SUMMARY PLAN DESCRIPTION OF THE EVERETT CLINIC PROFIT SHARING AND 401(k) EMPLOYEE SAVINGS PLAN AND TRUST

Transcription

1 SUMMARY PLAN DESCRIPTION OF THE EVERETT CLINIC PROFIT SHARING AND 401(k) EMPLOYEE SAVINGS PLAN AND TRUST REVISED 2016

2 TABLE OF CONTENTS Section Page 1. GENERAL PLAN INFORMATION ELIGIBILITY REQUIREMENTS AND COMMENCEMENT OF PARTICIPATION FUNDING AND ALLOCATION OF CONTRIBUTIONS BENEFIT PAYMENTS AND OTHER DISTRIBUTIONS FEDERAL INCOME TAXATION OF BENEFITS PAID VESTING INVESTMENT OF FUNDS AMENDMENT OF PLAN AND TERMINATION CLAIMS PLAN TERMINATION INSURANCE ERISA RIGHTS NOTICE... 26

3 Effective January 1, 2016 SUMMARY PLAN DESCRIPTION OF THE EVERETT CLINIC PROFIT SHARING AND 401(k) EMPLOYEE SAVINGS PLAN AND TRUST AGREEMENT THIS IS TO ANNOUNCE that The Everett Clinic has amended and restated its Profit Sharing and 401(k) Employee Savings Plan to bring the same into compliance with legislative changes. The Plan was established to provide a valuable retirement benefit to eligible Employees upon their retirement from active service with the Employer. This Summary Plan Description (SPD) describes in general terms the essential features of the Plan, the complete text of which is available for your inspection in the office of the Employer. Should there be any conflict in the detail between a statement in this Summary and the complete Plan and Trust Agreement, as amended, the terms of the Plan and Trust Agreement shall prevail. Upon fulfillment of all applicable eligibility requirements which are described below, employees of the Employer will participate in the Plan. 1. GENERAL PLAN INFORMATION Name of Plan Type of Plan The name of this Plan is THE EVERETT CLINIC PROFIT SHARING AND 401(k) EMPLOYEE SAVINGS PLAN AND TRUST (herein referred to as the "Plan"). This Plan is a Profit Sharing and 401(k) Employee Savings Plan and Trust Agreement established pursuant to Internal Revenue Code ' 401. The IRS last issued a favorable determination letter on the terms of the Plan on January 11, Plan Number 001 Plan Year January 1 to December 31 Employer Sponsor The Everett Clinic, P.S. (reorganized and renamed The Everett Clinic, PLLC) 3901 Hoyt Avenue Everett, WA Telephone (425) ; Facsimile (425)

4 Participating Employer Everett MSO, Inc. Employer Identification Numbers Employer: Trust: Everett MSO, Inc Plan Administrator Retirement Plan Operations Committee 3901 Hoyt Avenue Everett, WA Telephone (425) ; Facsimile (425) Type of Administration Agent for Service of Process and Representative The Plan Administrator is the Retirement Plan Operations Committee selected by the Plan Trustees. The Plan Administrator is responsible to keep the records for the Plan and to administer the Plan. It is important to keep the Plan Administrator informed of your current address and marital status at all times. The Plan Administrator will also be able to answer any questions you may have about your Plan. Andrea B. Rodewald, Plan Representative The Everett Clinic, PLLC 3901 Hoyt Avenue Everett, WA Service of process may also be made upon any Plan Trustee or the Plan Administrator. Other Plan Representatives may also be designated. Plan Trustees Effective January 1, 2016 The Trustees of The Everett Clinic Profit Sharing 401(k) Employee Savings Plan and Trust are: Robert E. Andre, M.D., Nariman Heshmati, M.D., Edward A. Jacobs, M.D., Betsy Suydam and Andrea B. Rodewald. The business address of all of the Trustees is 3901 Hoyt Avenue, Everett, Washington The Trustees are appointed for staggered terms. Hours of Service The Plan and this Summary Plan Description include references to hours of service. To become eligible to participate in the plan, to advance on the vesting schedule or to share in the allocation of an Employer profit sharing contribution, the plan requires you to complete a minimum number of hours of service during a specified period. The sections covering eligibility to participate, vesting and employer contributions explain this 2

5 aspect of the Plan in the context of those topics. However, hour of service has the same meaning for all purposes of the plan. The Department of Labor, in its regulations, has prescribed various methods under which the Employer may credit hours of service. The Employer has selected the actual method for crediting hours of service. Under the actual method, you will receive credit for each hour for which the Employer pays you, directly or indirectly, for the performance of your employment duties. You also will receive credit for certain hours during which you do not work if the Employer pays you for those hours, such as vacation. If your absence from employment is due to maternity or paternity leave, you will receive credit for unpaid hours of service related to your leave, not to exceed 501 hours. The Retirement Plan Operations Committee will credit these hours of service to the first period during which you otherwise would incur a one-year break in service as a result of the unpaid absence. In addition, if your absence is due to qualified military service, the Retirement Plan Operations Committee will credit you with hours of service in accordance with the Uniformed Services Employment and Reemployment Rights Act (AUSERRA@). These hours are credited only for the purpose of avoiding a break in service and are not credited for purposes of qualifying for an allocation of an employer profit sharing contribution. The Employer is a successor to Faulkner s Pharmacy, Inc., and Western Washington Medical Group Oncology Department. In this respect, the Plan takes into account certain service of employees with the predecessor employer for purposes of eligibility to participate and for purposes of vesting. Military Service. If you are a veteran and are reemployed under the Uniformed Services Employment and Reemployment Rights Act of 1994, your qualified military service may be considered service with the Employer. There may also be benefits for employees who die or become disabled while on active duty. Employees who receive wage continuation payments while in the military may benefit from law changes effective in If you think you may be affected by these rules, ask the Plan Administrator for further details. 3

6 2. ELIGIBILITY REQUIREMENTS AND COMMENCEMENT OF PARTICIPATION 401(k) Eligibility Requirements of eligibility to participate in the 401(k) portion of the Plan are as follows: A. Age. No age requirement; B. Nonunion. Employee is not a member of a collective bargaining agreement where the issue of retirement benefits has been the subject of good faith bargaining between the Employees and Employer, unless such agreement expressly provides for participation in this Plan; C. Other. Employee is not classified as a nonresident alien, a Aleased employee@ as defined in the Plan, an independent contractor, regardless of any reclassification or attempted reclassification of leased employees or independent contractor by the Internal Revenue Service, court of law or other governing authority or a reclassified employee defined in the Plan as any person the Employer does not treat as a common law employee (including, but not limited to, independent contractors, persons the Employer pays outside of its payroll system and out-sourced workers) regardless of any reclassification or attempted reclassification by the Employer, Internal Revenue Service, court of law or other governing authority; and, D. Election Form. Employee has completed and returned a 401k Enrollment Change Form which applies to prospective compensation payable. 4

7 Commencement of 401(k) Salary Deferrals An Employee who meets the above eligibility requirements may elect to contribute 401(k) salary deferrals into the Plan effective on the next regular Plan entry date. Plan entry dates are each payroll period after completion of all of the applicable eligibility requirements. In addition to the entry dates described above, an eligible employee may elect to contribute 401(k) salary deferrals into the Plan effective on the first day of employment. The Plan Committee will allocate your elective deferrals to a separate account designated by the Plan as your Deferral Contributions Account. References to elective deferrals mean both pre-tax deferrals and Roth 401(k) deferrals. Ability to make Roth 401(k) Deferrals The Plan includes Roth 401(k) deferrals. The Roth 401(k) deferrals and, in most cases earnings will not be taxed when you take a Plan distribution. You will be able to make Pre-tax deferrals (which are also referred to as Pre-tax 401(k) deferrals), or you may make Roth 401(k) deferrals or a combination of Pre-tax 401(k) deferral and Roth 401(k) deferral contributions. The elective deferral limits below (See Elective 401(k) Salary Deferrals ) apply to pre-tax, Roth 401(k) or any combination of these deferrals. If you make a Pre-tax 401(k) deferral, then your taxable income is reduced by the deferral contribution so you pay less in federal income taxes. Later, when the Plan distributes the deferrals and earnings, you will pay the taxes on those deferrals and the earnings. Therefore, with a Pre-tax 401(k) deferral, federal income taxes on the deferral contributions and on the earnings are only postponed. Eventually, you will have to pay taxes on these amounts. With a Roth 401(k) deferral, you must pay current income tax on the deferral contribution. If you elect to make Roth 401(k) deferrals, the deferrals are subject to federal income taxes in the year of deferral, but the deferrals and, in most cases, the earnings on the deferrals are not subject to federal income taxes when distributed to you. For the earnings to be distributed tax-free, there must be a qualified distribution from your Roth 401(k) deferral account. To be a qualified distribution, the distribution must occur after one of the following: (1) your attainment of age 59½, (2) your disability, or (3) your death. In addition, the distribution must occur after the expiration of a 5- year participation period. The 5-year participation period is the 5-year period beginning on the calendar year in which you first make a Roth 401(k) contribution to our Plan (or to another 401(k) Plan or 403(b) plan if such amount was rolled over into our Plan) and ending on the last day of the calendar year that is 5 years later. For example, if you make your 5

8 first Roth deferral under this Plan on November 30, 2016, your participation period will end on December 31, It is not necessary that you make a Roth contribution in each of the five years. If a distribution from your Roth 401(k) deferral account is not a qualified distribution, the earnings distributed with the Roth 401(k) deferrals will be taxable to you at the time of distribution (unless you roll over the distribution to a Roth IRA or other 401(k) plan or 403(b) plan that will accept the rollover). In addition, in some cases, there may be a 10% excise tax on the earnings that are distributed. Whenever you receive a distribution, the Administrator will deliver to you a more detailed explanation of your options. However, the tax rules are very complex and you should consult with qualified tax counsel before making a choice. 401(k) Employer Matching Contributions Profit Sharing Eligibility An Employee who is eligible to make and makes 401(k) salary deferrals shall be eligible to receive an allocation of a discretionary matching employer contribution. Requirements of eligibility to participate in the profit sharing portion of the plan are as follows: A. Years of Service. Employee has completed one year of service ; B. Age. No age requirement; C. Nonunion. Employee is not a member of a collective bargaining agreement where the issue of retirement benefits has been the subject of good faith bargaining between the Employees and Employer, unless such agreement expressly provides for participation in this Plan; and, D. Other. Employee is not classified as a nonresident alien, a Aleased employee@ as defined in the Plan, an independent contractor, regardless of any reclassification or attempted reclassification of leased employees or independent contractor by the Internal Revenue Service, court of law or other governing authority or a reclassified employee defined in the Plan as any person the Employer does not treat as a common law employee (including, but not limited to, independent contractors, persons the Employer pays outside of its payroll system and out-sourced workers) regardless of any reclassification or attempted reclassification by the Employer, Internal Revenue Service, court of law or other governing authority. 6

9 Employer Profit Sharing Contributions An Employee shall become a participant in the profit sharing portion of the plan on the next plan entry date after completion of the above eligibility requirements. Plan entry dates are the first day of each month. One Year of Service Eligibility Example: The Plan defines Ayear of service@ as a 12-month period in which you work 1,000 hours for the Employer. For eligibility purposes, the initial eligibility computation period is the first 12 consecutive month period beginning on your first day of employment with the Employer. If you don=t meet the year of service requirement during the first 12-month service period, subsequent 12- month periods will be measured on a Plan year basis which is a calendar year. For example, if you began work on July 10, 2015, and worked 1,000 hours from your date of hire until July 9, 2016, you would have met the year of service requirement for eligibility purposes. You would then enter the Plan on the next following plan entry date (e.g., August 1, 2016). If you did not work 1,000 hours during this initial eligibility computation period of July 10, 2015 through July 9, 2016, the Plan will review your hours worked during the next eligibility computation period which would be January 1, 2016 through December 31, 2016 and, if you worked 1,000 hours, you would enter the Plan on the next plan entry date or January 1, If you did not work 1,000 hours during the calendar year 2016, each subsequent calendar year would be reviewed to determine if you met the one year of service requirement for eligibility purposes. If you terminate employment after becoming a Participant in the Plan and later return to employment, you will re-enter the Plan on your reemployment date. Also, if you terminate employment after satisfying the Plan=s eligibility conditions but before actually becoming a participant in the Plan, you will become a participant in the Plan on the later of your scheduled entry date or your re-employment date. 3. FUNDING AND ALLOCATION OF CONTRIBUTIONS Establishment of Account Balances When you become a participant in the Plan, a profit sharing account and/or a 401(k) account will be established for you as applicable. Your account(s) will be adjusted at least annually for contributions, forfeitures (if applicable), gains or losses from investments and costs of plan administration according to the rules explained in this section. 7

10 Currently, the Plan provides for valuation of your profit sharing account(s) quarterly as of March 31, June 30, September 30 and December (k) accounts are valued daily. After the end of each calendar year quarter, you will receive a statement showing the value of your account and the activity for the reporting cycle. The plan reporting cycle is quarterly on March 31, June 30, September 30 and December 31. The Retirement Plan Operations Committee may also require a valuation on any other date. To the extent that the Trustee invests in daily (or other periodically) priced and/or Aunitized@ funds and utilizes a periodically priced record-keeping system, the term Avaluation date@ shall mean each business day (or other appropriate period) throughout the Plan Year in which such funds are reported and allocated by the Plan record-keeper. Special rules apply to alternative assets that are not valued on a daily basis. You will not receive any adjustment to your account balance for trust fund earnings after the latest valuation date. Employer Contributions to Profit Sharing Accounts Beginning with the end of the first Plan Year after you have met all eligibility requirements, the Employer may annually elect to contribute a discretionary profit sharing contribution to the Plan out of its net profits, accumulated earnings or other assets. The Employer may choose not to make profit sharing contributions to the Plan for a particular Plan Year. The Plan as adopted by the Employer is an integrated profit sharing plan. Integrated profit sharing plan means the Plan takes into account contributions the Employer makes for employees under the Federal Social Security Act in making Employer contribution allocations. For each plan year the Employer makes profit sharing contributions to the Plan, the Retirement Plan Operations Committee will allocate this contribution to the separate accounts maintained for participants. The Retirement Plan Operations Committee completes this allocation using a two step formula. Under the first step, the Retirement Plan Operations Committee will allocate to each participant 5.4% of his or her total Compensation paid during the plan year and, at the same time, will allocate to each participant 5.4% of his or her excess Compensation. If the Employer s nonelective contribution is not sufficient to provide these allocation percentages, the Retirement Plan Operations Committee will proportionately reduce the allocation so the allocation percentage based on total Compensation is the same as the allocation percentage based on excess Compensation. Excess Compensation is a participant s Compensation in excess of the designated integration level. This designated integration level is 88% of the taxable wage base in effect at the beginning of the plan year. The federal government annually adjusts the taxable wage base. 8

11 The second step applies if any Employer profit sharing contributions for the plan year remain unallocated after the first step. Under the second step, the Retirement Plan Operations Committee will allocate the balance based on each participant s share of the total Compensation paid during the plan year to all participants in the Plan. Example #1. Assume your Compensation exceeds the designated integration level by $5,000 for a plan year and the Employer profit sharing contribution is sufficient to provide the maximum 5.4% allocation percentage for the allocation in the first step. You would receive an allocation of 5.4% x $5,000, or $270.00, plus 5.4% of your total Compensation. If, after this first tier allocation, $10,000 of Employer nonelective contributions remained unallocated, and your total Compensation equals 10% of the total Compensation paid to all participants for that plan year, then you would receive an additional allocation of 10% x $10,000, or $1,000, in addition to the first allocation. Example #2. Suppose in Example #1 the Employer s profit sharing contribution provided only a 4% allocation in the first step. Then your allocation would equal 4% x $5,000, or $200 plus 4% of your total Compensation. There would not be a second step allocation because the 4% allocations would result in the allocation of the Employer s entire nonelective contribution. If, under Example #1, your Compensation does not exceed the designated integration level, your first step allocation would equal 5.4% of your total Compensation because you would not have excess Compensation. Conditions for Allocation With limited exceptions, to be eligible to receive an allocation of an Employer profit sharing contribution, you must complete 1,000 hours of service during the plan year (January 1 through December 31) and you must be employed by the Employer on the last day of the Plan Year. The hours of service requirement does not apply in the event of termination due to death or disability. The last day of the year employment requirement does not apply in the event of termination due to death, disability or when the employee terminates at or after age 55 with five years participation Elective 401(k) Salary Deferrals For any calendar year, your elective deferrals may not exceed a specific dollar amount as determined by the Internal Revenue Service. For example, for calendar year 2016, the maximum dollar amount is $18,000. If your elective deferrals for a particular calendar year exceed the dollar limitation in effect for that calendar year, the Plan will refund the excess amount, plus any earnings (or loss) allocated to that excess amount. If you participate in another "401(k) arrangement" or in similar arrangements under which you elect to have an employer contribute on your behalf, your 9

12 total elective deferrals may not exceed the dollar limitation in effect for that calendar year. The Form W-2 you receive from each employer for the calendar year will report the amount of your elective deferrals for that calendar year under that employer's plan. If your total exceeds the dollar limitation in effect for that calendar year you should decide which plan you wish to designate as the plan with the excess amount. If you designate this Plan as holding the excess amount for a calendar year, you must notify the Retirement Plan Operations Committee of that designation as soon as possible so that any distribution can be made by April 15 of the following calendar year. The Trustee then will distribute the excess amount to you, plus earnings (or loss) allocated to that excess amount. All 401(k) salary deferrals will be reflected on your annual W-2 and compensation wage statement (but will not be subject to current federal income taxation, however, they will be subject to (FICA) social security tax withholding). Special 401(k) Catch-up Contributions. Each participant who is eligible to make 401(k) elective deferrals under the Plan, and who has attained age 50 before the close of the Plan Year, is eligible to make catch-up contributions in accordance with special limitations announced annually by the IRS. These special catch-up contributions are in addition to the maximum dollar limitations described above and are currently $6,000 in As an example, assume that you are an eligible participant and defer $18,000 into your 401(k) account during the 2016 Plan Year. Assume also that you are age 50 as of September 1, 2016, and desire to make an additional $6,000 catch-up contribution under the provisions of this paragraph. Your total 401(k) deposits for 2016 would be $24,000 (which is permissible notwithstanding the limitations described above). You will always be 100% vested in any catch-up contributions you make to the Plan, and such contributions will be subject to the ordinary rules regarding 401(k) contributions with respect to deductibility from your current income and subject to employment taxes as would be the case for your ordinary 401(k) deposits. Distributions of these amounts will occur in the same manner as your 401(k) deferrals made under the Plan. Catchup contributions are not eligible for matching contributions. Your salary reduction agreement remains in effect until you revoke the agreement. You may elect to increase or decrease your 401(k) salary deferrals, prospectively. Modifications will be effective on the next regular pay period after submission of a revised election. You may elect to suspend your 401(k) salary deferrals at any time during the Plan Year; provided, the suspension will be effective on the next pay period. Your salary reduction contributions may not exceed the maximum amount permitted annually by the Code, the IRS and the limitations set forth below. 10

13 Additional restrictions on Employee contributions apply to highly compensated Employees. All Employee and Employer contributions must meet the nondiscrimination tests contained in the Internal Revenue Code. If Employee 401(k) salary deferrals exceed the dollar limitations, or Employer and/or Employee contributions exceed the maximum contribution or deduction amounts, the Employer will automatically distribute any such excess to you in accordance with applicable laws and plan provisions. 401(k)Employer Matching Contributions to 401(k) Accounts Qualified Nonelective Contributions The Employer may also elect to contribute a discretionary matching contribution to the Plan based upon part or all of each Participant's 401(k) salary deferrals. Discretionary Employer matching contributions are determined by the Board of Directors. The Retirement Plan Operations Committee will allocate matching contributions monthly. You are not required to be employed on the last day of the Plan Year to receive a match. Note catch-up contributions, described above, are not eligible for matching contributions. The Plan permits the Employer to contribute a discretionary amount for a plan year which the Employer will designate as qualified nonelective contributions. If the Employer makes qualified nonelective contributions for a plan year, the Retirement Plan Operations Committee will allocate those contributions to the separate accounts of those participants who are eligible for an allocation for the plan year but who are not highly compensated employees for that plan year. The law defines highly compensated employees to include most owners and employees whose compensation for the plan year exceeds certain dollar limitations prescribed by the Internal Revenue Service. Voluntary After- Tax Employee Contributions Rollover Contributions Special Top- Heavy Rules Voluntary after-tax Employee contributions to the Plan are prohibited. The Plan accepts certain rollover contributions. Consult the Retirement Plan Operations Committee for details. You may elect to invest your rollover contribution in either the profit sharing account (trustee directed) or the 401(k) account (participant directed). In addition, you may request a transfer of your rollover account from the profit sharing to the 401(k) account or vice versa one time each year. Any such directive will become effective as of the first day of the next quarter (January 1, April 1, July 1 or October 1). If the Plan is or becomes "top-heavy," special rules apply. A Plan is top-heavy if more than sixty percent (60%) of Plan assets are credited to the accounts of "Key Employees." Key Employees are generally defined 11

14 as owners, officers or highly compensated employees of the Employer. If the Plan is or becomes top-heavy, the contributions allocated to non-key Employees who have met the eligibility requirements, participate in the Plan and who are employed on the last day of the Plan Year must equal the lesser of: (1) three percent (3%) of compensation; or, (2) the same percentage of compensation credited to the account of the Key Employee who has the largest Employer contribution. If you are a participant in more than one Plan, you will be entitled to receive the above described minimum top-heavy benefit under only one of such Plans. Each year, the Administrator is responsible to determine whether the Plan is "top-heavy." At present, the Plan is not top-heavy. If the Plan is top-heavy in any Plan Year, then non-key employees shall be entitled to the above described "top-heavy minimum benefits." Special Plan Definitions Compensation. The Plan defines compensation as total compensation paid to the employee for services rendered to the Employer (including elective deferrals) with the exception of reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, deferred compensation and welfare benefits. The Plan includes compensation paid for regular compensation, unused accrued bona fide sick, vacation or other leave, if such amounts would have been included in compensation if paid prior to your termination of employment and you would have been able to use the leave if employment had continued will be included. However, regardless of the preceding, these amounts will not be included if they are otherwise excluded from Plan compensation or if they are paid more than 2 ½ months after you terminate employment, or if later, the last day of the Plan Year in which you terminate employment. With limited exceptions, the Plan includes only the employee=s compensation paid for the parts of the plan year in which you are actually a participant. The Internal Revenue Code contains further limitations on eligible compensation and funding limitations. For any Plan Year included compensation for Plan purposes is limited to $200, (subject to cost of living adjustments). Normal Retirement Age: The later of age 65 or 5 years of participation in the Profit Sharing portion of the Plan. 12

15 4. BENEFIT PAYMENTS AND OTHER DISTRIBUTIONS Plan Distribution Events Plan distributions may be made to you upon the occurrence of any of the following events: Termination From Employment. from employment. The Participant's termination Death. The Participant's death. Disability. The Participant's termination because of permanent and total disability, as defined in the Plan. Other Permissible Distributions Other permissible distributions from the Plan include certain distributions prior to termination of employment which will reduce the value of your account which you would otherwise receive at retirement. The Plan permits the following additional types of distributions: Qualified Domestic Relations Order. As a general rule, your interest in your account may not be assigned to another person or to a creditor. This means that your interest may not be sold, used as collateral for a loan, given away or otherwise transferred. In addition, your creditors may not attach, garnish or otherwise interfere with your account. There is, however, an exception to this general rule. Specifically, the Plan Administrator may be required by law to recognize obligations you incur as a result of court ordered maintenance, child support, a marital dissolution or legal separation decree. The Plan Administrator must honor a Qualified Domestic Relations Order (QDRO). A QDRO is a decree or order that obligates you to pay child support or spouse maintenance, or otherwise allocates a portion of your assets in the Plan to your spouse, former spouse, child or other dependent. If a QDRO is received by the Plan Administrator, all or a portion of your benefits may be used to satisfy such obligation. If you anticipate the issuance of a QDRO, you should immediately advise your Plan Administrator and provide a copy of the proposed QDRO. You may obtain a copy of the plan=s current procedures for determining QDRO=s from the Plan Administrator. The Plan Administrator shall determine the validity and "qualified" status of any order received. Additional rules and regulations apply to disbursements made pursuant to a QDRO. 13

16 In Service Distributions. Subject to the account balance limitations described below, after you reach age 55 for profit sharing and are 100% vested and age 592 for 401(k) (including Roth 401(k) deferral account)*, qualified nonelective and matching, you may request payment of your account balance during your continued employment and you may still continue to participate in the Plan. A participant may only take four such distributions within any Plan Year. In Service Distributions can only occur on the regular plan distribution dates described herein. * However, in addition to meeting the conditions of this Section, you may only receive an in-service distribution from your Roth 401(k) deferral account if the distribution would also be considered a qualified distribution as described in Section (2). Rollover contributions may be withdrawn at any time. However, such distributions may only occur on the regular plan distribution dates described herein. Qualified reservist distribution. If you are a reservist or National Guardsman who, after September 11, 2001, was called to active duty for at least 180 days (or indefinitely), you may take a distribution of your elective deferrals at any age. The 10% penalty tax normally applicable to a distribution before age 59½ does not apply. You also may repay the distribution to an IRA, without limiting amounts you otherwise could contribute to the IRA, provided you make the repayment within two years following your completion of active duty. Distributions for deemed severance of employment. If you are on active duty for more than 30 days, then the Plan treats you as having severed employment for distribution purposes. This means that you may request a distribution from the Plan. If you request a distribution on account of this deemed severance of employment, then you are not permitted to make any contributions to the Plan for six (6) months after the date of the distribution. Distribution Options Upon the occurrence of a distribution event, if your vested account balance does not exceed $1,000 (including any rollover contributions) as of the next valuation date, the Plan may direct the Trustee to pay your benefit in a single lump sum on the next distribution date after your termination from employment. Your written consent to this distribution will not be required in such event. Plan benefits may be paid in a lump sum payment 14

17 directly to you or as a direct rollover to an eligible transferee plan. Upon the occurrence of a distribution event, if your vested account balance exceeds $1,000 (including any rollover contributions) as of the next valuation date, you will have the option to select the timing and method of your benefit distribution subject to applicable plan limitations. You must complete a benefit election form and your written consent to such a distribution is required. The distribution must follow the guidelines explained below. Plan benefits may be paid in a lump sum payment directly to you or as a direct rollover to an eligible transferee plan. As long as all or a part of your account remains undistributed, it will continue to share in the investment gains or losses of the Plan according to applicable plan provisions even after you are no longer eligible to share in future plan contributions by your Employer. Effective January 1, 2015, for all accounts, in the event of termination due to death, disability or upon reaching at least age 55, you may elect to receive: Installment payments. Partial distributions. Actual Payment Dates Participants are entitled to receive their distributable benefits within an administratively feasible period of time after termination from employment or after the occurrence of any other distribution event. All distributions are made based upon the value of the Participant's account as of the most recent valuation date preceding the date of distribution. As indicated above, the valuation dates are on March 31, June 30, September 30 and December 31. The Retirement Plan Operations Committee may specify any additional valuation dates as well. The normal distribution dates are on or about February 15, May 15, August 15 or November 15 following the next valuation date following your distribution event and submission of your request for payment. For example, if you terminate before June 30 you may receive a distribution on or about August 15, if you terminate before December 31, you may receive a distribution on or about February 15 and so on. You may not actually receive your distribution on the distribution date you elect. The Plan provides the Trustee an administratively reasonable time following a particular distribution date to make actual distribution to a participant. A special limited rule applies to certain participants who request a partial or installment distribution from the Plan. Specifically, if a Participant is 15

18 eligible to elect to receive a partial distribution or installment payments, the participant may elect to receive the benefit payment on or about January 15 of each Plan Year. Unless otherwise elected, benefits will commence in the required amount no later than April 1 of the calendar year following a Participant's attainment of age seventy and one-half (702). Other Withdrawal Provisions Loans. The Plan permits the Retirement Plan Operations Committee to adopt a policy under which the Plan may make loans to participants. A copy of the current loan policy may be obtained from the Retirement Plan Operations Committee upon request. Hardship Withdrawals. You may receive a portion of your 401(k) (not including Roth 401(k) deferral account) or profit sharing account in the event of an immediate and heavy financial need that cannot be met from other resources. Hardship is generally defined as a need which is due to one of the following: major uninsured medical expenses for you or your family; payment of tuition, related educational fees and room and board expenses for the next twelve (12) months for college education for you or your dependents; purchase of a principal residence for you; to prevent the eviction from or foreclosure on the mortgage on your principal residence; or, funeral expenses for a family member. expenses for the repair of damage to your principal residence that would qualify for the casualty deduction under the Internal Revenue Code. The amount of the hardship distribution may not exceed the lesser of: the amount actually required to alleviate the hardship (plus an amount necessary to cover the taxes payable as a result of the hardship distribution); or, your eligible account balance. You must also have obtained all distributions, other than hardship distributions, and all nontaxable loans currently available under all plans that your Employer maintains. You must be able to demonstrate the existence of a hardship to the Plan Administrator. All hardship distributions are subject to immediate income taxes and may also be subject to the 10% premature 16

19 distribution tax payable on distributions occurring before your attainment of age fifty-nine and one-half (592). Hardship distributions will be made on a uniform and nondiscriminatory basis and shall be subject to the ultimate discretion of the Plan Administrator. Hardship distributions are not available after termination of employment or where any other distribution event has occurred to permit a distribution. A hardship (as described above but only as to educational expenses, funeral expenses and certain medical expenses) of your Plan beneficiary also may qualify for a hardship distribution. Your beneficiary is anyone that you properly designate under the plan terms, or, if you fail to designate a beneficiary, your beneficiary under the Plan s default provisions. 401(k) Hardship Withdrawals. The amount available from your 401(k) account includes your 401(k) salary deferrals only (excluding all earnings and the employer match). If you take a hardship distribution from 401(k) salary deferrals, you may not make 401(k) Salary Deferrals for the next following six (6) months. Profit Sharing Hardship Withdrawals. Profit sharing hardship distributions are generally available pursuant to the same hardship rules and restrictions described above, however, before any hardship distribution from your profit sharing plan account balance occurs, all available monies in your 401(k) elective deferral account must be exhausted first. In addition to the events above, hardship withdrawals are also available from your profit sharing account only for additional circumstances which the Retirement Plan Operations Committee determine come within the definition of a severe financial hardship. Miscellaneous. In addition to the above withdrawal and benefit provisions, Employee Participants may, in limited instances, and subject to applicable limitations be able to withdraw Plan benefits upon the occurrence of one of the following: Plan termination; sale of the corporation, its subsidiary or substantially all of its assets; or, any other occurrence recognized under the Internal Revenue Code which authorizes a Plan distribution. Any withdrawal in accordance with the above shall be available on a uniform and nondiscriminatory basis to all Participants and shall be subject to all applicable rules and regulations. Plan Termination. The termination of the Plan does not permit you to receive a distribution from your account unless: (1) you otherwise have the right to a distribution, as described above; or (2) the Employer does not maintain a successor plan. If you are able to receive a distribution only because the Employer does not maintain a successor plan, you must agree to take that distribution as part of a lump sum payment of your entire account balance under the Plan. The Trustee will transfer to the successor 17

20 plan any portion of your interest the Plan is unable to distribute to you. In-Plan Roth Conversions In-Plan Roth Rollover Contributions. If you are eligible for a distribution from a vested account balance other than a designated Roth contribution account, you may elect to roll over the distribution to a designated Roth contribution account in the Plan, as described in this Summary. You may roll over the distribution directly. If you make an In-Plan Roth Rollover Contribution, the contribution will be subject to taxation to the extent the distribution does not represent after-tax dollars. Please refer to the Special Tax Notice you receive in connection with the distribution regarding the tax consequences of an In-Plan Roth Rollover Contribution. Accounts eligible. You may roll over directly to an In-Plan Roth Rollover Account from any other Account you have in the Plan (e.g., elective deferrals, matching contributions, employer profit sharing contributions), provided you are eligible for a distribution of the Account at the time you elect the In-Plan Roth Rollover. Distribution timing. You may elect an In-Plan Roth Rollover only for an in-service distribution you are eligible to receive. Other Limitations. Rollovers may only be made from accounts which are fully vested. You may only elect to make an In-Plan Roth Rollover Contribution if you are a Participant at the time of the rollover. In-Plan Roth Transfers. The Plan permits In-Plan Roth transfers. An In-Plan Roth transfer allows you to elect to change the tax treatment of all or a portion of your pre-tax accounts, as explained below. You do not pay taxes on the contributions or earnings of your pre-tax accounts (including matching and profit sharing accounts) in the Plan until you receive an actual distribution. In other words, the taxes on the contributions and earnings in your pre-tax accounts are deferred until a distribution is made. Roth accounts, however, are the opposite. With a Roth account you pay current taxes on the amounts contributed. When a distribution is made to you from the Roth account, you do not pay taxes on the amounts you had contributed. In addition, if you have a qualified distribution (explained above), you do not pay taxes on the earnings that are attributable to the contributions. The In-Plan Roth transfer allows you to transfer amounts from your vested pre-tax accounts to an In-Plan Roth Transfer Account. If you elect to 18

21 make such a transfer, then the amount transferred will be included in your income for the year. Once you make an election, it cannot be changed. It s important that you understand the tax effects of making the election and ensure you have adequate resources outside of the plan to pay the additional taxes. The In-Plan Roth transfer does not affect the timing of when a distribution may be made to you under the Plan; the transfer only changes the tax character of your account. You should consult with your tax advisor prior to making a transfer election. Accounts Eligible. You may elect an In-Plan Roth transfer from any vested accounts you have in the Plan. Other Limitations. Transfers may only be made from accounts which are fully vested. Selection of Beneficiary and Required Spouse Consent You may only elect to make an In-Plan Roth Transfer if you are a Participant at the time of the transfer. You should select a beneficiary to receive your retirement benefits and name such beneficiary on an election form provided by the Plan Administrator. You may change your beneficiary at any time prior to the receipt of benefits, but each time you do so, you must give the Plan Administrator a new signed and dated beneficiary designation form. If you wish to designate a nonspouse beneficiary for any portion of your account, your spouse must consent to this designation. Your spouse=s consent must be in writing, must be witnessed by a notary or a plan representative and must expressly agree to the specifically-named beneficiary. Once given, your spouse=s consent cannot be revoked. If you change your beneficiary, however, your spouse must again consent. If you have not named a beneficiary or if your beneficiary is deceased when you die, your account will be paid to your contingent (alternate) beneficiary or according to the "default" plan distribution provisions which provide for payment to: your surviving spouse; lineal descendants; parents; or, your estate. 5. FEDERAL INCOME TAXATION OF BENEFITS PAID Existing Federal income tax laws do not require you to report as income the portion of the annual Employer contribution allocated to your account. However, when the Plan later distributes 19

22 your account balance to you, such as upon your retirement, you must report as income the Plan distributions you receive. However, it may be possible for you to defer Federal income taxation of a distribution by making a Arollover@ contribution to your own rollover individual retirement account ( IRA ) or to another retirement plan. Mandatory income tax withholding rules apply to some distributions you do not rollover directly to an individual retirement account or to another plan. At the time you receive a distribution, you also will receive a notice discussing withholding requirement and the options available to you. Also, if you receive a distribution from the Plan before you attain age 59-1/2, the law imposes a 10% penalty on the amount of the distribution you receive to the extent you must include the distribution in your gross income, unless you qualify for an exception from this penalty. You should consult a tax advisor regarding this 10% penalty. In addition, we emphasize you should consult your own tax adviser with respect to the proper method of reporting any distribution you receive from the Plan. Non-Spouse Rollover. An individual or trust who is a non-spouse death beneficiary under the Plan may be able to directly roll over all or a portion of the Participant s account to an IRA. Contact the Retirement Plan Operations Committee for more details. 6. VESTING Employee 401(k) Salary Deferrals &Employer Matching All 401(k) salary deferrals and discretionary employer matching contributions made into the Plan are always one hundred percent (100%) vested. When a benefit is one hundred percent (100%) vested, it is nonforfeitable which means it cannot be taken away from you. Profit Sharing Employer Contributions Profit Sharing employer contributions shall be vested according to the following schedule: Completed Years of Service Vested Percentage 1 0% 2 20% 3 40% 4 60% 5 80% 6 100% If you attain Normal Retirement Age or terminate employment as a result of death or disability, the entire amount credited to your account shall be one hundred percent (100%) vested. 20

23 Forfeitures Amounts attributable to discretionary contributions forfeited by other Participants who terminate will be shared by the remaining Participants eligible to receive a contribution or used to pay reasonable plan expenses for the Plan Year in which the forfeiture occurs and then if any remain to pay reasonable plan expenses or as an Employer contribution for the following plan year. Any amount you forfeit on termination will reduce your account balance. Year of Service To determine your percentage under a vesting schedule, a year of service means a 12-month vesting service period in which you complete at least 1,000 hours of service. The Plan measures the vesting service period as the plan year (January 1 to December 31). If you complete at least 1,000 hours of service during a plan year, you will receive credit for a year of service even though you are not employed by the Employer on the last day of that plan year. You will receive credit for years of service with the Employer prior to the time the Employer established the Plan and for years of service prior to the time you became a participant in the Plan. Forfeiture Break in Service Rule The Plan provides two methods of vesting forfeiture which may apply before a participant becomes 100% vested in his entire interest under the Plan. The primary method of vesting forfeiture is the Aforfeiture break in service@ rule. The secondary method of forfeiture is the Acash out@ rule. Termination of employment alone will not result in forfeiture under the Plan unless you do not return to employment with the Employer before incurring a Aforfeiture break in service.@ A Aforfeiture break in service@ is a period of 5 consecutive vesting service periods in which you do not work more than 500 hours in each vesting service period comprising the 5 year period. Example Assume you are 100% vested in your 401(k) and matching account and 60% vested in your account balance. After working 400 hours during a particular vesting service period, you terminate employment and perform no further service for the Employer during the next 4 vesting service periods. Under this example, you would have a Aforfeiture break in service@ during the fourth vesting service period following the vesting service period in which you terminated employment because you did not work more than 500 hours during each vesting service period of 5 consecutive vesting service periods. Consequently, you would forfeit the 40% non-vested portion of your account. If you had returned to employment with the Employer at any time during the 5 consecutive 21