FOR PLAN PARTICIPANTS Nonqualified Deferred Compensation Plan Enrolling in the Plan Fresenius Medical Care North America Deferred Compensation Plan Contract ID: 617599
Table of Contents Welcome... 1 Eligibility and enrollment... 1 Why nonqualified deferred compensation?... 1 How the plan works... 2 Deferral elections... 2 Taxes... 2 Investment options... 2 Vesting... 3 Distributions... 3 Other distribution events and payout types... 3 Have you participated in the plan prior to 2005?... 4 Planning and status... 4 Legal status of the plan... 4 Change in control... 4 Other considerations... 4 Manage your account... 4 Not FDIC or NCUA insured May lose value Not a deposit No bank or credit union guarantee Not insured by any Federal government agency
Welcome Eligibility and enrollment As a highly compensated employee, you are eligible to participate in the Fresenius Medical Care North America Deferred Compensation Plan. The FMCNA Deferred Compensation Plan is a unique, tax-deferred savings program designed to help you meet your personal financial objectives by allowing you to defer compensation on a pre-tax basis. When you defer compensation, you also defer paying federal and state income taxes. The nonqualified FMCNA Deferred Compensation Plan is a great complement to a qualified plan, such as a 401(k), because you are not subject to the same pre-tax contribution limit meaning you can increase your salary deferral amount in the nonqualified plan. The deferral election period for this plan runs from November 20 through December 11, 2017. Why nonqualified deferred compensation? The FMCNA plan offers you an additional opportunity to save for your retirement, on a pre-tax basis, above the limits of a qualified retirement plan. Nonqualified plans can be more flexible than traditional retirement programs and allow you to: Defer compensation on a pre-tax basis in excess of qualified retirement plan limits. Accumulate earnings tax-deferred. Design an individualized investment strategy and distribution plan. Access high-quality account information.
How the Plan Works Deferral elections You may defer different amounts from different types of compensation: Salary Minimum of 1%; maximum of 90%. Bonus 10% to 90%. Commissions 10% to 90%. Please note that bonus and commission deferrals are capped at 90%, leaving enough money for you to pay payroll taxes. The bonus deferral election you make during this open enrollment period will apply to the bonus earned in 2018 and paid in early 2019. The company will establish an account on your behalf to track the value of the benefits under the Plan. The value of your benefit account reflects all contributions and the performance of those reference investments you have selected. In order to receive the tax advantages offered by the plan, federal law requires the plan to be unfunded. This means that the plan assets must be part of the general assets of the Company, and, therefore, must be subject to the claims of the Company s creditors. In the event that the company becomes insolvent, you will be an unsecured general creditor of the Company. Once you make an election to defer any type of compensation, the decision cannot be changed until the next annual enrollment period, except for reasons of extreme financial hardship. The plan is evergreen, which means that your deferral elections remain in effect year from year to year unless you change them during the enrollment period. The compensation that you elect to defer will be withheld and credited to your account as soon as administratively practicable after the deferred amount would otherwise have been paid to you. Your deferrals into this Plan may reduce the wages counted under the FMCNA 401(k) Savings Plan. Please take this into consideration when determining deferral amounts. Taxes When you defer compensation, you also defer paying federal and state income taxes. Social Security and Medicare taxes (also known as FICA taxes) are deducted at the time of deferral. Distributions are taxed as ordinary income. When you receive a distribution, you will pay federal and state income taxes on your deferrals and any gains. Reference investment options The reference investment options in this plan consist of mutual funds that mirror your FMCNA 401(k) Plan investments. You can make reference investment elections that apply to your entire account or you can choose different options for different purposes. For example, you might elect to have different reference investment elections for short-term distributions than what you elect for your retirement distributions.
Participant deferrals are 100% vested immediately. Vesting Distributions At the time you make a deferral election, you will also make a distribution election. There are two types of distributions: Retirement Normal retirement is age 65. Early retirement is age 55 and five years of service. In-Service You may elect an in-service distribution date that is a future year in January to receive deferrals, while still employed or in-service at Fresenius. You can decide to take a scheduled in-service distribution later than what you initially elected, but you cannot take it sooner. To change a scheduled distribution, you must elect to postpone the date at least 12 months prior to the scheduled distribution date, and it must be extended by at least five years beyond the original distribution date. For example, if you elected to receive an in-service distribution in 2019, you must notify the plan administrator that you wish to postpone the distribution by Dec. 31, 2017. Other distribution events and payout types In addition to retirement distributions and scheduled withdrawals, the following qualify as distribution events. EVENT Death or Disability Separation from service prior to normal or early retirement Separation from service after normal or early retirement Unforeseeable emergency PAYOUT TYPE Lump sum Lump Sum Lump sum or a number of annual installments up to 15 years Participant can petition to receive a distribution limited to the amount needed to satisfy the emergency Have you participated in the plan prior to 2005? In 2004, Section 409A was added to the Internal Revenue Code by the American Jobs Creation Act. If you were participating in the plan prior to 2005, you will have two accounts one with a Pre-409A balance and one with a Post-409A balance. The Pre-409A balance features the same distribution options as described above, except if you re interested in changing a scheduled distribution, it must be done one year in advance of the distribution date and is required to be extended by at least one year beyond the original distribution date, due to the account falling under pre-409a guidelines for distributions.
Planning and Status Legal status of the plan Under government regulations, deferred compensation plans are nonqualified. Nonqualified plans do not have the same level of asset and tax protection as qualified plans, such as a 401(k) plan. The company deposits all deferred compensation into a trust account that was established solely for the purpose of holding the assets and paying benefits. This account is informally known as a Rabbi Trust. If the company were to become insolvent or bankrupt, plan participants would be considered unsecured creditors of the company. Participant accounts are considered deemed accounts. The trust funds are company assets until they are distributed. Change in control If the company is sold or otherwise comes under the control of a new entity, the plan may be liquidated by paying out the plan s assets to participants or it may be continued with the new entity. Other considerations Unlike a 401(k) plan, the NQDC plan does not allow for loans or rollovers. Manage your account You will be able to enroll, designate your beneficiaries, monitor and make changes to your nonqualified deferred compensation account by logging onto www.principal.com. If you have questions, please call 1-866-694-6386. The FMCNA Human Resources contact for the Deferred Compensation Plan is Lynne O Leary, Director of Benefit Operations. Please feel free to call Lynne at 1-800-662-1237, ext. 4136 or email at Lynne.O_Leary@fmc-na.com with any questions or comments. Principal National Life Insurance Company and Principal Life Insurance Company, Des Moines, Iowa 50392-0001, www.principal.com Insurance products issued by Principal National Life Insurance Co. (except in NY) and Principal Life Insurance Co. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., 800-247-1737, Member SIPC, and/or independent broker/dealers. Principal National, Principal Life, Principal Funds Distributor, and Principal Securities are members of the Principal Financial Group, Des Moines, IA 50392. The subject matter in this communication is provided with the understanding that Principal is not rendering legal, accounting, or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, or accounting obligations and requirements. NQ33-04 11/2017 t16082501mq