Notwithstanding any other provision of the plan to the contrary, the “annual addition” (defined below) of any participant under this plan shall not, at any time within a “limitation year” (defined below), exceed the limit of paragraph (A)(2) below, subject to the additional limit of paragraph (A)(3) below, if applicable.
(A) Definitions. For purposes of this section, the following definitions shall apply unless the context clearly indicates or requires a different meaning.
AGGREGATE COMPENSATION. The entire wages, salary and other amounts actually paid by the employer or any affiliate to a participant for the “limitation year” for personal services actually rendered in the course of employment; including, but not limited to, commissions paid salesperson, compensation for services on the basis of a percentage of profits and bonuses; provided, however, that AGGREGATE COMPENSATION shall not include:
(a) Employer or affiliate contributions to or distributions from this plan or any other pension, profit sharing, thrift or other plan of deferred compensation (other than amounts received by a participant and included in his or her gross income under the Code pursuant to an unfunded nonqualified plan);
(b) Income arising at any time other than the time of transfer attributable to the transfer of property in connection with the performance of services; and
(c) Other amounts which receive special tax benefits, such as premiums for group term life insurance (but only to the extent the premiums are not includable in the gross income of the participant).
ANNUAL ADDITION. When used in reference to a participant for any “limitation year”, means the sum for the plan and all other qualified defined contribution plans maintained by the employer or an affiliate of:
(a) Salary deferral contributions and other contributions made by the employer for such participant for such “limitation year”;
(b) Forfeitures allocated to such participant under such plans for such “limitation year”; and
(c) The lesser of:
1. The amount of the employee contributions to such plans made by such participant in excess of 6% of his or her AGGREGATE COMPENSATION for such “limitation year”; or
2. One-half of such participant’s total employee contributions to such plans for such “limitation year”.
LIMITATION YEAR. The 12-month period ending on December 31 of each year.
PROJECTED ANNUAL BENEFIT.
(a) The annual benefit payable to a participant under a straight life annuity which is the actuarial equivalent of the employer or affiliate contributed benefit payable on account of such participant’s participation in any qualified pension plans maintained by the employer or an affiliate (considered as one plan), excluding, however:
1. The value of a surviving spouse’s annuity the annual amount of which does not exceed that payable to such participant;
2. The amount of any benefits attributable to rollover contributions (as defined in I.R.C. §§ 403(a)(4) and 408(d)(3) and 26 U.S.C. § 402(c)(5)); and
3. Any ancillary benefits (such as pre-retirement medical, death and disability benefits).
(b) Determined under the terms of such plan(s) on the assumption that such participant continues employment until his or her normal retirement date under such plan(s), that his or her covered compensation under such plan(s) continues at the same rate as in effect in the “limitation year” under consideration until the date he or she reaches his or her normal retirement date, and that other relevant factors used to determine benefits under such plan(s) remain constant as of the current year for all future years”.
(B) Basic limitation. The “annual addition” with respect to a participant in any “limitation year” shall not exceed the lesser of $30,000 (as adjusted for cost of living increases pursuant to I.R.C. § 415) or 25% of such participant’s “aggregate compensation” for the “limitation year”. If any participant’s “annual addition” exceeds the maximum limitations of this paragraph (B) after taking into consideration all similar limitations in all other qualified defined contribution plans maintained by the employer or an affiliate, the salary deferral contributions included in the computation of his or her “annual addition” shall, to the extent necessary, be used to reduce future salary deferral contributions on behalf of such participant, or held unallocated in a suspense account within the trust and reallocated to the accounts of other participants in a manner permitted under Treas. Reg. § 1.415-6(b)6, being 26 C.F.R. § 1.415-6(b)6.
(C) Combined limitation.
(1) If a participant participates in both a qualified defined benefit pension plan maintained by the employer or an affiliate and a qualified defined contribution plan maintained by the employer or an affiliate, the sum of paragraphs (C)(1) and (C)(2) below may not exceed 1.0 where:
(a) Is the sum of the “projected annual benefit” of the participant under all defined benefit pension plans of the employer or an affiliate determined as of the close of the “limitation year,” divided by the lesser of:
1. The product of 1.25 multiplied by the dollar limitation in effect under I.R.C. § 415(b)(1)(A) for such year; or
2. The product of 1.4 multiplied by the amount which may be taken into account under I.R.C. § 415(b)(1)(B) with respect to such participant for such year.
(b) Is the sum of the “annual additions” to the participant’s accounts under all defined contribution, plans of the employer or any affiliate as of the close of the “limitation year” and for all prior “limitation years”, divided by the sum of the lesser of paragraphs (C)(1)(b)1. or (C)(1)(b)2. below for such year and for each prior year of service with the employer or affiliate (regardless of whether any such defined contribution plan was in existence during those years), where:
1. Is the product of 1.25 multiplied by the dollar limitation in effect under I.R.C. § 415(c)(1)(A); and
2. Is the product of 1.4 multiplied by the amount which may be taken into account under I.R.C. § 415(c)(1)(B) with respect to such participant for such years.
(2) In the event that the sum of paragraphs (C)(1)(a) and (C)(1)(b) above would exceed 1.0 in any “limitation year”, the “projected annual benefit” of such participant under the applicable defined benefit pension plan shall be reduced to the extent required to reduce such sum to 1.0.
(Ord. MET 86-13, passed 5-30-1986)