Condell Health Network Retirement Plan

Transcription

1 Earning for Today and Saving for Tomorrow Condell Health Network Retirement Plan (the Condell Pension Plan ) inspiring possibilities

2 Condell Health Network Retirement Plan Participant Sumary Advocate Condell Medical Center Associates Advocate Health Care Network ( Advocate ) offers the Condell Health Network Retirement Plan (the Condell Pension Plan or Plan ) as part of its retirement program for associates of Advocate Condell Medical Center. Advocate assumed sponsorship of the Plan from Condell Medical Center (the Medical Center ) as of December 1, 2008, when the Medical Center became a part of Advocate s network of health care providers. The Plan was frozen to new participation and to benefit accruals effective December 31, The Condell Pension Plan in combination with Social Security, the Advocate Health Care Network Retirement Savings Plan 401(k) (the 401(k) Plan ), and the Advocate Health Care Network Pension Plan (the Pension Plan ) helps you prepare for your future financial security. The 401(k) Plan and the Pension Plan cover you if you are an active employee who has met the eligibility requirements of those plans. The amount of the pension benefit you will receive under the Plan is based upon certain factors, including your Credited Service with the Medical Center, your Average Monthly Pay from the Medical Center, and your Covered Compensation. The meaning of these terms, as well as the Plan s formula for determining pension benefits, are explained in this booklet. As it is important for you to understand this pension benefit and all of its key features, we are providing you with this booklet summarizing the terms and features of the Plan. You will want to keep this booklet handy for future reference. Important! This summary describes the Plan s terms that are in effect as of January 1, This booklet is intended to describe the major features of the Condell Pension Plan. Full details of the Plan are contained in the official Plan documents, which legally govern the Plan. Every effort has been made to accurately describe the terms of the Plan. However, because this booklet is only a summary, it cannot describe all Plan rules or how the rules will apply to every person in every situation. In the event of any discrepancies between information in this booklet and the Plan documents, the Plan documents will govern. If you have any questions regarding your pension benefit under the Plan, visit Advocate Benefits at or call The Plan Administrator has absolute discretionary authority to determine eligibility for benefits and to construe the terms of the Plan. Advocate reserves the right to amend, modify or terminate the Condell Pension Plan at any time, for any reason. If a material amendment is made or termination occurs, you will be notified promptly according to applicable law. This booklet is not a contract of employment and nothing in the Plan gives any associate the right to be retained in the service of Advocate or any of its affiliated companies (Advocate and its affiliated companies are sometimes referred to in this summary as the Advocate companies ). Any of the Advocate companies may discharge or discipline an associate at any time. 2

3 Plan Highlights Feature Pension Benefit The Condell Pension Plan was frozen with respect to additional benefit accruals and participation, effective as of December 31, 2007 (the Freeze Date ). How it Works Your pension benefit, which is expressed as a monthly payment for the term of your life after you retire, is based on your Credited Service, Average Monthly Pay, and Covered Compensation. This means that service you provided to the Medical Center (or any other Advocate company) after this date, and compensation you earned for that service, are not taken into account in determining your Credited Service and Average Monthly Pay under the Plan. Covered Compensation was also frozen as of December 31, Vesting You are fully vested when you have five years of Vesting Service or attain age 65 while actively employed. Distributions Plan Cost Normal retirement occurs at age 65. However, you generally may begin receiving your pension benefit at any time after you terminate employment and reach age 55 if you have five or more years of Vesting Service. The Plan offers several payment options. You may elect a lump sum payment, or you may receive monthly payments for your lifetime only, or for your life and that of your surviving spouse or other beneficiary. Advocate pays the full cost of the Plan, and prior to December 1, 2008, the Medical Center paid the full cost. No associate contributions are required or allowed. The Plan is funded through a trust. All contributions to the Plan are held and invested by a trustee appointed by Advocate. The money in the trust can be used only to pay benefits and administrative costs of the Plan, and cannot be returned to Advocate until all benefits have been paid. Plan pension payments are processed by a third party administrator appointed by Advocate. Please contact Advocate Benefits if you have any questions after reading this booklet. Advocate Benefits At Your Service Advocate Benefits Service Center is Advocate s benefits information resource center. You can call Advocate Benefits at Representatives are available from 8 am to 6 pm Central Time, Monday through Friday. To reach a representative enter your PIN number or say representative. By calling the toll-free number, you can request a pension application form for an estimate of your benefit. 3

4 What s Inside Who is Eligible and When Participation Begins...5 Service...6 How Your Benefit is Determined...9 When Benefits are Paid How You Receive Plan Benefits...16 If You Should Die Before Beginning Payments...18 Taxes on Your Benefits...19 How to Apply for Benefits...21 Accelerated Vesting...22 Other Important Information...23 Administrative Facts...25 ERISA

5 Who is Eligible and When Participation Begins Eligibility The Plan was frozen to new participation effective December 31, 2007, and no associate or employee of the Medical Center or any of the Advocate companies that was hired or rehired after this date is eligible to participate in the Plan. Also, no associate or employee who first completed a year of Eligibility Service (as described on page 6) after the Freeze Date is eligible for Plan participation. Prior to the Freeze Date, you became eligible to participate in the Plan if you: were an employee of the Medical Center; had reached the age of 21; had completed a year of Eligibility Service; and were not a leased employee, as defined in the Internal Revenue Code. Participation Prior to the Freeze Date, you generally became a participant in the Plan as of the first day of the first month on or after which you satisfied all the above criteria for Plan participation. If you first completed a year of Eligibility Service after your first year of employment, you became a participant in the Plan as of the first day of the following calendar year. Statements You may contact Advocate Benefits at to receive an estimate of your benefits from the Plan. Your pension estimate will show your frozen December 31, 2007 accrued benefit. 5

6 Service Your period of employment with the Medical Center (and other Advocate companies, if applicable) is referred to as your Service. Your Service generally is measured by the Hours of Service you complete during the time you work for the Medical Center and the Advocate companies. Prior to the Freeze Date, your Service was used to determine if you satisfied the eligibility requirements for participation (as described above) and whether you earned a year of Credited Service in a particular calendar year. After the Freeze Date, your Service continues to be credited for the purpose of determining your vested interest (i.e., a nonforfeitable, permanent right) to your pension benefit under the Plan. Credited Service Prior to the Freeze Date, you received a year of Credited Service for each calendar year in which you completed at least 1,000 Hours of Service. No service you perform for the Medical Center or any other Advocate company after December 31, 2007 will be counted toward your Credited Service. For periods of employment with the Medical Center from January 1, 1989 through the Freeze Date of December 31, 2007, Credited Service was measured only in full, completed years, meaning that if you did not perform 1,000 Hours of Service in a calendar year, you received no Credited Service for that year. However, if you were already employed by the Medical Center on January 1, 1989, you also received credit for both full and partial years of Credited Service performed prior to this date, in accordance with the terms of the Plan that were then in effect. Eligibilty Service Prior to the Freeze Date, you were required to perform one year of Eligibility Service to begin participating in the Plan. A year of Eligibility Service was determined in one of two ways: You earned a year of Eligibility Service if you completed at least 1,000 Hours of Service in the first 12-consecutive-month period from your date of hire, or If you didn t complete 1,000 Hours of Service during the first 12-consecutive-month period from your date of hire, you earned a year of Eligibility Service once you completed 1,000 Hours of Service during a subsequent calendar year. Because the Plan is frozen to new participation, no service you perform for the Medical Center or any other Advocate company after December 31, 2007 will be counted toward your Eligibility Service. Vesting Service Vesting Service is measured in full, completed years. You receive one year of Vesting Service for each calendar year in which you complete at least 1,000 Hours of Service for the Medical Center or any other Advocate company. This means that your future service with the Medical Center or any other Advocate company will count for purposes of vesting under the Condell Pension Plan. You will not be entitled to any pension benefit until you are fully vested in the Plan. See Vesting on page 8 for an explanation of when you become fully vested. 6

7 Hours of Service You earn an Hour of Service for each hour you work (or have worked) for the Medical Center or any other Advocate company for pay. You also earn Hours of Service for hours you re paid while away from work for such things as: Paid time off (vacation, illness and incapacitation) Layoff Military duty Jury duty Approved leave of absence You also earn an Hour of Service for each hour of back pay that is awarded or agreed to by the Medical Center or another Advocate company (with no duplication of hours for hours already credited). However, you cannot be credited with more than 501 Hours of Service for any one period where you do not perform any job duties, unless you were on a qualified military leave and you return within the time frame required by law One-Year Break in Service If, prior to the Freeze Date, you left the Medical Center, you incurred a one-year Break in Service if you failed to complete more than 500 Hours of Service in a Plan year, and you were in a terminated status as of the last day of the Plan Year. If you later returned to work for the Medical Center prior to the Freeze Date, you again became eligible for Plan participation if you were eligible before the Break(s) occurred. If you were not previously eligible for Plan participation, to commence participation you had to satisfy the Plan s eligibility requirements as if you were a new employee. The rules below describe how your previous Credited Service and Vesting Service was treated for Plan purposes if you left the Medical Center and were later rehired prior to the Freeze Date: If you were rehired prior to having a Oneyear Break in Service: All your previous Credited Service and Vesting Service was restored once you were rehired. 7 If you had one or more Breaks in Service, but were previously vested in your pension benefit: If you were vested in your pension benefit before your Break(s) in Service, meaning that you had already earned at least five years of Vesting Service, your previous Vesting Service was reinstated when you were rehired, and your pension benefit based on your previous Credited Service was not forfeited, since it was already vested. Of course, to the extent you received your pension benefit and were later rehired, upon your subsequent termination date any further pension benefit you might receive would be reduced by the value of the benefit you previously received. If you had one or more Breaks in Service, and were not previously vested in your pension benefit: If you had no vested interest in your pension benefit before your Break(s) in Service, meaning that you had not yet completed five years of Vesting Service, your previous Credited Service and Vesting Service was reinstated only if the number of consecutive one-year Break(s) was less than (i) five, or (ii) your years of service before the Break(s), whichever was greater. In this circumstance, your previous Credited Service and Vesting Service was only reinstated after you completed one year of service after returning to work. The rules described above also apply if you leave the Medical Center or the Advocate companies after December 31, 2007 and are subsequently rehired; however, because you are no longer receiving Credited Service due to the Plan freeze, the rules are only relevant for Vesting Service. The rules described above will also be used to determine your Vesting Service if you left the Medical Center and were participating in the Plan prior to December 1, 2008 and you have been subsequently hired by the Medical Center or any of the Advocate companies.

8 Maternity/Paternity Leave Solely to prevent a one-year Break in Service, you may still earn Hours of Service if you are away from Advocate because of: Your pregnancy. The birth or adoption of your child. Caring for your child immediately following birth or adoption. You can receive up to 501 hours of service for such an absence. Vesting You will become fully vested in your pension benefit meaning you will have a 100% nonforfeitable right to your benefit if you are a participant in the Plan, and any of the following events occur while you are employed by the Medical Center or any other Advocate company: You accrue five years of Vesting Service You reach age 65. If you are eligible for maternity/paternity leave, you must provide the Plan Administrator the information necessary to verify your leave and establish the number of working days missed. 8

9 How Your Benefit is Determined Your Plan benefits are determined according to a formula which expresses the amount of your pension benefit as a monthly annuity payment for your life. There are several factors that are considered in determining the amount of your monthly pension benefit, including your years of Credited Services, Average Monthly Pay, and Covered Compensation. Because the Plan was frozen effective December 31, 2007, these factors are determined by taking into account only your service for the Medical Center and your pay received from the Medical Center on or prior to the Freeze Date. Pension Benefit Formula If you had 25 or more years of Credited Service as of December 31, 2007 and were eligible for normal retirement, your monthly pension benefit is the sum of: 35% of your Average Monthly Pay Plus 12.5% of your Average Monthly Pay that exceeds 1/12 of your Covered Compensation If you had less than 25 years of Credited Service as of December 31, 2007 and were eligible for early retirement, your monthly pension benefit is determined according to the same general formula, but it is reduced in proportion to the number of years of Credited Service you had as of December 31, 2007 divided by 25. If you had less than 25 years of Credited Service as of December 31, 2007 and were not retirement eligible, your monthly pension benefit is determined according to the same general formula, but it is reduced in proportion to the number of years of Credited Service you had as of December 31, 2007 divided by your total projected years of service through normal retirement. Note: If you terminate employment after you have completed five years of Vesting Service but before you reach age 55 (see If You End Your Employment Before Age 55 with 5 Years of Service on page 13), your monthly pension benefit will be calculated as described above, except that your benefit (1) will be based on the years of Credited Service that you would have earned if you had continued to work until age 65, and (2) will be multiplied by a fraction equal to your actual years of Credited Service, divided by the years of Credited Service that you would have earned if you continued to work until age 65 (but in no case less than 25 years of Credited Service). Note, however, that all participants stopped earning Credited Service after December 31, Minimum Benefits At normal retirement age the Plan has a minimum benefit provision for people who were Plan participants on December 31, If you were a participant in the Plan on this date, your pension benefit will not be less than the pension benefit you accrued as of December 31, 1988, applying the terms of the Plan that were in existence on that date. AND Your pension benefit will also not be less than $1,000 per year. Examples of Pension Benefit Determinations Example 1: Assume that Judy is retiring in 2017 at age 65 with 25 years of Credited Service (earned as of December 31, 2007). For this example, assume that Judy s Average Monthly Pay is $5,000 and 1/12 of her Covered Compensation is $4,300 (i.e., her Covered Compensation is $51,600). 9

10 Judy s pension benefit would be: 35% of her Average Monthly Pay of $5,000, which is $1,750 PLUS 12.5% of $700 (the portion of her $5,000 Average Monthly Pay that exceeds 1/12 of her Covered Compensation of $4,300), which is $87.50 Based on these assumptions, Judy s monthly pension benefit under the Plan would be $1,750 + $87.50 = $1, Example 2: Assume that Joe is retiring in 2017 at age 65 with 20 years of Credited Service. For this example, assume that Joe s Average Monthly Pay is $4,000 and 1/12 of his Covered Compensation is $4,300. Joe s Average Monthly Pay therefore does not exceed 1/12 of his Covered Compensation. Joe s pension benefit would be: 35% of his Average Monthly Pay of $4,000, which is $1,400 MULTIPLIED BY 20/25 (Joe s years of Credited Service divided by 25), which is 80% Based on these assumptions, Joe s monthly pension benefit would be $1,400 80% = $1, Example 3: Assume that Jill terminated with a vested benefit under the plan on January 1, She was age 45 at the time of termination had earned 20 years of Credited Service. Jill has 20 additional years until her Normal Retirement age 65. Jill earned the right to receive a deferred vested benefit at age 65. Assume Jill s Average Monthly Pay is $3,000 and 1/12 of her Covered Compensation is $7,000. Since Jill s Average Monthly Pay does not exceed 1/12 of her Covered Compensation, her deferred monthly pension benefit would be: 35% of her Average Monthly Pay of $3,000, which is $1,050 MULTIPLIED BY 20/40 (Jill s years of Credited Service divided by her total projected service to Normal Retirement Age), which is 50% Based on these assumptions, Jill s monthly pension benefit payable at age 65 would be $1,050 50% = $ Example 4: Assume that John was hired in 1998 at age 35. He remained employed until age 65 in From his hire date at the age of 35, he would have worked 30 years until his Normal Retirement age 65. At the time of the plan freeze on December 31, 2007, he had earned 10 years of Credited Service and his Average Monthly Pay was $4,000. At the plan freeze, 1/12 of his Covered Compensation is $7,650. Since John s Average Monthly Pay deos not exceed 1/12 of his Covered Compensation, his deferred monthly pension benefit would be: 35% of his Average Monthly Pay of $4,000, which is $1,400 MULTIPLIED BY 10/30 (John s years of Credited Service through the plan freeze date of December 31, 2007 divided by his total projected service to Normal Retirement Age), which is 33%. Based on these assumptions, John s monthly pension benefit payable at age 65 would be $1, % = $

11 Average Monthly Pay Effective January 1, 2006, for determining your Average Monthly Pay, the five years in which you received the most Pay are taken into consideration, regardless of whether the years are consecutive, but no Pay for a year in which you did not perform at least 1,000 Hours of Service is taken into account. If you have not received Pay in each of five calendar years, your Average Monthly Pay is determined according to the total Pay you have received divided by the number of months you worked and received Pay. However, pay earned after the Freeze Date of December 31, 2007 is not taken into account for purposes of computing your Average Monthly Pay. A different method of determining Average Monthly Pay was in effect prior to January 1, Pay Your Pay is the compensation you received from the Medical Center during a particular calendar year. Specifically, Pay includes any compensation you received from the Medical Center that was reported on your Form W-2, including salary, wages, overtime, and similar amounts, plus any contributions you may have made to a 401(k) plan, cafeteria benefit plan, or qualified transportation benefit plan maintained by the Medical Center. Compensation you received after the Freeze Date of December 31, 2007 is not taken into account as Pay for purposes of determining your pension benefit. Example Of How Average Monthly Pay Is Determined Example for a participant who is actively employed after January 1, 2006: Assume that Mary is retiring in 2015 at age 65, and that Mary s highest five calendar years of Pay are 2001, 2002, 2003, 2006 and 2007 (her five highest years of Pay are not consecutive): 2007 Pay: $80,000 and Mary completed at least 1,000 Hours of Service 2006 Pay: $80,000 and Mary completed at least 1,000 Hours of Service 2003 Pay: $80, Pay: $75, Pay: $75,000 $390,000 / 60 months = $6,500 Mary s Average Monthly Pay 11

12 Covered Compensation Your Covered Compensation is the average, rounded to the nearest $600, of the Social Security taxable wage bases (SSTWBs) in effect under the Social Security Act for each year during the 35-year period ending on the date you reach Social Security retirement age. However, Covered Compensation was frozen effective December 31, 2007, and will not be adjusted for future years. The SSTWB in effect for a particular year is the maximum amount of pay that is subject to Social Security taxes. The SSTWB is determined each year by the Social Security Administration. Following is the SSTWB history through 2007: Year Wage Base Year Wage Base Year Wage Base $3, $32, $68, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,400 Examples Of How To Calculate Covered Compensation For this example, assume that Joe was born in 1941, his Social Security retirement age is 65, and Joe decided to retire in 2006 at age 65. Joe would follow these steps to calculate his Covered Compensation: Add all the wage bases for the 35 years up to (and including) 2006 Divide by 35 to get the average Round to the nearest $600 Joe s Covered Compensation = $48,500 However, the calculation is different for an individual who reaches his or her Social Security retirement age after December 31, 2007 (the Freeze Date), because Covered Compensation was frozen as of the Freeze Date. 12 Assume that Mike was born in 1951, his Social Security retirement age is 66, and Mike decides to retire in 2016 at age 65. Because Covered Compensation was frozen effective December 31, 2007, Mike s Covered Compensation is calculated by counting the years up to (and including) Add all the wage bases for the 35 years up to (and including) 2007 Divide by 35 to get the average Round to the nearest $600 Mike s Covered Compensation = $51,600

13 When Benefits are Paid As you approach retirement, you will need to make two decisions that affect your actual monthly benefit payment: when to retire and the form of payment of your pension benefit. Generally, you cannot begin receiving your benefits under the Plan until you have reached age 55. The section below summarizes how different types of retirement (e.g., normal retirement, late retirement, early retirement, and disability retirement) may affect your monthly benefit payment. The following section (How You Receive Plan Benefits, see page 15) describes the forms of payment available. You should consult your personal financial advisor and/or tax advisor for assistance in determining when and how to take your Condell Pension Plan benefit. Normal Retirement: Age 65 Your normal retirement age under the Plan is 65. If you reach your normal retirement age while still employed, you may begin receiving your normal retirement benefit under the Plan as of the first day of (i) the month following your retirement, or (ii) the month that you perform less than 40 hours of service. Late Retirement: After Age 65 You may choose to continue working after you reach age 65. If you do so, your pension benefit upon your actual date of retirement will be your normal retirement benefit, as determined by applying the Plan s benefit formula. If you reached age 65 before January 1, 2011 and chose to continue working, your pension benefit may be adjusted upon your actual date of retirement. Early Retirement: Age 55 through 64 with 5 Years of Vesting Service You may take early retirement at any time after age 55 if you have at least five years of Vesting Service. Your early retirement date will be the first day of the month following the date you leave the Medical Center and all other Advocate companies. Early retirement benefit payments may begin on your early retirement date or you can elect to have payments begin on the first day of any month following the month you retire, up to the month you reach age 65. If you elect to take early retirement, your normal pension benefit will be reduced by: two-tenths of one percent (0.2%) for each whole calendar month by which your first early retirement benefit payment precedes your 65th birthday, up to a maximum of 36 months, and four-tenths of one percent (0.4%) for each whole calendar month by which your first early retirement benefit payment precedes your 62nd birthday. EXAMPLE OF EARLY RETIREMENT REDUCTION Example: Assume that John begins receiving early retirement benefit payments on his 61st birthday, and his normal pension benefit payable at age 65 is $2,000 per month. John s retirement benefit, which he is beginning to receive 48 months before his 65th birthday, will be reduced by: 36 months x 0.2% x $2,000 = $144 PLUS 12 months x 0.4% x $2,000 = $96 Therefore, John s monthly early retirement benefit payments will be reduced by ($144 + $96) = $240 in total, and he will therefore receive $1,760 per month. 13

14 If You End Your Employment Before Age 55 with 5 Years of Service If you leave the Medical Center and all other Advocate companies for any reason after completing five or more years of Vesting Service but before your reach early retirement age (age 55), you will receive a deferred vested benefit beginning at age 65. However, you may elect to have payments begin on the first day of any month following the month you reach age 55, up to the month you reach age 65. If you begin your payments before age 65, your monthly benefit will be reduced by one half of one percent (0.5) for each whole calendar month by which your first deferred vested benefit payment precedes your 65th birthday, to reflect the fact that it will be paid over a longer period of time. Disability Retirement After the freeze date, if you have five years of Credited Service and you become disabled, you will be eligible for disability retirement even if you do not terminate employment. You are considered disabled if you are certified as disabled by the Advocate Disability Council or the Social Security Administration. You may elect to commence payment of your Condell pension benefits once you reach normal retirement age (age 65). Prior to the Freeze Date, Disability retirement payments were determined according to the Plan s normal benefit formula, but taking into account Credited Service that would have been earned if a disabled associate had continued to work until age 65 (assuming he or she is still disabled at that time). After the Freeze Date, Disability retirement payments are determined according to the Plan s normal benefit formula, but will not take into account any Credited Service that would have been earned if a disabled associate had continued to work until age 65. If You Return to Work After Benefits Begin If you had been receiving monthly benefits and then returned to work at the Medical Center or another Advocate company before January 1, 2015, your benefit payments may have been suspended. If, as of December 31, 2014, your benefit payments had been suspended under this rule, they resumed after January 1, After January 1, 2015, your return to work after you begin receiving monthly benefits will not result in a suspension of benefit payments. Benefits payable to you under the Plan when you terminate employment again will be re-determined based on the Plan terms then in effect, and taking into account the benefits previously paid to you. In no case will your re-determined benefits be less than what you were receiving immediately prior to your re-employment. You should contact Advocate Benefits if you have questions about your monthly benefits during your re-employment. Required Benefit Commencement If you are not actively employed at age 70-1/2, under IRS rules, payments must begin no later than April 1 of the calendar year following the calendar year you reach age 70-1/2. If you are actively employed at age 70-1/2, you may elect to commence payment of your Plan benefit on April 1 of the calendar year following the calendar year you reach age 70-1/2 or on the first day of any subsequent calendar month prior to your termination of employment. 14

15 Maximum Benefits The IRS imposes certain maximum limits on annual benefits. The Plan Administrator will notify you if you are affected. In very general terms, an annual pension is limited to the lesser of (i) a dollar amount specified by the Internal Revenue Service ($210,000 for 2016) which may be adjusted for the cost of living, and (ii) 100% of your average compensation for your three highest paid consecutive calendar years with the Medical Center or any other Advocate company. 15

16 How You Receive Plan Benefits The way benefits are paid may be as important to you as the amount you receive. Because individual retirement income needs differ, the Plan allows you to decide how your benefits will be paid. There are several payment options available to you. Some the options may not be available when you retire, depending on your marital status and your age when payments begin. You should consult your personal financial advisor and/or tax advisor for assistance in determining when and how to take your Condell Pension Plan benefit. You need to contact Advocate Benefits to receive a Pension Plan Benefit Application and then file your completed application with Advocate Benefits in order to request benefit payment-related documents. You will receive these documents at least 30 days (but not more than 180 days) before your benefit payments begin. If you would like to begin receiving your benefits before the end of this 30-day period, you can waive the election period, provided your benefits do not begin until at least eight days after you receive the documents. The payment option you elect becomes effective on the date payments start. You may choose or change your payment option at any earlier time. Once your payments begin, you cannot change your payment option. Payment Options Generally, the Condell Pension Plan offers five benefit payment options, as described below: Single Lump Sum This payment option will provide you the full value of your vested benefit in a single payment. Once this payment is made from the Plan, no further benefits will be paid. If the total value of your vested pension benefit is $1,000 or less, determined actuarially, it will be distributed automatically in this form unless you elect to roll over the benefit as described below. For more detail, please see the section entitled Cash-Out of Benefits Valued at $5,000 or Less on page 16. If you are entitled to a single lump sum payment, you may be able to make a rollover to an Individual Retirement Account (IRA) or another employer s tax qualified plan (see Rollover Rights on page 18.) You may also elect to receive your pension benefit as a combination of a single lump sum payment and one of the annuity forms described below. Lump Sum and Annuity This payment option allows you to receive part of the value of your vested benefit asa lump sum payment and the remainder in one of the annuity options described below, reduced to reflect the value of the lump sum payment. Life Only Level Annuity This payment option will provide you monthly annuity payments beginning on your annuity start date and continue for your life. After you die, no additional payments will be made to any other person. If you are single, this is your normal form of payment. If you want to elect another payment option, you must reject this form in writing and specify the option and the beneficiary, if applicable. 16

17 Qualified 50% Joint & Surviving Spouse Level Annuity This method of payment will provide you reduced monthly annuity payments beginning on your annuity start date and continue for your life. When you die, 50% of your reduced benefit will continue to be paid to your surviving spouse. If your spouse dies before you, benefit payments will continue to be paid to you until you die and your payment amount will not change. If you are married, this is your normal payment form. If you want to elect another payment option, you and your spouse must reject this form in writing and specify a different payment option (and beneficiary, if applicable). 10-Year Certain & Life Level Annuity This payment option will provide you monthly annuity payments beginning on your annuity start date and continue for your life. If you die before receiving payments for 120 months (ten years), payments will continue to your designated beneficiary for the rest of the 120- month period. The monthly payments your beneficiary will receive will be equal to 96% of the monthly payments you received during your life. 50%, 75%, or 100% Joint & Surviving Beneficiary Level Annuity This payment option will provide you reduced monthly annuity payments beginning on your annuity start date and continuing for your life. When you die, 50%, 75%, or 100% (according to your election) of your reduced benefit will continue to be paid to your spouse or other designated beneficiary for his or her life, if your designated beneficiary survives you. When You Make Your Election If you are married you must obtain your spouse s written consent to elect anyone other than your spouse as beneficiary or to elect any form of payment other than the Qualified 50% Joint & Surviving Spouse Level Annuity. However, you may revoke a non-spouse beneficiary designation at any time without your spouse s consent. If you are not married and you elect a form of payment other than the Life Only Level Annuity, you may designate a beneficiary to receive benefits if you should die before you receive all of your pension benefits from the Plan. Spousal Consent For all purposes under the Plan that require spousal consent, such consent must be in writing and acknowledged by a notary public. Cash-Out of Benefits Valued at $5,000 or Less If your benefit is $1,000 or less, you will automatically be given an opportunity to elect a lump sum rollover or lump sum cash payment. If you do not elect in a timely manner your distribution option, you will automatically receive a cash distribution of your benefit in a single lump sum payment as soon as administratively feasible. This payment will be subject to the 20% mandatory withholding tax. On or after September 12, 2016, if you have terminated employment with the Medical Center and all other Advocate companies, and your benefit is greater than $1,000 but less than or equal to $5,000, you will automatically be given an opportunity to elect a lump sum rollover or lump sum cash payment. If you do not elect your distribution option, such amount will automatically be rolled over to an individual retirement account (IRA) chosen by the Plan Administrator. This rollover will not be subject to the 20% mandatory withholding tax. Consistent with the rules issued by the U.S. Department of Labor, the Plan fiduciaries will select an IRA provider to receive automatic rollover distributions from the Plan. If you do 17

18 not elect a distribution from the Plan after your termination of employment and your Plan balance is automatically rolled over to the IRA, you will no longer be a participant in the Plan, but you will be the owner of the IRA, have investment discretion over the IRA proceeds and may enforce the terms of the IRA. Until you take action to direct the investment of the proceeds, the money will be invested in an interest bearing savings account. While the savings account is insured by the Federal Deposit Insurance Company, it is not guaranteed. The fund is designed to preserve principal and provide a reasonable rate of return while maintaining liquidity. There may be annual or other fees associated with maintaining an IRA through the provider selected by the Plan Administrator. You will be notified of any such fees if your Plan benefits are automatically rolled over to an IRA. This special part of the Plan gives your spouse or other beneficiary financial protection if you should die before retirement. Benefits If You Are Married If you have a vested pension benefit under the Plan, have not (with your spouse s consent) designated someone other than your spouse to be your designated beneficiary, and die before your benefit payments start, your surviving spouse will be entitled to receive a lifetime monthly benefit in the form of an annuity. This is payable for as long as the surviving spouse lives, with no further payments due after the surviving spouse s death. Payments will begin on the first day of the month following the month in which you would have reached your earliest retirement date (i.e., age 55), although your surviving spouse may also elect to defer the start of payments. If you die after reaching the age of 55, the amount of the lifetime payments your surviving spouse will receive pursuant to the above paragraph will be equivalent to those that he or she would have received under the Plan s Qualified 50% Joint & Surviving Spouse annuity assuming you had retired the day before your death. If you die before reaching age 55, this amount will be determined assuming you terminated your employment on your date of death, survived to age 55, retired with a 50% Joint & Surviving Spouse annuity, and died the day after you reached age 55. Instead of receiving an annuity benefit, your surviving spouse may elect to receive the full value of the survivor benefit in the form of a single lump sum payment. If your surviving spouse elects to receive a lump sum payment, once the payment is made from the Plan, no further benefits will be paid. If the total value of the survivor benefit is $5,000 or less, determined actuarially, it will be distributed automatically in the form of a single lump sum payment. 18

19 Taxes on Your Benefits Taxes are deferred on your pension benefit until you receive payment from the Plan. However, when benefits are paid to you, that money will be considered taxable income. The way your benefit is taxed will depend on whether you receive payment as a lump sum or monthly annuity. If You Receive Payment in a Lump Sum Special rules may apply if you receive your benefit in a lump sum. Advocate cannot give you tax advice. You should get professional tax advice before your benefits are paid. Here is some general information about how a lumpsum payment is taxed under current law. Federal tax law requires Advocate to automatically withhold 20% of a lump sum payment for federal income taxes before it is paid to you. Federal taxes are not withheld on checks made payable directly to an IRA (other than a Roth IRA) or another employer s qualified plan. Since the Plan is meant for retirement, the IRS imposes a 10% penalty tax on some payments made before age 59½. (This early withdrawal penalty is in addition to any income taxes that may be due.) However, the 10% penalty tax may not apply if payment is made on account of your total and permanent disability or death, for medical expenses deductible on your federal income tax return, or because of a qualified domestic relations order (QDRO). You may be able to defer paying federal income taxes, and the 10% early withdrawal penalty, if applicable, on your lump-sum payment by rolling it over to an Individual Retirement Account (IRA) or into the qualified retirement plan of another employer. (See Rollover Rights across). If You Receive Payment as a Monthly Annuity If you receive a monthly annuity, your payments will be taxable when you receive them. Generally, the 10% penalty tax does not apply to benefits paid on a monthly basis on or after age 55. Federal tax law requires Advocate to withhold taxes automatically on these benefits unless you request otherwise. The amount withheld will depend on your filing status and the number of exemptions you claim. If you choose not to have taxes withheld from your benefits, you ll be responsible for the taxes due when you file your tax return. If no taxes are withheld, or if the amount withheld is not enough to cover the actual taxes due, you may be required to make estimated tax payments. Rollover Rights If you are entitled to a single lump-sum payment from the Plan, you may be able to postpone payment of federal taxes on your lump sum benefit payment by choosing a direct or conventional rollover to an IRA (other than a Roth IRA) or to another employer s tax-qualified plan. The IRS requires that 20% of the lump-sum payment be withheld for federal income taxes unless you elect a direct rollover. Amounts that are directly rolled over are not taxable to you until distributed from the IRA or employer-sponsored plan. If you receive a single lump-sum payment from the Plan, you can make a deposit into an IRA or another employer s tax-qualified plan within 60 days of the date you receive the check from the Plan. However, 20% of such lump-sum payment will be withheld for federal income taxes. Further, any amounts that you receive directly may also be subject to an IRS-imposed 10% early withdrawal penalty if they are not rolled into an IRA or another employer-sponsored tax-qualified plan within 60 days of distribution. 19

20 You can also rollover your lump sum payment to a Roth IRA. You will be taxed on the amount rolled over, but the 10% penalty tax for early withdrawal will not apply as long as you do not take a distribution from the Roth IRA for 5 years. Later distributions from the Roth IRA, including subsequent earnings, will not be taxed if certain requirements are satisfied, such as having a Roth IRA for 5 years and taking a distribution after death, disability or attainment of age 59-1/2. Rollover to Advocate 401(k) Plan Any distribution from this Plan which qualifies as an eligible rollover distribution can be directly rolled over to the Advocate Health Care Network Retirement Savings Plan 401(k). During the period before your lump sum benefit is paid, you will receive written details on your rollover options and their effect on your income tax withholding. Because these federal tax rules can be complicated, you are strongly encouraged to consult a tax adviser about your options for receiving a single lump-sum payment. You will also be provided with a copy of the Special Tax Notice that summarizes the various tax consequences of your payment option. 20

21 How to Apply for Benefits To receive benefits from the Plan, you must request the appropriate forms from Advocate Benefits Service Center. It may be necessary for you to supply additional information along with the forms before the Plan pays your benefits. Contact Advocate Benefits at If you die, and your surviving spouse is entitled to a benefit under the Plan, he or she should contact Advocate Benefits to begin the payment process. If you don t keep your most recent address on file and Advocate can t locate you, benefit payment from the Plan may be delayed. Appeal of a Denied Claim You will be notified in writing in 90 days (180 days in the case of special circumstances) if your claim for benefits is denied, in whole or in part. The notification will include the specific reason for denial, reference to specific plan provisions upon which the denial is based, a description of any additional materials or information necessary to process the claim and your rights to have the claim reviewed. Within 60 days after receiving a denial notification, you or your authorized representative may request a review by the appeals Administrator by submitting your request, in writing, at the address listed in the Administrative Facts section on page 24. During this 60-day period, you may review pertinent documents and submit issues and comments to the appeals Administrator. You will usually receive written notice of a review decision within 60 days of your request. In unusual circumstances, the appeals Administrator may need another 60 days to reach a decision. You will be given specific reasons for the decision, with specific references to the pertinent Plan provisions on which the decision is based. When writing about the Plan, identify the Plan both by name and the Employer Identification Number and Plan Number (see Administrative Facts on page 24). If you disagree with the claim decision, you may file a lawsuit for benefits or actions under the Plan, but you must first exhaust the Plan s appeals procedures described above. If you do not file a claim or follow the Plan s appeals procedures (such as appeal a denied claim or follow the above time limits for responding), you will give up legal rights, including your right to file a suit in court, as you will not have exhausted your internal administrative appeal rights. In addition, any lawsuit you file must be filed within the applicable statute of limitations period, and in no event, no more than two years after the date on which the appeals Administrator issued its final decision on your claim. Any such lawsuit must be filed in the U.S. District Court for the Northern District of Illinois, Eastern Division. 21

22 Accelerated Vesting Under special circumstances, Advocate, in its discretion, may make a participant s benefit under the Plan fully vested and non-forfeitable as of a particular date, regardless of the participant s years of service. This may happen, for example, in connection with certain types of corporate activities (such as a sale of a business unit). Any such special vesting rules will satisfy applicable non-discrimination rules. The table below shows the participants whose benefits have been 100% vested as of the specified effective date under such special circumstances: Affected Participants whose Benefits became Fully Vested If you were employed by Advocate Condell Centre Club- Libertyville or the Advocate Condell Centre Club-Gurnee (the Centre Clubs) immediately prior to March 1, 2014 and terminated employment with the Advocate companies and the Centre Clubs on March 1, 2014 in connection with the transfer of management and operations of the Centre Clubs to Midtown Health, L.L.C. Effective Date March 1,

23 Other Important Information This section provides additional details regarding the Condell Pension Plan, including administrative information. All formal documents relating to the Plan are available for your inspection at Advocate s principal office. Advocate Benefits can make arrangements for you to see them during normal business hours. You may also obtain a copy upon the payment of a reasonable fee to cover the cost of reproduction. Your request (in writing) should be sent to: Senior Vice President and Chief Human Resources Officer Advocate Health Care 3075 Highland Parkway Downers Grove, IL Military Leave If you take a leave of absence from Advocate Condell Medical Center and the Advocate Companies for military service, special rules may apply to you. If you will be taking military leave, please contact Advocate Benefits (visit advocatebenefits.com or call ) for additional information about these special rules. W-2 Reporting Current federal law requires that the Retirement Plan box on the Form W-2 be marked if you are covered by a retirement plan (such as a 401(k) plan, a 403(b) plan, or a pension plan), regardless of whether you receive a benefit from the plan. In most cases, this affects eligibility to make Individual Retirement Account (IRA) contributions. For more information on how this may affect you, please contact your personal tax advisor. Assignment of Benefits In most cases your rights and accrued benefits under the Plan cannot be attached, garnished or otherwise taken over by a creditor. Similarly, you don t have the right to alienate, anticipate, commute, pledge, encumber or assign any of the benefits or rights that you expect to receive. 23 However, under certain court orders (for example, qualified domestic relations orders ( QDROs )), the Plan Administrator may be required to pay some of your benefits to someone else your former spouse or your children, for example. As soon as you re aware of any court proceeding that may affect your benefit, contact your Human Resources Department. QDROs must be accepted and approved by the Plan Administrator (or its delegate) before any payment is made to someone other than you. Participants and beneficiaries can obtain sample QDROs and a copy of the Plan s QDRO procedures upon request from the Plan Administrator without charge. If you (or your beneficiary) are unable to care for your own affairs, any payments due may be paid to someone who is authorized to manage your affairs. This may be a relative or a court-appointed guardian. No Guarantee of Employment Rights Nothing in the Plan gives any associate the right to be retained in the service of Advocate Condell Medical Center or any Advocate company. Nor does it interfere with the right of Advocate Condell Medical Center and the Advocate Companies to discharge or discipline any associate at any time. Top-Heavy Plan Rules If, in any plan year, a plan is determined to be a top-heavy plan that is, the sum of cumulative accrued benefits or account balances (as applicable) for certain associates (those that are considered key employees under IRS rules) under all of Advocate s defined benefit plans or defined contribution plans (as applicable) exceed 60% of the total accrued benefits and account balances for all associates certain minimum vesting or benefit accrual rules (as applicable) may apply. If the Plan ever becomes top heavy, you will be advised of the effect, if any, on your benefits.