Your share of the profit sharing contribution is determined by the following fraction: Profit Sharing Contribution
X
Your Compensation Total Compensation of All Participants Eligible to Share
For example: Suppose the profit sharing contribution for the Plan Year is $20,000. Employee A's compensation for the Plan Year is $25,000. The total compensation of all participants eligible to share, including Employee A, is $250,000. Employee A's share will be: $20,000
X
$25,000 $250,000
or
$2,000
What are forfeitures and how are they allocated? Definition of forfeitures. In order to reward employees who remain employed with the Employer for a long period of time, the law permits a "vesting schedule" to be applied to certain contributions that your Employer makes to the Plan. This means that you will not be "vested" in (entitled to) all of the contributions until you have been employed with the Employer for a specified period of time (see the Article entitled "Vesting"). If a participant terminates employment before being fully vested, then the non-vested portion of the terminated participant's account balance remains in the Plan and is called a forfeiture. Allocation of forfeitures. Forfeitures will be allocated as follows: •
Forfeitures may first be used to pay any administrative expenses.
•
Any remaining forfeitures will be used to reduce any Employer contribution. ARTICLE IV COMPENSATION AND ACCOUNT BALANCE
What compensation is used to determine my Plan benefits? Definition of compensation. For the purposes of the Plan, compensation has a special meaning. Compensation is generally defined as your total compensation that is subject to income tax and paid to you by your Employer during the Plan Year. If you are a self-employed individual, your compensation will be equal to your earned income. The following describes the adjustments to compensation that may apply for the different types of contributions provided under the Plan. Salary Deferrals Adjustments to compensation. The following adjustments to compensation will be made for purposes of salary deferrals: •
salary deferrals to this Plan and to any other plan or arrangement (such as a cafeteria plan) will be included.
• reimbursements or other expense allowances, fringe benefits, moving expenses, deferred compensation, and welfare benefits will be excluded. •
compensation paid while not a participant in the component of the Plan for which compensation is being used will be excluded.
• compensation paid after you terminate employment for services performed during your regular working hours, or for services outside your regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments that would have been made to you and treated as Plan compensation had you continued employment will be excluded if they are paid to you after the later of: (i) 2 1/2 months after you terminate employment, or (ii) the last day of the Plan Year in which you terminate employment. • compensation paid for unused accrued bona fide sick, vacation or other leave, if such amounts would have been included in Plan compensation if paid prior to your termination of employment and you would have been able to use the leave if employment had continued will be excluded if they are paid to you after the later of: (i) 2 1/2 months after you terminate employment, or (ii) the last day of the Plan Year in which you terminate employment. • nonqualified unfunded deferred compensation, if the payments are includible in gross income and would have been paid to you and treated as Plan compensation had you continued employment, will be excluded if they are paid to you after the later of: (i) 2 1/2 months after you terminate employment, or (ii) the last day of the Plan Year in which you terminate employment. •
compensation paid to you after you terminate employment due to permanent and total disability will be excluded. January 2011 5