Plan Highlights Reaching the Right Place with the Bon Ton Stores, Inc. Retirement Contribution Plan. 1
How to start reaching the Right Place. Reaching the Right Place Start Saving Early This Plan Highlights provides an overview of the Plan benefits. More information is available on the Plan website at https://bonton.ingplans.com, including lots of resources on how to create a retirement savings strategy and how to manage your account. If you have questions, please call the Information Line at 1-877-426-6866. Customer Service Associates are available Monday Friday, from 8:00 a.m. to 8:00 p.m. Eastern time (except on days the New York Stock Exchange is closed). The Retirement Contribution Plan is one of your most important benefits. This 401(k) Plan makes it easy to save money while you are earning a paycheck so you ll have a better opportunity to live the lifestyle you want when you retire. The Plan is the smart place to save for the future because you get: Tax advantages The money you contribute to the Plan lowers your taxable income, which reduces your current tax bill. Plus, you do not pay taxes on any investment earnings while your money is in the Plan, which can help your money grow faster. Investment advice ING Advisor Service is available to help you make informed choices, even if you are an investment novice. Total control You decide how much to save and how to invest, and you can change those decisions whenever you want. Also, you can borrow money from your account before retirement and take your vested account balance with you if you leave Bon Ton. Why You Should Save in the 401(k) Most people will rely on some combination of Social Security, earned income and personal savings to provide income throughout retirement. Even if Social Security is still available to you by the time you retire, most of your retirement income will likely come from your savings and investments, including the money you save in employer-sponsored 401(k)s. And if you plan on living a long life in retirement, then you ll need substantial savings to maintain your income for 20 30 years or more. It s never too late to start saving and investing for retirement. However, the sooner you start, the more likely you are to reach your savings goals because you have the opportunity to save a lot more money over a longer time frame. Here s an example of the power of starting early: If you put $200 a month into an investment returning 6% a year starting at age 30, your account would grow to $200,903 by age 60. If you waited 10 years and started saving $200 a month at age 40 with the same 6% investment return, your account would grow to just $92,408 at age 60. Waiting just 10 years cost over $108,495 in lost retirement income. This hypothetical example merely demonstrates potential account growth over different time periods only and does not reflect the returns of any particular investment in the Plan. This does not constitute specific tax or investment advice. Save as Much as You Can Try to save as much as your budget will allow. As your income increases, consider increasing your 401(k) contribution rate. Even small increases in your contribution can make a difference over time. This is because in addition to the money you are contributing, you also benefit from tax-deferred compounding on any earnings, such as dividends, interest and capital gains, which can help your account grow faster. 2
Try 2% more! 8% OF SALARY: $198,796 6% OF SALARY: $149,097 $200,000 $160,000 $120,000 $80,000 $40,000 $0 Year 1 Year 10 Year 20 Year 30 In the hypothetical example above, an associate who makes $20,000 and contributes 8% of his or her annual salary versus the 6% contributed by another associate will have nearly $50,000 in additional savings over a 30-year period. Assumptions Two individuals making $20,000 a year 30 years until retirement 3.5% salary growth rate 6% annual rate of return One individual defers 6% of salary for 30 years; the other individual defers 8% of salary for 30 years Assumes biweekly paycheck This hypothetical example merely demonstrates potential account growth over different time periods only and does not reflect the returns of any particular investment in the Plan. This does not constitute specific tax or investment advice. Another benefit of saving more is your ability to lower your current income taxes. Every dollar you contribute to the Plan on a pre-tax basis lowers your taxable income by a dollar. That can reduce your taxes, saving you money right now. Enrolling in the Plan Benefit status associates over the age of 18 are eligible to start contributing to the Plan on the first of the month following the completion of three months of benefit status service. Non-benefit status associates over the age of 18 are eligible to start contributing on the first of the month following completion of one year with at least 1,000 hours of service within their first year of service or any subsequent Plan year. As soon as you are eligible, you may enroll in the Plan at any time. To enroll manually 1. Make sure you meet the eligibility requirements. 2. Decide what percentage of your pay you want to save (from 1% 50%, subject to IRS limits). 3. Choose your investments. 4. Log in to the Plan website using the Password mailed to your home address by ING. The Password will arrive in a separate envelope from this enrollment material. (If you have lost or forgotten your Password, call the Information Line.) Select the arrow to the right of Bon Ton Stores, Inc. Retirement Contribution Plan balance or click Go To My Account, and then select Enroll Now. Follow the instructions to enroll. 5. Then, access Personal Information from the Plan website to name your beneficiary. Your contributions will begin to be deducted from your paycheck usually within 30 days (or as soon as administratively possible after this date). NAMING YOUR BENEFICIARY Your beneficiary is the person or persons who will receive the money from your account in the event of your death. Be sure to name a beneficiary and keep your election current so you can control who gets your money. You can elect your beneficiary in the Personal Information section of the Plan website or by form. Obtain a copy of the form in the Forms section of the Plan website or by calling the Information Line. AUTOMATIC ENROLLMENT To make it easy for you to start Reaching the Right Place at retirement, once you are eligible you will be automatically enrolled in the Plan. Your pre-tax contribution rate will be set at 3% of pay and your contributions will be invested in the SSgA Target Retirement Fund appropriate for your expected year of retirement (assuming retirement at age 65). You can elect a different deferral percent or opt out of automatic enrollment within 30 days of becoming eligible. To choose either of these options, visit the Plan website at https://bonton.ingplans.com or call the Information Line at 1-877-426-6866. If you opt out, you may enroll and start contributing to the Plan at any time in the future. 3
REDUCING YOUR TAXES Your Plan contributions are made before any taxes are taken from your pay (called pre-tax contributions). This means every dollar you contribute lowers your taxable income by a dollar. Lower taxable income means lower taxes. So the more you contribute, the more you may reduce your current tax bill. 4 Contributing to the Plan Deciding how much to contribute You may contribute 1% to 50% of your pay on a pre-tax basis, but not more than the annual IRS dollar limit of $17,000 for 2012. (Highly compensated employees may be further limited in how much they can contribute.) Contributions are automatically deducted from your paychecks. Escalating your contribution rate One of the best ways to stay on track to meet your long-range goals is to steadily increase your contribution rate over time. That s why your pre-tax contribution will be automatically increased by 1% each year if you receive a salary increase related to your annual review. You will be notified prior to the increase, and if you do not wish to increase your contribution, you may call the Information Line or go online and decline. Except in years you actively decline, the automatic rate escalator will continue to increase your contribution by 1% each year you receive a pay increase until you reach a 6% contribution rate. If you prefer to increase your contribution rate on another schedule, the Contribution Rate Escalator feature makes it easy. You can choose how much your contribution goes up and when it happens. To activate the Contribution Rate Escalator, log in to your account on the Plan website at https://bonton.ingplans.com and select Contributions, or call the Information Line. Catch-up contributions If you will be age 50 or older before year-end, and you are making the maximum pre-tax contribution (50% of pay or $17,000, whichever is less) you may make an additional pre-tax catch-up contribution of up to $5,500 in 2012, providing your catch-up contribution isn t more than your available paycheck. If you have not satisfied the maximum pre-tax contribution by year-end, your catch-up contributions will be classified as regular pre-tax contributions, as necessary. Rollovers You can roll over pre-tax money from another qualified retirement plan or IRA into this Plan. 1 However, these contributions (and related earnings) will be tracked separately from pre-tax payroll contributions and earnings. You do not need to meet the Plan s eligibility requirements to make rollover contributions. Call the Information Line at 1-877-426-6866 for more information and to request the appropriate forms. 1 Note: The rules governing distribution provisions in this Plan may be different than the distribution provision rules from which rollover money originated. The Plan s withholding rules for distributions may apply to rollover money from other Plans. Discretionary matching contributions Bon Ton Stores, Inc. may make an annual discretionary matching contribution on the first 6% of your pre-tax contributions. If made, matching contributions are calculated and posted to associate accounts on an annual basis. You need to complete 1,000 hours and one year of service within your first year of employment or in any subsequent Plan year in order to become eligible for matching contributions. Once you have met the eligibility requirements, you will always be eligible to receive matching contributions regardless of hours worked, as long as you are employed on the last day of the Plan year. Please note, Company Match Contributions are discretionary, meaning that the company may or may not make a match, since contributions will only be made if the company attains certain profit levels. The Company Match Contributions consist of two parts: Years of Service Match The more years of service an associate has with the company, the higher the Years of Service Match they could receive. Your years of service will be determined on December 31st each year using your whole number years of service from your most recent date of hire. For example, if you were rehired on 3/22/2008, you will have 4.7 years of service on 12/31/2012 so using the chart below you would fall into the 1-4.9 Years of Service group. Years of Service 1 4.9 Years 5.0 14.9 Years 15.0 24.9 Years Profit Sharing Match The more profit the Company makes, the higher the potential Profit Sharing Match associates could receive. A minimum level of net profit must be achieved before any Profit Sharing Match is made, so the Profit Sharing Match could be 0%. To make this match, Bon Ton must, in its discretion, make a level of profit that both justifies the amount of the match and still returns value to the Company s shareholders. In order to receive Company Match Contributions, you must contribute your own money to the Plan. If eligible, make sure you take full advantage of the potential Company Match by contributing 6% of your pay to the Plan. Keep in mind that any amount you contribute to the Plan from 1% to 6% may be matched by the company. Vesting To be vested is to legally own the money in your account. You are immediately 100% vested in your own contributions and any earnings on those contributions. In addition, you are immediately vested in any QNEC contributions and any earnings on those contributions. Company matching contributions made to your account on or after January 1, 2008, become 100% vested after 3 years of service. If you die, become disabled, or attain normal retirement age, you automatically become 100% vested in all contributions and earnings. 25.0 Years or More
Investing Your Contributions You can choose to invest your contributions in any combination of 11 individual investment funds and 6 Target Retirement funds plus the Bon Ton Company Stock Fund. If you are automatically enrolled in the Plan, 100% of your contributions will be invested in the SSgA Target Retirement Fund appropriate for your expected year of retirement (assuming retirement at age 65), unless you choose a different investment fund or funds. ASSET CLASS Short Term Investments Bond Balanced Target Date Large Cap Stock Small/Mid Cap Stock International Stock Employer Stock INVESTMENT OPTION MCM Stable Asset Fund Vanguard Total Bond Market Index Fund 2 PIMCO Total Return Fund American Funds American Balanced Fund SSgA Target Retirement Income Fund SSgA Target Retirement 2010 Fund SSgA Target Retirement 2020 Fund SSgA Target Retirement 2030 Fund SSgA Target Retirement 2040 Fund SSgA Target Retirement 2050 Fund SSgA S&P 500 Index Fund MainStay Large Cap Growth Fund Allianz NFJ Dividend Value Fund RidgeWorth Small Cap Value Equity Fund Vanguard Extended Market Index Fund 2 American Funds EuroPacific Growth Fund 4 Vanguard Total International Stock Index Fund 2, 3 The Bon Ton Company Stock Fund 2 The Vanguard Total Bond Market Index Fund, Vanguard Extended Market Index Fund, and Vanguard Total International Stock Index Fund have a trading restriction that prohibits transferring money out of the fund and back into the fund within 60 days. 3 The Vanguard Total International Stock Index Fund has a 2% redemption fee on shares sold before the required holding period of 60 days. 4 Trading restrictions may be applied to your transactions. If you transfer $5,000 or more out of the American Funds EuroPacific Growth Fund, you cannot transfer $5,000 or more back into that same fund for 30 days. Detailed information on each investment option, including fund objective, performance and fees, is on the fund fact sheets included with this packet or may be obtained from the Plan Investments section of the Plan website. Prospectuses are available by contacting the individual fund company. Contact information can be found on the fund fact sheets. The Self-Managed Account (SMA) If you are an experienced investor who is comfortable taking on more risk, the SMA is a brokerage option that allows you to invest in most exchangetraded stocks and bonds plus more than 13,000 different mutual funds. You can invest up to 100% of your vested account balance in the SMA. For details or to open an SMA, call the Information Line at 1-877-426-6866 and request the SMA application. ING Advisor Service The ING Advisor Service 5, powered by Financial Engines, can help you make savings and investment decisions. Access the Personal Online Advisor at no additional cost to you and get personalized guidance on savings and investing. Or with the Professional Account Manager program, professionals help you select a personalized mix of investment options, out of the funds available in the plan and provide ongoing account management all for a fee based on your account balance. For details, select the ING Advisor Service link on the Plan website or call the Information Line at 1-877-426-6866. ING Investment Advisors are available Monday Friday, from 8:00 a.m. to 8:00 p.m. Eastern time. 5 Advisory Services provided by ING Investment Advisors, LLC for which Financial Engines Advisors, LLC acts as sub advisor. ING Investment Advisors does not give tax or legal advice. If you need tax advice, consult your accountant or lawyer, if you need legal advice, consult your lawyer. For more information about the ING Advisor Service, please read the ING Investment Advisors Disclosure Statement. A Disclosure Statement may be viewed online by accessing the ING Advisor Service link through your Plan s website at https://bonton.ingplans.com. You may also request a Disclosure Statement from an ING Investment Advisor by calling your Plan s Information Line at 1-877-426-6866. Financial Engines Advisors, LLC is not a corporate affiliate of ING Investment Advisors, LLC or ING Institutional Plan Services, LLC. C11-1109-015 (11/11) 5
GO GREEN! You have the option to turn off paper statements and eligible confirms. To sign up, after logging on to the Plan website select My Mailbox. If you select this option, your Plan statements and eligible confirms will be delivered to your Plan website s secure online mail box. You will receive an e-mail when documents have been posted. Keep in mind you can, at any time and for no charge, request that a statement be mailed to you by calling the Plan Information Line. Managing Your Account Account access Most account transactions and information requests can be made 24/7 through the Plan website at https://bonton.ingplans.com. The website also has a wide range of interactive tools and educational resources to help you learn more about investing and personal finance. You can also make account transactions and get Plan information by calling the Information Line at 1-877-426-6866. Customer Service Associates are available by phone Monday through Friday, from 8:00 a.m. to 8:00 p.m. Eastern time (except on days the New York Stock Exchange is closed). Access your account on the go: In addition, you can access your account via your mobile device to view some account details and process certain transactions. Mobile account access is available via your app store. Search for key words: ING Retire. 6 6 The mobile account application is available for owners of the iphone, ipod Touch, and Android devices. The iphone and ipod Touch are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc. Account transactions You can perform account transactions online or over the phone at any time, including: Changing your contribution rate Changing your investment elections Transferring money from one investment fund to another Rebalancing your investment portfolio automatically on a schedule you set up Updating your beneficiary Requesting forms Taking loans from your account You can borrow money from your account to help with short-term financial needs. Loan payments, including interest, are automatically deducted from your pay along with your regular Plan contributions. The loan interest rate is the Prime Rate as published in the Wall Street Journal on the last business day of the prior month plus 1%. The minimum loan amount is $1,000 and the maximum amount is 50% of your vested account balance or $50,000 minus your highest outstanding loan balance in the last 12 months and any defaulted loans (including interest), whichever is less. You may only have 2 loans outstanding at any time. Taking loans from your Plan account can seriously undermine your long-term savings strategy. Call the Information Line during business hours and speak to a Customer Service Associate to learn more. Withdrawing money from your account Generally, the money you contribute to the Plan is meant to be withdrawn after you retire. Withdrawals before retirement or age 59-1/2 are not allowed except for certain IRS-defined financial hardships. 7 Once you reach age 59-1/2, you may begin withdrawing money from your account without penalty. These withdrawals will be taxed as ordinary income at your current tax rate. For details on withdrawal options and considerations, call the Information Line. 7 Withdrawals from the Plan may be subject to 20% federal tax withholding and state tax withholding may also apply. Federal, state and local taxes may also apply, and if you are younger than age 59-1/2, a 10% early withdrawal penalty may apply. 6
Leaving Bon Ton If you retire or terminate employment from Bon Ton Stores, Inc., you will need to decide what to do with your vested account balance. 8 Bon Ton offers a free retirement consultation service to assist you in making decisions about your retirement savings. Retirement Consultants can help you understand the benefits of keeping your money growing tax-deferred by helping you understand your options, including the benefits of staying in the Plan, as well as advise you on the tax consequences of each option. 9 To access a Retirement Consultant, call the Information Line at 1-877-426-6866. Retirement Consultants are available Monday through Friday, from 8:00 a.m. to 8:00 p.m. Eastern time (except on days the New York Stock Exchange is closed). If your account balance is less than $1,000, you have the following options: Roll over the balance to another qualified plan or IRA if allowed Take the money in cash as a lump sum distribution If your account balance is greater than $1,000, you have the following options: Leave your money invested in the Plan (distributions must begin once you reach age 70-1/2) Defer a distribution to a specified date Take the money in cash as a lump sum distribution Roll over the balance to another qualified plan or IRA if allowed Before making a distribution decision, please call the Information Line at 1-877-426-6866 and speak with a Distribution Specialist. Fees and expenses Each participant of the Retirement Contribution Plan may pay ING $50 per year as the administrator and record keeper. This payment goes to ING to process your contributions, mail your statements, transfer your investments as directed and process distributions. Additional expenses for investment monitoring, required Plan audits, legal advice, government compliance and required Plan document changes are also charged to the Plan. Typically, the majority of these expenses are covered by fees paid by the investment funds back to ING in the form of 12b-1 fees or revenue sharing arrangement (fund fees are deducted from the investment fund assets and are reflected in each fund s total return-see individual Fund Fact Sheets for details). The fees paid to ING by these investment funds are calculated daily and are based on the value of each fund. Forfeitures, which are unvested company contributions remaining from participants who have terminated, may also be used to pay expenses. Each quarter, any remaining Plan expenses not covered by these fees are deducted directly from participant account values on a pro-rata basis; that is, as a percentage across all accounts. If the fees paid by the investment funds to ING are greater than the Plan expenses, your account will not be directly charged and the excess dollars can be used to offset future expense shortfalls. Some fees are charged directly to the participant; these fees are specific and are charged for optional Plan features. The optional Plan features would include loan issuances, expedited check delivery, maintaining a self-managed account (SMA) and advisory services. 8 Distributions from the Plan may be subject to 20% federal tax withholding and state tax withholding may also apply. Federal, state and local taxes may also apply and if you are younger than age 59-½, a 10% early withdrawal penalty may apply. If you roll over the balance directly to another qualified plan or IRA, no taxes or penalty will apply. 9 Neither ING or its affiliated companies or representatives offer legal or tax advice. Seek the advice of a tax attorney or tax advisor prior to making a tax-related insurance or investment decision. Retirement Consultants are Registered Representatives of ING Financial Partners (member SIPC). C10-1220-002 (1/11) 7
Here s what you can access via the Main Menu of the Information Line at 1-877-426-6866: 1 Account Information 1 Account balance 2 Fund performance 3 Daily fund prices 2 Investment Elections/Contribution Information 2 Change contribution election % (if applicable) 3 Change investment allocations 3 Reallocation/Transfers 1 Reallocate account 2 Transfer between funds 4 Form Requests 5 Other Options 1 Withdrawal information (if applicable) 2 Loan information (if applicable) 3 Change password/enable Internet 9 Exit Information Line 0 Customer Service Associate With the Information Line, you will have 24-hour access to your account. You can get current account information and investment information, and you can initiate transactions. If you have questions, Customer Service Associates are available weekdays from 8:00 a.m. to 8:00 p.m. Eastern time (except on days the New York Stock Exchange is closed) to offer assistance. Service for hearing impaired If you are hearing impaired, a special service is available. Please call 1-800-579-5708. Here s what you can do on the Plan website at https://bonton.ingplans.com: 24 hours a day, 7 days a week MY ACCOUNT INFORMATION View your account details and perform transactions* to your account online: Balances Contributions Manage Investments Loans (if applicable) Withdrawals Transaction History Pending Transactions Here s some of the things you can do via your mobile device: Manage your retirement plan account on the go, whenever and wherever you want. To get the mobile app go to your app store and search for: ING Retire. 10 Some of the key account details you ll be able to see include: Current balances & balance history Balances by fund & source Personal rates of return Contribution history PLAN INVESTMENTS Review your funds profile, performance and pricing Fund Performance Fund Prices Fund Information You can also process certain transactions: Change your contributions Transfer money among funds Reallocate your account balance Change your future investment direction PLAN INFORMATION Find out the benefits of your plan What s New Plan Highlights Customer Service FAQs * Each time you complete a transaction, you will be given a confirmation number, which we encourage you to retain for future reference. If you experience excessive delays during the processing of your transactions or have any additional questions, please contact a Customer Service Associate at 1-877-426-6866. 10 The mobile account application is available for owners of the iphone, ipod Touch, and Android devices. 8 BON TON_PH_0312 2012 North America Insurance Corporation.