you during your joint lives. However, your benefit will be reduced based upon the percentages shown in the table below (Survivor Benefit Option Table) to help pay for the increased benefit to your spouse. To elect either the 75% or 100% survivor benefit, you must make a written election by completing the appropriate form provided by the CSX Pension Center (toll-free ) at the time of retirement. Once payments begin, you may not change the election and you will continue to receive the reduced benefit even if your spouse predeceases you. Survivor Benefit Option Table Use this table to find the percentage of normal or early retirement pension levels that would be provided under either the 75% or 100% survivor benefit option. (See Examples 3A and 3B, Examples of Benefit Calculations) Age of Member* 75% Survivor Benefit Factor** 100% Survivor Benefit Factor** % 93% % 92% 65-up 95.28% 91% *Age at nearest birthday **These factors are decreased by ½% for each full year in excess of three that the spouse s age is less than the age of the member. For example, if your age is 58 and your spouse s age is 54, and you choose the 100% survivor benefit, the factor is decreased from 93% to 92.5%. If your spouse s age is greater than yours, the factor is increased by ½% for each full year in excess of three that your spouse s age is greater than yours; however, the factor will never exceed 98%. Electing a Non-Spouse Survivor Benefit You may designate a person other than your spouse to receive the 50%, 75% or 100% survivor s benefit. The election of this form of pension payment cannot become effective before you retire. If you are married, your election to designate someone other than your spouse to receive your survivor s benefit becomes effective only if your spouse gives written approval of such designation and the approval is signed by your spouse in the presence of the Plan Administrator or a Notary Public. If you elect a non-spouse survivor benefit, your monthly benefit may have to be adjusted to assure that it satisfies the incidental death benefit rule under Treasury regulations. This reduction applies to all three forms of payment: the 50%, 75% and 100% survivor options. The amount of the reduction will vary, depending on your age and the age of your designated beneficiary. If you are interested in a non-spouse survivor benefit, contact the CSX Pension Center at NAI v5 13 Final

16 8. Examples of Benefit Calculations Here are some examples of how your benefit may be calculated. The examples given are illustrations of how members benefits may be calculated. Actual pension calculations for retiring members are based on individual circumstances. Due to the varying work histories of employees and the effect of particular Plan provisions in individual circumstances, it is not possible to present examples covering all situations which may arise. In each of the following examples, 60% of the Railroad Retirement benefit has been used as an offset in the pension formula (but the offset has not been prorated for the period of Plan participation). If you are eligible only for Social Security, then the appropriate offset would be 40% of the applicable Social Security benefit, and the calculations would be made in the same manner as shown in the examples. If you are eligible for both Social Security and Railroad Retirement, based on your service under the Plan, the proper offset would be 60% of your Railroad Retirement benefit plus 40% of your Social Security benefit. Example 1: Normal Retirement Pension. Retirement Age Years of Service Average Monthly Compensation Assumptions Spouse s Age Estimated monthly Railroad Retirement benefit Election of 100% preretirement survivor benefit at age $3, $1,300 No Based on the above assumptions, your monthly benefit would be calculated as follows (see The Benefit Formula): 1.5% x 40 x $3,000 = $1, Less reduction for Railroad Retirement benefit 60% of $1, Monthly pension = $1, This is the amount you would receive monthly for the rest of your lifetime. After your death, your spouse if surviving would receive one-half of your benefit or $510 for the remainder of his or her lifetime. Example 2A: Early Retirement At Ages Retirement Age Years of Service Average Monthly Compensation Assumptions Spouse s Age Estimated monthly Railroad Retirement benefit $2, $1,200 (payable at age 60) Election of 100% preretirement survivor benefit at age 55 No Your monthly benefit would be calculated as follows: NAI v5 14 Final

17 1.5% x 35 x $2,900 = $1, Less reduction for Railroad Retirement benefit 60% of $1,200* Monthly pension = $ This is the amount you would receive monthly for the rest of your lifetime. After your death, your spouse, if surviving, would receive onehalf of your benefit or $ for the remainder of his or her lifetime. *The 60% offset for Railroad Retirement is applied immediately since an employee who is age 60 with 30 or more years of railroad service is eligible for a Railroad Retirement annuity at age 60. Example 2B: Early Retirement Before Age 60 Retirement Age Years of Service Average Monthly Compensation Assumptions Spouse s Age Estimated monthly Railroad Retirement benefit $2, $900 (payable at age 62) Election of 100% preretirement survivor benefit at age 55 No Although your monthly benefit begins immediately after your retirement, it will not be reduced for the Railroad Retirement benefit until that benefit actually becomes payable at age 62. That means you will receive a larger benefit before age 62, and a smaller monthly benefit on and after your 62 nd birthday. 1.5% x 28 x $2,500 = $1, Less reduction for early retirement $1, x 24/ Monthly benefit until age 62 = $ Less reduction for Railroad Retirement benefit 60% of $900 = Monthly benefit starting at age 62 = $ You will receive $980 monthly until your 62 nd birthday. If you die before your 62 nd birthday, your surviving spouse will receive one-half of your benefit or $490 monthly until you would have turned age 62. Your surviving spouse s monthly pension will be further reduced as noted below on what would have been your 62 nd birthday. At age 62, your monthly benefit will be reduced to $440 because your Railroad Retirement benefit becomes payable. This is the amount that you would receive monthly for the rest of your lifetime. If you die after your 62 nd birthday, your surviving spouse will receive one-half of your benefit or $220 monthly for the rest of his or her lifetime. Example 3A: 75% Survivor Option. If at the time you retire, you elect the 75% survivor option, the benefit amounts shown in Example 2B, Examples of Benefit Calculations are multiplied by the appropriate factor (96.37% under the assumptions in this example) from the Survivor Benefit Option Table. Monthly benefit until age 62 $980 x 96.37% = $ Monthly benefit starting at age 62 $440 x 96.37% = $ These monthly amounts would be payable to you for life. After your death, your spouse, if NAI v5 15 Final

18 surviving, would receive 75% of your benefits or $ until the date you would have attained age 62 and then $ for the rest of his or her life. Example 3B: 100% Survivor Option. If at the time you retire, you elect the 100% survivor option, the benefit amounts shown in Example 2B, Examples of Benefit Calculations are multiplied by the appropriate factor (93% under the assumptions in this example) from the Survivor Benefit Option Table. Monthly benefit until age 62 $980 x 93% = $ These monthly amounts would be payable to you for life. After Monthly benefit starting at age 62 $440 x 93% = $ your death, your spouse, if surviving, would receive 100% of your benefits or $ until the date you would have attained age 62 and then $ for the rest of his or her life. Example 4: 50% and 100% Survivor Benefit If Employee Dies Before Retiring If the employee in Example 2B, Examples of Benefit Calculations died at age 58 prior to retirement (instead of after) and all other assumptions are the same, the surviving spouse is eligible for a 50% pre-retirement survivor annuity and immediately begins receiving $490 per month, provided the participant and spouse had been married for at least one year as of the participant s date of death. This benefit continues until the date the employee would have reached age 62; thereafter, the surviving spouse s benefit will be $220 per month for life. (See section If You Die Prior to Retirement) 100% survivor benefit payable until age 62 = $ Reduction for 100% pre-retirement survivor benefit (in effect 3 years) ($ x 1.5%) Surviving spouse s monthly benefit until the date participant would have been age 62 = $ However, if the employee had previously elected the 100% pre-retirement survivor option at age 55, the spouse will receive the same benefit he or she would have received had the employee retired under the 100% survivor option immediately prior to the employee s death (see Example 3B, Examples of Benefits Calculations), reduced by the charge for pre-retirement (see 100% Pre-Retirement Survivor Benefit) as shown in the Table. The surviving spouse will receive a monthly benefit of $ until the date the employee would have reached age % survivor benefit payable starting at age 62 $ Reduction for 100% pre-retirement survivor benefit (in effect 3 years) ($ x 1.5%) = Surviving spouse s monthly benefit starting at the date participant would have been age 62 = $ At the date the employee would have reached age 62, the surviving spouse s monthly 100% survivor benefit payable after age 62 (see Example 3B, Examples of Benefit Calculations) will be reduced by $6.14 to $ monthly for the rest of his or her life. NAI v5 16 Final

19 Example 5: Vested Benefit If Employee Leaves The Company Before Age 55 With At Least 10 Years Of Credited Service Age at Termination Years of Service Average Monthly Compensation Assumptions Spouse s Age $2,500 3 years younger Estimated monthly Railroad Retirement benefit $400 (payable at age 62) Election of 100% preretirement survivor benefit at age 55 No If you leave the Company and are ineligible to retire immediately, you are considered a terminated vested participant and, unless you elect an alternative form of benefit, will receive a 50% Survivor Option with a level lifetime amount that is reduced for Railroad Retirement/Social Security at the time benefit payments first begin. See Reduction In Vested Pension If You Leave The Company Prior To Age 55 With At Least 10 Years of Vesting Service. Your monthly benefit beginning at age 55 would be calculated as follows: 1.5% x 13 x $2,500 = $ Less reduction for Railroad Retirement 60% of $ Monthly Vested Pension = $ Less reduction for early commencement of benefits $ x 60% Monthly benefit starting at age 55 = $99.00 Your monthly benefit will be determined by first applying the reduction for your Railroad Retirement or Social Security benefit. That amount is further reduced by 6% for each year your age is less than 65 when benefits begin. This is your level lifetime vested pension benefit. After your death, your surviving spouse will receive a monthly benefit of $49.50 ($99.00 x 50%) for the rest of his or her life. 9. If You Die Prior to Retirement If you are vested in your benefits and are married, your surviving spouse will receive at least a 50% pre-retirement survivor benefit if you die before commencing such benefits. At age 55, active employees who are vested have an opportunity to elect a 100% pre-retirement survivor benefit again payable if you die before commencing your benefit. If you become disabled before commencement of your benefit, you will remain a Member of the Plan and in effect treated like an active employee for purposes of the Plan. If You Die Before Retirement If you are vested in the Plan and are married and have been for at least the one-year period immediately prior to your death, unless you have made a different election, a lifetime pension equal to 50% of the benefit you had accrued at the time of your death will be provided for your surviving spouse (see Example 4, Examples of Benefit Calculations), as described in the following table: NAI v5 17 Final

20 Age If You Die Having Met These Conditions Years of Service Employment Status Beginning When You Would Have Reached 5 Active employment No earlier than age While disabled Immediately After retirement from active service or while on qualifying disability** but before benefits begin Terminated at age 50 or later < Terminated Immediately No earlier than age 55 Later of age 55 or date of death < While disabled Age 55 < 65 5 but < 10 Terminated or Disabled Age 65 Your Surviving Spouse Will Receive a 50% Benefit * Reduced for Early Commencement 1/360 th for each month prior to age 60 (see Early Retirement) 1/360 th for each month prior to age 60 (see Early Retirement) 1/360 th for each month prior to age 60 (see Early Retirement) 1/360 th for each month prior to age 60 (see Reduction for Early Retirement) 1/2% for each month prior to age 65 (see Reduction for Early Retirement) 1/2% for each month prior to age 65 (see Reduction for Early Retirement) *If you die while in active service, after reaching age 55, and after choosing the 100% pre-retirement survivor option, your surviving spouse will receive 100% of the reduced benefit. ** See section on If You Become Disabled Optional Spouse s Pension (100% Pre-Retirement Survivor Benefit) At age 55, vested employees may elect a 100% pre-retirement survivor benefit. By choosing this option, your eligible spouse will receive 100% of the monthly benefit you would have received if you had retired on the day before your death (see Example 4, Examples of Benefit Calculations). The 100% pre-retirement survivor benefit must be elected by the later of: N/A The date you attain age 55 and become vested under the Plan; 30 days after the date of your marriage; or The date that is 30 days after the date the Plan Administrator notifies you of your right to elect an Optional Spouse s Pension. Before you become eligible to choose this option, you will be provided with an election form and a written explanation of the Optional Spouse s Pension. You must complete and return the form prior to the latest of these three events. For the avoidance of doubt, you may NOT elect the 100% pre-retirement survivor benefit after the latest of the three events set forth above. NAI v5 18 Final

21 Note that there is a charge for the Optional Spouse s Pension (See 100% Pre-Retirement Survivor Benefit). Your pension at retirement will be permanently reduced for each month during which your choice was in effect prior to retirement. The monthly charge factors are shown in the table below: The 100% pre-retirement survivor benefit must be made in writing. You must complete and return the appropriate form provided by the CSX Pension Center (toll-free ). Your decision will remain in effect until you revoke it, retire, become divorced, or your spouse dies. Age at time of election Monthly reduction percentage for each year 100% pre-retirement survivor election is in effect /24 th of 1% / month /16 th of 1% / month 65 and up 1/12 th of 1 % / month For the avoidance of doubt, there are other form of payment elections you can make that also cause a reduction to your benefit. Specifically, if you elect the 75% or 100% joint on survivor annuity effective when you retire and elect to commence your benefit, the monthly benefit amount payable to you during you and your spouse s joint lives is reduced by an additional amount while your spouse s monthly benefit amount is increased to match the 75% or 100% survivor benefit amount you elected. If You Become Disabled If you cease to be an employee on account of disability prior to February 1, 2003, and you are eligible for and continuously receiving benefits under the Salary Continuance and Long-Term Disability Plan, you will continue to be credited with vesting service and credited service under this Plan. When you reach normal retirement age, you will be entitled to a disability retirement pension under the Plan. Your benefit will include the vesting and credited service earned for the period you were eligible for disability benefits based on your average compensation history before you became disabled. If you become eligible for disability benefits under the Long-Term Disability Plan on or after February 1, 2003, you will not accrue service or credited service under this Plan for your period of disability. Heroes Earnings Assistance and Relief Tax Act (HEART Act) If you die while engaged in qualified military service, your beneficiary will be entitled to any additional benefits (other than benefit accruals relating to your period of qualified military service) provided under the Plan in the same manner as if you had returned to work with the Company and then had a termination of service on account of death. It is a good idea to review your beneficiary designations from time-to-time to make sure that they reflect your intentions, especially if your marital status changes. Consult the CSX Pension Center at if you wish to check on your current designations. NAI v5 19 Final