ITW Bargaining 401(k) Plan Enrollment Guide And Summary Plan Description

Transcription

1 ITW Bargaining 401(k) Plan Enrollment Guide And Summary Plan Description INFORMATION FOR EMPLOYEES REPRESENTED BY A UNION

2 Save In The ITW 401(k) Plan This 401(k) Plan Enrollment Guide & Summary Plan Description (SPD) offers an overview of your ITW Bargaining Savings and Investment Plan ( 401(k) Plan ). Visit ITWemployee.com for more information on the 401(k) Plan. Designed to make it easy and convenient to save and invest for tomorrow, the 401(k) Plan gives you all the tools you need to effectively take charge of your financial future something that s more important today than ever. Please read this SPD to learn more about the 401(k) Plan. Also be sure to make the most of the online retirement planning tools and resources available to you through ITWemployee.com. If you have questions, please visit ITWemployee.com to access the ITW Retirement Plans website or call the ITW Employee Service Center at , Option 3. 2 This description is intended to provide you with general information about the Plan. Benefits are based on Plan provisions in effect at the time of publication. This description is not meant to interpret, extend, or change the provisions of the Plan in any way. If anything in this description conflicts with the provisions of the Plan, the terms of the actual Plan document will govern in all cases. The Company and its fiduciaries reserve the right to interpret ambiguities in the Plan and this description in their complete discretion. The Employee Benefits Steering Committee of ITW has absolute discretionary authority to determine eligibility for benefits and construe the terms of the Plan. The provisions of the Plan may only be determined accurately by reading the actual Plan document.

3 A QUICK INTRODUCTION If you re like most people, you ve probably pictured how you would like to live in retirement. But how often do you think about where the money s going to come from to finance your future? Social Security will likely provide income each month. Another primary source of retirement income is personal savings. The 401(k) Plan is set up to help you save effectively with a variety of features and benefits, including: Instructions on enrolling in the 401(k) Plan. A choice of two investment paths. Easy access to statements online. Flexibility in distribution options. Easy rollover to an IRA or other qualified retirement plan. This guide describes your benefits under the 401(k) Plan. TABLE OF CONTENTS Enrolling In The 401(k) Plan... 4 Two Ways To Save... 5 Vesting... 6 Two Ways To Invest... 7 Beneficiary Designation Loans And Withdrawals...14 Distribution Options Claims And Appeals (k) Plan Tools And Resources Access And Manage Your Account Rollovers General Information Legal And Administrative Information Your Rights To Benefits Under ERISA (k) Plan At A Glance

4 Enrolling In The 401(k) Plan Take care of your future financial security by actively enrolling in the 401(k) Plan. HOW TO ENROLL ONLINE Just follow the steps below. 1. Visit ITWemployee.com and select the Click Here button for Employees represented by a Union (including those covered by a Collective Bargaining Agreement). Scroll down to ITW Retirement Plans and click on Go to Plan Site. 2. Log in using your Social Security Number and Password. * 1 * Within one to two weeks of your hire date you should receive your Password in the mail. Call the ITW Employee Service Center at , Option 3, if you need to request it be resent to you. 2 Four Simple Steps To Complete Your Enrollment 1. Elect your contribution rate and determine if you want to set a contribution Rate Escalator (see pages 5-6). 2. Choose what happens if you reach the pre-tax contribution limit (contribution carryover election) in a calendar year (see page 33). 3. Select your investment path (see pages 7-12). 4. Indicate your beneficiary information (see pages 6 and 13). Once you confirm your selections, you re done. Your elections will be processed as soon as administratively possible and you should begin contributing to the 401(k) Plan within one to two pay periods. Did You Know? Experts believe you ll need 80-90% of your pre-retirement income to live comfortably when you stop working. You can quickly and easily find out how much you ll need to save each month in order to maintain your lifestyle after you retire. Just log on to ITWemployee.com, and visit the Do More to Plan and Save section on the home page to access your Personal Forecast and the retirement planning tools available to you. Your information will be pre-populated, so with just a few steps you can determine how much you should be saving. 4

5 TWO WAYS TO SAVE You can contribute 1-50% of your pay to the 401(k) Plan on a pre-tax basis. In addition, you can contribute 1-10% on an after-tax basis. Your pre-tax and after-tax contributions combined cannot exceed 50% of your pay, up to annual limits set by the IRS. Pre-tax contributions Are deducted from your pay before taxes are taken out, reducing your taxable income so you pay less in taxes. With pre-tax saving, you actually end up taking home more money than if you saved the same amount outside the 401(k) Plan (see the chart below). REGULAR SAVINGS ACCOUNT PRE-TAX SAVING IN THE PLAN Annual pay Saving 6% * pre-tax in the 401(k) Plan Taxable income Income tax (at 20%) Take-home pay Saving 6% * in regular savings $40,000 N/A $40,000 $8,000 $32,000 $2,400 $40,000 $2,400 $37,600 $7,520 $30,080 N/A NET TAKE-HOME PAY ** $29,600 $30,080 * 6% of pay means a contribution of $46.15 a week. ** Does not take into account any other payroll deductions. After-tax contributions Are taxed before being deposited into your account. They may be a good idea if you think you ll need a source of income later in life when you may be in a higher tax bracket than today. Did You Know? Financial planners suggest a savings rate of 10% or more. If you are having trouble saving 10% now, consider saving at a lower rate and using the Rate Escalator to help you increase your savings over time. See next page. YOUR SAVINGS Your total 401(k) Plan account may consist of different individual sub-accounts. They are: Employee Pre-tax Account your pre-tax savings and related investment returns. Employee After-tax Account your after-tax savings and related investment returns. Company Account(s) contributions made by the company, if applicable, plus related investment returns. Rollover Account amounts you have rolled over from another plan or IRA, including related investment returns. Others certain funds transferred from plans that are merged into the 401(k) Plan may be included in one of the accounts listed above. Or, they may be kept in a separate account, depending on any special rules that may apply. 5

6 Enrolling In The 401(k) Plan 6 Rate Escalator Here s how to use it. Once you have enrolled, the online Rate Escalator is a simple tool that you can set up today to gradually increase your contributions over time. It s a great way to boost your savings without having to actively make changes to your account. With the Rate Escalator, you can: Periodically increase your savings rate, automatically Select the initial increase date and frequency of increases (e.g. annually) Choose a savings goal and then use the Rate Escalator to reach it. (Once reached, your goal rate will be maintained until you make an election change.) Go to your ITW Retirement Plans account home page and select Rate Escalator in the Contributions section. Are You Age 50 Or Older This Year? If you are, or will be, age 50 or older this calendar year, and your pre-tax contributions are expected to exceed the limit for the year, you are eligible to contribute an additional amount on a pre-tax basis through catch-up contributions. Please note that catch-up contributions are not matched by ITW. VESTING IN THE 401(k) PLAN Vesting means to own the money in your account. You are always 100% vested in your contributions, any rollover contributions, and investment earnings on those contributions. You are immediately 100% vested in your company account(s), if applicable, and investment earnings on those contributions. If you became a participant through an ITW acquisition, vesting on your prior Plan balance was determined based upon the terms of the deal. DESIGNATE. DON T PROCRASTINATE. In the event of your death, your beneficiary designations on file will apply. So it s important to keep your beneficiaries upto-date especially if you ve recently been married or divorced, or if you ve had a child or grandchild. This will help ensure your assets go to exactly whom you want, as quickly and efficiently as possible. If you don t actively designate beneficiaries, your vested 401(k) Plan balance will be paid to your spouse if you re married, or to your estate if you re single. To Designate A Beneficiary For Your 401(k) Plan, Follow These Steps 1. Go to the home page of the ITW Retirement Plans website and access 401(k) Plan. 2. Access Personal Information, located in the top navigational bar, and select Beneficiary Information. 3. Select Add/Edit Beneficiary. CONTINUED 4. Confirm your marital status and select Next. If the status is incorrect, report the correct data to your HR representative as soon as possible. 5. Enter the personal information for each beneficiary. After you have reviewed your beneficiary information, you will be asked to select Save. If you do not select Save, your beneficiary information will not be updated. Repeat steps 3-5 for the other beneficiaries, including contingent beneficiaries. See page 13 for more information.

7 Two Ways To Invest Whether you re knowledgeable and comfortable enough to make your own investment decisions, or you d prefer to rely on professionals, the 401(k) Plan offers two different paths to guide you. PATH1 THE TARGET RETIREMENT FUNDS Ideal for those who don t have the time or experience to manage their investments, the Target Retirement Funds are made up of different, well-diversified mixes of the Core Investment Funds (described on page 9) and real asset components such as TIPS and commodities (described on page 8). All you have to do is pick the fund with the date closest to when you think you ll need your retirement account typically, the fund closest to the year you reach age 65. From then on, professional fund managers gradually adjust the asset mix of the fund over time to suit your retirement horizon. Your investment mix will gradually become more conservative, eventually resulting in the asset allocation of the Retirement Fund as you near age 65. This same asset allocation will continue through the length of your retirement. Path1 Target Retirement Funds AGGRESSIVE CONSERVATIVE Retirement Fund (for those participants in or near retirement) 2015 Target Retirement Fund 2020 Target Retirement Fund 2025 Target Retirement Fund 2030 Target Retirement Fund 2035 Target Retirement Fund 2040 Target Retirement Fund 2045 Target Retirement Fund 2050 Target Retirement Fund 2055 Target Retirement Fund The Target Retirement Funds are the 401(k) Plan s default investment option. See page 10 for more information. In addition to the ease of investing, Path1 gives you the flexibility to invest up to 20% of your balance in the ITW Common Stock Fund. Path1 Restrictions You may only invest in a single Target Retirement Fund at any time. You may not directly invest in any of the Path2 options except the ITW Common Stock Fund while invested in a Target Retirement Fund. No more than 20% of your balance may be invested in the ITW Common Stock Fund. 7

8 Two Ways To Invest Key Features Of The Target Retirement Funds CONTINUED You benefit from professional investment allocation and diversification based on your savings time horizon (how long you have to save). If you have a longer time horizon, you may start off investing with the goal of achieving the highest potential returns (which involves the most risk). As the target date approaches, you become a more conservative investor, ultimately invested in the Retirement Fund. You benefit from a professional investment advisor who rebalances and adjusts the fund s mix of assets periodically. Example Of Target Fund Asset Allocations RETIREMENT FUND 2035 FUND 2055 FUND Stable Asset Fund Diversified Bond Fund Real Assets Large Company US Stock Fund Mid/Small Company US Stock Fund Diversified Foreign Stock Fund Glossary Of Investment Terms: Asset Classes Bonds are like an I.O.U. from a corporation or government that pays either a fixed or adjustable rate of interest for borrowing money. Cash represents short-term money market instruments including Certificates of Deposit (CDs) or Treasury bills. Commodities are physical investments such as food and metals. Stocks represent ownership in a corporation, usually as shares. TIPS are issued and backed by the US Treasury and promise to pay a specified interest rate plus the rate of inflation. 8

9 PATH2 THE CORE INVESTMENT FUNDS Designed for those who want to actively create and manage their investment strategy, the Core Investment Funds offer a mix of different asset classes to help you build a portfolio to suit your retirement goals and risk tolerance. Each Core Investment Fund has a different investment objective and represents one of the major asset classes, from the most conservative stable assets to the more aggressive foreign stocks. Since it only invests in one security, the ITW Common Stock Fund is the most aggressive option. Aside from the Stable Asset Fund and the ITW Common Stock Fund, the funds are funds of funds, meaning each one is made up of a collection of underlying professionally invested funds with multiple fund managers. This creates diversity of investment styles within each fund. With Path2 fund options, you create your own portfolio using a mix of funds. More details on each of the Path2 funds, including the underlying fund managers, are available in the Plan Investments section of the ITW Retirement Plans website. Path2 Core Investment Funds AGGRESSIVE CONSERVATIVE Stable Asset Fund Diversified Bond Fund Large Company US Stock Fund Mid/Small Company US Stock Fund Diversified Foreign Stock Fund ITW Common Stock Fund RETURN ITW Common Stock Fund Diversified Foreign Stock Fund Mid/Small Company US Stock Fund Large Company US Stock Fund Diversified Bond Fund Stable Asset Fund RISK Path2 Restriction Money transferred to the Stable Asset Fund must remain invested in that fund for a period of 60 days before it can be transferred to another fund option. You cannot become a Path1 investor until that 60-day period has passed. The Importance Of Diversification In A Savings Strategy By having a mix of or diversifying your investments, you may reduce your exposure to market risk while improving your potential returns. Investment experts say that good diversification and consistent investing is critical to achieving one s retirement goals. 9

10 More Information About Your Investment Options DEFAULT INVESTMENT FUND: PATH1 TARGET RETIREMENT FUNDS You may direct the investment of all of the contributions made to the 401(k) Plan by you or the company on your behalf, as well as earnings on those contributions, to one or more of the 401(k) Plan s available funds, which include a broad range of investment alternatives intended to allow you to achieve a diversified portfolio, without financial penalty. If you do not select an investment path or you are enrolled in the 401(k) Plan, your account will automatically be invested in the Target Retirement Fund nearest to the year you turn 65. AUTOMATIC ACCOUNT REBALANCING If you are a Path1 Target Retirement Fund investor, the Automatic Rebalancing feature is already built into the fund options and does not need to be set. If you are a Path2 Core Investment Fund investor, you have the option of establishing Automatic Account Rebalancing, which allows you to have your account automatically rebalanced based on the timeframe you select and according to your investment allocations on file for future contributions. You may elect this option through the ITW Retirement Plans website or by contacting the ITW Employee Service Center. It s an easy way to keep your portfolio on track. Any investment election changes will turn off Automatic Account Rebalancing. DIVERSIFICATION RIGHTS In general, a defined contribution retirement plan, such as this 401(k) Plan, must allow you to elect to move any portion of your account that is invested in company stock from that investment into other investment alternatives under the 401(k) Plan. The 401(k) Plan offers full diversification. You can immediately diversify any portion of your account that is invested in the ITW Common Stock Fund, whether you bought it yourself or it was purchased with company contributions (if eligible, based on your collective bargaining contract), subject to the insider trading rules. You may contact the ITW Employee Service Center for specific information regarding your right to diversify in the ITW Common Stock Fund, including how to make the diversification election. In deciding whether to exercise this right, you will want to give careful consideration to the preceding information that describes the importance of diversification. All of the investment options under the 401(k) Plan are available to you if you decide to diversify out of company stock. 10

11 ITW STOCK DIVIDEND ELECTION 401(k) Plan participants who hold shares in the ITW Common Stock Fund will have the option to reinvest each stock dividend to purchase additional shares of stock in the 401(k) Plan or receive a cash payout of each dividend payment. ITW common stock normally pays dividends on a quarterly basis. You may make your dividend election by visiting the ITW Retirement Plans website or by calling the ITW Employee Service Center. Unless you make an election to receive a cash payout, the dividends will automatically be reinvested in your account. If you would like a cash payout, you must make this election and the 401(k) Plan will pay you the dividends on your shares in the ITW Common Stock Fund. Cash payouts of dividends are considered taxable income for the year in which they are paid, but are not subject to the additional 10% penalty normally applied to early withdrawals. Cash payouts cannot be rolled over to an IRA or another qualified plan; once cashed out, you lose the tax deferred status of the dividends. If you invest in the ITW Common Stock Fund, IRS rules require that you elect available cash dividend distributions before receiving a hardship withdrawal. FUND MANAGEMENT The ITW Employee Benefits Investment Committee may add, change, or delete any investment funds as appropriate and as allowed by the 401(k) Plan document at any time. The majority of the 401(k) Plan s funds are made up of a mix of mutual funds, commingled funds, and separate accounts providing you with diversification and the advantage of different investment styles. The mix within each fund is managed by professional investment managers according to established investment policy guidelines for the 401(k) Plan. Commingled funds and separate accounts are generally only available to institutional investors like the 401(k) Plan. By having a mix of managers, and leveraging the 401(k) Plan s buying power, there is flexibility in the investments, and improved flexibility to manage potential risk and reward. There may also be reduced investment fees. 11

12 More Information About Your Investment Options FEES As an investor in a fund, you pay for what it costs to run that particular fund: the cost of the fund managers, the trading activity, the administration, research and, in the case of retail mutual funds, advertising. These costs are deducted as expenses from what the fund earns. Expenses vary from one fund to another. As of June 30, 2013 the expenses ranged from 0.09% to 0.81%. Please reference the fund fact sheets available on the ITW Retirement Plans website for current expenses. Lower fees could result in a greater account balance over time. See the fund expense * example below which shows the impact of an investment management fee of 0.25% versus a 1.0% fee. While the fund might have earned 7%, if the fees were 1%, the actual fund return would be 6%. If the fees were only 0.25%, your balance would show a 6.75% return. This difference adds up over time. When evaluating funds, it is important to compare net returns (after fees). CONTINUED Impact Of Fees On Fund Balance NET INVESTMENT WITH 0.25% MANAGEMENT FEE NET INVESTMENT WITH 1.00% MANAGEMENT FEE $15,106 DIFFERENCE $75,332 $60,226 $1,409 DIFFERENCE $19,603 $18,194 $5,327 DIFFERENCE $38,429 $33, YEARS 20 YEARS 30 YEARS * This example is for illustrative purposes only and does not constitute specific tax or investment advice. The example above assumes a $10,000 balance which earns an annual investment return of 7% and is compounded monthly over 10, 20 and 30 years. Your actual returns may be more or less depending on the returns of your investments. 12

13 Naming A Beneficiary A beneficiary is the person or persons who will receive your account in the event of your death. You may elect, view or change your primary and secondary beneficiaries at any time on the ITW Retirement Plans website. After you have logged on, access 401(k) Plan. Simply go to Personal Information and select Beneficiary Information. You may also contact the ITW Employee Service Center to request a beneficiary designation form. If you are married, your spouse is automatically your primary beneficiary. If you are married and name someone other than your spouse as your primary beneficiary, your spouse must approve the designation by signing the beneficiary designation form in the presence of a notary public. Any beneficiary designation you make while not married becomes invalid if you subsequently marry. The designation will not be used, in whole or in part, even if your spouse dies or you get a divorce. If you do not name a beneficiary, or if your beneficiary dies before you, your benefit will be paid as follows: If you are survived by a spouse, your surviving spouse will be the sole beneficiary; If you do not have a surviving spouse, your estate will be the beneficiary. If you die before 401(k) Plan distributions begin, and there is no designated beneficiary, then all of your benefits must be paid out by December 31 of the year containing the fifth anniversary of the year in which you died. BENEFICIARY TYPES Surviving Spousal Beneficiary If your spouse is your sole beneficiary, he or she may elect for distributions to begin by the later of December 31 of the year following the year in which you died, or by December 31 of the year in which you would have attained age 70 1 /2. Non-Spousal Beneficiary If you have a designated beneficiary other than a spouse, he or she may elect for distributions to begin by December 31 of the year following the year of your death, to be paid over the remaining life expectancy of your beneficiary. If your beneficiary dies before the entire account is paid, the remaining balance of the account will be paid to his or her beneficiary in a single-sum payment, as soon as administratively feasible following the death of your beneficiary. Trust Or Estate Beneficiaries If your beneficiary is a trust, estate, corporation or other entity that is not an individual, your account balance will be paid to the designated entity (as long as it is a legally valid designation) in a single-sum distribution as soon as practicable following your death. To designate a beneficiary, visit ITWemployee.com and access the Employees represented by a Union (including those covered by a Collective Bargaining Agreement). Scroll down to ITW Retirement Plans and access Go to Plan Site. You can also access the ITW Retirement Plans website directly at 13

14 Loans And Withdrawals 14 LOANS The loan feature of the 401(k) Plan allows you to secure a loan with your account balance. You must be an active employee at the time your loan is processed. You can have up to three outstanding loans at any time and only one loan may be taken during any 12-month period. While the 401(k) Plan s loan terms may be advantageous in certain situations, there are no other financial or tax advantages to Plan loans. If you fail to repay the loan principal and interest in a timely manner, your loan may be considered a distribution of your retirement savings which will result in your having to pay taxes, including a possible tax penalty. How to Apply for a Loan To request a loan or to model a repayment schedule and the impact of a loan on your account, go to the ITW Retirement Plans website or call the ITW Employee Service Center. There will be a one-time, non-deductible, non-refundable application fee of $50 charged to your account for each loan processed. If you request a loan, it will be taken from your sub-accounts in the following order: Employee After-tax Account Rollover Account Company Account(s) Employee Pre-tax Account Others The 401(k) Plan will issue a loan check within five to 10 business days after your loan request. If you have established personal banking information on the ITW Retirement Plans website at least seven business days in advance of your loan request, your loan amount can be automatically deposited to a personal banking account. Along with your check or deposit advice, you will receive a Truth in Lending Disclosure that states the terms of the loan. Once you cash or deposit the loan check, you become legally obligated to repay the loan. If for any reason you do not want to accept the loan, do not cash or deposit the check. Simply mark the front of the check void and return it to the ITW Employee Service Center. The $50 loan application fee will not be refunded if you cancel the loan. How Much You Can Borrow The minimum amount you can borrow is $1,000. The maximum amount you can borrow is the lesser of: $50,000 reduced by the highest total of all loan balances during the previous 12 months, or the greater of: 50% of your vested account balance (net of any outstanding loan balances) or $10,000. For example, if you have a vested account balance (net of outstanding loans) of $30,000 and the highest total of all loan balances during the previous 12 months was an existing loan of $5,000, the maximum amount you can borrow is $15,000, which is the lesser of: $45,000 ($50,000 - $5,000); or $15,000 (the greater of 50% of $30,000 or $10,000). To determine the amount you may borrow, go to the ITW Retirement Plans website or contact the ITW Employee Service Center. Interest Rate The loan interest rate will equal the Prime rate of interest as published in The Wall Street Journal on the first business day of the month in which the loan is requested and will be a fixed rate for the term of the loan.

15 How Your Loan Is Repaid You repay your loan through regular payroll deductions over the term of your loan (12 to 60 months). Payroll deductions should begin in the pay period following the loan issue date. When you submit your loan request, you will have given authorization to have payroll deductions taken to repay your loan. In the event your pay frequency changes, your loan repayment amount should also change. This is to ensure that the unpaid balance of your loan and corresponding interest will be paid in equal payments each pay period so that the entire amount of your loan and corresponding interest is paid in full by the end of the term of your loan. You may repay your loan in full at any time. Partial loan repayments will not be accepted. Your loan payoff amount is available on the ITW Retirement Plans website or by calling the ITW Employee Service Center. If you have established personal banking information on the website, you may elect to have the payment of your total outstanding loan balance automatically deducted from your personal banking account. Loan Repayments (Upon Separation) If you have outstanding loans, you will need to continue making monthly loan repayments until your loan is completely paid off or pay your loan balance in full by the end of the calendar quarter following the quarter in which you leave ITW. Otherwise, your loan will be treated as a taxable distribution. To continue monthly repayments after you leave ITW, you must set up automatic payments (ACH) from a bank account. If the entire loan balance is not paid and automatic payments are not set up by the end of the calendar quarter following the quarter in which you leave ITW, the outstanding loan balance becomes taxable and may be subject to an early withdrawal penalty. There are two ways to repay the loan by check or by ACH. Loan Payoff By Check 1. Obtain the loan payoff amount through the ITW Retirement Plans website or ITW Employee Service Center. 2. Submit a cashier s check, certified check, or money order made payable to the ITW 401(k) Plan. 3. Include your ITW Employee ID or SSN, and the loan number, on the payoff check. 4. Mail to: ING U.S. Attn: ITW Bargaining Savings and Investment Plan Administration Unit PO Box 5166 Boston, MA Our overnight mailing address is: ING U.S. Attn: ITW Bargaining Savings and Investment Plan Administration Unit 30 Braintree Hill Office Park Braintree, MA Monthly Repayments By ACH To add your banking information and elect to continue loan repayments through monthly ACH payments, you can go to the ITW Retirement Plans website. 1. Once in the 401(k) Plan section, from the Personal Information dropbox, select Banking Information. Enter your bank account information. 2. In the Loans section, select Loan Payment and select the Automate recurring direct debit payments for active loans box. 15

16 Loans And Withdrawals CONTINUED What Happens To Loan Repayments Each loan repayment consists of principal and interest. The principal portion of the repayment reduces the outstanding loan balance. The total repayment (principal and interest) is invested in accordance with your current investment elections. Missed Loan Repayments When you return to work after any extended period of absence where scheduled loan payments were not made and your loan has not yet been considered in default, you must resume payments on your loan. The loan repayment amount will be recalculated so that the payments and interest accrued for the period when no repayments were being made are paid off over the remaining loan repayment period. If you miss loan repayments due to an unpaid leave of absence or a layoff, the default will be delayed until the earliest of (a) one year, (b) the date of the last scheduled loan repayment or (c) your employment is considered to have terminated. Special rules apply to loan repayments during military leave. Default And Foreclosure Your loan can go into default after an extended period during which no payments are received (see Missed Loan Repayments). If your loan goes into default, you have up to one calendar quarter following the default event to repay the loan in full. If the loan is not fully repaid by the end of the quarter following the default date (or the date you request a distribution, if earlier), the unpaid balance of your loan must be reported as taxable income. The unpaid loan balance then may be subject to a penalty tax in addition to regular income taxes. If you die, your estate or your beneficiaries may repay the unpaid balance of your loan within the above specified time period. When you leave ITW, your outstanding loan balance is considered to be a distribution unless you: Repay your loan balance in full within the calendar quarter following your termination of employment; or Arrange to continue making loan repayments after termination of employment through automatic monthly payments from a personal banking account. If foreclosure cannot be made because your employment has not terminated, your loan will be considered a deemed distribution and the loan balance will continue to accrue interest until foreclosure occurs. A loan default may also impact the amount available for future loans. It is important that you consider the consequences of a loan default and foreclosure. WITHDRAWALS Funds Available For Withdrawal Although the main purpose of the 401(k) Plan is to help you accumulate funds for your future financial security, there are three types of withdrawals available in the 401(k) Plan while you are still an active employee: In-Service; Age 59½; and Hardship. The amounts available for withdrawal while you re an employee depend on your age and the specific reason for the withdrawal. The following rules apply to all withdrawals: The amount available for withdrawal will be reduced by any loans you may have taken from the 401(k) Plan. Your withdrawal will be taken on a pro-rata basis from each fund in which your accounts are invested. 16

17 Requesting A Withdrawal Withdrawal requests may be made at any time during the year. Withdrawals are processed as soon as possible after the request is received and approved. In-service and age 59½ withdrawals can be requested once per calendar quarter through the ITW Employee Service Center. Hardship withdrawal requests require a form that can be downloaded from the ITW Retirement Plans website. You can elect to have the proceeds of your withdrawal automatically deposited to your personal banking account if you have your personal banking information established on the ITW Retirement Plans website at least seven days in advance of your withdrawal request. Age 59½ Withdrawal If you are age 59½ or older, you may request one age 59½ withdrawal per calendar quarter through the ITW Retirement Plans website or by calling the ITW Employee Service Center. You can withdraw the following for any reason: All or part of your employee pre-tax, after-tax, and rollover accounts; and All or part of your company account(s). In-Service Withdrawal You may request one in-service withdrawal per calendar quarter through the ITW Retirement Plans website or by contacting the ITW Employee Service Center. You can withdraw the following for any reason: All or part of your employee after-tax and rollover accounts; and The lesser of 50% of your company contribution account(s), or 100% of your company contribution account(s) minus the company contributions made to your account in the last 24 months, (if eligible). In addition, if you have an account from certain predecessor plans, those funds are not eligible for an in-service withdrawal. 17

18 Loans And Withdrawals CONTINUED Hardship Withdrawal If you are under age 59½, you can withdraw your employee pre-tax contributions only if you have a financial hardship. To be eligible for a hardship withdrawal, the amount needed from the 401(k) Plan must not be readily available to you from any other source. For instance, you must first obtain an in-service withdrawal and any 401(k) Plan loans available to you. In addition, if you invest in the ITW Common Stock Fund, IRS rules require that you elect available cash dividend distributions before receiving a hardship withdrawal (see page 11 for ITW Stock Dividend Election information in the More Information About Your Investment Options section). You cannot withdraw more than the balance of your employee pre-tax account as of December 31, 1988, plus your pre-tax contributions after that date, minus any hardship withdrawals after that date. A hardship withdrawal of employee pre-tax contributions can only be made for the following reasons: Buying your primary residence (but not for regular mortgage payments); Non-reimbursed medical expenses (for you or your dependent) that would be deductible under the Internal Revenue Code; Payment of tuition, related educational fees, and room and board expenses for the next 12 months of post-secondary education for you, your spouse, children or dependents; Mortgage or rent payments to prevent eviction or foreclosure on your principal residence; Payments for burial or funeral expenses for your deceased parent, spouse, children or dependents; and Expenses for repairing damages to your primary residence that would qualify for a casualty deduction under IRS Code Section 165 (without regard to whether the loss exceeds 10 percent of your adjusted gross income). If you make a hardship withdrawal, all employee and company contributions under the 401(k) Plan will be suspended for six months. At the end of the six-month period, contributions will automatically resume based on your contribution elections on file. Amounts withdrawn before age 59½ are generally subject to income tax plus a 10% penalty tax. Generally, taxes are not withheld from your hardship distribution unless you request that taxes be withheld. If you request tax withholding and have the funds available your distribution will be grossed up to cover the taxes. For example, if your hardship request is $900 and you want 25% withheld for taxes to the extent possible the 401(k) Plan would distribute $1,200 and withhold $300 in taxes. Please consult with your tax advisor for more information. All hardship withdrawals will be processed based on the laws in effect when you make your request. 18

19 Distribution Options YOUR DISTRIBUTION OPTIONS You are entitled to the vested value of your 401(k) Plan account when you retire or leave ITW employment. Distribution Based On Your Account Balance If your account balance is $1,000 or greater, you have several options: Leave the money in the 401(k) Plan however you must generally begin taking distributions once you reach age 70 1 /2. Take your money in monthly, quarterly or annual installment payments. Roll over the balance to another qualified 401(k) plan, 401(a) plan, 403(a) plan, 403(b) plan, governmental 457 plan or IRA. Take part of the money in cash called a partial lump-sum distribution. The remainder of the balance would continue to be invested according to your investment elections and would be available for distribution at any point in the future. Take all of the money in a lump-sum distribution. Your balance in the 401(k) Plan would be paid to you. If you have a balance in the ITW Common Stock Fund, you may elect a distribution in shares. If you do not elect a distribution method, your money will automatically stay invested in the 401(k) Plan until you reach age 70 1 /2. If your account balance is less than $1,000, you will receive a lump-sum distribution unless you roll over the balance to another qualified 401(k) plan, 401(a) plan, 403(a) plan, 403(b) plan, governmental 457 plan, a Roth or traditional IRA. Your balance will be distributed to you 90 days following the end of the quarter in which you left employment with ITW. Retirement Planning Assistance If you should leave ITW, you will want to consider maintaining your savings momentum and continue to accumulate savings for your long-term goals. You can review your options by calling the ITW Employee Service Center at , Option 3, and asking to speak to an ING Financial Partners Retirement Consultant *. * Retirement Consultants are Registered Representatives of ING Financial Partners (member SIPC). ING does not offer legal or tax advice. Consult with your tax and legal advisors regarding your individual situation. CN Timing Of Your Payout Distribution requests may be made through the ITW Retirement Plans website or by calling the ITW Employee Service Center. You must wait at least 30 days following your termination of employment before requesting a distribution. If you have established personal banking information on the ITW Retirement Plans website at least seven business days in advance of your distribution request, your distribution amount can be automatically deposited to a personal banking account. Payment will be made as soon as practical after your request is received but in no event before 30 days following your termination of employment. 19

20 Distribution Options CONTINUED TAX CONSEQUENCES OF DISTRIBUTIONS Distribution choices and rules are complicated. You are encouraged to talk with your tax advisor or financial planner before deciding how to take your distribution. Contributions to the 401(k) Plan (except after-tax contributions) are not subject to federal income tax when made, and earnings on these contributions are not taxed to you when earned under the 401(k) Plan. However, distributions to you or your beneficiary after your retirement, death or other termination of employment generally are taxed to you or your beneficiary when received. A 10% penalty tax generally applies to distributions before age 59 1 /2. In some situations, you may defer income to a later date and avoid the 20% mandatory federal income tax withholding that applies to many distributions by directly transferring the distribution to an individual retirement account or another tax-qualified plan (if that plan accepts direct transfers). In general, when you receive a distribution from the 401(k) Plan in the form of company shares, you will be taxed on the cost to the 401(k) Plan of the company shares and not on the value of any appreciation in the stock (the net unrealized appreciation ). When you sell the company shares, you will be taxed on the difference between the sale price and the cost to the 401(k) Plan. However, in general, this rule only applies if your distribution is a complete distribution of your entire benefits under the 401(k) Plan. Otherwise, you may be taxed on the net unrealized appreciation at the time of your distribution. CLAIMS AND APPEALS If you submit a claim for benefits, the procedures described below will apply. Initial Review Of Claims If you have submitted a written request for a 401(k) Plan benefit to which you feel you should be entitled, you ll receive a response to that request within 90 days of the date it was received by the ITW Employee Benefits Steering Committee ( the Committee ), unless the Committee notifies you before then that up to an additional 90 days will be required to review your request. The provisions of the 401(k) Plan will be applied in considering your request for benefits. Denial Of Claims If you claim a benefit that is more than is determined under the 401(k) Plan s terms or if you claim any benefit or form of payment that is not provided by the 401(k) Plan, your claim will be denied. Your denial notice will include the reasons for the denial, the 401(k) Plan provisions on which the denial is based, a description of any information which the Employee Benefits Steering Committee does not have which might result in a different decision, and a description of the 401(k) Plan s review procedures and the time limits applicable to such procedures, including a statement of your right to bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on review. 20

21 Appeal Of Denied Claims If your claim for benefits is denied, in whole or in part, you, or any person you authorize to represent you, may ask the ITW Employee Benefits Steering Committee for a review of the claim. The request for a review must be submitted within 60 days of the date you receive a denial notice. If a written denial notice is not provided within 90 days (or 180 days if extended) after the Committee receives the claim, you shall be deemed to have exhausted your administrative remedies under the 401(k) Plan and shall be entitled to pursue any available remedies under Section 502(a) of ERISA. Your request for a review of a denied claim must be in writing. See the Legal and Administrative Information section (page 29) for the address of the Plan Administrator, where you may direct your appeal to the ITW Employee Benefits Steering Committee. You or your authorized representative should include in writing to the Committee, any issues, comments or reasons you feel should result in a reversal of the previous decision, or any documents, records and other information relating to the claim. In your request for a review, you will be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to your claim. The Committee will review your claim under the 401(k) Plan s terms, taking into account all comments, documents, records and other information submitted by you relating to the claim, without regard to whether the information was submitted or considered in the initial benefit determination. Normally, you ll receive written notice of their final review decision within 60 days of the date your written request is received. If an extension of time is needed to review the claim, you will be notified before the 60 days has gone by. In no event will the review period be extended beyond the 120th day following the date the Committee received your written request for review of a denied claim. The notice of final review will specify reasons for the denial and the 401(k) Plan provisions on which the decision is based. If written notice of the decision is not given to you within 60 days (or 120 days if applicable), you will be deemed to have exhausted your administrative remedies and can bring a civil action in court. Unless otherwise required by law, the decision of the Committee on review of the claim denial will be binding on all parties. 21

22 401(k) Plan Tools And Resources Once you have developed your retirement savings strategy and determined your investment approach, ITW gives you access to the retirement planning tools, educational resources and information you need to keep track of and manage your account 24/7. 401(k) Plan Account Information The online statement tool offers up-to-date account details and allows you to decide what information you want shown. Quarterly statements are available online or can be mailed to you at home displaying your current account balance and investment performance over the last three months. You can also opt into receiving quarterly online statements instead of paper statements. Resource Center Available on the ITW Retirement Plans website, this helpful section offers a variety of useful tools and retirement planning information to help you learn more about investing and help with your long-term financial planning. 22

23 ING Advisor Service * Gives you access to professional investment advice, which can help you work toward reaching your goals. Depending on the level of help you want or need, you have two service options to choose from: Personal Online Advisor or Professional Account Manager. Personal Online Advisor Available at no additional cost, this do-it-yourself option is a web-based guide ideal for anyone who wants some general tell me what to do kind of advice. The Personal Online Advisor offers you advice for refining your investment strategy. You then have the option of implementing this advice by simply hitting the Accept Advice button, or you can save it for future consideration. You can access the Personal Online Advisor through ITWemployee.com. Visit the Do More to Plan and Save section on the home page or the ING Advisor Service link on the top navigation bar from any page. Develop Your Retirement Strategy Refine Your Strategy Professional Account Manager Available for an additional fee (no more than $5 a month for every $10,000 in your account), this full-service option is designed for someone who prefers to take a hands-off, take care of it for me type approach. Simply call the ITW Employee Service Center at , Option 3, and ask to speak with an Investment Advisor Representative. The initial consultation comes at no additional charge, and if you choose to enroll in the Professional Account Manager service, you ll benefit from ongoing assessments of your progress, periodic account updates and optimization. * Advisory Services provided by ING Investment Advisors, LLC for which Financial Engines Advisors, LLC acts as sub advisor. ING Investment Advisors, LLC does not give tax or legal advice. If you need tax advice, consult your accountant or attorney. If you need legal advice, contact your attorney. For more information about the ING Advisor Service, please read the ING Investment Advisors Disclosure Statement that may be viewed online by accessing the ING Advisor Service link (access via ITWemployee.com) or requested from an Investment Advisor Representative by calling the ITW Employee Service Center at , Option 3. Financial Engines Advisors, LLC is not a corporate affiliate of ING Investment Advisors, LLC or ING Institutional Plan Services, LLC. CN

24 Access And Manage Your Account 24 Hours A Day ITW RETIREMENT PLANS WEBSITE (ITWemployee.com) The online tools and resources on the preceding pages can all be found at ITWemployee.com. Simply go to the ITW Retirement Plans website on the landing page or log on directly to In addition to the great features already discussed, the site also allows you to: Change your contribution amount Perform fund transfers Change your investment options Learn about investing Access forms Obtain investment information And more ITW EMPLOYEE SERVICE CENTER ( , Option 3) If you prefer, you can also access and manage your account over the phone by calling the ITW Employee Service Center. Participant Services Representatives and ING Investment Advisor Representatives are available from 7 a.m. to 7 p.m. Central time, weekdays, excluding stock market holidays. A Spanish menu and Spanishspeaking representatives are also available. ING RETIRE (Mobile account app * ) Once you have enrolled, you can check in on your ITW 401(k) Plan using your iphone, ipod touch, Android or Kindle device. ** Simply download the app from your preferred mobile app store (keywords: ING Retire) and enjoy a wealth of information and on the go transactions such as: Current balance(s) Transaction history Balances by asset class and fund Personal rate of return Historical fund performance Contribution history The mobile app can also be used to perform transactions, allowing you to: Change your contributions Set your contribution rate to increase automatically Transfer money among funds Reallocate your account balance Change how future contributions will be invested Estimate your potential future retirement income * You will need your Password issued by ING to access your account. To request a Password reminder, visit to have a reminder mailed to your home address. ** iphone and ipod are trademarks of Apple Inc., registered in the U.S. and other countries. Android is a trademark of Google Inc. Amazon and Kindle are trademarks of Amazon.com, Inc, or its affiliates. 24

25 Rollovers YOU CAN CONSOLIDATE YOUR RETIREMENT ACCOUNTS If you have retirement accounts in a former employer s qualified plan, rolling it into your ITW 401(k) may be worth considering. A 401(k) rollover gives you a number of benefits, including: Greater control You ll be able to manage all your retirement accounts in one place, quickly and easily through ITWemployee.com. No taxes or penalties You ll avoid the taxes and penalties that can be triggered by withdrawing from your retirement accounts. Compound interest and earnings all your accounts will be working together to earn you interest and dividends on your 401(k) Plan investments. How To Request A 401(k) Rollover Step 1: Contact your former employer and let them know you d like to roll your old 401(k) balance into your ITW 401(k) Plan. Step 2: Follow the instructions your former employer provides. Step 3: Ask your former employer to make the check payable to: ITW 401(k) Plan: FBO [YOUR name] Step 4: Complete an ITW Rollover Contribution Form to select investment options. You ll find this form at ITWemployee.com or on the enclosed CD. Step 5: Submit the ITW Rollover Contribution Form with the check to ING. Please note: If sent separately, your check will be returned to you. Online: ITWemployee.com Phone: , Option 3 Please note: All transactions completed by 3 p.m. Central time will be processed the same business day. Transactions completed after 3 p.m., on weekends or stock market holidays, will be processed the next business day. 25

26 General Information MORE INFORMATION ABOUT YOUR 401(k) PLAN Section 404(c) Employee Retirement Income Security Act ITW has designed the 401(k) Plan to satisfy Section 404(c) of the Employee Retirement Income Security Act of 1974 (ERISA) and related regulations covering participantdirected investments. Under the 401(k) Plan, you decide how your account is to be invested among the investment choices established by the ITW Employee Benefits Investment Committee. Because the company has designated the 401(k) Plan as an ERISA 404(c) plan, however, neither ITW nor its Employee Benefits Investment Committee will be liable for losses that result from your investment decisions. You can request the following information from the 401(k) Plan s 404(c) representative, which is ING, by writing to the ITW Plan Administration Team on behalf of the Plan Administrator, PO Box 5166, Boston MA , or by telephone at , Option 3: Profiles, fund fact sheets and similar information for the mutual funds, commingled funds and separate accounts that make up the Path2 Core Investment Funds. A list of the assets in each of the managed accounts that form a part of the core funds and the value of each such asset, as well as the name of the issuer of each fixed rate investment contract issued by a bank, savings and loan association or an insurance company, the term of the contract and the rate of return on the contract. An Introduction To ING U.S. ING U.S. is the company that handles the daily servicing of the 401(k) Plan, providing you with 401(k) Plan information, saving and investing education, processing of transactions, and more. ING U.S. (NYSE: VOYA) offers a comprehensive array of financial services, which includes life insurance, retirement plans, mutual funds, managed accounts, alternative investments, institutional investment management, annuities, employee benefits and financial planning. For more information, visit Plan Insurance This 401(k) Plan is not covered by the Pension Benefit Guaranty Corporation s (PBGC) termination insurance program. The PBGC guarantees pensions from defined benefit plans that fund for a specific monthly benefit upon retirement. Since this 401(k) Plan is a defined contribution plan, with benefits based on account balances rather than a specific monthly benefit, it is therefore not insurable. 26

27 Qualified Domestic Relations Order A court may order that part of your 401(k) Plan benefits be assigned to another person (your former spouse, separated spouse, child or other dependent) due to a divorce, separation or child support situation. The court order is called a domestic relations order and if it meets the 401(k) Plan requirements, it becomes a Qualified Domestic Relations Order (QDRO). QDRO procedures and a model order designed to provide a very basic assignment under the 401(k) Plan are available at no charge under the Forms section of the ITW Retirement Plans website or by calling the ITW Employee Service Center. Spouse Definition Your spouse is designated as the one who meets all the requirements of a valid marriage contract in the state in which you live, subject to applicable law. A former spouse may be considered your spouse under a QDRO (usually the result of your spouse s claim on your Plan benefit during separation or divorce proceedings). Loss Of Benefits There are certain circumstances that may lead to your losing part or all of your account. Among these are the following: Your account may be reduced by an adverse investment experience. Also, your account may be reduced by administrative costs incurred by the 401(k) Plan and trustee to the extent those costs are not paid directly by the company. The 401(k) Plan is operated under certain assumptions. These assumptions are that it s a qualified plan under the Internal Revenue Code and no amounts are contributed or allocated by error. If any of these assumptions is incorrect, your benefit may be affected and company contributions, if eligible, may be returned to the company. Certain contribution and earnings limits set by the IRS may reduce, eliminate or otherwise affect your benefit. Generally, your benefits may not be assigned, sold, transferred, garnished or pledged as collateral. However, your benefit may be attached to satisfy a federal tax levy or a QDRO. A QDRO, issued by a state court, provides that a part of your benefit be paid for child support, alimony or marital property rights. If you leave the company before you re fully vested, you may forfeit the non-vested part of your company contributions (if eligible, based on your collective bargaining contract), and related earnings. You will forfeit this amount if you re not rehired before having five straight one-year breaks in service or on receiving a payment from the 401(k) Plan. If you are rehired before you have a five-year break in service and you repay the distribution within a certain time period, the amount you lost will be reinstated. For more information about repayment, see Restoring Forfeitures (next page). 27

28 General Information You must keep your current address on file with the company. If you cannot be located when it is time to pay your account, your payment may be delayed or forfeited. If your account is forfeited for this reason and you later request your payment your account will be reinstated. However you will not receive any investment returns on your account from the forfeiture date to the reinstatement date. Restoring Forfeitures Any nonvested portion of your company basic account (if applicable) will be forfeited when you receive a distribution of your vested account balance or have a five-year break in service, whichever occurs first. If you are rehired before you have a five-year break in service, any amounts you forfeited will be reinstated if you repay all 401(k) Plan distributions you received after your employment ended. This repayment must be received by what would be your fifth straight one-year break in service if you had not been rehired. If you do not repay your distribution, forfeitures will not be restored to your account. If you are rehired after a five-year break in service, forfeitures will not be restored to your account. No Contract Of Employment Nothing contained in the 401(k) Plan will be construed as a contract of employment between ITW and any employee, or as a right of any employee to continue in the employment of ITW or as a limitation of its right to discharge any employee with or without cause. Applicable Law CONTINUED The 401(k) Plan will be construed and administered according to the Employee Retirement Income Security Act of 1974 (ERISA) or subsequent amendments or any other laws of the United States of America. 28

29 Legal And Administrative Information It s important that you understand how the 401(k) Plan works so you can take advantage of the benefits the 401(k) Plan is designed to provide. This SPD will give you a basic understanding of how the 401(k) Plan works. Read it carefully to find out when you re eligible to participate, how you can invest your funds and when your account is available to you. If you have any questions, contact the ITW Employee Benefits Steering Committee. This SPD will be effective until another SPD is issued with a later effective date. This SPD may be modified from time to time. To determine the proper benefits at any given time under a 401(k) Plan, it is necessary to consult the SPD as it was in effect at that time. This SPD is intended to provide you with general information about the 401(k) Plan. The formal texts of the 401(k) Plan and trust agreements are the primary documents which form the 401(k) Plan. While every effort has been made to be sure this description is as complete and accurate as possible, the terms of the 401(k) Plan and trust agreements shall be controlling in case of any conflict between this description and the 401(k) Plan and trust agreements. This SPD is not meant to interpret, extend, or change the provisions of the 401(k) Plan in any way. The Employee Benefits Steering Committee of ITW has authority to determine eligibility for benefits and construe the terms of the 401(k) Plan. The provisions of the 401(k) Plan may only be determined accurately by reading the actual 401(k) Plan document. PLAN INFORMATION Plan Name ITW Bargaining Savings and Investment Plan ( BSIP ) Plan Administration The 401(k) Plan is sponsored by Illinois Tool Works Inc. The ITW Employee Benefits Steering Committee is the Plan Administrator and handles the operation of the 401(k) Plan, interprets 401(k) Plan provisions and makes the final decisions about such issues as eligibility and payment of benefits. The 401(k) Plan may rely on other professional service providers to assist in Plan administration. You can address letters to: Retirement Plan Administrator Illinois Tool Works Inc West Lake Avenue Glenview, IL , Option 3 Service Of Legal Process Legal process may be served on the Plan Administrator or General Counsel of ITW at the above address. 29

30 Legal And Administrative Information Plan Year The 401(k) Plan s financial records are kept on a calendar-year basis from January 1 to December 31. Plan Identification ITW s identification number, assigned by the Internal Revenue Service, is The 401(k) Plan also has an identification number, which is 039 (BSIP). Plan Type This is a defined contribution plan (401(k) Plan). Plan Trustee Contributions to the 401(k) Plan are deposited into trust funds, which are managed by the trustee. The trustee is: The Northern Trust Company 50 South LaSalle Street Chicago, IL Successor Company CONTINUED In the event of the dissolution, merger, consolidation or reorganization of ITW, the 401(k) Plan may or may not be continued by the successor. If the 401(k) Plan is continued by the successor, the successor will be substituted for ITW under the 401(k) Plan. The substitution of the successor will constitute an assumption of the 401(k) Plan liabilities by the successor and the successor will have all of the powers, duties, and responsibilities of ITW under the 401(k) Plan. 30 Indemnification The ITW Employee Benefits Steering Committee shall be indemnified by ITW from and against any and all liability, joint or several, for their acts and omissions and for the acts and omissions of their agents and other fiduciaries in the administration and operation of the 401(k) Plan. The ITW Employee Benefits Steering Committee shall also be indemnified by ITW against all costs and expenses reasonably incurred by them in connection with the defense of any action, suit or proceeding related to the 401(k) Plan, including the cost of reasonable settlements (other than amounts paid to ITW) made to avoid costs of litigation and payment of any judgment or decree entered in such action, suit or proceeding. ITW shall not, however, indemnify the ITW Employee Benefits Steering Committee with respect to any act finally adjudicated to have been caused by willful misconduct or with respect to the cost of any settlement unless the settlement has been approved by a court of competent jurisdiction. The right of indemnification shall not be exclusive of any other right to which the ITW Employee Benefits Steering Committee may be legally entitled and it shall inure to the benefit of the duly appointed legal representatives of the ITW Employee Benefits Steering Committee.

31 Your Rights To Benefits Under ERISA ERISA RIGHTS AND PROTECTIONS As a participant in the 401(k) Plan you are entitled to certain rights and protections under ERISA. ERISA provides that all 401(k) Plan participants shall be entitled to: Receive Information About Your Plan and Benefits Examine, without charge, at the Plan Administrator s office and at other specified locations, such as worksites, all documents governing the 401(k) Plan, and a copy of the latest annual report (Form 5500 Series) filed by the Plan with the US Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration. Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the 401(k) Plan, the latest annual report (Form 5500 Series) and an updated summary plan description. The Plan Administrator may make a reasonable charge for the copies. Receive a summary of the 401(k) Plan s annual financial report. The Plan Administrator is required by law to furnish each participant with a copy of this summary annual report. Prudent Actions By Plan Fiduciaries In addition to creating rights for 401(k) Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit Plan. The people who operate your 401(k) Plan, called fiduciaries of the Plan, have a duty to do so prudently and in the interest of you and other 401(k) Plan participants and beneficiaries. No one, including your employer, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a pension benefit or exercising your rights under ERISA. Enforce Your Rights If your claim for a pension benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of 401(k) Plan documents or the latest annual report from the 401(k) Plan and do not receive them within 30 days, you may file suit in a Federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court. In addition, if you disagree with the 401(k) Plan s decision or lack thereof concerning the qualified status of a domestic relations order or a medical child support order, you may file suit in Federal court. If it should happen that Plan fiduciaries misuse the 401(k) Plan s money, or if you are discriminated against for asserting your rights, you may seek assistance from the US Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. 31

32 Your Rights To Benefits Under ERISA CONTINUED If you are successful the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous. ASSISTANCE WITH YOUR QUESTIONS If you have any questions about your 401(k) Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from your Plan Administrator, you should contact the nearest area office of the Employee Benefits Security Administration, US Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, US Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C., You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration. AMENDMENT OR TERMINATION OF THE 401(k) PLAN The 401(k) Plan may be partially or wholly amended at any time, either prospectively or retroactively, by ITW. You will be informed of any changes that are made and told how the changes affect your benefits, if at all. ITW also reserves the right to terminate or suspend the 401(k) Plan at any time. You and your covered dependents will be bound by the terms of any such amendment, modification, termination or suspension. No change in the 401(k) Plan or termination will deprive you of any benefits to which you are entitled at the time of amendment or termination. 32

33 401(k) Plan At A Glance ELIGIBILITY ENROLLMENT EMPLOYEE CONTRIBUTIONS CATCH-UP CONTRIBUTIONS CONTRIBUTION CARRYOVER ELECTION COMPANY CONTRIBUTIONS ROLLOVERS BENEFICIARY DESIGNATION VESTING LOANS AND WITHDRAWALS Generally, you are eligible to participate upon hire at ITW. Prior service with an acquired unit generally counts towards eligibility and vesting requirements. You can actively enroll through ITWemployee.com. You can contribute from 1% to 50% of your pay on a pre-tax basis up to annual IRS limits. In addition, you can contribute from 1% to 10% on an after-tax basis, or up to 50% of your pay by using a combination of both pre-tax and aftertax contributions. Your total contributions (pre-tax, after-tax and any company contributions, if eligible, based on your collective bargaining contract) are subject to annual IRS limits. If you are or will be age 50 or older by the end of the calendar year, you may be able to make additional pre-tax catch-up contributions up to annual IRS limits. Your pre-tax contributions are stopped when you reach the pre-tax limit during a calendar year. By electing Yes as your contribution carryover election, you will continue your pre-tax contribution on an after-tax basis (up to 10%) for the remainder of the year, so you may continue to receive the company contribution, if eligible, based on your collective bargaining contract. Regardless of your contribution carryover election, your pre-tax savings will automatically resume the following January based on your pre-tax election rate on file. ITW provides company contributions, if eligible, based on your collective bargaining contract. You can roll in your balance from another qualified retirement plan. This can include pre-tax and after-tax contributions. Your beneficiary is the person(s) who would receive your vested account if you were to pass away. Log on to ITWemployee.com and access 401(k) Plan. Simply go to Personal Information and select Beneficiary Information to add/edit your designation. You are always 100% vested in your contributions, any rollover contributions, and any earnings on those contributions. You are immediately 100% vested in your company account(s), if eligible. If you became a participant through an ITW acquisition, vesting on your prior balance was determined based upon the terms of the deal. You have access to your account through loans and withdrawals as an active employee. 33

34 401(k) Plan At A Glance CONTINUED INVESTMENT OPTIONS LOAN REPAYMENTS (UPON SEPARATION) DISTRIBUTION OPTIONS PARTICIPANT SERVICES REPRESENTATIVES STATEMENTS AND CONFIRMATIONS You have the choice of two investment paths: Path1 Target Retirement Funds or Path2 Core Investment Funds. Path1 Target Retirement Funds are for those who don t have the time or experience to actively manage their investments. All you need to do is select one fund with the date closest to when you will retire or will need your retirement account, and an investment manager manages the investment mix for you to meet your savings time horizon. With the Path1 Target Retirement Funds, you can also invest up to 20% of your account balance and/or future contributions in the ITW Common Stock Fund. Path2 Core Investment Funds allow a more hands-on approach if you prefer to actively manage your investments. Path2 Core Investment Funds offer a mix of different asset classes and styles to suit your time horizon and tolerance for risk. Be sure to learn more about your options and read the individual fund fact sheets prior to making any investment decisions. When employment with ITW ends, any remaining loan balance is due and payable in full by the end of the calendar quarter following the quarter in which you leave ITW. You also have the option of continuing to make loan repayments after termination through automatic monthly payments from a bank account. See pages for more information. If you have a loan, you can review your outstanding loan balance through the ITW Retirement Plans website in the Loans section under My Account. You can also call the ITW Employee Service Center at , Option 3, and speak with a Participant Services Representative. See pages for more details about all of your distribution options as a former employee, as well as the tax consequences of taking a distribution from your account. ING Financial Partners Retirement Consultants are available to answer any questions you may have. Participant Services Representatives and Investment Advisor Representatives are available via the ITW Employee Service Center at , Option 3, Monday through Friday (excluding stock market holidays) from 7 a.m. to 7 p.m. Central time. Spanish-speaking representatives are available. You can check your balance or generate an online statement through ITWemployee.com. You are encouraged to go green and elect to turn off paper quarterly statements and confirmation statements for transactions. If you go green you will receive statements in your online mailbox in the ITW Retirement Plans website. You have the option to have confirmation statements delivered in Spanish. This 401(k) Plan overview reflects the provisions of the ITW Bargaining Savings and Investment Plan as amended through December 31,

35 Everything You Need To Know In One Place Access the CD below to review the latest information on the ITW 401(k) Plan, including helpful resources like the following: The Investment Funds A Rollover Form And More 35

36 Keep This Document For Your Records Retirement Planning Assistance For retirement planning assistance you can call the ITW Employee Service Center at , Option 3, and ask to speak to an ING Financial Partners Retirement Consultant *. Retirement Consultants are licensed financial professionals available to provide guidance on your retirement savings, including the features of your ITW 401(k) Plan. Retirement Consultants can help you understand your options and the tax consequences of each. Retirement Consultants are available weekdays from 7 a.m. to 7 p.m. Central time (excluding stock market holidays). * Retirement Consultants are Registered Representatives of ING Financial Partners (member SIPC). ING does not offer legal or tax advice. Consult with your tax and legal advisors regarding your individual situation. CN For more information concerning your ITW benefits, visit ITWemployee.com or call the ITW Employee Service Center at , Option 3. ITW Bargaining 401(k) Plan Enrollment Guide and SPD 9/13