ENGILITY MASTER SAVINGS PLAN

Transcription

1 ENGILITY MASTER SAVINGS PLAN SUMMARY PLAN DESCRIPTION Effective January 1, 2017

2 Engility Corporation offers eligible employees the right to participate in the Engility Master Savings Plan (the MSP ). Under the MSP, employees of Engility Corporation can participate by directing that a certain percentage of their compensation be deferred and contributed to the MSP for investment in various investment options offered through the MSP, including a fund consisting principally of common stock of Engility Holdings, Inc. ( Engility Stock ). About this Booklet This Summary Plan Description booklet (the SPD ) is intended to provide you with the information required to be disclosed to plan participants in a summary plan description under the Employee Retirement Income Security Act of 1974, as amended ( ERISA ). It also includes information required to be provided to employees under the Securities Act of 1933, as amended (the Securities Act ), when they are contributing to an employee benefit plan under which they can invest in the securities of their employer. Certain information about the investment options available under the MSP is contained in other documents that have been filed with the Securities and Exchange Commission and is incorporated by reference into this SPD (see page 41). Engility Corporation will provide without charge to each participant in the MSP whose accounts are invested in Engility Stock any and all documents provided to holders of Engility Stock. Additionally, Engility Corporation will provide without charge to each employee who is eligible for the MSP, upon written or oral request, a copy of any and all information that has been incorporated by reference into this SPD (other than exhibits to such documents, which are not specifically incorporated by reference) as well as a copy of any annual reports, proxy statements and other communications distributed to shareholders generally. Such requests, as well as any other requests for additional information about the MSP or its administrators, should be directed to the Benefits Plan Committee, Engility Corporation. The information contained herein constitutes part of a prospectus covering securities that have been registered under the Securities Act in connection with the Engility Master Savings Plan, as it may be amended from time to time. Additional updated information about the Plan and its available investment options may be periodically provided through supplements to the SPD Booklet or by contacting Fidelity Management Trust Company directly.

3 TABLE OF CONTENTS The MSP... 1 Highlights... 1 Eligibility and Participation... 4 Who s Eligible... 4 When Participation Begins... 4 How to Enroll... 4 Using the MSP s Automated Resources... 6 MSP Participation and Transfers of Employment... 7 Termination and Re-enrollment... 7 Funding Your MSP Account... 9 Employee Payroll Deduction Contributions... 9 Employee Rollover Contributions Employer Contributions Vesting Employee Contributions Employer Contributions Investing Employee and Employer Contributions Voting Rights Making Investment Decisions Changing Your Investment Strategy Excessive Trading Rules Account Valuation Loans and Withdrawals Loans Withdrawals Distributions How Distributions Are Made Distributions When You Die Requesting a Distribution Taxes on Distributions Other Information You Should Know How Benefits May Be Delayed... 29

4 IRS Limits Ownership of Benefits Divorce and Your MSP Benefits No Right to Continued Employment Plan Administration Compliance With Federal Law Claims Procedure Future of the MSP Your Rights Under ERISA Prudent Actions by Plan Fiduciaries Enforcing Your Rights Assistance With Your Questions Prospectus Information Incorporation of Certain Documents by Reference Plan Facts... 41

5 THE MSP Engility Corporation ( Engility ) maintains the Engility Master Savings Plan (the MSP ) for eligible employees of Engility and its participating divisions and affiliates ( business units or Employer ). This Summary Plan Description is a non-technical explanation of the principal features of the MSP as in effect on January 1, Please read it and refer to it when you have any questions about the MSP. We have tried to explain things in everyday language, but you will come across some words and phrases that have specific meanings within the context of the MSP. To help you understand them, we have included their definitions in the text. Please also be sure to read the Other Information You Should Know section of this booklet for important information and facts about your rights under the MSP. The actual provisions of the MSP are set forth in a detailed plan document. Should this Summary Plan Description differ from the actual plan document, the terms of the plan document will govern. Highlights You may contribute from 1% to 75% of your eligible compensation in the form of pre-tax contributions, Roth contributions, after-tax contributions or a combination thereof, subject to IRS limits. However, after-tax contributions are limited to 50% of your eligible compensation. If you are considered a highly compensated employee, as defined by the IRS, different limits may apply. If you will be at least 50 years old as of December 31 of the calendar year, and are contributing at the Internal Revenue Code dollar contribution limit or the MSP percentage contribution limit (as specified above), you may pursuant to a separate election make an additional catch-up contribution of up to 50% of your eligible compensation, subject to IRS limits, as pre-tax and/or Roth catch-up contributions. Catch-up contributions are not match eligible. 1

6 If you do not actively elect to contribute to the MSP when you are first eligible, you will be enrolled automatically at 3% of your eligible pre-tax compensation. Engility rehires are eligible for the auto enrollment feature. Engility will match your pre-tax, Roth and after-tax contributions up to 50% of the first 8% of your compensation after the end of each calendar quarter, for a total match of up to 4% of your compensation, provided you are employed and an eligible employee on the last day of the applicable quarter for which the matching contribution is being made. Part-time employees are eligible to make pre-tax, Roth and after-tax contributions, but are not eligible for the Employer match. Your pre-tax, Roth, pre-tax catch-up, Roth catch-up and after-tax contributions are fully vested as soon as they are made. Employer matching contributions become vested after 3 years of vesting service, as follows: you will be 25% vested after completion of your first year of vesting service, 50% vested after completion of your second year of vesting service, and 100% vested after completion of your third year of vesting service. You direct the investment of your pre-tax, Roth, pre-tax catch-up, Roth catch-up, and after-tax contributions, choosing among the investment options the MSP offers. Employer contributions that were made to you prior to January 1, 2013, if any, generally are invested in the Engility Stock Fund, although you may transfer these amounts to other investment options if you wish to do so at any time. You can get investment information, change your investment choices and make other transactions by calling the Fidelity Participant Service Center at (800) or visiting Fidelity NetBenefits at Collect calls can be made from overseas at (508) You may withdraw or borrow amounts credited to your account under certain circumstances. The vested portion of your account is payable to you upon your termination of employment from Engility and all of its business units for any reason. Please note that such a distribution would be subject to taxes and IRS penalties if not rolled over to another employer plan or IRA. 2

7 Any vested amount remaining in your account upon your death will be paid to your beneficiary under the MSP. Please be sure to keep your beneficiary designations current. For more information or if you have any questions Call the Fidelity Participant Service Center toll-free at Monday through Friday (excluding New York Stock Exchange holidays) from 8:30 a.m. to midnight Eastern Time to speak with a Service Center Representative. The same toll-free number also gives you access to an automated voice response system virtually 24 hours per day, seven days per week. Internationally based employees may call the Fidelity Participant Service Center and the automated voice response system collect at (508) Log on to Fidelity NetBenefits at You may use your existing Fidelity NetBenefits user name and password to access your account. 3

8 ELIGIBILITY AND PARTICIPATION Who s Eligible You are eligible to participate in the MSP if you are an Engility employee or an employee of a participating Engility business unit. You are not eligible to participate in the MSP if you are an independent contractor, a leased employee, a resident of Puerto Rico, an employee with no U.S. source income from Engility, or are covered by a collective bargaining agreement, unless the agreement provides for MSP participation. Part time employees are eligible to make pre-tax, Roth and after-tax contributions to the MSP, but are not eligible for the Employer match. When Participation Begins You are eligible to participate in the MSP immediately after you become an employee of a participating Engility business unit. You are allowed to enroll at any time during the year. You will receive a Fidelity Enrollment Guide in the mail within a few weeks of your date of hire. How to Enroll There are two ways to enroll in the MSP: Active Enrollment and Automatic Enrollment. If you are hired as an Engility employee and you do not actively enroll within 30 days of your date of hire, you will be enrolled automatically in the MSP subject to the exceptions listed above under Who s Eligible and Engility rehires. Active Enrollment. Before you actively enroll in the MSP, you will need to decide each of the following: the percentage of compensation you want to save as pre-tax, Roth, pre-tax and/or Roth catch-up (if applicable), and after-tax contributions how you want to invest your contributions 4

9 who will receive your account balance in the event of your death (see Naming a beneficiary, page 29). Once you receive your enrollment materials from Fidelity, you may call the Fidelity Participant Service Center at (800) or log on to Fidelity NetBenefits at to enroll in the MSP. Your payroll deduction contributions usually will begin within two pay periods after Fidelity processes your enrollment, or as soon as administratively possible. After you are enrolled, you will receive confirmation of your enrollment elections, as described below: If you enroll online, you may immediately print a confirmation of your MSP elections. If your address is on file with Fidelity, you will also receive an confirmation within 24 hours after you enroll. If you enroll with a phone representative at the Fidelity Participant Service Center, you will receive either a written confirmation in the mail, or an confirmation, whichever you elect. Review your enrollment confirmation carefully. If there are any errors, it is your responsibility to immediately call the Fidelity Participant Service Center. Automatic Enrollment. To encourage employees to participate in saving for their future, the MSP provides automatic enrollment for newly hired employees who do not actively enroll in the MSP within 30 days of their date of hire. (Please note that if you previously worked for Engility, and are rehired, you will be enrolled in the MSP automatically. If you are a member of a union, automatic enrollment will not be available to you. Check with the Benefits Department if you are unsure about the availability of this feature.) As a new or rehired Engility employee, you will be enrolled automatically in the MSP if you do not actively enroll within 30 days of your date of hire. Beginning with the first pay period on or after the 30 th day, 3% of your pay will be withheld on a pre-tax basis. Your contributions will be invested automatically in the applicable Target Date Fund (the default investment option under the MSP), as determined by your date of birth. At any time, you may elect a percentage higher or lower than the 3% automatic contribution by following the 5

10 process outlined in the Fidelity Enrollment Guide. You also may change your investment election from the designated Target Date Fund at any time by calling the Fidelity Participant Service Center at (800) or by logging on to Fidelity NetBenefits at If you wish to enroll sooner than 30 days after your date of hire, you may enroll at any time by following the process outlined in the Fidelity Enrollment Guide. Please wait approximately one week following your date of hire, or until you receive the Fidelity Enrollment Guide in the mail, before you attempt to contact Fidelity, as Fidelity will not have your information until Engility or its participating business unit has notified Fidelity that you are a newly hired employee eligible to participate in the MSP. If you do not wish to be enrolled automatically in the MSP, you may contact Fidelity at any time within the first 30 days following your date of hire and change your pre-tax contribution percentage to 0%. Using the MSP s Automated Resources The MSP offers two automated systems to help you manage your account: over the Internet via Fidelity NetBenefits at over the phone via the Fidelity Participant Service Center, a toll-free voice response system. To reach the Fidelity Participant Service Center, call (800) If you re hearing impaired, call (800) If you re overseas, call collect: (508) Both systems enable you to get information (account balance, available loan and withdrawal amounts, etc.) and make transactions (re-allocate existing investments, change investment of future contributions, initiate loans and most withdrawals) 24 hours a day, 365 days a year. A Personal Identification Number (PIN) is required to authorize transactions, and is considered equivalent to your written election and signature. In using an automated system to conduct MSP transactions, participants are responsible for verifying the completion of their transactions. Neither Fidelity nor Engility is responsible for any failure to implement a request due to difficulties with electronic transmissions or similar problems. 6

11 MSP Participation and Transfers of Employment From a participating business unit to a participating business unit or status. If you transfer from a business unit that participates in the MSP to another Engility business unit or status that participates in the MSP, your MSP participation will continue uninterrupted under the terms applicable to the new employer. You will retain your account balance under the MSP when you transfer to the current business unit. However, the prior business unit s provisions (vesting, for example) if different will continue to apply to the portion of your account balance attributable to service with your prior business unit. Service at both the prior and current business unit will be taken into consideration for vesting in the Employer match or other Employer contributions from both the prior and current business unit. From a participating business unit to a non-participating business unit or status. If you transfer from a business unit that participates in the MSP to an Engility business unit or status that does not participate in the MSP, you will become an inactive MSP participant, which means you may no longer make contributions to the MSP. However, you will continue to earn vesting credit in the MSP for your service with the non-participating business unit. You may also continue to direct the investment of your MSP account. From a non-participating business unit to a participating business unit or status. If you transfer from a business unit or status that does not participate in the MSP to another Engility business unit that participates in the MSP, you will be considered a new MSP participant. Service with your prior business unit will count for MSP purposes. If your prior employer sponsored a different 401(k) plan, your account balance will remain with that plan. Service at both the prior and current business units will also be taken into consideration for vesting in the Employer match or other Employer contributions from both the prior and current business units. To determine whether a business unit participates in the MSP, contact the Fidelity Participant Service Center at (800) Termination and Re-enrollment Employer contributions may be subject to forfeiture if you leave Engility before you become fully vested in your account balance. 7

12 If you leave Engility and are later rehired by Engility as an eligible employee within 5 years (see Who s Eligible ), you may rejoin MSP immediately upon your rehire. Your service prior to your termination will be considered in determining eligibility for Employer contributions (if any) and vesting. Upon your reemployment, an adjusted hire date will be calculated, taking into account your previous hire date(s), termination date(s) and reemployment date(s). In other words, your vesting service earned prior to termination will be added to your vesting service earned after reemployment to determine your final vested percentage. Forfeitures. Any Employer contributions that were made on your behalf that are not fully vested when you terminate employment with Engility will be subject to forfeiture. The nonvested portion of your Employer contribution account will be forfeited upon the earlier of (1) the date you receive a distribution of your vested account balance and (2) five years after your termination date. Forfeited contributions and earnings will be applied to offset future Employer contributions to the MSP, if any, and pay MSP administrative expenses. If the nonvested portion of your Employer contribution account is forfeited due to a distribution of your vested account balance, forfeited amounts will be restored if you become reemployed by Engility within five years of your termination date (or six years from the time you began an approved leave) and you repay the entire amount of your distribution to the Trustee no later than 30 days after the fifth anniversary of your date of reemployment. Call the Fidelity Participant Service Center or log on to Fidelity NetBenefits at to enroll or re-enroll. 8

13 FUNDING YOUR MSP ACCOUNT Employee Payroll Deduction Contributions Generally, you can contribute from 1% to 75% of your compensation to the MSP in the form of pre-tax contributions, Roth contributions, after-tax contributions or a combination thereof. However, after-tax contributions are limited to 50% of your compensation. In general, compensation means all cash remuneration that is paid to you by your Employer during the plan year and is includible in gross income, including regular earnings, commissions, overtime compensation, supplemental geographic pay differentials, performance-based bonuses, regular vacation pay, and elective payroll deduction contributions under Code Sections 125, 132(f)(4), and 401(k). Compensation does not include non-performance-based bonuses, incentive pay, severance payments, termination incentive payments, lump sum vacation allowances, taxable fringe benefits, stock-based compensation (whether settled in cash or stock), imputed income from life insurance, employer contributions to any qualified retirement plan, nonqualified deferred compensation plan or welfare plan, employee deferrals or contributions to any nonqualified deferred compensation plan, distributions from any qualified retirement plan, nonqualified deferred compensation plan or welfare plan, or any reimbursed expenses, such as relocation expenses and education expenses, and any other item not specifically included in compensation herein. Compensation for any plan year is limited, as required under the Internal Revenue Code. This limit is adjusted each year for cost of living. You choose whether you would like your contributions in the form of pre-tax contributions, Roth contributions, after-tax contributions or a combination thereof, as described below. Once you have elected the percentage of compensation you want to save, the amount will be deducted from each of your paychecks. Your election goes into effect as soon as administratively feasible and stays in effect until you make a change. Retroactive contributions are not permitted, nor will deductions be taken from any amount that is due and owed to you at the time you become ineligible for participation (such as payments for accrued but unused vacation days). You may increase, decrease, suspend or resume your contributions via the Fidelity Participant Service Center or Fidelity NetBenefits at The change will go into effect as soon as is administratively feasible after your request. 9

14 You also may elect to participate in our Annual Increase Program, which allows you to establish regular annual increases to your MSP contribution amount. You will need to select the percentage of the increase and the date you want the increase to take effect. If you coordinate your increase date and amount with your expected pay increases, you may be able to realize both an increase in your take-home pay and a higher retirement savings contribution. Contact the Fidelity Participant Service Center or log on to Fidelity NetBenefits to elect the Annual Increase Program. Pre-tax contributions. If you make pre-tax contributions to the MSP, you pay no current federal income taxes and (in most states) you pay no current state income taxes on those contributions. Also, any investment income your pre-tax contributions may earn is not currently taxed. Pre-tax contributions (and any investment earnings) continue to be tax-sheltered for as long as they remain in the MSP. Roth contributions. If you make Roth contributions to the MSP, you pay current federal and state income taxes on those contributions. However, any investment income your Roth contributions may earn is not currently taxed. When you receive a qualified distribution of Roth contributions and earnings from the MSP, you will not be taxed on the Roth contributions or the investment income your Roth contributions have earned. However, if you receive a distribution of Roth contributions and earnings that is not a qualified distribution, you will be taxed on the investment income your Roth contributions have earned (but not the Roth contributions themselves, which were taxed when they went into the MSP). Contact the Fidelity Participant Service Center for information regarding qualified distributions. Catch-up contributions. If you will be at least 50 years old as of December 31 of the calendar year, you may be eligible to make an additional pre-tax or Roth contribution (known as a catchup contribution) to the MSP. Catch-up contributions are available to you if you will be at least 50 years old as of December 31 of the calendar year and are contributing either 50% of your pay on a pre-tax, Roth, or after-tax basis for the entire year or your pre-tax and Roth contributions reach the Section 402(g) annual dollar limit described in the IRS Limits section of this SPD. Catch-up contributions require a separate election. Contact Fidelity for more information. After-tax contributions. If you make after-tax contributions to the MSP, you pay current federal and state income taxes on those contributions. However, any investment income your after-tax contributions may earn is not currently taxed. When you receive a distribution of after-tax 10

15 contributions and earnings from the MSP, you will be taxed only on the investment earnings, not the contributions (which were taxed when they went into the MSP). IRS limits. Section 402(g) of the Internal Revenue Code places an annual dollar contribution limit on the amount of pre-tax and Roth contributions you may make each year to a 401(k) plan. In addition, Section 414(v) of the Internal Revenue Code places an annual dollar contribution limit on the amount of catch-up contributions you may make each year to a 401(k) plan. These limits are described in greater detail in the IRS Limits section of this SPD. Once your pre-tax and Roth contributions reach the Section 402(g) limit, those contributions to the MSP stop for the remainder of the plan year. Similarly, once your catch-up contributions reach the Section 414(v) limit, those contributions to the MSP stop for the remainder of the plan year. Pre-tax and Roth contributions will resume automatically with the first pay period of the next plan year. Your pre-tax and Roth contribution percentage will be based on your most recent election. Please note, however, that if you changed your election from pre-tax or Roth to after-tax when you reached the Section 402(g) limit, your contributions will continue in the new plan year on an after-tax basis unless you make a new pre-tax or Roth election. Excess annual contributions. You are responsible for tracking any excess pre-tax, Roth, catchup (pre-tax and/or Roth), or after-tax contributions you make during a calendar year to two or more different qualified retirement plans. If you have an excess amount, you must notify your local Benefits Department no later than March 1 of the following year in order to have the excess amount processed for distribution by April 15. As required by IRS regulations, excess contributions you do not report on a timely basis remain in the MSP and are taxed twice once for the year in which you make the contribution and again when you take a distribution of the excess from your MSP account at termination of employment. You will receive a 1099-R from Fidelity stating the taxable amount of your excess contribution in January of the year following the distribution. Engility is not responsible for any tax obligation you may incur as a result of excess annual contributions to two or more qualified plans. Your other benefits. Although your pre-tax contributions reduce your compensation for federal and most state income tax purposes, they do not affect your benefits in other Employer-sponsored 11

16 plans (nor do your after-tax or Roth contributions). Also, making contributions to the MSP does not reduce your future Social Security benefits. Employee Rollover Contributions In general, if you are eligible to receive a distribution from your previous employer s qualified plan, you may transfer, or roll over, your distribution into the MSP. You may also roll over amounts from an Individual Retirement Account (IRA). Taxes on the money you roll over are deferred until the rollover is paid out to you. All rollovers to the MSP must be completed within 60 calendar days after you receive your distribution check except in the case of a direct rollover (that is, a distribution that goes directly from your previous employer s plan to the MSP). Government requirements regarding rollover contributions are quite complex. All rollovers must be approved and you may be asked to provide proof that the rollover meets all MSP requirements. If you are considering a rollover contribution, contact the Fidelity Participant Service Center, which handles all rollover questions and transactions. Employer Contributions Employer matching contributions (for eligible participants) under the MSP are made in cash after the end of each calendar quarter to those who are eligible participants as of the last day of the applicable quarter for which the contribution is being made. Engility will match your pre-tax, Roth and after-tax contributions at 50%, up to 8% of your compensation, for a total match of up to 4% of your compensation. Part-time employees are not eligible for the Employer match. Tax treatment. You will not be taxed on any prior Employer matching contributions to the MSP on your behalf until those amounts are distributed to you. The same tax treatment applies to any investment income Employer matching contributions may earn. 12

17 VESTING Employee Contributions You are always fully vested in your pre-tax, Roth, pre-tax catch-up, Roth catch-up, after-tax and rollover contributions, and investment earnings on these amounts. Vesting simply means that you are entitled to these amounts; they cannot be forfeited. Employer Contributions Vesting Rules. You become 100% vested in your Employer matching contributions made after January 1, 2017, and any investment earnings attributable to them, after 3 years of vesting service, subject to the following schedule: Completed Period of Service Vested Percentage less than 1 year 0% At least 1 year, but not 2 years 25% At least 2 years, but not 3 years 50% 3 years or more 100% If your employment with the Employer terminates before you complete 3 years of vesting service, you will be vested in your Employer Matching Contributions and any earnings attributable to them, based on the years of vesting service you have completed as of termination. You will become fully vested if you are employed by Engility when you reach age 65 (normal retirement) or if you leave Engility because of your total and permanent disability or death. You are generally credited with a year of vesting service for each year of employment with Engility. Vesting service is measured from your first day of employment (or reemployment) until your termination of employment with Engility, and includes certain periods of authorized leave, such as federal Family and Medical Leave Act (FMLA) leave, military or disability leave, and certain periods of layoff. 13

18 If you transfer from one Engility business unit to another, your vesting service will transfer with you and will be applied in determining the vested percentage of your previous and future Employer contributions. In addition, if amounts are transferred to the MSP for you from another employer s taxqualified plan in connection with a corporate acquisition, the vested status of these transferred amounts will be subject to the terms and conditions of the acquisition, as specified in the Purchase Agreement that governs the acquisition. Engility will notify you of the vested status of these amounts when they are transferred to the MSP. Historical Vesting Rules. Employer matching contributions made under the MSP prior to January 1, 2017, vest 100% after you complete 3 years of vesting service. Employer matching contributions made under the MSP prior to January 1, 2016 vest 25% after you complete one year of vesting service, 50% after you complete two years of vesting service and 100% after you complete three years of vesting service. If you were a participant in the TASC, Inc. Savings Plan (the TASC Plan ), any employer contributions made to your account under the TASC Plan prior to 2016 are 100% vested. If you were an employee of L-3 Communications Corporation on July 12, 2012 and became an employee of Engility on July 13, 2012, you will receive vesting credit for your prior service with L-3 Communications. If you terminated employment with L-3 Communications prior to July 12, 2012 but your account balances transferred to the Engility MSP on July 13, 2012, the vesting schedule in effect in the L- 3 Communications Master Savings Plan at the time of your termination is the schedule that applies to you. Refer to the L-3 Communications MSP SPD booklet in effect when your employment terminated for information about your vested status. 14

19 INVESTING Employee and Employer Contributions You decide how to invest your pre-tax, Roth, catch-up (pre-tax and/or Roth), after-tax, rollover and Employer contributions. The MSP offers a variety of investment options to suit the diverse needs of participants. The investment options currently available are listed in the Investment Options Supplement and described in materials prepared by Fidelity Management Trust Company, the MSP s Trustee. You may invest in one or more of the investment options offered under the MSP in 1% multiples, and change your investment allocation at any time. If you do not make an investment election, your account will be invested in a default investment option. Your contributions remain in the default investment option until you change your investment election. If you do not make an investment election, your default investment option will be the applicable Target Date Fund, as determined by your date of birth, regardless of your date of hire. (See the Target Date Funds chart in the Investment Options Supplement for more information.) You have the right under the MSP to direct the investment of your existing balance and future contributions to any available MSP investment option(s) at any time. Voting Rights The MSP provides you the ability to exercise voting, tender, and similar rights for the mutual funds in which you are invested through the MSP. Materials related to the exercise of these rights will be sent to you at the time of any proxy meeting, tender offer, or similar rights relating to the particular mutual funds held in your account. Making Investment Decisions The Benefits Plan Committee, which is appointed by the Engility Board of Directors to administer the MSP, selects the investment options available under the MSP. The Benefits Plan Committee may establish or discontinue any investment option at any time. Please read carefully 15

20 the separate investment option materials, which include a description and prospectus of each option, to determine which option or combination of investment options is right for you. (These materials are available from Fidelity.) While the Benefits Plan Committee decides which investment options to make available to you under the MSP, it s up to you to select the option(s) in which you will invest your contributions. Engility will provide you with information on the options but cannot give you investment advice. Keep in mind that any investment carries a degree of risk. The annual rate of return on your investment will vary depending on the options in which you invest. How the options have performed in the past does not guarantee that those results will continue in the future. It is up to you to monitor the investment options performance and to make investment elections that meet your own financial goals. You are responsible for your investment choices. Neither the Trustee, the investment manager nor Engility is responsible for any losses that result from your investment decisions. Changing Your Investment Strategy Existing account balances. You may re-allocate your existing account balances among the investment options (that is, shift money you have already invested from one option to another) in 1% increments or specific dollar amounts, at any time. Reallocating existing balances does not change the way your future contributions will be invested. Changes in investment of contributions. You can change the way you invest your future pre-tax, Roth, catch-up (pre-tax and/or Roth), after-tax, rollover and Employer matching contributions in each option at any time. All changes must be in 1% increments. How to make changes. To make MSP changes, call the Fidelity Participant Service Center or go to Fidelity NetBenefits at Your change generally will be effective on the day you call if you complete your call by 4:00 p.m. Eastern Time on a business day (a day that the New York Stock Exchange opens for business). Otherwise, your change will be effective the next business day. 16

21 Excessive Trading Rules Due to scrutiny from the Securities and Exchange Commission (SEC) placed on plan sponsors and fiduciaries to curb market timing and excessive trading, all mutual funds offered as investments under the MSP are subject to excessive trading rule policies. Large short-term cash flows in and out of a fund can disrupt portfolio strategies and costs. To protect the interests of, and maintain a standard of fairness among shareholders, this policy monitors exchanges in and out of mutual funds in the MSP. Although you can exchange between investment options freely in the MSP, you must do so in conjunction with each option s excessive trading policy. These policies are outlined in each investment option s prospectus. Please be sure to read them carefully. Account Valuation Account values are determined each day the New York Stock Exchange is open for business. The value of your MSP account will reflect the investment performance of the investment option or options in which you have invested. Account valuations reflect all contributions, transfers, distributions, loans, and income and losses attributable to your account. Electronic statements. You can check how your MSP account is doing and monitor MSP activity at any time by going to Fidelity NetBenefits at You can create your own online statement to cover any time period you like over the past 24 months. Participant account statements. You will receive a statement of your MSP account shortly after the end of each calendar quarter. Fidelity provides these statements electronically unless you request paper statements mailed directly to your home instead. To do so, call the Fidelity Participant Service Center or go to Fidelity NetBenefits at and change your election within the Mail Preferences area of the Your Profile tab. With electronic statements, you will receive an when your statement is available. You must go to Fidelity NetBenefits to view your statement. Please note that you will receive a written annual statement from Fidelity, generally in the first quarter of the calendar year, reflecting your overall account activity for the prior year, regardless of whether you elect to receive electronic or written statements. 17

22 In addition, you will receive a confirmation statement each time you re-allocate account balances, change future investment elections, take out a loan or make a withdrawal. These statements are normally mailed as soon as practicable following such activity. You may instead elect to receive them electronically. Please note that there are no guarantees on how a particular investment option will perform. You are encouraged to consult a financial advisor when making investment decisions. 18

23 LOANS AND WITHDRAWALS Loans If you are an active employee with a vested account balance of at least $2,000, you may take a loan from your account for any reason. There is no current income tax imposed on what you borrow. You pay interest on your loan, which is credited to your account, along with any principal repayments. You may have only one loan outstanding at any time. How much you may borrow. The minimum amount you may borrow is $1,000. The maximum is the lesser of 50% of the value of your vested account balance or $50,000, reduced by your highest loan balance during the preceding 12 months. Available balances are determined prior to the application of any loan processing fees. Where your loan comes from. When you take a loan from the MSP, your account is reduced in the following order to reflect the outstanding loan balance: First: Second: Third: Fourth: pre-tax contributions vested Employer matching contributions rollovers after-tax contributions Investment options in which the account is invested will be reduced on a pro-rata basis. Repaying your loan. You repay your loan in equal installments over the term of the loan through payroll deductions. All principal and interest repayments are credited to your account according to your investment elections in effect at the time of repayment. If you have a loan outstanding when you are on an approved leave of absence, or terminate employment with Engility, or transfer to a non-participating business unit you may continue to repay your loan directly to Fidelity through an ACH Loan Repayment Service or by using a coupon book and a certified check or money order. Loan payments made directly to Fidelity are monthly. Please contact Fidelity for more information about this service. 19

24 You are responsible for continuing payment of your loan after payroll deductions stop. Failure to repay the loan will cause the loan to default and be considered taxable income to you. Interest on your loan. The interest rate is equal to the prime interest rate plus one percent. The MSP will use the rate in effect as of the first day of the month in which you take the loan. Your interest rate will stay constant throughout the term of your loan. You can check the current interest rate on MSP loans via the Fidelity Participant Service Center or Fidelity NetBenefits at Please note that the loan interest rate for the MSP is adjusted on a quarterly basis by Fidelity. Term of loan. You choose the loan repayment period, which can be from one to five years. If the loan is to buy your principal residence and you provide proper documentation (such as an executed purchase and sale agreement), you can take up to 10 years to repay it. You can repay your full outstanding balance at any time via ACH, certified check or money order; partial pre-payments are not allowed. If you take an approved leave of absence, loan repayments may be suspended for up to one year, although interest will continue to accrue during this suspension period. If you are on an approved military leave, your loan repayments may be suspended for a longer period of time as prescribed by federal law and, if necessary, your interest rate may be adjusted to reflect the rate mandated by the Uniformed Services Employment and Reemployment Rights Act (USERRA). At the end of the suspension period, the outstanding principal loan balance and accrued interest will be recalculated and repayment will continue. Repayment will be by payroll deduction if you return from an approved leave of absence to active full-time employment with Engility or a participating business unit; if you do not return to active full-time employment with your Engility, you will need to repay your loan directly to Fidelity, as explained above, through ACH or by using a coupon book and a certified check or money order. Payments made through ACH or by coupon book are made monthly. Applying for a loan. To apply for a loan, contact the Fidelity Participant Service Center or go to Fidelity NetBenefits at and follow their instructions. You will receive written confirmation of the loan, a promissory note and a check. By signing the 20

25 check, you are agreeing to the loan terms. Once you apply for a loan the request is irrevocable, even if a request to cancel is made before the issuance of a loan check. If you pay off a loan, you may not initiate a new loan for a period of fifteen days after the first loan s payoff date. Loan fees. A loan origination fee is automatically deducted from your account. These fees are subject to change from time to time. Contact the Fidelity Participant Service Center or go to Fidelity NetBenefits at to find the current fee amounts. If you default on a loan from the MSP. You are responsible for timely payment of your loan from the MSP. While your loan payments are generally made through payroll deductions, it is your responsibility to ensure payments start on time and continue on a regular basis. If you fail to make a scheduled loan repayment, you will be in default on your loan as of the first day of the following calendar quarter. Interest will accrue during any period of default. Unless you make full payment of the outstanding loan within 90 days after you are in default, you will be deemed to have received a distribution from the MSP in an amount equal to the remaining outstanding loan amount. This distribution will be reported to the IRS as a taxable distribution and may be subject to the additional 10% tax that generally applies to taxable MSP distributions made before age 59 1 / 2. Additionally, a default will cause you to be prohibited from taking another loan from the MSP. Withdrawals While you are still employed by Engility, you may withdraw money or shares or stock from your account under certain circumstances. There are two different types of in-service MSP withdrawals: regular withdrawals and hardship withdrawals. All withdrawals are made from your account in a specific order. If you make a withdrawal, certain taxes and withholding requirements may apply. See the Taxes on Distributions section of this SPD for additional information. Regular withdrawals. While actively employed, you may make a regular withdrawal (i.e., a withdrawal for any reason) at any time. If you re not yet 59½, a regular withdrawal can come only from these amounts, and in this order: 21

26 First: Second: Third: after-tax contributions, if any rollover contributions, if any Employer matching contributions, only after you reach age 55 and only to the extent you are vested in those amounts If you are at least 59½ and have withdrawn all of the above amounts, a regular withdrawal can also come from your pre-tax or Roth contributions, and in this order: First: Second: pre-tax contributions, if any Roth contributions, if any Hardship withdrawals. If you are under age 59½, you may take a withdrawal from your pre-tax or Roth contributions only if you have a financial hardship (although you cannot withdraw any amount attributable to earnings on pre-tax or Roth contributions). A financial hardship is an immediate and heavy financial need for which no other funds are reasonably available. Hardship withdrawals are governed by strict IRS rules. You will be considered to have a financial hardship if your withdrawal is for any of the following reasons: payment of medical expenses for you, your spouse or a dependent that are not reimbursed by insurance and are tax-deductible purchase of your primary residence (not mortgage payments) payment of the next 12 months tuition for post-secondary education for you, your spouse or a dependent payment to prevent eviction from or foreclosure on your primary residence payment of funeral expenses for a member of your family or such other similar expenses as may be approved by the Benefits Plan Committee in a uniform and non-discriminatory manner payment for reimbursement of expenses caused by natural disaster, as long as the expenses qualify for a casualty deduction for federal income tax purposes. The amount you need must be documented, and the hardship withdrawal cannot exceed the amount of the need (which may include any amounts necessary to pay taxes and penalties 22

27 reasonably anticipated to result from the withdrawal). You may not take a hardship withdrawal unless you have already taken out all other withdrawals and loans permitted under the MSP. If you take a hardship withdrawal, your pre-tax, Roth, pre-tax catch-up, Roth catch-up and aftertax contributions to the MSP will be suspended for six months following receipt of the withdrawal. At the end of the six-month period, your pre-tax, Roth, pre-tax catch-up, Roth catchup, and after-tax contributions will not automatically resume. If you wish to begin participation again, you must re-elect your contribution percentages using the process described on page 5. Qualified reservist distributions. You may elect to withdraw part or all of the amount credited to your Accounts during a period of your active duty (because of your status as a member of a reserve component) that lasts for at least 180 days or for an indefinite period. Requesting a withdrawal. To apply for and process a regular withdrawal, go to or call the Fidelity Participant Service Center. To apply for a hardship withdrawal or a qualified reservist distribution, call the Fidelity Participant Service Center and request a hardship withdrawal application form. You must then complete and return the form. Your application will be reviewed, and you will be notified when a decision has been made. How withdrawals are paid. Withdrawals are paid in cash, except that you may elect to receive that portion of the withdrawal taken from the Engility Stock Fund in cash or shares of stock. Unless you elect otherwise, payment from the Engility Stock Fund will be made in shares of stock if the value of the payment is equal to 10 or more shares and in cash if equal to less than 10 shares. Fractional shares will be paid in cash. When you take a withdrawal from your account, the investment options in which the account is invested will be reduced on a pro-rata basis. 23

28 DISTRIBUTIONS You may elect to receive your vested account balance when you terminate employment with Engility for any reason. How Distributions Are Made $5,000 or less. If your vested account balance is $1,000 or less when you terminate employment, you will receive a distribution of your vested account balance in a lump-sum payment as soon as practicable following your termination date. If your vested account balance is $5,000 or less but more than $1,000 when you terminate employment, if you do not elect to receive a distribution of your vested account balance, your account will be rolled over to a Fidelity IRA. More than $5,000. If your vested account balance is more than $5,000 when you terminate employment, you may elect to receive a distribution of your vested account balance at any time but you may not delay the distribution later than April 1 following the year in which you reach age 70½. You may elect to receive your distribution in one of the following ways: a lump sum, monthly, quarterly or annual installments over a period of not less than five years or more than 20 years, or a combination of a lump sum and installments. If you leave all or part of your account balance in the MSP, you may continue to direct the investment of those amounts. You may not, however, take withdrawals or loans. If you had an account balance under a money purchase pension plan that was transferred to this Plan (referred to as your Transferred Account Balance ), it is fully vested. You may elect to have your Transferred Account Balance used to purchase a qualified joint and survivor annuity. A qualified joint and survivor annuity is an annuity that pays you a monthly benefit for your life and, upon your death, pays to your surviving spouse a monthly benefit for life equal to 50% of the monthly benefit that was paid to you. If you elect a qualified joint and survivor annuity and you die before you begin receiving payments, your surviving spouse, if any, will receive your Transferred Account Balance in the form of a qualified preretirement survivor annuity, which is 24