(A) Distribution of benefits. Except as otherwise provided in this section, a participant’s account shall become distributable upon a participant’s attainment of age 70.5 or upon severance from employment. If the participant has had a severance from employment, the distribution of a participant’s account shall commence no later than April 1 of the calendar year following the year of the participant’s attainment of age 70.5. Distributions shall be made in accordance with one of the payment options described in division (C) below.
(B) Distribution procedures. The employer may from time to time establish procedures for participant distribution elections, provided that such procedures are not inconsistent with the requirements of division (A) above.
(C) Payment options.
(1) A participant (or a beneficiary as provided in division (F) below) may elect to have the value of the participant’s account distributed in accordance with one of the following payment options provided that such option is available under the investment and consistent with the limitations set forth in division (D) below:
(a) Life annuity;
(b) Life annuity with 60, 120, or 180 monthly payments guaranteed;
(c) Unit refund life annuity;
(d) Joint and last survivor annuity (spouse only);
(e) Lump sum;
(f) Term certain annuity with 36, 48, 60, 72, 84, 96, 108, 120, 132, 144, 156, 168, or 180 monthly payments guaranteed;
(g) Withdrawals for a specified number of years;
(h) Withdrawals of a specified amount; or
(i) Any other method of payment agreed upon between participant and employer and accepted by the investment provider or service provider.
(2) If a participant fails to effect a payment option, any required payments shall be made under a payment option designated by the employer.
(3) Notwithstanding the options above, any option that involves a life contingency (or a joint life contingency) shall only be available under an annuity contract offered or obtained under the terms of the Plan.
(D) Required minimum distributions.
(1) No payment option may be selected by the participant (or a beneficiary) unless it satisfies the requirements of Code § 401(a)(9) and any additional Code limitations applicable to the Plan. The provisions of this section shall apply for purposes of determining required minimum distributions for calendar years beginning with the 2003 calendar year. The requirements of this section shall take precedence over any inconsistent provisions of the Plan. All distributions required under this section shall be determined and made in accordance with the regulations under § 401(a)(9) of the Code. Notwithstanding the other provisions of this section, distributions may be made under a designation made before January 1, 1984, in accordance with § 242(b)(2) of the Tax Equity and Fiscal Responsibility Act (TEFRA) and the provisions of the Plan that relate to § 242(b)(2) of TEFRA.
(2) The participant’s entire interest shall be distributed, or begin to be distributed, to the participant no later than the participant’s required beginning date. If the participant dies before distributions begin, the participant’s entire interest shall be distributed, or begin to be distributed, no later than as follows:
(a) If the participant’s surviving spouse is the participant’s sole designated beneficiary, then unless the surviving spouse elects to apply the five-year rule (pursuant to division (D)(6) below), distributions to the surviving spouse shall begin by December 31 of the calendar year immediately following the calendar year in which the participant died, or by December 31 of the calendar year in which the participant would have attained age 70.5, if later.
(b) If the participant’s surviving spouse is not the participant’s sole designated beneficiary, then unless the designated beneficiary ejects to apply the five-year rule (pursuant to division (D)(6) below), distributions to the designated beneficiary shall begin by December 31 of the calendar year immediately following the calendar year in which the participant died.
(c) If there is no designated beneficiary as of September 30 of the year following the year of the participant’s death, the participant’s entire interest shall be distributed by December 31 of the calendar year containing the fifth anniversary of the participant’s death.
(d) 1. If the participant’s surviving spouse is the participant’s sole designated beneficiary and the surviving spouse dies after the participant but before distributions to the surviving spouse begin, this division (D)(2), other than division (D)(2)(a) above, shall apply as if the surviving spouse were the participant.
2. For purposes of this division (D)(2) and division (D)(4), unless division (D)(2)(d) applies, distributions are considered to begin on the participant’s required beginning date. If division (D)(2)(d) applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under division (D)(2)(a) above. If distributions under an annuity purchased from an insurance company irrevocably commence to the participant before the participant’s required beginning date (or to the participant’s surviving spouse before the date distributions are required to begin to the surviving spouse under division (D)(2)(a) above), the date distributions are considered to begin is the date distributions actually commence.
3. Unless the participant’s interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the required beginning date, as of the first distribution calendar year distributions shall be made in accordance with divisions (D)(3) and (D)(4) of this section. If the participant’s interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder shall be made in accordance with the requirements of § 401(a)(9) of the Code.
(3) During the participant’s lifetime, the minimum amount that shall be distributed for each distribution calendar year is the lesser of:
(a) The quotient obtained by dividing the participant’s account balance by the distribution period in the Uniform Lifetime Table set forth in § 1.401(a)(9)-9 of the regulations, using the participant’s age as of the participant’s birthday in the distribution calendar year; or
(b) If the participant’s sole designated beneficiary for the distribution calendar year is the participant’s spouse, the quotient obtained by dividing the participant’s account balance by the number in the Joint and Last Survivor Table set forth in § 1.401(a)(9)-9 of the regulations, using the participant’s and spouse’s attained ages as of the participant’s and spouse’s birthdays in the distribution calendar year.
(c) Required minimum distributions shall be determined under this division (D)(3)(c) beginning with the first distribution calendar year and up to and including the distribution calendar year that includes the participant’s date of death.
(4) (a) If the participant dies on or after the date distributions begin and there is a designated beneficiary, the minimum amount that shall be distributed for each distribution calendar year after the year of the participant’s death is the quotient obtained by dividing the participant’s account balance by the longer of the remaining life expectancy of the participant or the remaining life expectancy of the participant’s designated beneficiary, determined as follows.
1. The participant’s remaining life expectancy is calculated using the age of the participant in the year of death, reduced by one for each subsequent year.
2. If the participant’s surviving spouse is the participant’s sole designated beneficiary, the remaining life expectancy of the surviving spouse is calculated for each distribution calendar year after the year of the participant’s death using the surviving spouse’s age as of the spouse’s birthday in that year. For distribution calendar years after the year of the surviving spouse’s death, the remaining life expectancy of the surviving spouse is calculated using the age of the surviving spouse as of the spouse’s birthday in the calendar year of the spouse’s death, reduced by one for each subsequent calendar year.
3. If the participant’s surviving spouse is not the participant’s sole designated beneficiary, the designated beneficiary’s remaining life expectancy is calculated using the age of the beneficiary in the year following the year of the participant’s death, reduced by one for each subsequent year.
(b) If the participant dies on or after the date distributions begin and there is no designated beneficiary as of September 30 of the year after the year of the participant’s death, the minimum amount that shall be distributed for each distribution calendar year after the year of the participant’s death is the quotient obtained by dividing the participant’s account balance by the participant’s remaining life expectancy calculated using the age of the participant in the year of death, reduced by one for each subsequent year.
(c) Except as otherwise elected (pursuant to division (D)(6), below), if the participant dies before the date distributions begin and there is a designated beneficiary, the minimum amount that shall be distributed for each distribution calendar year after the year of the participant’s death is the quotient obtained by dividing the participant’s account balance by the remaining life expectancy of the participant’s designated beneficiary, determined as provided in divisions (D)(4)(a) and (D)(4)(b) above.
(d) If the participant dies before the date distributions begin and there is no designated beneficiary as of September 30 of the year following the year of the participant’s death, distribution of the participant’s entire interest shall be completed by December 31 of the calendar year containing the fifth anniversary of the participant’s death.
(e) If the participant dies before the date distributions begin, the participant’s surviving spouse is the participant’s sole designated beneficiary, and the surviving spouse dies before distributions are required to begin to the surviving spouse under division (D)(2)(a) above, this division (D)(4) shall apply as if the surviving spouse were the participant.
(5) For the purpose of this chapter, the following definitions shall apply unless the context clearly indicates or requires a different meaning.
DESIGNATED BENEFICIARY. The individual who is designated as the beneficiary under § 1-9-6
(B) of the Plan and is the designated beneficiary under § 401(a)(9) of the Code and § 1.401(a)(9)-1, Q&A-4, of the regulations.
DISTRIBUTION CALENDAR YEAR. A calendar year for which a minimum distribution is required. For distributions beginning before the participant’s death, the first distribution calendar year is the calendar year immediately preceding the calendar year that contains the participant’s required beginning date. For distributions beginning after the participant’s death, the first DISTRIBUTION CALENDAR YEAR is the calendar year in which distributions are required to begin under division (D)(2). The required minimum distribution for the participant’s first DISTRIBUTION CALENDAR YEAR shall be made on or before the participant’s required beginning date. The required minimum distribution for other distribution calendar years, including the required minimum distribution for the DISTRIBUTION CALENDAR YEAR in which the participant’s required beginning date occurs, shall be made on or before December 31 of that distribution calendar year.
LIFE EXPECTANCY. Life expectancy as computed by use of the single life table in § 1.401(a)(9)-9 of the code.
PARTICIPANT’S ACCOUNT BALANCE. The account balance as of the last valuation date in the calendar year immediately preceding the distribution calendar year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. The ACCOUNT BALANCE for the valuation calendar year includes any amounts rolled over or transferred to the plan either in the valuation calendar year or in the distribution calendar year if distributed or transferred in the valuation calendar year.
REQUIRED BEGINNING DATE. April 1 of the calendar year following the later of:
1. The calendar year in which the participant attains age 70.5; or
2. The calendar year in which the participant retires.
(6) Participants or beneficiaries may elect, on an individual basis, whether the five-year rule or the life expectancy rule in divisions (D)(2) and (D)(4) above applies to distributions after the death of a participant who has a designated beneficiary. The election must be made no later than the earlier of September 30 of the calendar year in which distribution would be required to begin under division (D)(2) above, or by September 30 of the calendar year which contains the fifth anniversary of the participant’s (or, if applicable, the surviving spouse’s) death. If neither the participant nor the beneficiary makes an election under this division (D)(6), distributions shall be made in accordance with divisions (D)(2) and (D)(4) above.
(E) Post-retirement death benefits. Should the participant die after he or she has begun to receive benefits under a payment option, the guaranteed or remaining payments, if any, under the payment option shall be payable to the participant’s beneficiary commencing with the first payment due after the death of the participant. Payment to the participant’s beneficiary must comply with § 401(a)(9) of the Code, and with any additional Code limitations applicable to the Plan, if the beneficiary does not continue to live for the remaining period of payments under the payment option, then the remaining benefits under the payment option shall be paid to the beneficiary’s beneficiary or, if none, the beneficiary’s estate. In no event shall the employer be liable for any payments made in the name of the participant or a beneficiary before the employer or its agent receives proof of the death of the participant or beneficiary.
(F) Pre-retirement death benefits. Should the participant die before he or she has begun to receive benefits under division (A) above, a death benefit equal to the value of the participant’s account shall be payable to the beneficiary. Such death benefit shall be paid in a lump sum unless the beneficiary elects a different payment option. Payment to the participant’s beneficiary must comply with § 401(a)(9) of the Code, and with any additional Code limitations applicable to the Plan. Should the beneficiary die before the completion of payments under the payment option, the value of the remaining payments under the payment option shall be paid to the beneficiary’s beneficiary or, if none, the beneficiary’s estate.
(G) Unforeseeable emergency withdrawals.
(1) If the employer so elects under 1-9-2(B), then in the event of an unforeseeable emergency, a participant may apply to the employer to receive that part of the value of his or her account that is reasonably needed to satisfy the emergency need (including any amounts that may be necessary to pay any federal, state, or local income taxes or penalties reasonably anticipated to result from the distribution). If such application for withdrawal is approved by the employer, the employer shall direct the issuer, trustee, or custodian to pay the participant such value as the employer deems necessary to meet the emergency need.
(2) The regulations under § 457(d)(1)(A)(iii) of the Code define an unforeseeable emergency as a severe financial hardship of the participant or beneficiary resulting from an illness or accident of the participant or beneficiary, the participant’s or beneficiary’s spouse, or the participant’s or beneficiary’s dependent (as defined in Code § 152, and, for taxable years beginning on or after January 1, 2005, without regard to Code § 152(b)(1), (b)(2), and (d)(1)(B)); loss of the participant’s or beneficiary’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by homeowner’s insurance, e.g., as a result of a natural disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the participant or beneficiary. For example, the imminent foreclosure of or eviction from the participant’s or beneficiary’s primary residence may constitute an unforeseeable emergency. In addition, the need to pay for medical expenses, including non-refundable deductibles, as well as for the cost of prescription drug medication, may constitute an unforeseeable emergency. Finally, the need to pay for the funeral expenses of a spouse or a dependent (as defined in Code § 152, and, for taxable years beginning on or after January 1, 2005, without regard to Code § 152(b)(1), (b)(2), and (d)(1)(B)) may also constitute an unforeseeable emergency. Except as otherwise specifically provided in this division (G), neither the purchase of a home nor the payment of college tuition is an unforeseeable emergency.
(3) A distribution on account of an unforeseeable emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or by cessation of deferrals under the Plan.
(H) Transitional rule for annuity payment option elections. If this Plan document constitutes an amendment and restatement of the Plan as previously adopted by the employer and if a participant or beneficiary has commenced receiving benefits under an annuity payment option, that annuity payment option shall remain in effect notwithstanding any other provision of this Plan.
(I) Participant’s election to receive in-service distribution. If the employer so elects under § 1-9-2(C), a participant may elect to receive an in-service distribution of the total amount payable to him or her under the Plan if:
(1) Such amount does not exceed the dollar amount under § 411(a)(11)(A) of the Code;
(2) No amount has been deferred under the Plan with respect to the participant during the two- year period ending on the date of the distribution; and
(3) There has been no prior distribution under the Plan to the participant under this division (I) or under division (J) below.
(J) Distribution without participant’s consent. If the employer so elects under § 1-9-2(D), the total amount payable to a participant under the Plan may be distributed to the participant without his or her consent if:
(1) Such amount does not exceed $1,000;
(2) No amount has been deferred under the Plan with respect to the participant during the two- year period ending on the date of the distribution; and
(3) There has been no prior distribution under the Plan to the participant under this division (J) or under division (I) above.
(Ord. 05-11, passed 10-18-2005)