3.96.050 Time of Benefit Payment

3.96.050 Time of Benefit Payment.

A. Distribution. Payment from the plan will not be distributed to a participant until she/he has a distributable event. A distributable event under the plan includes a Participant’s:

1. severance from employment, or

2. death.

3. In addition, the following in-service withdrawals will be permitted:

a. unforeseeable emergency,

b. attainment of age 70½, and

c. small amount cashouts.

4. Rollover Contributions may be distributed at any time regardless of whether the Participant has a distributable event. If a Participant or Beneficiary made an irrevocable benefit election prior to 2002, the plan permits those individuals to revise these elections. However, if an individual chose to annuitize under a fixed annuity, the election may not be revised. Payments from the Plan will be made only upon Separation from Service, or an Employer approved financial hardship that results from an unforeseeable emergency.

B. Latest Commencement Date – Age 70½. Notwithstanding any other Plan provision to the contrary, benefits for a Participant or Beneficiary shall commence no later than April 1 following the later of the calendar year in which the Participant attains age 70½, or the calendar year in which the Participant has a Severance from Employment.

C. Severance from Employment. The plan may allow a Participant who has a severance from employment with the Employer to receive his or her account balance upon such severance in accordance with the plan rules.

1. Upon the death of a Participant, distributions are made to a designated Beneficiary. A Participant in the plan is not required to designate a spouse as a Beneficiary. However, a spouse may be entitled to a death benefit even if she/he is not a designated Beneficiary under a Participant’s account(s). Assets under the plan generally are community property to the extent the contributions were made while the Participant and his or her spouse were married and domiciled in a community property jurisdiction.

2. The plan provides for distribution options upon the death of a Participant and may require the immediate distribution of death benefits. Regulations require death benefits to be distributed within a certain period of time. The time frame depends upon whether the Beneficiary is a spouse or non-spouse. If Minimum Distribution Requirement ("MDR") payments have not begun upon a Participant’s death, payments must be distributed to a designated Beneficiary no later than:

a. Designated Beneficiary Rule: Payment of the deceased Participant’s account balance must begin no later than December 31 of the calendar year immediately following the calendar year of the Participant’s death, payable over a period not to exceed the life expectancy of the Beneficiary.

b. Designated Beneficiary is Surviving Spouse: If the designated Beneficiary is the surviving spouse, the payments to the spouse must begin by the later of:

(1) December 31 of the calendar year immediately following the calendar year in which the Employee dies, or

(2) December 31 of the calendar year in which the Employee would have attained age 70½.

3. The payments to the surviving spouse must be made over a period not to exceed the spouse’s life expectancy. In the alternative, a spouse or non-spouse Beneficiary may elect to have death benefits paid under the five-year rule.

a. Five-year rule: The deceased Participant’s entire account balance must be distributed to a designated Beneficiary no later than the December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

b. If MDR payments have begun to be made to a Participant prior to death, payments of the deceased Participant’s account balance must begin to be made to a Beneficiary (regardless of whether the Beneficiary is a spouse or non-spouse) beginning no later than December 31 of the calendar year immediately following the calendar year of the Participant’s death and must be paid over the Beneficiary’s life expectancy.

c. MDR payments made over a Beneficiary’s life expectancy, whether a Participant dies before or after MDR payments have begun, are made as follows:

(1) Non-spouse Beneficiary: for years after the year of the Participant’s death, the distribution period is generally the remaining life expectancy of the designated Beneficiary. The Beneficiary’s remaining life expectancy is calculated using the age of the Beneficiary in the year following the year of the Participant’s death, reducing the life expectancy factor by one for each subsequent year.

(2) Spousal Beneficiary: for years after the year of the Participant’s death, the distribution period during the surviving spouse’s life is the spouse’s single life expectancy. For years after the year of the surviving spouse’s death, the distribution period is the spouse’s life expectancy calculated in the year of death, reducing the life expectancy factor by one for each subsequent year.

(3) No designated Beneficiary (e.g., Participant’s estate or a trust that is not being "looked through" is the Beneficiary): as of the end of the year after the Participant’s death there is no life expectancy on which to base the payments and therefore, the distribution period is the Participant’s life expectancy calculated in the year of death, reduced by one for each subsequent year.

1. A plan may permit a Participant to receive in-service withdrawals in the case of an "unforeseeable emergency." Unforeseeable emergency is a severe financial hardship of the Participant, the Participant’s spouse or the Participant’s dependents resulting from an illness or accident, loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

2. The circumstances that will constitute an unforeseeable emergency will depend upon the facts of each situation, but, in any event, payment may not be made to the extent that such hardship is or may be relieved:

a. Through reimbursement or compensation by insurance or through another manner,

b. By liquidation of the Participant’s assets, to the extent the liquidation of these assets would not itself cause severe financial hardship, or

c. By cessation of deferrals under the plan. Withdrawals of amounts because of an unforeseeable emergency can only be permitted to the extent reasonably needed to satisfy the emergency need (including any amounts necessary to pay taxes or penalties).

Examples of what are not considered to be unforeseeable emergencies include the need to send a Participant’s child to college or the desire to purchase a home.

a. The Participant must submit to the Committee a written request for withdrawal accompanied by evidence that his or her financial condition warrants an advance release of funds and results from events beyond the Participant’s control. The committee shall review the request and determine whether payment of any amount is justified. If payment is justified, the amount shall be limited to an amount reasonably needed to meet the emergency. The Committee shall determine the amount and form of payment. Any amount remaining in the account after an unforeseeable emergency withdrawal shall be distributed in accordance with the provisions of this Plan.

b. The Committee may delegate review and determination responsibilities to a hearing officer. If the Employer appoints a hearing officer, and the Participant disagrees with the hearing officer’s determination, he or she may appeal that decision to the Committee within ten days after receiving notice of the hearing officer’s decision.

4. Unforeseeable Emergency Withdrawals After Commencement of Benefit Payments. Once regular installment payments to a Participant have commenced under the Plan, the Participant may request payment acceleration if the Participant suffers an unforeseeable emergency as defined in Section 3.96.050 E.1. An accelerated payment may be made in accordance with Section 3.96.050 E.3.a. and the amount of such payment shall not exceed the amount needed to meet the emergency. Any amount remaining in the account after such accelerated payment shall be distributed in accordance with the provisions of this Plan.

F. Small Amount Cashouts. If the value of a Participant’s accounts under the plan is $5,000 or less and the Participant has not made a Deferral Contribution to the plan in the previous two Plan Years, a plan may permit the Participant to elect to receive a distribution of his or her accounts, payable in a lump sum, before the Participant has a severance from employment. In determining the $5,000 amount, the plan may choose to disregard any Rollover Contributions made by the Participant. A Participant may only take one such distribution while employed by the Employer.

G. Purchasing Service Credits Under a State or Local Retirement System. A Participant may direct the Administrator to transfer amounts under his or her Participant Account tax-free under the Plan in accordance with Code Section 457(e)(17) to the fiduciary of a state or local retirement system in order to enable the Participant to purchase years of service credits under the system or repay amounts previously cashed out under the system even if the Participant is not eligible for a distribution under 3.96.050 A. The Administrator shall take such reasonable measures as required to ensure that the intended recipient plan will accept such transferred amounts.

H. Distribution for Minor Beneficiary or Incompetent. In the event a distribution is to be made to a minor, then the Administrator may direct that such distribution be paid to the legal guardian, or if none, to a parent of such Beneficiary or to the custodian for such Beneficiary under the Uniform Gift [Transfers] to Minors Act, if such is permitted by the laws of the state in which the Beneficiary resides. Such a payment to the legal guardian, parent or guardian of a minor Beneficiary shall fully discharge the Provider, any other providers of the Plan, Administrator, Employer, and Plan from further liability on account thereof. In the event a distribution is to be made to an incompetent, then the Administrator may direct that such distribution be paid to the duly appointed and currently acting conservator of the incompetent or to other such individual who is legally responsible for the incompetent as permitted by the laws of the state in which the incompetent resides. Such a payment to the conservator or other such individual who is legally responsible for the incompetent shall fully discharge the Provider, any other providers of the Plan, Administrator, Employer, and Plan from further liability on account thereof.

I. Location of Participant or Beneficiary Unknown. In the event that all, or any portion, of the distribution payable to a Participant, Former Participant, Alternate Payee or Beneficiary hereunder shall, at the Participant’s or Former Participant’s Severance from Employment, remain unpaid solely by reason of the inability of the Administrator, after sending a registered letter, return receipt requested, to the last known address, and after further diligent effort, to ascertain the whereabouts of such Participant, Former Participant, Alternate Payee or Beneficiary, the amount so distributable shall be held within the Investment Product, with investment direction provided by the Administrator, under the Plan. In the event a Participant, Former Participant, Alternate Payee or Beneficiary is located subsequent to his benefit being held in such account, such benefit shall be restored, including any applicable interest, and paid, to the Participant, Former Participant, Alternate Payee or Beneficiary, in accordance with this Chapter.