OLD REPUBLIC BASELINE SECURITY PLAN (for employees who enter the Plan on or after January 1, 2014)
Contents Page Introduction...2 Definitions...3 Eligibility and Enrollment...4 Contributions...5 Investing Contributions...6 Earnings...7 When You Receive Your Benefits...8 How You Receive Your Benefits...9 In Case You Die...10 Withdrawals/Loans...11 Vesting and Forfeitures...12 Amendment and Termination...14 Claims Appeal...15 For Your Reference...16 1
Introduction The Old Republic Baseline Security Plan ( Baseline Security Plan or Plan ) is an important part of the benefits and security for you and your family. In this booklet, you ll learn about this benefit. We ll talk about eligibility and discuss some choices you ll have. And we ll consider how you can receive the benefits of the Plan. This Plan gives you a chance to participate in the Company s success and at the same time helps provide you with additional financial security, both now and in your retirement years. As you read about your Baseline Security Plan, consider the key words: your Plan. This Plan is for you. Benefits are based in part on the performance of your operating group - which is determined mainly by your efforts and those of your fellow employees. Thus these joint efforts have a direct effect on your Plan, and your resulting benefits. (January 2014) 2
Definitions Throughout the Plan, certain capitalized terms are used. These terms are defined as follows: Committee means the Executive Committee of the Board of Directors, which has been appointed by the Company to administer the Plan. Company means Old Republic International Corporation. Discretionary Employer Contributions means discretionary contributions made to the Plan by an Employer and allocated based upon your compensation. Employer means Old Republic International Corporation and its affiliates and subsidiaries that have adopted this Plan. You can receive from the Committee, upon written request, information as to whether a particular Employer has adopted the Plan. Hour of Service means each hour you are paid for, or entitled to payment, for the performance of duties for an Employer. You will also receive credit for service if you are paid while you are on an approved leave of absence (vacation, holiday, illness, layoff, jury duty, or military duty). You should note, however, that no more than 501 Hours of Service are required to be credited to you for any single continuous period in which you perform no duties. Also, an Hour of Service will not be credited for any payment made or due because of workers compensation, unemployment compensation, or medical insurance. Plan means the Old Republic Baseline Security Plan, as amended from time to time. Plan Recordkeeper means Fidelity Investments. Year of Service means each 12-month period from January 1 through December 31 in which you complete 1,000 or more Hours of Service with an Employer. 3
Eligibility and Enrollment Generally, you become a participant in the Plan upon your first date of employment. Your eligibility to receive a contribution is discussed in the Contributions section below. Note that if you are a leased employee, a non-employee director, an independent contractor or a temporary employee, you are not eligible to participate. See the Plan for further details. When you become eligible, you will receive a Fidelity welcome guide that outlines the features of the Plan and prompts you to designate a beneficiary(ies) and to choose investment options for your accounts. Each participant has two contribution accounts in the Plan: a Discretionary Employer Contribution Account (referred to as Employer Contribution on Fidelity statements and website) and a Rollover Account (referred to as Pre-Tax Rollover on Fidelity statements and website). 4
Contributions Discretionary Contributions Employers may make discretionary contributions for any year, based on performance and subject to approval of the Company. Such contributions will be allocated as of December 31st of each year to the Discretionary Employer Contribution Account of employees that: completed 1,000 or more Hours of Service during the year, and that were employed on December 31st of that year or who died, became fully disabled during the year, or retired at or after age 65. The amount allocated to your Discretionary Employer Contribution Account will equal the same proportion that your compensation bears to the combined total compensation of all the participants who are entitled to share in your Employer s Discretionary Employer Contribution for that year. Forfeitures Forfeitures from the accounts of other terminated employees (see page 12) will be allocated as of December 31st of each year on an Employer by Employer basis to the Discretionary Employer Contribution Accounts of participants: who completed 1,000 or more Hours of Service during the year; and were employed on December 31st of that year (or died, retired on or after age 65, or became fully disabled during the year). The amount of forfeitures allocated to your Discretionary Employer Contribution Account will equal the same proportion that your compensation bears to the combined compensation of the other participants who are entitled to share in forfeitures for that year. Rollover Contributions At any time, you may make a rollover into the Plan of amounts from an IRA or qualified retirement plan of another employer. Contact Fidelity for details and appropriate forms. Amounts you roll over will be held in your Rollover Account in the Plan. Compensation Compensation for purposes of the Plan is your base compensation, including overtime pay, if applicable. Some items are excluded from compensation for purposes of the Plan, such as bonuses, commissions, car allowances, moving expenses, severance pay and amounts realized with respect to stock options. See the plan document for further details. Maximum Compensation allowed in allocating Discretionary Employer Contributions and forfeitures is $150,000. Limitations on Contributions Under the law, there are limitations on the contributions that may be made or allocated to your accounts in any Plan Year. Specifically, the total of all contributions and forfeitures (but not earnings) allocated to your accounts in all defined contribution plans in any calendar year may not exceed $52,000. The $52,000 limitation could be increased after 2014 by an annual cost of living factor. 5
Investing Contributions Your accounts are invested at your direction in the Funds approved by the Committee and described in documents you will receive periodically from Fidelity, the Plan Recordkeeper. These documents will be updated regularly to provide current information on available investments under the Plan. Information on investment options is also available on Fidelity s website, www.401k.com. To transfer amounts among the Funds, you must make a request with the Plan Recordkeeper, via computer through the Fidelity website or via telephone through the Fidelity Retirement Benefits Line. Access information is provided on the last pages of this summary booklet. You may use the web site or phone line to request transfers up to 12 times per year. During each of these 12 sessions, you may transfer amounts among as many approved Funds as you wish. Your transfers will generally be effective as of the business day made. Default Investment Fund If you do not specify an investment fund in which contributions will be invested, the Plan will deposit contributions into a default fund. The default fund is a target date fund based on your normal retirement date. At your direction, Fidelity Investments will reallocate your balance from the default fund and/or direct future contributions/rollovers to a specific fund of your choosing. ERISA Section 404(c) With respect to the amounts in your accounts, the Plan gives you the flexibility to develop your own investment scheme. You will be responsible for investing these amounts subject to the terms of the Plan and rules and regulations adopted by the Committee. Neither the Committee nor the Trustees will pass upon the prudence of your investment choices. With respect to these amounts, the Plan is intended to constitute a plan described in section 404(c) of the Employee Retirement Income Security Act of 1974 and Title 29 of the Code of Federal Regulations Section 2550.404c-1, and accordingly, fiduciaries of the Plan may be relieved of liability for any losses that are the direct and necessary result of investment instructions given by a Participant or beneficiary. 6
Earnings On each business day, each Fund receives an allocation of income or loss. The amount of income or loss is based upon the performance of each Fund during the current year. Once the income or loss for a Fund is calculated, it is allocated to your accounts based upon the proportion that your accounts invested in the Fund bears to total amounts invested in the Fund. 7
When You Receive Your Benefits Due to Retirement You are eligible to receive benefits when you retire due to age or disability. Your normal retirement date is your 65th birthday. If you continue working past this date, you may continue to participate in the Plan and earn benefits. A Participant shall be considered to have retired for disability if at the time he retires he is considered disabled under the terms of the Old Republic International Corporation Long-Term Disability Plan (regardless of whether he has elected coverage under that plan) or is eligible to receive Social Security disability benefits. Due to Termination/Resignation If the vested balance in your accounts does not exceed $1,000, you will receive your vested balance within 60 days following the calendar year in which you terminate service. If the vested balance in your accounts exceeds $1,000 upon your termination or resignation, you will receive your vested balance within 60 days following the calendar year in which the latest occurs: your 65th birthday or the date you terminate employment with all Employers. However, you may request distribution after you terminate service with all Employers. 8
How You Receive Your Benefits The amounts in your account will be paid to you in cash. You may elect to receive benefits in a lump sum distribution or in installments. If you elect the installment payment method, you will receive your balance in substantially equal installments spread over a period not to exceed the joint life expectancy of you and your designated beneficiaries. Benefits paid from the Plan will be subject to federal and state taxes, as applicable, at the time they are distributed, unless you elect the direct rollover option described below. You should consult your tax advisor before deciding whether to take or delay a benefit distribution. Direct Rollover Option Benefits paid to you in a lump sum generally can be paid directly to an IRA or another qualified retirement plan. Payment to an IRA or qualified retirement plan will be made by giving you a check, issued in the name of the IRA or qualified plan you designate. If you elect the direct rollover option, your payment will not be taxed until you take a distribution from the IRA or qualified plan to which you roll over. 9
In Case You Die If you die before your benefit payments commence, your benefits will be paid to your beneficiary within 90 days following your death. In addition, if you elect installment payments and die before your benefits are completely paid out, the unpaid balance will go to your beneficiary. If you are married at the time of your death, your surviving spouse will automatically be your beneficiary unless you have designated another beneficiary and your spouse has consented to such a designation. The consent must be in writing, notarized by a notary or witnessed by a plan representative, and your spouse must acknowledge the effect of the consent. Should your beneficiary die before all the funds from your accounts are paid out, the remaining balance will be distributed to the other beneficiary(ies), if any. If there is no beneficiary living when you die, then the remaining balance will be paid to your estate. If your beneficiary is a minor or is legally disabled, the Committee, at its discretion, can: make payment to your beneficiary; make payment to a legal guardian; make payment to any relative to pay for the care, support or education of the beneficiary; or use the funds to provide such care, etc., to the beneficiary. Please note, if the Committee notifies you or your beneficiary(ies) that benefits are available, the benefits must be claimed within two calendar years after such notification or they will be distributed to one or more of your relatives, or your beneficiary s relatives, as determined by the Committee. If the Committee cannot locate an appropriate relative within three calendar years after notification, the participant s benefits will be forfeited. However, if an appropriate relative subsequently applies for the forfeited benefit, such benefit will be reinstated. It is important to keep your beneficiary election up to date so that your account is paid to the person or persons that you intend. Please update your election regularly, especially after a lifechanging event such as marriage, divorce, birth of a child or death of a spouse or child. 10
Withdrawals/Loans The Plan does not permit in-service withdrawals or loans. 11
Vesting and Forfeitures In the language of benefit plans, vesting is an important word. It means your ownership rights to your accounts. You are always fully vested in amounts you have rolled over to the Plan. In addition, you are fully vested in your Discretionary Employer Contribution Account if you terminate service on or after your 65th birthday, death, or disability; or if you terminate employment for any other reason as long as you have completed six Years of Service. Vesting becomes very important if you terminate service before age 65 and before completing six Years of Service. We say this because the Plan has been designed to give you a percentage of your interest in your Discretionary Employer Contribution Account for each Year of Service you have completed - up to 100% as shown below. Years of Service Vested Interest 1 0% 2 20% 3 40% 4 60% 5 80% 6 100% Because of the method used by the Plan to count Hours of Service, for vesting purposes, you will earn a Year of Service in your first year of employment if you are a full-time employee and your employment date is prior to August 1, and in your last year of employment if your separation date is subsequent to May 31. Amounts in your Discretionary Employer Contribution Account which exceed your vested interest will be forfeited and redistributed to other participants at the end of the year at the close of the calendar year in which you terminate your service, as described on page 5. Break in Service A Break in Service is any calendar year in which you do not complete 501 Hours of Service with the Employer. Here s how this could affect your vesting. The unvested portion of your Discretionary Employer Contribution Account is forfeited upon your termination of service and re-allocated to other participants at the end of the year. If you are not fully vested upon termination of service, but are rehired by your Employer before incurring five consecutive one year Breaks in Service, you have a right to have the balance you 12
forfeited restored to your accounts. This is accomplished by your repaying to the Plan any amount(s) which had been distributed to you after your departure. You must repay this amount before the earlier of: the date you incur five consecutive Breaks in Service following the distribution or the fifth anniversary of your rehire. If you are not fully vested upon termination of service, but are rehired before receiving a distribution from the Plan and before incurring five consecutive Breaks in Service, your Discretionary Employer Contribution Account will be restored in full without your being required to take any action. If you return to work after a Break in Service, you will once again participate in the Plan. When this happens, if you are partially or fully vested, you receive credit for any previous Years of Service (before the Break in Service). If you have no vested interest but return before incurring five consecutive Breaks in Service, you will also receive credit for any previous Years of Service. However, if you have no vested interest and incur five consecutive Breaks in Service, you forfeit your prior Years of Service. NOTE: A calendar year in which you complete between 501 and 999 Hours of Service is not considered a Break in Service nor a Year of Service. Of course, if you complete 1,000 or more Hours of Service in a year, you will be credited with a Year of Service. If you are absent from employment because of pregnancy, because of birth or adoption of a child, or for the purpose of caring for a child immediately after its birth or adoption, you will receive credit in one year for a sufficient number of hours (not to exceed 501) to avoid a Break in Service. 13
Amendment and Termination Amendment The Plan may be amended at any time, including retroactively, by a resolution of the Board of Directors of the Company. No amendment to this Plan can retroactively reduce benefits already accrued to you, except when required to comply with an act of Congress or the Internal Revenue Code. Termination Although the Employers intend the Plan to be permanent, they reserve the right to terminate the Plan or discontinue contributions to the Plan at any time. Upon termination of the Plan, you will receive a lump sum distribution of your current account balances as soon as practicable. 14
Claims Appeal The Plan is designed to provide you with benefits automatically. It s unlikely that problems will arise. In all cases, the Plan is designed to provide you or your beneficiary with the benefits to which you are entitled. But, if for some reason, either you or your beneficiary don t receive the benefit to which you believe you or your beneficiary are entitled, contact: Old Republic International Corporation Baseline Security Plan Administration Committee 307 North Michigan Avenue Chicago, Illinois 60601 (312) 346-8100 ext.4283 If your claim is denied, you or your beneficiary will receive a written explanation of the denial within 90 days. The denial will give: * Specific reason or reasons for the denial. * Specific reference to the Plan provisions on which the denial is based. * Description of additional information necessary for you to substantiate your claim and an explanation of why that information is necessary. * Information describing how to present a claim for review. If you fail to receive a written notice, your claim is deemed to be denied. If you or your beneficiary believe you are incorrectly denied a benefit, you may request a written review of your case. You must write to the Committee within 60 days of the date you received the denial, or within 150 days after you file a claim if your claim is deemed denied. Any such request should be accompanied by documents or records in support of your appeal. You have the right to review documents pertinent to your claim. Within 60 days (or 120 days in special circumstances) after receipt of your written appeal for review, the committee will notify you in writing of its final decision. If this period is extended, you will be notified within the first 60 days. This decision must contain specific reasons and reference to the Plan provisions on which the denial is based. 15
For Your Reference Here are some basic facts about the Plan and its administration. As a participant in the Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA). The Department of Labor describes these below. You may: * Examine, without charge, at the Plan administrator s office and at other specified locations, such as work sites, all Plan documents, including insurance contracts, collective bargaining agreements, and copies of all documents filed by the Plan with the U. S. Department of Labor, such as summary annual reports and Plan descriptions. * Obtain copies of all Plan documents and other Plan information upon written request to the Plan administrator. The administrator may make a reasonable charge for the copies. * Receive a summary of the Plan s annual financial report. The Plan administrator is required by law to furnish each participant with a copy of this summary annual report. * Obtain a statement telling the employee whether he has a right to receive a benefit under the Plan and, if so, what his benefit would be if he stops working under the Plan now. This statement must be requested in writing and is not required to be given more than once a year. The Plan must provide the statement free of charge. In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the Plan, called fiduciaries of the Plan. These fiduciaries must operate the Plan prudently and in the interest of you and other 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 benefit or exercising your rights under ERISA. If your claim for a benefit is denied in whole or in part, you must receive a written explanation of the reason for the denial. You have the right to have the Plan review and reconsider your claim. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the Plan and do not receive them within 30 days, you may file suit in federal court. In such a case the court may require the Plan administrator to provide the materials and pay up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan 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. If it should happen that Plan fiduciaries misuse the Plan s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in federal court. The court will decide who should pay court costs and legal fees. 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. 16
If you have any questions about your Plan, you should contact the Plan administrator. If you have any question about this statement or about your rights under ERISA, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington D.C. 20210. Plan Sponsor The Plan has been established by the following Company, which is also the administrator of the Plan: Old Republic International Corporation 307 North Michigan Avenue Chicago, Illinois 60601 Financial Aspects The Plan is funded by contributions made by the Employers. These contributions, plus any employee contributions, go to the Plan trustee. Currently, the Plan trustee is: Inter Capital Company of Chicago 307 North Michigan Avenue Chicago, Illinois 60601 Administration Day-to-day administration of the Plan is handled by the Plan Recordkeeper, Fidelity Investments. The Plan Recordkeeper s address is: Fidelity Investments Institutional Services Company, Inc. 82 Devonshire Street Boston, Massachusetts 02109 The telephone number of the Fidelity Retirement Benefits Line is (800) 835-5091. The Internet address for the Fidelity website is www.401k.com. The Plan year begins on January 1 and ends on December 31. If you have any legal action against the Plan, process should be served on: Old Republic International Corporation Baseline Security Plan Administration Committee 307 North Michigan Avenue Chicago, Illinois 60601 (312) 346-8100 17
In addition, process may be served on the Plan administrator or Plan trustee. Plan Name The full name of the Plan is Old Republic Baseline Security Plan. Government Filings Information regarding the Plan is to be filed with the United States Department of Labor under the Company s Employer Identification Number (36-2678171) and Plan number. The Plan number for the Baseline Security Plan is 003. Be sure to use these numbers in any governmentrelated correspondence about the Plan. The Plan is a defined contribution Plan, which means that certain amounts are defined in advance as contributions. Your benefits are provided from individual accounts; therefore, those benefits are not insured by the Pension Benefit Guaranty Corporation, a federal organization that insures certain kinds of pension benefits. Please note, the contents of this booklet are a guide to help you better understand your Baseline Security Plan. If there is an inadvertent conflict between the actual provisions of the Plan and this summary, the Plan document will control. Be sure to keep your Employer and Fidelity informed of any changes in your address so that you will continue to receive important information about the Plan. 18