The 401(k) Savings Plan

Transcription

1 The 401(k) Savings Plan Your Wealth Accumulation Program JPMorgan Chase offers a number of wealth accumulation plans that help you build income for your future. These plans include: The Retirement Plan The 401(k) Savings Plan The Employee Stock Purchase Plan Working together, the components of these plans along with your personal savings and Social Security benefits allow you to design a personal strategy to help you meet your long-term financial needs. This section will provide you with a better understanding of how the 401(k) Savings Plan works, including how and when benefits are paid. Questions? Contact the 401(k) Savings Plan Call Center: JPMC401k ( ) TDD: Service Representatives are available from 8 a.m. to 8 p.m. Eastern Time, Monday through Friday, except New York Stock Exchange holidays. To Access the 401(k) Savings Plan Web Center: From Work: Go to Company Home > My Work > 401(k) Savings Plan Web Center From Home: Go to via the Internet, and follow the path above JPMorgan Chase understands the importance of planning for the future; that s why we offer the 401(k) Savings Plan. Joining the JPMorgan Chase 401(k) Savings Plan is optional. If you participate, you decide how much to contribute to your account and how your savings should be invested. You can contribute on a before-tax basis that is, before federal and, in most cases, state and local taxes have been withheld. With before-tax contributions, you reduce your current taxable income and defer taxes on both your savings and any earnings on those savings until you withdraw them from the plan. You can also make Roth 401(k) contributions on an after-tax basis that is, after federal, state and local income taxes have already been withheld. In this case, you do not lower your taxable income, but when you take a qualified distribution, your contributions, including any investment earnings, are tax-free when withdrawn. Update: Your Guide to Benefits at JPMorgan Chase This document is your summary plan description of the JPMorgan Chase 401(k) Savings Plan. The U.S. Department of Labor requires JPMorgan Chase to routinely provide benefits plan summaries to plan participants. Please retain this information for your records. This document does not include all of the details contained in the applicable insurance contracts, plan documents, and trust agreements. If there is a discrepancy between the official plan documents and this summary, the official plan documents will govern. Be sure to read the About This Guide section and the Plan Administration section for more important details about the plan and this description, and for reference to the official plan documents. Effective 1/1/08 The 401(k) Savings Plan 1

2 In addition, if you are eligible and have completed one year of total service, JPMorgan Chase will generally match the first 5% of benefits pay you contribute to the plan. Taxes on your matching contributions and their investment earnings are deferred until you take a withdrawal or a distribution from the plan. Whatever you re working toward, the 401(k) Savings Plan can help you get that much closer to your long-term financial goals. This section will provide you with a better understanding of how the 401(k) Savings Plan works, including how and when benefits are paid. Securities Act This summary plan description is incorporated by reference into the 401(k) Savings Plan Prospectus on page 54 covering securities that have been registered under the Securities Act. The enclosed prospectus is prepared and circulated in connection with JPMorgan Chase s obligations under United States securities laws to its shareholders, not pursuant to any obligations set forth in the Employee Retirement Income Security Act (ERISA). Accordingly, participants should be aware that the prospectus is a separate document unrelated to this summary plan description, and the financial statements referred to by it, and incorporated by reference therein, have not been prepared pursuant to the fiduciary duties imposed by ERISA. Effective 1/1/08 The 401(k) Savings Plan 2

3 Table of Contents Page Important Terms... 5 Some Quick Facts... 8 Participating in the 401(k) Savings Plan... 9 Eligibility... 9 When Participation Begins... 9 How to Enroll Fiduciary Responsibilities Beneficiaries When Contributions End When Participation Ends Contributions to Your Account Your Contributions Catch-Up Contributions (If Eligible) JPMorgan Chase Matching Contributions JPMorgan Chase Non-Matching Contributions Rollover Contributions When Contributions Are Vested Legal Limits on Benefits Pay and Contributions How Will My Taxable Income be Affected? Making a Decision about Your Contributions Maximizing Your Total Savings Investment Funds Investment Funds Lifestyle Portfolios Investment Fund Performance Investment Management Fees, Recordkeeping, and Other Plan Expenses Temporary Investments Accounting Method Investing Your Contributions Investing Future Contributions Reallocations and Transfers of Your Existing Vested Account Balance Daily Plan Processing Limits on Reallocations/Transfers Affecting the International Funds and Mutual Funds Equity Wash Rules Limitations on Certain Reallocations or Transfers from the Stable Value Fund Potential Adjustments to JPMorgan Chase Common Stock Fund Transactions Borrowing or Withdrawing from Your Account Loans Withdrawals While Employed When and How a Withdrawal Is Paid JPMorgan Chase Common Stock Fund Dividend Election Payment Options How Your 401(k) Savings Plan Account Is Paid Receiving Account Payments After You Retire or Terminate from JPMorgan Chase Mandatory Distributions The JPMorgan Chase U.S. Benefits Program is available to most full-time and part-time U.S. dollar-paid salaried employees who are regularly scheduled to work 20 hours or more a week and who are employed by JPMorgan Chase & Co. or one of its subsidiaries to the extent that such subsidiary has adopted the JPMorgan Chase U.S. Benefits Program. This information does not include all of the details contained in the applicable insurance contracts, plan documents, and trust agreements. If there is any discrepancy between this information and the governing documents, the governing documents will control. JPMorgan Chase & Co. expressly reserves the right to amend, modify, reduce, change, or terminate its benefits and plans at any time. The JPMorgan Chase U.S. Benefits Program does not create a contract or guarantee of employment between JPMorgan Chase and any individual. JPMorgan Chase or you may terminate the employment relationship at any time. Effective 1/1/08 The 401(k) Savings Plan 3

4 Payments to a Beneficiary Tax Consequences Additional Income Tax Rollovers Direct Rollovers Traditional Rollover Additional Plan Information Right to Amend If You Become Divorced or Legally Separated Voting of JPMorgan Chase Common Stock Approved Quarterly Window Periods Top-Heavy Rules Pension Benefit Guaranty Corporation Appeals Process Additional Information on Investment Funds If Your Situation Changes Appendix A Heritage Morgan and Heritage Bank One Plan Participants Former Participants in The Deferred Profit Sharing Plan of Morgan Guaranty Trust Company of New York and Affiliated Companies for United States Employees Former Participants in the Bank One Savings and Investment Plan Appendix B Bank One Supplemental Savings and Investment Plan Contributions Investing Your SSIP Account Vesting Distributions Accessing Your Account (k) Savings Plan Prospectus Effective 1/1/08 The 401(k) Savings Plan 4

5 Important Terms As you read this summary of the JPMorgan Chase 401(k) Savings Plan, you ll come across some important terms related to the plan. Many of those important terms are defined here to help you better understand the plan. Term After-Tax Contributions Before-Tax Contributions Benefits Pay for the 401(k) Savings Plan Break in Service Catch-Up Contributions Common Stock Direct Fund Dividend Income Employee Stock Ownership Plan (ESOP) Definition Contributions you may have previously made to a heritage 401(k) plan after federal, state, and local income taxes were withheld. These contributions should not be confused with Roth 401(k) contributions. Contributions you make to the plan that are taken from your pay before federal (and, in most cases, state and local) taxes are withheld. This lowers your taxable income and your current income tax liability. The Internal Revenue Code limits the amount you may contribute annually to the 401(k) Savings Plan on a combined before-tax and Roth 401(k) basis. For 2008, the combined legal limit is $15,500. This amount is subject to change periodically. For purposes of making employee contributions, benefits pay is your annual base pay plus applicable job differential pay (e.g., shift pay). It does not include any annual bonuses, overtime, special recognition, or other incentive awards you might receive. In certain situations, your benefits pay may include other cash earnings (e.g., commissions, draws, and overrides) paid under certain non-annual incentive plans that provide compensation in lieu of base salary. For 2008, the legal limit on benefits pay is $230,000. Generally, the period beginning on the date your employment with JPMorgan Chase, or an affiliate that is a member of the controlled group, ends for any reason and ending on the date you re rehired. A break in service may affect your total service, and therefore, your right to receive matching contributions under the 401(k) Savings Plan. Please see If Your Situation Changes on page 47 for a more detailed explanation. Before-tax and/or Roth 401(k) contributions that may be made annually to the 401(k) Savings Plan by eligible participants who are age 50 or older as of December 31 of any calendar year. The Internal Revenue Code limits the amount you can contribute annually on a catch-up basis. For 2008, the legal limit is $5,000. This amount is subject to change periodically. Please see Catch-Up Contributions (If Eligible) on page 12 for more information. Common stock represents an ownership interest in a corporation. If the company has also issued preferred stock, both common and preferred stockholders have ownership rights. Common stockholders assume a greater risk of loss than preferred stockholders, but generally exercise greater control and may gain a greater reward in the form of dividends and capital appreciation. One of the investment funds in the JPMorgan Chase 401(k) Savings Plan that represents a single investment fund under the plan. A payment of cash or stock from a company s retained earnings to each stockholder as declared by the company s board of directors. Dividends are not guaranteed. The JPMorgan Chase Common Stock Fund, one of the plan s investment funds, is also an Employee Stock Ownership Plan (ESOP). You can elect to have any dividend income reinvested in the JPMorgan Chase Common Stock Fund, or you can have it distributed to you in cash. Please Note: This type of dividend does not qualify for the lower tax rate normally applicable to dividends paid directly by a corporation. Please see JPMorgan Chase Common Stock Fund Dividend Election on page 34 for more information. Effective 1/1/08 The 401(k) Savings Plan 5

6 Term Full-Time Employee Hardship Withdrawals Heritage Plans JPMorgan Chase Common Stock Fund JPMorgan Chase Matching Contributions JPMorgan Chase Non-Matching Contributions Lifestyle Portfolio Market Value or Fair Value Net Asset Value per Unit (NAV) Definition An employee who is regularly scheduled to work 40 hours a week. Withdrawals of certain types of vested money are allowed only if you have a serious and immediate financial hardship that cannot be met by other resources and is limited to very specific circumstances. Please see Withdrawals While Employed on page 30 for more information. The predecessor savings plans that heritage Bank One and heritage JPMorgan Chase employees participated in prior to January 1, The predecessor plans are the Bank One Corporation Savings and Investment Plan and the JPMorgan Chase 401(k) Savings Plan. An investment fund that invests substantially all its assets in shares of JPMorgan Chase common stock except for a certain amount of uninvested cash to use in settling daily transactions. Contributions made by JPMorgan Chase to the 401(k) Savings Plan on behalf of certain eligible employees after they complete one year of total service. These contributions match, dollar for dollar, the first 5% of benefits pay that you contribute to the 401(k) Savings Plan on a per pay period basis (up to the legal limit). Please see JPMorgan Chase Matching Contributions on page 13 for more information. Please Note: If your total annual cash compensation is $250,000 or more, you are not eligible to receive matching contributions under the 401(k) Savings Plan. This determination is made as of each August 1 and applies for the next succeeding calendar year. Discretionary contributions made by JPMorgan Chase, from time to time, for certain non-highly compensated designated employees. Please see JPMorgan Chase Non-Matching Contributions on page 13 for more information. In the JPMorgan Chase 401(k) Savings Plan, an investment portfolio that is made up of a predetermined combination of some of the plan s direct funds. In no case does it include the JPMorgan Chase Common Stock Fund. The investment mix of a lifestyle fund reflects its particular investment objectives and a defined degree of risk and return. The value of each plan investment fund normally determined as of the close of business of the New York Stock Exchange. It is generally based on market quotations. If market quotations are not available for particular securities or are not deemed to be representative of their value, the plan uses various methods to determine the value of such securities that reflect their fair value. The fair market value of the assets of each investment fund s total assets less liabilities, divided by the number of units allocated to the fund. The value of a single unit is called net asset value per unit, or NAV. Part-Time Employee A salaried employee who is regularly scheduled to work between 20 and 39 hours per week. Qualified Distribution For purposes of determining whether any investment earnings associated with Roth 401(k) contributions can be withdrawn tax-free, a qualified distribution is one in which: Your Roth 401(k) account has been in existence for at least five years. The five-year holding period begins with the first tax year for which you made a Roth 401(k) contribution to the plan, and continues to run even if you stop making Roth 401(k) contributions; and Contributions and earnings are not withdrawn until you reach age , die, or become disabled. Effective 1/1/08 The 401(k) Savings Plan 6

7 Term Rollover Contribution Roth 401(k) Contributions Total Annual Cash Compensation Total Service Unit Vesting Definition A contribution you make to the JPMorgan Chase 401(k) Savings Plan from a previous employer s tax-qualified plan (like another 401(k) plan), from a conduit or contributory Individual Retirement Account (IRA), from another qualified plan including a governmental plan, or from the JPMorgan Chase Retirement Plan (after you terminate employment with the company). Please see Rollovers on page 42 for more information. Contributions you make to the plan that are taken from your pay after federal, state and local taxes are withheld. This does not lower your taxable income or your current income tax liability. The Internal Revenue Code limits the amount you may contribute annually to the 401(k) Savings Plan on a combined before-tax and Roth 401(k) basis. For 2008, the combined legal limit is $15,500. This amount is subject to change periodically. For purposes of determining your eligibility to receive JPMorgan Chase matching contributions and non-matching contributions, total annual cash compensation is your base salary plus applicable job differential pay (e.g., shift pay) as of each August 1, plus any cash earnings from any incentive plans (e.g., annual bonus, commissions, draws, overrides, and special recognition payments or incentives) that are paid to or deferred by you for the previous 12-month period. (Overtime is not included.) Your total annual cash compensation is calculated as of each August 1 to take effect the following January 1 and will remain unchanged throughout the year. Generally, the period beginning on your first business day actively-at-work as an employee of JPMorgan Chase or an affiliate and ending when your employment ends. This generally includes all periods of employment with JPMorgan Chase or any of the merged companies that have become part of JPMorgan Chase. If you had service with heritage Bank One, your total service will not include such prior Bank One service to the extent it would not have been recognized by the heritage Bank One Savings and Investment Plan. A portion of ownership in an investment fund (or portfolio). Your right or your designated beneficiary s right to receive your entire plan account balance. You re always 100% vested in (meaning you have a non-forfeitable right to) the value of your contributions whether before-tax, Roth 401(k), or rollover and any investment experience associated with these contributions, as well as the value of any associated matching contributions (adjusted for investment experience). JPMorgan Chase non-matching contributions, if any, will generally vest after you complete three years of service. Effective 1/1/08 The 401(k) Savings Plan 7

8 Some Quick Facts Reasons for Joining Participation How Much You Can Contribute How JPMorgan Chase Makes Matching Contributions How Contributions Are Invested When You re Vested Accessing Funds from Your Account How Often Your Account Is Valued The 401(k) Savings Plan is a key component of the JPMorgan Chase Wealth Accumulation Plans. The plan offers a tax-effective way for you to save for your future, offering both before-tax contribution and Roth 401(k) contribution features. Additionally, saving is easy through convenient payroll deductions. Finally, most participants who complete one year of service are eligible to receive JPMorgan Chase matching contributions. Full-time employees are eligible to enroll in the 401(k) Savings Plan as of your first day of employment with JPMorgan Chase. Part-time employees are eligible to participate the first of the month after completing 90 days of service. Eligible participants receive JPMorgan Chase matching contributions the first of the month following completion of one year of total service. Please see Important Terms beginning on page 5 for the definition of Total Service. You can contribute up to 50% of your benefits pay per pay period on a before-tax and/or Roth 401(k) basis (up to certain legal limits). Please see Important Terms beginning on page 5 for a definition of Benefits Pay. The combined legal limit for before-tax and Roth 401(k) contributions in 2008 is $15,500. In addition, participants who are age 50 or older as of December 31 of any calendar year may be eligible to make catch-up contributions to the plan. The legal limit for 2008 is $5,000. For certain eligible participants, after you complete one year of total service, JPMorgan Chase matches your contributions, dollar for dollar, up to the first 5% of benefits pay on a per pay period basis. Please Note: If your total annual cash compensation is $250,000 or more, you are not eligible to receive matching contributions under the 401(k) Savings Plan. Please see Important Terms beginning on page 5 for the definition of Total Annual Cash Compensation. This determination is made as of each August 1 and applies for the next succeeding calendar year. You decide how your contributions are invested among the investment funds (in 1% increments to a total of 100%) offered by the plan. You can also decide if you want any future JPMorgan Chase matching contributions, if eligible, invested in the plan s JPMorgan Chase Common Stock Fund or invested in the same manner as your employee contributions. You are always 100% vested in (meaning you have a non-forfeitable right to) the value of any contributions you make to the plan (adjusted for investment experience) as well as the value of any associated JPMorgan Chase matching contributions (adjusted for investment experience), if eligible. JPMorgan Chase non-matching contributions, if any, will generally vest after you complete three years of service. While you re an active employee, you can access your account through loans and/or withdrawals. Please see Borrowing or Withdrawing from Your Account on page 28 for more information. The value of your account is calculated each day that the New York Stock Exchange is open for trading. With certain exceptions, transactions are processed the same business day if you request the transaction by 4 p.m. Eastern Time or the close of the New York Stock Exchange, whichever is earlier. The transaction is generally based on the closing market value/fair value on the day you request it and is reflected in your account through the 401(k) Savings Plan Web Center and Call Center the next business day. Please see Daily Plan Processing on page 26 for information about what happens if there is a market disruption. Effective 1/1/08 The 401(k) Savings Plan 8

9 Participating in the 401(k) Savings Plan The JPMorgan Chase 401(k) Savings Plan is a defined contribution plan. This means the value of your account depends on the amount of contributions made, as well as gains and losses based on your investment choices. The general guidelines for participating in the JPMorgan Chase 401(k) Savings Plan are described in this section. Eligibility Your participation in the JPMorgan Chase 401(k) Savings Plan is optional. In general, you are eligible to participate if you are: A U.S. dollar-paid employee who receives salary or earns draw, commissions, or production overrides ( salaried employee ); Regularly scheduled to work 20 or more hours per week; and Employed by JPMorgan Chase & Co. or one of its subsidiaries to the extent that such subsidiary has adopted the plan. Please Note: An individual classified or employed in a work status other than as a common law salaried employee by his/her employer, such as an: Independent contractor/agent (or its employee), Hourly-paid employee, Intern, and/or Occasional/seasonal, leased, or temporary employee, is not eligible to participate in the plan regardless of whether an administrative or judicial proceeding subsequently determines this individual to have instead been a common law salaried employee. When Participation Begins If you re an eligible full-time employee, you are immediately eligible to enroll in the 401(k) Savings Plan as of your first day of employment with JPMorgan Chase there s no waiting period. If you are an eligible part-time employee, you are eligible to enroll in the plan the first of the month after completing 90 days of total service. However, in either case, it s your responsibility to enroll in the plan. Your enrollment will become effective in accordance with administrative practices. In general, as an eligible participant, you may receive JPMorgan Chase matching contributions the first of the month following completion of one year of total service. Please see JPMorgan Chase Matching Contributions on page 13 for more information. Confirmation Statements You ll receive a confirmation statement following most requested 401(k) Savings Plan transactions. For instance, you ll receive a statement after you first enroll in the plan. In addition, if you change your future contributions or reallocate or transfer your existing account balance, you ll receive a statement confirming your elections. Effective 1/1/08 The 401(k) Savings Plan 9

10 How to Enroll When you become eligible to enroll in the plan, you will receive a 401(k) Savings Plan enrollment kit containing information regarding the plan and the enrollment process. Before enrolling, it s important to review the materials carefully to ensure you understand all the details of the plan, including the risks of investing. You can access your 401(k) Savings Plan enrollment materials online via Company Home > HR & Personal > Pay & Benefits > Enrollment Materials. (A copy of these materials will also be sent to you via interoffice mail. However, you do not need to wait for these materials to arrive to make your enrollment elections online.) Fiduciary Responsibilities The 401(k) Savings Plan is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974 (ERISA) relating to defined contribution plans. The plan is intended to constitute a plan described in Section 404(c) of ERISA and Title 29 of the Code of Federal Regulations Section C-1. Under these regulations, fiduciaries of the plan may be released of liability for any losses that are the direct and necessary result of investment instructions given by a participant or beneficiary. Beneficiaries A beneficiary is the person(s) you name to receive your vested plan benefit in the event of your death. You can name any individual to be your beneficiary but only on a form approved and accepted by the plan. However, if you re legally married, your spouse will automatically be your sole primary beneficiary under current law. If you want to designate someone other than your spouse as your primary beneficiary, your spouse must give written, notarized consent (this consent is irrevocable). Please Note: If you name someone as a beneficiary and you subsequently marry, your prior designation becomes invalid and your new spouse will be your beneficiary. Your most recent beneficiary designation will remain in effect until you make a change. If you re not married and don t name a beneficiary, or if your beneficiary predeceases you, vested benefits are paid to your estate upon your death. Changing Your Beneficiary You can change your 401(k) Savings Plan beneficiary at any time (subject to the rules for naming a beneficiary) by completing the Beneficiary Designation Form for JPMorgan Chase s Benefit Plans that is accepted by the plan administrator. To request this form, please call accesshr at JPMChase ( ). (The TDD number for participants with a hearing impairment is ) Service Representatives are generally available from 8 a.m. to 7 p.m. Eastern Time, Monday through Friday, except certain U.S. holidays. This form is also available online through Company Home > HR & Personal > Pay & Benefits. Effective 1/1/08 The 401(k) Savings Plan 10

11 When Contributions End Your contributions to the 401(k) Savings Plan and any associated JPMorgan Chase matching contributions, if eligible, will end when: You stop contributing to the plan; You reach any plan or legal limits; Your benefits pay ends; Your employment with JPMorgan Chase or a participating affiliate ends for any reason; You transfer to an affiliate/unit that doesn t participate in the plan; or You die. When Participation Ends Your participation in the plan ends when you or your beneficiary receives payment of your vested account balance. Effective 1/1/08 The 401(k) Savings Plan 11

12 Contributions to Your Account This section provides important details about the types of contributions you can make to the plan and, for certain eligible employees (as described under JPMorgan Chase Matching Contributions on page 13), the dollar-for-dollar matching contributions that JPMorgan Chase will automatically make to the plan on your behalf on the first 5% of benefits pay you contribute per pay period. Please see Important Terms beginning on page 5 for the definition of Benefits Pay. Your Contributions You can contribute up to 50% (in increments of 1%) of your benefits pay each pay period on a combined before-tax and/or Roth 401(k) basis (subject to legal limits): Before-tax Contributions Contributions made before federal income taxes, and in most cases, state, and local income taxes are withheld. With before-tax contributions, you lower your current taxable income during the year the contributions are made, and your take-home pay is, in most cases, higher than it would be if you contributed the same amount on a Roth 401(k) basis. Roth 401(k) Contributions Contributions made on an after-tax basis, which means federal, state, and local income taxes have already been withheld. With Roth 401(k) contributions, you do not lower your current taxable income during the year contributions are made, and your take-home pay is, in most cases, lower than it would be if you contributed the same amount on a before-tax basis. The combined annual legal limit for contributions in 2008 is $15,500. Your contributions will automatically be capped once they reach the annual legal limit. If this happens, your contributions will automatically resume at the beginning of the following calendar year at your last elected contribution rate. Any existing after-tax contributions from heritage plans will remain invested in the plan according to your elections and continue to be subject to investment experience. The investment earnings on these contributions do not receive the favorable tax treatment afforded to investment earnings on Roth 401(k) contributions. You can change the amount of your 401(k) Savings Plan contributions at any time through the 401(k) Savings Plan Web Center or Call Center. Any changes you make generally become effective according to administrative practices. Catch-Up Contributions (If Eligible) If you are at least age 50, or will reach age 50 at any time during the calendar year, you may be eligible to make additional before-tax and/or Roth 401(k) contributions known as catch-up contributions (subject to legal limits). For 2008, the combined annual catch-up contribution limit is $5,000. You are eligible to make catch-up contributions if the following applies to you: You will be at least age 50 by December 31 of the current year; and You will reach the annual legal limit on contributions ($15,500 in 2008); or You contribute to the plan at the maximum annual rate of 50% but will not reach the annual legal limit on contributions. JPMorgan Chase Matching Contributions Because matching contributions are made each pay period, you should carefully consider the effect your contribution elections have on matching contributions (if eligible). Please see Maximizing Your Total Savings on page 16 for more information. Potential Additional Limits There also may be additional limits imposed on contributions made by highly compensated employees. These limits are based on the ratio of contribution amounts to highly compensated and non-highly compensated employees. In 2008, you re generally considered a highly compensated employee if your total compensation is $105,000 or more for the year. (This definition is subject to change annually.) These limits may require reductions in the rate of contributions made during the year as well as refunds of contributions and earnings following the end of the year. Effective 1/1/08 The 401(k) Savings Plan 12

13 If you meet the requirements for catch-up contributions described on page 12, you may want to consider making an election to contribute up to an additional $5,000 to the plan. The annual legal limit for catch-up contributions in 2008 is $5,000. Your catch-up contributions will automatically be capped once they reach the annual legal limit. If this happens, your catch-up contributions will automatically resume at the beginning of the following calendar year at your last elected catch-up contribution rate. However, the amount is not adjusted for any increase in the catch-up contribution limit. Keep in mind that any catch-up contributions you make will be in addition to your regular before-tax and/or Roth 401(k) contributions and will be invested in the same manner as your regular employee contributions. When making your election, you will specify a dollar amount to be taken each pay period. You can change the amount of your catch-up contributions at any time through the 401(k) Savings Plan Web Center or Call Center. Any changes you make generally become effective according to administrative practices. JPMorgan Chase Matching Contributions If eligible, beginning the first of the month coincident with or next following the completion of one year of total service, JPMorgan Chase will match, dollar for dollar, the first 5% of benefits pay you contribute to the plan per pay period on a combined before-tax, Roth 401(k), and catch-up basis (subject to legal limits). Please see Important Terms beginning on page 5 for the definition of Total Service. Please refer to Maximizing Your Total Savings on page 16 for information about how these matching contributions may affect your contribution elections. Please Note: If your total annual cash compensation is $250,000 or more, you are not eligible to receive matching contributions under the 401(k) Savings Plan. This determination is made as of each August 1 and applies for the next succeeding calendar year. JPMorgan Chase Non-Matching Contributions JPMorgan Chase may, from time to time, make discretionary contributions for certain designated non-highly compensated employees. If JPMorgan Chase determines to make a non-matching contribution, the employees designated to receive the contribution will be notified. Please see When Contributions Are Vested on page 14 for more information on when non-matching contributions are vested. Rollover Contributions You are eligible to make a rollover contribution to the 401(k) Savings Plan at any time after your employment begins or if you have a 401(k) Savings Plan account balance after you leave the company. Your rollover contribution can be made after you receive a distribution from: Your previous employer s qualified defined contribution or defined benefit plan; A conduit or contributory Individual Retirement Account (IRA); A governmental 457 plan; or A 403(b) annuity plan. Saver s Credit Certain individuals may be eligible to receive an income tax credit of up to $1,000 (or $2,000 if filing jointly) for contributing to qualified tax-deferred retirement plans, such as the 401(k) Savings Plan. These credits are limited to individuals whose adjusted gross income (AGI) is less than or equal to the following amounts for 2008: $53,000 for couples filing income taxes jointly; $39,750 for individuals who file as heads of households; and $26,500 for single taxpayers. For more information, please contact your personal financial planner or tax advisor. Effective 1/1/08 The 401(k) Savings Plan 13

14 By rolling over your distribution to the plan, you ll continue to defer taxes on it. You ll also avoid a 10% penalty tax that may apply to your distribution. After your employment with the company terminates, you will have the same rollover choices that are available to active employees, assuming you continue to maintain an account balance in the 401(k) Savings Plan. In addition, you will have the ability to roll over your vested lump-sum distribution from the JPMorgan Chase Retirement Plan to the 401(k) Savings Plan; in this instance, a 401(k) account balance is not required. A Rollover Application is available via the 401(k) Savings Plan Web Center or Call Center. When Contributions Are Vested You are always 100% vested in (meaning you have a non-forfeitable right to) the value of any before-tax and/or Roth 401(k) contributions, as well as rollover contributions, you make to the 401(k) Savings Plan (adjusted for investment experience). You are always 100% vested in the value of any associated JPMorgan Chase matching contributions, if eligible, adjusted for investment experience. JPMorgan Chase non-matching contributions, if any, will generally vest after you complete three years of service. Legal Limits on Benefits Pay and Contributions The Internal Revenue Code limits the amount of benefits pay that can be considered for purposes of making employee contributions to a qualified 401(k) plan. For 2008, this amount is $230,000. This amount is subject to change over time. In addition, the Internal Revenue Code limits the amount you may contribute annually to a qualified 401(k) plan on a regular before-tax and/or Roth 401(k) basis, as well as on a combined catch-up basis. The combined annual legal limit for regular contributions in 2008 is $15,500, and $20,500 if you are age 50 or over in 2008 and eligible to make catch-up contributions. These contributions limits apply across all 401(k) plans in which you participate during a calendar year. JPMorgan Chase will monitor your benefit pay and before-tax, Roth 401(k), and catch-up contributions to the 401(k) Savings Plan to ensure that you don t exceed the legal limits. However, if you contributed to the plan of any other employer during the year, it is your responsibility to monitor compliance with legal limits on contributions. If you elect a contribution percentage that results in your total before-tax and/or Roth 401(k) contributions exceeding the legal limit for the year, you may request a refund of the excess amount. All refunds for the excess amounts contributed during the year must be requested no later than April 1 of the following year. If these contributions are not distributed to you before April 15 following the year in which they were contributed, you will be taxed twice on these contributions once in the year of contribution and again in the year of distribution. To request a refund, please contact the 401(k) Savings Plan Call Center. Effective 1/1/08 The 401(k) Savings Plan 14

15 How Will My Taxable Income be Affected? The following examples show how making before-tax or Roth 401(k) contributions to the 401(k) Savings Plan can affect your pay. Please Note: The numbers shown below are for illustrative purposes only. For example, state and local taxes or certain other payroll deductions are not reflected. In addition, the actual rate of your Federal taxes may vary depending on your individual situation. Example 1: Description Before-Tax Saving Roth 401(k) Saving Annual Benefits Pay $40,000 $40,000 Less Before-Tax Contributions -2,000-0 Taxable Income $38,000 $40,000 Less Federal Income Taxes (assumed 18% tax rate) Less Roth 401(k) Contributions -6,840-7, ,000 Take-Home Pay $31,160 $30,800 In the above example, contributing $2,000 on a Roth 401(k) basis instead of on a before-tax basis reduces the individual s take-home pay by $360. Example 2: Description Before-Tax Saving Roth 401(k) Saving Annual Benefits Pay $100,000 $100,000 Less Before-Tax Contributions -10,000-0 Taxable Income $90,000 $100,000 Less Federal Income Taxes (assumed 28% tax rate) -25,200-28,000 Less Roth 401(k) Contributions -0-10,000 Take-Home Pay $64,800 $62,000 In the above example, contributing $10,000 on a Roth 401(k) basis instead of on a before-tax basis reduces the individual s take-home pay by $2,800. To better understand how Roth 401(k) contributions and before-tax contributions may affect your personal situation, you can access a modeling tool available on the 401(k) Savings Plan Web Center. The Roth 401(k) Planner shows the likely impact on your take-home pay and allows you to model the retirement income provided when contributing on a before-tax basis versus a Roth 401(k) basis. Roth 401(k) Planner To access the Roth 401(k) Planner, go to Company Home > My Work > 401(k) Savings Plan Web Center > My Accounts > Plan Highlights > Roth 401(k) Planner. Effective 1/1/08 The 401(k) Savings Plan 15

16 Making a Decision about Your Contributions A decision about whether to make Roth 401(k) contributions or before-tax contributions depends on many factors, such as your age, financial needs, tolerance for risk, and what you believe your income tax rate will be during retirement. While everyone s individual situation differs, below are some general guidelines that you may find useful when making your decision. Generally, you may prefer making Roth 401(k) contributions if: You believe you will be in the same or higher income tax bracket during retirement than you are now. You cannot contribute to a Roth IRA outside of the plan because you exceed the income limitations. (Generally, you cannot contribute to a Roth IRA if your adjusted gross income is greater than $114,000 for single filers or $166,000 for married filing jointly.) You can afford to pay taxes on your contributions now and could benefit from potentially many years of accumulated tax-free investment earnings. Conversely, you may prefer making before-tax contributions if: You believe you will be in a lower income tax bracket during retirement than you are now. You want to take advantage of the tax break you receive in your current taxable income. You qualify for any earned income credits or dependent care credits. (Contributing on a Roth 401(k) basis will not decrease your taxable income and thus may affect your ability to qualify for these credits.) The above information is not intended to be, nor should it be construed as, tax advice. Because the tax rules can be quite complicated, you are encouraged to consult with a qualified tax or financial advisor before deciding which type of contribution is right for you. The tax considerations of the type of contribution you make to the plan, beforetax and/or Roth 401(k), are important. Please see Tax Considerations of Contributions Made to the Plan on page 39 for more information. You should also review the Roth 401(k) Qualified Distribution section on page 40. Maximizing Your Total Savings Important Information About Your Contribution Rate and JPMorgan Chase Matching Contributions Participants in the 401(k) Savings Plan can have many investment objectives and strategies. For example, some participants want to maximize the contributions they make to the plan. Others want to maximize the amount of matching contributions they receive from the company. And some participants want to do both and maximize their total savings in the plan. After completing one year of total service, JPMorgan Chase provides most employees with dollar-for-dollar matching contributions on the first 5% of benefits pay contributed each pay period. As a result, if you expect to participate in the plan for the full calendar year, you may wish to contribute a consistent rate of at least 5% each pay period, but less than the percentage that would cause you to exceed the before-tax and Roth 401(k) contribution legal limit ($15,500 in 2008) before year-end. If you exceed the limit prior to year-end, your matching contributions will end, as well as your employee contributions. Effective 1/1/08 The 401(k) Savings Plan 16

17 By decreasing your Roth and/or before-tax contribution rate and ensuring that you receive matching contributions throughout the year you may actually have more total annual dollars invested in the plan. The following examples illustrate this approach: Contributing at 25% will give you annual contributions of And annual matching contributions of For a total annual savings under the plan of However, by limiting your contribution rate to You will still contribute annual contributions of But, you will receive matching contributions of Thus increasing your total annual savings under the plan to This chart assumes 24 equal semi-monthly pay periods. Doing the Math Annual Benefits Pay of $78,000 Annual Benefits Pay of $120,000 $15,500 $15,500 $3,150 $3,250 $18,650 $18,750 20% 13% $15,500 $15,500 $3,900 $6,000 $19,400 $21,500 To find the highest contribution rate that will allow you to receive JPMorgan Chase matching contributions for the longest period of time during the year, just do the math. JPMorgan Chase 401(k) Contributions Calculator To model the effects of contribution rates and related JPMorgan Chase matching contributions based on your personal situation, you can access the JPMorgan Chase 401(k) Contributions Calculator. It s available online at the 401(k) Savings Plan Web Center via My Work. Based on the information you input, the calculator provides a personalized analysis of what contribution rates can give you the highest matching contributions from JPMorgan Chase or the highest savings amount based on your current benefits pay. Divide the annual legal contribution limit ($15,500 in 2008) by your annual benefits pay*, multiply the result by 100, and round down to the lowest whole number: $15,500 = 100 = Your annual benefits pay Round down to the lowest whole number You are responsible for electing a deferral rate that makes the most sense for your personal financial situation. *For 2008, the amount that can be recognized as benefits pay under the plan is $230,000. If You Contribute for Less Than a Full Year If you re contributing for less than a full year, you ll need to divide $15,500 (the combined Roth 401(k) and before-tax legal limit) by the amount of benefits pay you ll have for the remainder of the year when you start contributing. The resulting amount up to a maximum of 50% is the maximum rate you may contribute for the remainder of the year. Effective 1/1/08 The 401(k) Savings Plan 17

18 Investment Funds To help you create an investment strategy that s right for your financial objectives, the 401(k) Savings Plan lets you invest your savings among a number of investment funds with different risk and return characteristics. As a participant in the 401(k) Savings Plan, it s your responsibility to determine which investment choices and what balance of risk are right for you. You alone are responsible for your investment choices. By diversifying your investments spreading them out among several funds you may be able to provide more long-term stability. Know the Facts About Your Investment Funds Although some information about the plan s investment funds have been summarized in this section, it s important that you fully understand all the facts about the investment funds (including objectives, historical performance, and risk) before investing. You should read the 401(k) Savings Plan Investment Fund Profiles brochure and applicable mutual fund prospectuses, including the risks associated with each fund, before making any investment fund elections. If you need a copy of these materials, please access the 401(k) Savings Plan Web Center or Call Center. Please Note: JPMorgan Chase may change or eliminate any investment fund under the 401(k) Savings Plan at any time. The investment funds are not deposits or obligations of nor guaranteed by JPMorgan Chase (or any of its respective affiliates). Nor are they insured by the Federal Deposit Insurance Corporation (FDIC) or any other governmental agency. Investment in these funds involves risks, including the possible loss of principal. Therefore, it s important that you make informed investment decisions only after carefully reading all the plan information (including the mutual fund prospectuses and the 401(k) Savings Plan Investment Fund Profiles brochure) available through the 401(k) Savings Plan Web Center or Call Center. If you need a copy of these materials, please access the 401(k) Savings Plan Web Center or Call Center. Invest Carefully The Department of Labor s Web site has more information about individual investing and diversification. Please go to for more information. To help achieve long-term retirement security, you should give careful consideration to the benefits of a well-balanced and diversified investment portfolio. Spreading your assets among different types of investments may help you achieve a favorable rate of return, while it may minimize your overall risk of losing money. This is because market or other economic conditions that cause one category of assets, or one particular security, to perform very well often cause another asset category, or another particular security to perform poorly. If you invest more than 20% of your retirement savings in any one company or industry, your savings may not be properly diversified. Although diversification is not a guarantee against loss, it may be an effective strategy to help you manage investment risk. Investor Education Is Available Online Go to the 401(k) Savings Plan Web Center for a wide range of investor education topics, including information about retirement planning, understanding investments, and making investment decisions. The Web Center includes a number of interactive tools. You can access the Web Center from work or from home via the home page of My Work. With the exception of the JPMorgan Chase Common Stock Fund, the investment funds described in this section contain a number of securities issued by different corporations. In contrast, the JPMorgan Chase Common Stock Fund consists of a single security plus a small amount of cash. Thus, the JPMorgan Chase Common Stock Fund is not a diversified fund, and the value of an individual security can be more volatile than the market as a whole. Such volatility can be due to developments particular to the industry or the company, as well as to economic, political, regularity, and market developments. Effective 1/1/08 The 401(k) Savings Plan 18

19 In deciding how to invest your retirement savings, you should take into account all of your assets, including any retirement savings outside of the Plan. No single approach is right for everyone because, among other factors, individuals have different financial goals, different time horizons for meeting their goals, and different tolerances for risk. It is also important to periodically review your investment portfolio, your investment objectives, and the investment options under the Plan to help ensure that your retirement savings will meet your retirement goals. Investment Funds Most of the investment funds generally can be categorized as either a fixed income or an equity investment. The following chart provides a brief description of these investment funds. It is not intended to provide you with a complete overview of each fund. Therefore, before you make any investment decisions, please refer to the 401(k) Savings Plan Investment Fund Profiles brochure and the applicable mutual fund prospectuses available through the 401(k) Savings Plan Web Center or Call Center. Please Note: In general, all or any part of the assets of the plan s investment funds may be invested in short-term securities or other short-term investments. This allows the funds to meet liquidity needs or achieve investment objectives. 401(k) Savings Plan Investment Fund Characteristics Investment Fund The Objective/ Goal of This Fund Is to This Investment Fund Is Primarily Invested in The Value of Your Investment in This Fund Can Change Due to This Investment Fund Offers the Following Risk/Return Potential For the funds marked with an asterisk, please see Limits on Reallocations/Transfers Affecting the International Funds and Mutual Funds on page 27 and Equity Wash Rules Limitations on Certain Reallocations or Transfers from the Stable Value Fund on page 27 for more information. Short-Term Fixed Income* Stable Value* Preserve capital and generate current income Provide stability of principal with a steady return of interest income High-quality, short-term fixed income securities and cash instruments with an average maturity of less than 90 days Fixed-rate investment contracts issued by insurance companies and banks and bond commingled funds with book-value wrapper contracts Increase/decrease in securities value over purchase price, interest income, and reinvested income Increase/decrease in the interest rate earned by the fund over time Low Low to moderate Effective 1/1/08 The 401(k) Savings Plan 19

20 Investment Fund The Objective/ Goal of This Fund Is to This Investment Fund Is Primarily Invested in The Value of Your Investment in This Fund Can Change Due to This Investment Fund Offers the Following Risk/Return Potential For the funds marked with an asterisk, please see Limits on Reallocations/Transfers Affecting the International Funds and Mutual Funds on page 27 and Equity Wash Rules Limitations on Certain Reallocations or Transfers from the Stable Value Fund on page 27 for more information. Government Inflation- Protected Bond Core Bond * (mutual fund) Intermediate Bond High Yield Bond Large Cap Value Index Large Cap Value Generate a rate of return that exceeds inflation while seeking to preserve capital Maximize total return Generate current income while seeking to preserve capital Maximize long- term yield and capital appreciation Approximate overall performance of stocks that make up the Russell 1000 Value Index Provide long-term capital appreciation and dividend income Inflation-protected securities ( IPS ) Intermediate-term bonds with average maturities of 4 to 12 years through purchase of shares in JPMorgan Core Bond Fund Intermediate-term bonds with average maturities of 5 to15 years Below investment grade (speculative) high-yield bonds Common stocks of companies that make up the Russell 1000 Value Index Common stocks of large companies that the investment manager believes exhibit value characteristics Increase/decrease in securities value over purchase price, interest income, reinvested income, and inflation adjustments Increase/decrease in securities value over purchase price, interest income, and reinvested income Increase/decrease in securities value over purchase price, interest income, and reinvested income Increase/decrease in securities value over purchase price, interest income, and reinvested income Increase/decrease in securities value over purchase price and reinvested income Increase/decrease in securities value over purchase price and reinvested income Moderate Moderate Moderate Moderate to high Moderate to high Moderate to high Effective 1/1/08 The 401(k) Savings Plan 20