(A) General rules.
(1) Precedence. The requirements of this subchapter shall apply to any distribution of a participant's interest and will take precedence over any inconsistent provisions of this Plan.
(2) Requirements of regulations incorporated. All distributions required under this subchapter shall be determined and made in accordance with Code Section 401(a)(9), including the incidental death benefit requirement in Code Section 401(a)(9)(G), and the regulations thereunder. Any annuity distribution option provided under the terms of the Plan as in effect on April 17, 2002 will not fail to satisfy Code Section 401(a)(9), provided the distribution option satisfies Code Section 401(a)(9) based on a reasonable and good faith interpretation of the provisions of Code Section 401(a)(9).
(B) Time and manner of distribution.
(1) Required beginning date. The participant's entire interest will be distributed, or begin to be distributed, no later than the participant's required beginning date.
(2) Death of participant before distributions begin.
(a) If the participant dies before distributions begin, the participant's entire interest will be distributed, or begin to be distributed, no later than as follows:
1. If the participant's surviving spouse is the participant's sole designated beneficiary, distributions to the surviving spouse will 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 70-1/2, if later, except to the extent that an election is made to receive distributions in accordance with the five-year rule under division (F) of this section. Under the five-year rule, the participant's entire interest will be distributed to the designated beneficiary by December 31 of the calendar year containing the fifth anniversary of the participant's death.
2. If the participant's surviving spouse is not the participant's sole designated beneficiary, distributions to the designated beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the participant died, except to the extent that an election is made to receive distributions in accordance with the five-year rule under division (F) of this section. Under the five-year rule, the participant's entire interest will be distributed to the designated beneficiary by December 31 of the calendar year containing the fifth anniversary of the participant's death.
3. 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 will be distributed by December 31 of the calendar year containing the fifth anniversary of the participant's death.
4. 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 are required to begin, this division (B)(2), other than (B)(2)(a)1., will apply as if the surviving spouse were the participant.
(b) For purposes of this division (B)(2) and division (E) below, unless division (B)(2)(a)4. above applies, distributions are considered to begin on the participant's required beginning date. If division (B)(2)(a)4. above applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under division (B)(2)(a)1. above. If distributions under an annuity meeting the requirements of this subchapter 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 (B)(2)(a)1. above), the date distributions are considered to begin is the date distributions actually commence.
(3) Forms of distribution. 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 will be made in accordance with divisions (C), (D), and (E) below. If the participant's interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Code Section 401(a)(9) and section 1.401(a)(9) of the regulations. Any part of the participant's interest that is in the form of an individual account described in Code Section 414(k) will be distributed in a manner satisfying the requirements of Code Section 401(a)(9) and section 1.401(a)(9) of the regulations that apply to individual accounts.
(C) Determination of amount to be distributed each year.
(1) General annuity requirements. If the participant's interest is paid in the form of annuity distributions under the Plan, payments under the annuity shall satisfy the following requirements:
(a) The annuity distributions will be paid in periodic payments made at uniform intervals not longer than one year;
(b) The distribution period will be over the life (or lives) or over a period certain not longer than the period described in division (D) or (E) below;
(c) Once payments have begun over a period, the period may only be changed in accordance with division (G) below;
(d) Payments will either be nonincreasing or increase only as follows:
1. By an annual percentage increase that does not exceed the percentage increase in an eligible cost-of-living index for a 12-month period ending in the year during which the increase occurs or a prior year;
2. By a percentage increase that occurs at specified times and does not exceed the cumulative total of annual percentage increases in an eligible cost- of-living index since the annuity starting date, or if later, the recent percentage increase;
3. By a constant percentage of less than 5% per year, applied not less frequently than annual;
4. As a result of dividend or other payments resulting from actuarial gains provided:
a. Actuarial gain is measured not less frequently than annually,
b. The resulting dividend or other payments are either paid no later than the year following the year for which the actuarial experience is measured or paid in the same form as the payment of the annuity over the remaining period of the annuity (beginning no later than the year following the year for which the actuarial experience is measured),
c. The actuarial gain taken into account is limited to actuarial gain from investment experience,
d. The assumed interest rate used to calculate such actuarial gains is not less than 3%, and
e. The annuity payments are not increased by a constant percentage as described in division (C)(1)(d)3. above;
5. To the extent of the reduction in the amount of the participant's payments to provide for a survivor benefit, but only if there is no longer a survivor benefit because the beneficiary whose life was being used to determine the distribution period described in division (D) below dies or is no longer the participant's beneficiary pursuant to a qualified domestic relations order within the meaning of Code Section 414(p);
6. To provide a final payment upon the participant's death not greater than the excess of the actuarial present value of the participant's accrued benefit (within the meaning of Code Section 411(a)(7)) calculated is of the annuity starting date using the applicable interest rate and the applicable mortality table (or if greater, the total amount of employee contributions) over the total payments before the participant's death;
7. To allow a beneficiary to convert the survivor portion of a joint and survivor annuity into a single sum distribution upon the participant's death; or
8. To pay increased benefits resulting from a plan amendment.
(2) Amount required to be distributed by required beginning date and later payment intervals. The amount that must be distributed on or before the participant's required beginning date (or, if the participant dies before distributions begin, the date distributions are required to begin under division (B)(2)(a)1. or 2. above) is the payment that is required for one payment interval. The second payment need not be made until the end of the next payment interval even if that payment interval ends in the next calendar year. All of the participant's benefit accruals as of the last day of the first distribution calendar year will be included in the calculation of the amount of the annuity payments for payment intervals ending on or after the participant's required beginning date.
(3) Additional accruals after first distribution calendar year. Any additional benefits accruing to the participant in a calendar year after the first distribution calendar year will be distributed beginning with the first payment interval ending in the calendar year immediately following the calendar year in which such amount accrues.
(D) Requirements for annuity distributions that commence during participant's lifetime.
(1) Joint life annuities where the beneficiary is not the participant's spouse. If the participant's interest is being distributed in the form of a joint and survivor annuity for the joint lives of the participant and a nonspouse beneficiary, annuity payments to be made on or after the participant's required beginning date to the designated beneficiary after the participant's death must not at any time exceed the applicable percentage of the annuity payment for such period that would have been payable to the participant, using the table set forth in Q&A-2(c)(2), in the manner described in Q&A-2(c)(1), in section 1.401(a)(9)-6 of the regulations, to determine the applicable percentage. If the form of distribution combines a joint and survivor annuity for the joint lives of the participant and a nonspouse beneficiary and a period certain annuity, the requirement in the preceding sentence will apply to annuity payments to be made to the designated beneficiary after the expiration of the period certain.
(2) Period certain annuities. Unless the participant's spouse is the sole designated beneficiary and the form of distribution is a period certain and no life annuity, the period certain for an annuity distribution commencing during the participant's lifetime may not exceed the applicable distribution period for the participant under the uniform lifetime table set forth in Q&A-2 in section 1.401(a)(9)-9 of the regulations for the calendar year that contains the annuity starting date. If the annuity starting date precedes the year in which the participant reaches age 70, the applicable distribution period for the participant is the distribution period for age 70 under the uniform lifetime table set forth in Q&A-2 in section 1.401 (a)(9)-9 of the regulations plus the excess of 70 over the age of the participant as of the participant's birthday in the year that contains the annuity starting date. If the participant's spouse is the participant's sole designated beneficiary and the form of distribution is a period certain and no life annuity, the period certain may not exceed the longer of the participant's applicable distribution period, as determined under this division (D)(2), or the joint life and last survivor expectancy of the participant and the participant's spouse as determined under the joint and last survivor table set forth in Q&A-3 in section 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 calendar year that contains the annuity starting date.
(E) Requirements for minimum distributions after the participant's death.
(1) Death after distributions begin. If the participant dies after distribution of his interest begins in the form of an annuity meeting the requirements of this subchapter, the remaining portion of the participant's interest will continue to be distributed over the remaining period over which distributions commenced.
(2) Death before distributions begin.
(a) Participant survived by designated beneficiary. Except to the extent that an election is made to receive distributions in accordance with the five-year rule under division (F) below, if the participant dies before the date distribution of his interest begins and there is a designated beneficiary, the participant's entire interest will be distributed, beginning no later than the time described in division (B)(2)(a)1. or 2. above, over the life of the designated beneficiary or over a period certain) not exceeding:
1. Unless the annuity starting date is before the first distribution calendar year, the life expectancy of the designated beneficiary determined using the beneficiary's age as of the beneficiary's birthday in the calendar year immediately following the calendar year of the participant's death; or
2. If the annuity starting date is before the first distribution calendar year, the life expectancy of the designated beneficiary determined using the beneficiary's age as of the beneficiary's birthday in the calendar year that contains the annuity starting date.
Under the five-year rule, the participant's entire interest will be distributed to the designated beneficiary by December 31 of the calendar year containing the fifth anniversary of the participant's death.
(b) No designated beneficiary. 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 will be completed by December 31 of the calendar year containing the fifth anniversary of the participant's death.
(c) Death of surviving spouse before distributions to surviving spouse begin. If the participant dies before the date distribution of his interest begins the participant's surviving spouse is the participant's sole designated beneficiary, and the surviving spouse dies before distributions to the surviving spouse begin, this division (E) will apply as if the surviving spouse were the participant, except that the time by which distributions must begin will be determined without regard to division (B)(2)(a)1. above.
(F) Election of five-year rule. Participants or beneficiaries may elect on an individual basis whether the five-year rule in divisions (B)(2) and (E) 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 the distribution would be required to begin under division (B)(2) above if no such election is made, or by September 30 of the calendar year which contains the fifth anniversary of the participant's (or, if applicable, surviving spouse's) death.
(G) Changes to annuity payment period.
(1) Permitted changes. An annuity payment period may be changed only in association with an annuity payment increase described in division (C)(1)(d) above or in accordance with division (G)(2) below.
(2) Reannuitization. An annuity payment may be changed and the annuity payments modified in accordance with that change if the conditions in division (G)(3) below are satisfied and:
(a) The modification occurs when the participant retires or in connection with a plan termination;
(b) The payment period prior to modification is a period certain without life contingencies; or
(c) The annuity payments after modification are paid under a qualified joint and survivor annuity over the joint lives of the participant and a designated beneficiary, the participant's spouse is the sole designated beneficiary, and the modification occurs in connection with the participant's becoming married to such spouse.
(3) Conditions. The conditions in this division (G)(3) are satisfied if:
(a) The future payments after the modification satisfy the requirements of Code Section 401(a)(9), section 1.401(a)(9) of the regulations, and this subchapter (determined by treating the date of the change as a new annuity starting date and the actuarial present value of the remaining payments prior to modification as the entire interest of the participant);
(b) For purposes of Code Sections 415 and 417, the modification is treated as a new annuity starting date;
(c) After taking into account the modification, the annuity (including all past and future payments) satisfies Code Section 415 (determined at the original annuity starting date, using the interest rates and mortality tables applicable to such date); and
(d) The end point of the period certain, if any, for any modified payment period is not later than the end point available to the participant at the original annuity starting date under Code Section 401(a)(9) and this subchapter.
(H) Payments to a surviving child.
(1) Special rule. For purposes of this subchapter, payments made to a participant's surviving child until the child reaches the age of majority (or dies, if earlier) shall be treated as if such payments were made to the surviving spouse to the extent the payments become payable to the surviving spouse upon cessation of the payments to the child.
(2) Age of majority. For purposes of this division (H), a child shall be treated as having not reached the age of majority if the child has not completed a specified course of education and is under the age of 26. In addition, a child who is disabled within the meaning of Code Section 72(m)(7) when the child reaches the age of majority shall be treated as having not reached the age of majority so long as the child continues to be disabled. (Ord. 1806, passed 1-7-15)