Dow Corning Corporation Supplemental Savings Plan

Dow Corning Corporation Supplemental Savings Plan

Plan Well. Invest Well. Live Well. Dow Corning Corporation is committed to providing our employees with opportunities to plan for retirement. The Supplemental Savings Plan (SSP) will help you to maximize the Company match for your retirement as well as provide you with expanded tax-advantaged savings opportunities. What s Inside: 3 Your Plan at a Glance 4 The Benefits of Pretax Investing 5 Plan Features 6 Company Match 7 Your Investment Choices 9 SSP Calculator Instructions 10 Plan Enrollment 10 How to Manage Your Account This Enrollment Guide highlights the features of the Plan. The Plan is designed to supplement your Dow Corning Employees Capital Accumulation Plan (CAP) account and allow you to obtain the entire amount of the Company match that would otherwise be lost due to IRS contribution limits applicable to 2012. In addition, the Plan will allow you to defer additional compensation on a pretax basis for your retirement. Please carefully review and refer to your Enrollment Guide during the enrollment period November 28 through December 9, 2011. Deferrals will begin with your January 2012 payroll. This Enrollment Guide is your reference with source information where you may review fund options, consider your retirement goals, and select the right mix of investments to best meet your financial objectives. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal, or tax advice. Participation in the SSP does not create a right to continue employment with the Company. Why participate in the Plan? Maximize your company match Supplement other sources of retirement income Save for long-term retirement goals Invest on a tax-deferred basis Reduce your current income taxes 2

Your Plan at a Glance The Plan provides tax-advantaged savings opportunities, including: Pretax Voluntary Contributions. Your Base Salary, Annual Variable Incentive Plan (AVIP) award, and your Performance Excellence Plan (PEP) award are eligible sources of compensation to be deferred. Company Match. The Company will match a portion of your Base Salary and AVIP contributions. There is no match on PEP deferrals. Your match is based upon your hire date and eligible Company match in the CAP. Tax-Deferred Earnings. Your account will be credited with earnings on a tax-deferred basis, thereby maximizing the combined benefit of pretax deferrals and tax-deferred growth. Flexible Distribution Options. The plan offers flexible distribution options to help accommodate retirement financial goals you may have. Attractive Investment Options. You will have a variety of investment options similar to those available in your qualified 401(k) Plan or CAP Plan. Integrated Retirement Reporting. To facilitate your total retirement planning, T. Rowe Price, our CAP Plan administrator, also administers the SSP. This allows you to access both of your accounts from their website. Plan Well. Invest Well. Live Well. Planning for retirement can be a challenge, particularly during these turbulent financial times. With people living longer and retiring earlier to more active lifestyles, retirement plans and Social Security payments may not provide enough retirement savings. The Company s Supplemental Savings Plan is a tax-efficient program designed to fill the retirement income gap. The Retirement Savings Gap Retirement Income Replacement % of Final Compensations by Dow Corning Plans 100% 80% 60% 40% 20% 0% Re<rement Savings Gap Defined Benefit Plans* Re<rement Savings Gap 401(k) Plan 401(k) Plan 401(k) Plan Social Security Social Security Social Security Defined Benefit Plans* Current Compensation Re<rement Savings Gap Defined Benefit Plans* $125,000 $200,000 $300,000 Assumptions Age 45, Retirement Age 65 Hired: Post-2005 401(k) Starting Balance: $50,000 Maximum 401(k) Contributions Salary Increases: 3% Social Security Increases: 1.5% 6% Investment Return This chart is for illustrative purposes only. This is not meant to represent the performance of your plans. *Including both qualified and nonqualified Plans, if eligible. 3

Regulatory Limits on Your 401(k) Contributions IRS regulations limit the amount you can contribute to the CAP, which is a 401(k) plan. Those limitations are below: Under Age 50 Age 50+ 2012 2011 2012 2011 401(k) Elective Deferrals (D-CAP & Roth Combined Limit) $17,000 $16,500 $22,500 $22,000 Annual Defined Contribution Limit $50,000 $49,000 $55,500 $54,500 Annual Compensation Limit $250,000 $245,000 $250,000 $245,000 In any calendar year, the CAP dollar limits could be reduced even further based on the results from Dow Corning s Highly Compensated Employee (HCE) discrimination testing. The Benefits of Pretax Investing Why Defer? Due to the deferral limits mentioned above, many employees are saving for retirement with after-tax dollars. The SSP allows you to save for retirement with dollars that have not yet been taxed, allowing the full amount of your compensation to compound. For many, this alternative provides a very attractive and efficient method for savings. The chart below illustrates the benefit of deferring the same amount of compensation on a pretax, rather than after-tax, basis. Personal Investment Alternative SSP Compensation Invested: $25,000 $25,000 Current Income Tax at 40%: (10,000) $0 Net Amount to Invest: $15,000 $25,000 Taxable vs. Tax-Deferred Investment Returns Because investment earnings on your account are tax-deferred (i.e., you only pay income tax when you receive a distribution from your account), deferrals made on a pretax basis accumulate faster than they would if made on an after-tax basis. Assumptions Investment: $25,000/year Income Tax: 40% Tax on Investment Gains: 27% 6% Investment Return This chart is for illustrative purposes only. This is not meant to represent the performance of your plans. 4

Plan Features This section provides an overview of the Plan provisions. For more detailed information regarding the Plan, you can access a copy of the summary Plan description from the enrollment e-mail you will receive from T. Rowe Price during the week of November 21. Eligibility You are eligible to participate in the SSP if you are a key management employee or highly compensated employee and you meet the following requirements: You are employed by the Company as of the beginning of the Plan Year You are eligible to participate in the CAP Your annual Base Salary and target AVIP award for the preceding year are equal to or greater than the IRS maximum compensation limit for the Plan year ($250,000 for 2012) Unless you cease to be actively employed by the Company, or you are removed from the Plan, you will remain eligible for the SSP from year to year, even if your compensation falls below the limit. Allowable Deferral Amounts *Your total CAP and SSP deferrals for base salary cannot exceed 75%. Salary Deferrals In addition to deferring up to $17,000 in the CAP, the SSP allows you to defer up to 75% of salary (total CAP and SSP) to help you maximize your Company match and to accumulate savings for retirement and future income needs. Salary deferrals will begin with the January 2012 payroll. Note: Employees age 50 and above will continue to be eligible to make catch-up contributions to the CAP 401(k). Annual Variable Incentive Program (AVIP) Deferrals In addition to your base salary, the Plan allows you to defer up to 100% of your AVIP. For the enrollment period for 2012, you will elect your AVIP deferral for your award earned in 2012, but paid/deferred in 2013. Performance Excellence Plan (PEP) Deferrals The Plan allows you to defer up to 100% of your PEP granted in 2012. For the 2012 enrollment period, you may defer your PEP granted in 2012 for the 2012-2014 performance period (paid/deferred in 2015). 5

Company Match Match Eligibility To receive the Company match, you must be an active employee on January 1, 2013, who made SSP deferrals during the 2012 Plan Year, or you must have been an eligible employee who made deferrals during the 2012 Plan Year and separated from employment due to early or normal retirement, death, or disability. Match Formula The SSP company matching formula is the same as the matching formula in the CAP: Hired prior to 2006: Company Match = 100% on First 3% and 50% on the Next 2% 5% Deferral = 4% Company Match Max Match Under CAP = $10,000 Hired after 2005: Company Match = 100% on First 3% and 50% on the Next 4% 7% Deferral = 5% Company Match Max Match Under CAP = $12,500 The Company match under SSP is determined by your total eligible compensation (Base Salary + AVIP) less the Company match in the CAP. The 2012 Company match will be credited to your SSP account with the January 2013 payroll. Maximizing and Restoring Your Company Match The SSP is designed to make up for the regulatory limits by replacing the lost CAP match in the SSP. Therefore, you may be losing your match if you do not contribute to the CAP and/or you do not contribute the remaining matchable compensation to the SSP. The graph below illustrates the effect of the lost match if a participant does not maximize the Company match by participating in SSP. Value of SSP Company Match Assuming 6% Investment Earnings $500,000 $481,566 $450,000 $400,000 $350,000 Current Comp $250K Current Comp $350K $300,000 $274,552 $250,000 $200,000 $150,000 $137,770 $143,343 $100,000 $68,102 $50,000 $25,201 $0 10 Years 15 Years 20 Years Current Comp $250K Current Comp $350K You can use the retirement planning tool to calculate your contributions to the Plan, to help ensure that you maximize your Company match in the SSP. This tool will be sent to you separately via e-mail and will include personalized information. You will find the instructions for using this tool later in this enrollment guide, as well as in the e-mail you receive. 6

Your Investment Choices Your SSP account will be credited based on the fund alternatives you choose. These alternatives will be a similar array of funds as those in your current CAP. Fund information, and a wealth of education and interactive planning tools are available on the SSP site at rps.troweprice.com. In addition to fund information provided on rps.troweprice.com, the following information is available by request: A description of the annual operating expenses for each fund Copies of any prospectus or financial report from the investment fund sponsors, if applicable A list of the assets and a description of investment contracts, if applicable, for each fund Current share values and net performance history for each fund Current value of your retirement fund accounts To obtain this information, call T. Rowe Price at 800-922-9945. Vesting You are always fully vested in all contributions made to your SSP account while you are employed by the Company. Payment Options When you make your deferral election, you may also select how your Plan account will be paid to you. Upon your separation from service with the Company, your account will be paid based on your election of one of the three payment options below: Periodic Installments* over 5 years Payment Options Periodic Installments* over 10 years Lump Sum *The amount of each installment will equal the balance in your account on the valuation date divided by the number of installments remaining. Changing the Distribution Form of Payment Once you have made your election for distributions from your Plan account, you may change the form of distribution (for example, from lump sum to annual installments or from installments to lump sum). However, you must make the change in election no later than 12 months before the date of your separation from service from the Company, and this portion of your Plan account will not be payable until the five-year anniversary of your separation from service. Each year you participate, you will elect the form of distribution applicable to that portion of your Plan account. 7

Termination of Employment Participants who terminate employment other than by retirement, death, or disability will receive their Plan account as follows: Any account balance under $25,000 will be distributed within 75 days of termination date. If the account balance is equal to or greater than $25,000, the distributions will be made based upon the elections you made during the annual enrollment period. Death If you die before any distributions from your Plan account have started, the balance of your Plan account will be distributed to your beneficiary in a lump sum. Distribution is made upon the 30 th day following your date of death. Beneficiary Designation You may designate one or more beneficiaries to receive benefits payable upon your death. You may change your beneficiary designation(s) at any time by contacting T. Rowe Price. You will be asked to designate your beneficiary(ies) at the time of enrollment. Benefit Security/Rabbi Trust The SSP is a nonqualified retirement plan as opposed to the CAP/401(k) Plan which is a qualified plan. As a nonqualified Plan, SSP accounts are subject to the insolvency and change of control risk of Dow Corning. The amounts you defer and any company match will be held by Dow Corning as part of its general assets. Your account is a bookkeeping entry that shows the amount of your deferrals and matches, and deemed earnings, but doesn t necessarily reflect an actual account holding specific assets for you. An earnings amount will be credited to your account based on the performance of the funds you select, whether or not your deferrals and matches are actually invested in those funds. Because of this risk, you should first maximize your contributions to the CAP before contributing to the nonqualified SSP. To add a minimal level of security to Plan benefits, the Company has established a trust (known as a Rabbi Trust). The Company is not obligated to make any contributions to the Rabbi Trust, but once assets are contributed, they can only be used to pay Plan benefits unless the Company becomes insolvent. In order for the Plan to qualify for important exemptions under the Employee Retirement Income Security Act (ERISA) and to maintain the tax-deferred status of participant accounts, assets held in the Rabbi Trust are considered Company assets and are available to satisfy the claims of creditors of the Company. In the event the Company becomes insolvent, you are an unsecured general creditor of the Company with regard to your benefits under the SSP. Tax Information The SSP has been designed so that amounts contributed to the Plan as well as earnings on those amounts are not subject to federal or state income tax (or income tax withholding) until distributed to you. Your deferrals and Company match contributions are subject to applicable FICA (Social Security and Medicare) withholding at the time of deferral. Distributions from the Plan are not subject to FICA taxes or withholding. 8

Supplemental Savings Plan (SSP) Calculator Instructions Purpose: To assist you with planning your 2012 Plan contributions, the Company has created a useful calculator. With this tool, you can test and illustrate your 2012 contributions to the SSP based on your 2012 Base Salary Deferral, estimated 2012 Merit Increase, and estimated 2011 AVIP Deferral Election (paid in 2012). Your individual calculator will be e-mailed to you. This tool has been created for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, financial advice. Step 1 Open the SSP Tool and click on the SSP Calculator Tab Step 2 Assume your Merit Increase effective in April 2012 Step 3 Elect your 2012 SSP Base Salary Deferral Following the three steps above will provide you with these results: Your total 2012 Eligible SSP compensation (estimated Base Salary + estimated AVIP) Your total 2012 SSP Deferrals (estimated Base Salary + estimated AVIP Deferrals) Your total 2012 percentage deferred into the SSP (estimated Base Salary + estimated AVIP Deferrals ONLY) Your total 2012 estimated Company matching contributions (funded in January 2013) Other information within the tool: Your elected distribution options Your September 30, 2011, balance The estimated percentage of your Base Salary you will need to contribute to your SSP in 2012 to receive the maximum Company match. Please note: This is dependent on your 2011 AVIP Deferral Election. New participants in 2012 will not have a 2011 AVIP deferral. Please note: PEP payments are excluded from the tool, as they are not eligible for Company match. 9

Plan Enrollment How to Enroll in Your Plan You must enroll in the Supplemental Savings Plan to participate. To begin, log in to rps.troweprice.com, the enrollment website created specifically for the 2012 SSP. Please note: Contribution elections may only be made during the annual election period: November 28 December 9, 2011. In order to complete the enrollment process, you will need to follow these steps: Step 1: Log in to rps.troweprice.com, click on My Account, and then click on Account Information. Step 2: Select your deferral percentage (under My Contributions) for any combination of the following: Base Salary, AVIP, and PEP award. Step 3: Select your investment mix (under Investment Election). Step 4: Choose your distribution options. (Click on the Annual Election icon in the top-right center of the homepage.) Step 5: Name or change your beneficiary for the Plan. (Click on My Beneficiaries in the top right-hand corner of the homepage.) If you wish to see your current elections, click on the Current Elections tab on the homepage. How to Manage Your Account Call 800-922-9945 for Plan information and/or log in to rps.troweprice.com. This website provides 24-hour access so you can: Review Plan information Check your account balance Change your investment choices Access a wealth of resources View and print your quarterly and on-demand statements 10

Administration The Plan is administered by the SSP Committee, which has retained T. Rowe Price to act as the recordkeeper. Because T. Rowe Price is also the CAP recordkeeper, you will be able to logon to a single website to manage both your CAP and SSP accounts and utilize the many retirement tools available on-line. Below is a summary of your sources of assistance for the Plan: Dow Corning HR Shared Services T. Rowe Price Phone: Local: 989-496-4772 Toll-free: 800-440-0772 Phone: Toll-free: 800-922-9945 E-mail: G1HRSC or HRSC@dowcorning.com Website: rps.troweprice.com 11

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