ALASKA RAILROAD CORPORATION. 401(k) TAX DEFERRED SAVINGS PLAN FOR NON-REPRESENTED EMPLOYEES. Summary Plan Description

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1 ALASKA RAILROAD CORPORATION 401(k) TAX DEFERRED SAVINGS PLAN FOR NON-REPRESENTED EMPLOYEES Summary Plan Description March 2015

2 Table of Contents INTRODUCTION... 1 HIGHLIGHTS OF THE PLAN... 2 ELIGIBILITY... 4 ENROLLMENT... 4 YOUR CONTRIBUTIONS... 4 Pre-tax and Roth After-tax Contributions... 4 Catch-up Contributions... 5 Rollover Contributions... 5 Changing or Stopping the Amount You Contribute... 5 EMPLOYER CONTRIBUTIONS... 6 Matching Contributions... 6 INVESTMENT OF YOUR PLAN ACCOUNT... 6 Investment Choices... 6 Investment Risks and Control of Your Account... 7 Changing Your Investments... 9 Valuing Your Plan Account... 9 VESTING... 9 LOAN PROVISIONS RECEIVING PAYMENT FROM THE PLAN While Still Employed at the Railroad After Termination of Employment: QUALIFIED DOMESTIC RELATIONS ORDER (QDRO) IN CASE OF DEATH Naming Your Beneficiary TAXATION OF YOUR PAYMENT HOW TO FILE FOR DISTRIBUTION OF YOUR ACCOUNT IN CASE YOUR CLAIM FOR BENEFITS IS DENIED PROTECTION OF BENEFITS IMPACT OF TAX LAW CHANGES IF THE PLAN TERMINATES PLAN DOCUMENTS IF YOU HAVE QUESTIONS ADMINISTRATIVE FACTS ABOUT YOUR PLAN SPECIAL TAX NOTICE... Appendix This booklet is for informational purposes only. It is not an employment agreement and does not constitute a promise of future employment or unconditional benefits.

3 INTRODUCTION The for resented Employees ( Plan ) combined with the benefits you accrue in the Pension Plan and your personal savings and investments, can help you build your own solid retirement program. Please read the following information carefully and keep it for future reference. It was written to provide you with an understandable explanation of the main features of your Plan. If you have any questions, please be sure to contact the Human Resources Department for help. Of course, this booklet cannot cover every situation as it specifically pertains to you. If you require a more detailed explanation, you can review the official Plan document. If there is any inconsistency between this booklet and the Plan document, the Plan document will govern. Written or verbal communications you may receive about the Plan from any persons - whether they are authorized representatives of the or the resented Committee ( Committee ) or not - cannot alter the written terms of the Plan. The Plan s Recordkeeper is The Vanguard Group, Inc. ( Vanguard ). Plan Representatives referred to in this document are the staff members located in the Human Resources Department including the Retirement Specialist and the Manager, ARRC Retirement Plans. This booklet is for informational purposes only. It is not an employment agreement and does not constitute a promise of future employment or unconditional benefits. 1

4 HIGHLIGHTS OF THE PLAN You are eligible to participate in the Plan, as of your date of hire, if you are a common law employee of the Railroad and you are not a member of a collective bargaining unit, not a Special Services Employee, and not on the payroll of a third party leasing organization. Participation in the Plan is voluntary. If you are an eligible employee, you have options to contribute to the Plan: From as little as 1% to as much as 50% of annual earnings. On a pre-tax basis, meaning your annual taxable income is reduced by the amount you contribute during the year. On an after-tax basis, using the Plan s Roth 401(k) feature. In a combination of both pre-tax and after-tax contributions. Your Plan contributions can be up to the maximum dollar limit established under the Internal Revenue Code. For 2015, this limit is $18,000. If you are age 50 or over you may qualify to make a special catch-up contribution, up to an additional $6,000 for Either way, you can choose whether to save on a pre-tax or Roth after-tax basis. At any time, you can increase, decrease, or stop your contributions with your change taking effect on the next biweekly payday that is at least 14 days after the date you make the change. The Railroad will match the contributions you make of the first 4% of your eligible earnings. The match is 50 for each dollar you contribute. Any catch-up contributions you make are not eligible for the matching contribution. You may be eligible to make a rollover contribution if you have funds you accumulated in another tax-qualified plan prior to joining the Railroad. Your own pre-tax contributions, the Railroad s matching contribution, and any investment earnings are generally not taxable until you receive a distribution from the Plan. If you make Roth 401(k) contributions, these contributions are taxable in the year you make them, but are not taxable when distributed and may qualify for tax-free distributions of investment earnings if you take a qualifying distribution. Contributions can be invested in a variety of investment funds offering various degrees of risk and reward. In most cases, you can change how your existing account balance and any future contributions are invested on a daily basis. You have full responsibility for investing your account, and no other Plan fiduciary is liable for investment losses that are a direct and necessary result of your investment decisions. 2

5 Vesting is a form of ownership - a right to receive a payment in the future. You are always fully vested in your own employee contributions, including investment gains or losses. (Investment losses could reduce the amount due you.) Contributions made by the Railroad, and the investment gains or losses attributed to those contributions, are subject to a vesting requirement. You must complete a one-year period of service before you are vested in these contributions. Distribution of your vested accounts may be made if you terminate, die, become disabled, or, except in the case of the employer matching contribution account, reach age 59½. Your beneficiary will receive the payment if you should die before receiving it. You may borrow from your pre-tax contribution account, pre-tax catch-up contribution account, and pre-tax rollover account, or you may be eligible to make an early withdrawal from your pre-tax contribution account and pre-tax catch-up contribution account if you experience a financial hardship. Account information and services are available from the Plan Recordkeeper, Vanguard. See Recordkeeper on page 18 for contact information. 3

6 ELIGIBILITY You are eligible to participate in this Plan, as of your date of hire, if you are a common law employee of the Railroad and you are not a member of a collective bargaining unit, not a Special Services Employee, and not on the payroll of a third party leasing organization. ENROLLMENT Enrollment in the Plan is voluntary and is not automatic. You are responsible for setting your own savings goals. You decide whether or not to save through the Plan, and if you do save, you choose whether you will save on a pre-tax or Roth after-tax basis, and the amount you will save. Factors to consider in setting this amount include your other sources of savings, the total income you expect to receive after retirement, and your long-term financial needs. You may enroll at any time once you become eligible. Contact the Human Resources Department for the enrollment form and investment fund information. The enrollment form serves as a Salary Reduction Agreement. This agreement authorizes the Railroad to make payroll deductions equal to the whole percentage of your Earnings that you elect for your savings contribution. Contributions will start on the first payday that is at least 14 days after you complete and submit the necessary enrollment form. YOUR CONTRIBUTIONS Pre-tax and Roth After-tax Contributions You may elect to contribute any amount from 1% to 50% of your eligible Earnings, in whole percentages, up to the annual limit established under the Internal Revenue Code. (The 2015 limit is $18,000.) The term Earnings" is specifically defined as follows: Earnings includes all of your gross pay with the exception of car allowance, meals, severance or release pay, termination pay, injury pay, accumulated unused sick leave or annual leave upon termination, personal leave or annual leave cash in, overtime, other pay as defined by the Employer, and earnings received when not an eligible employee. Earnings includes your pre-tax or Roth after-tax contributions and catch-up contributions to this Plan, your salary reduction contributions to the Pension Plan and any of your pre-tax contributions for health and welfare benefits. Earnings in excess of an annual limit set by law ($265,000 in 2015) do not count. Earnings do not include the Railroad s contributions to other benefit plans. You may elect to designate your contributions as either pre-tax contributions or Roth after-tax contributions. 4

7 If you designate your contributions as pre-tax contributions Your contribution is calculated and deducted from your gross Earnings before federal tax withholding is calculated. Neither pre-tax contributions nor investment earnings on those contributions will be included in wages for federal income tax purposes on your annual Wage and Tax Statement (Form W-2). In most cases, state income taxes on your contributions are also deferred. City and local tax laws vary. However, see Taxation of Your Payment on page 15 for an explanation for the tax treatment of a distribution from your pre-tax contribution account. If you designate your contributions as Roth after-tax contributions Your contribution is calculated and deducted from your gross Earnings after federal tax withholding is calculated. Your after-tax contributions will be included as wages for federal income tax purposes on your annual Wage and Tax Statement (Form W-2), but investment earnings on those contributions are not. However, see Taxation of Your Payment on page 15 for an explanation for the tax treatment of a distribution from your Roth after-tax contribution account. Please note, Roth after-tax contributions and related earnings are not eligible for Plan loans or hardship distributions, discussed on pages 10 through 12. If you leave the Railroad to serve in the military and return to employment with the Railroad within the time prescribed by law, you may make up contributions you didn t make while in the military regardless of whether they exceed the annual limit. You may designate those contributions either as pre-tax contributions or Roth after-tax contributions. Catch-up Contributions If you will have attained age 50 before the end of a year, you may elect to make a special catchup contribution for that year that is in excess of the regular annual limit on pre-tax or Roth aftertax contributions. In order to make a catch-up contribution, you elect to make a contribution of a flat dollar amount for each remaining pay period in the year. Catch-up contributions are subject to a separate annual limit ($6,000 for 2015). You may designate your catch-up contributions as either pre-tax contributions or Roth after-tax contributions. Rollover Contributions Eligible employees with savings in a previous employer s tax-qualified plan may also make a rollover contribution to the Plan, subject to providing satisfactory evidence that the contribution qualifies under the Internal Revenue Code. Contact Human Resources for more information on this option. Changing or Stopping the Amount You Contribute You may change the amount you contribute or stop your contribution completely by calling Vanguard or visiting them online. See Recordkeeper on page 18 for contact information. The change will be effective on the first biweekly payday that is at least 14 days after the date you change it with Vanguard. 5

8 If you stop making contributions and wish to restart, you must wait until at least the first day of the next calendar quarter to resume your contributions. EMPLOYER CONTRIBUTIONS Matching Contributions The Railroad will make contributions on your behalf equal to 50 for each dollar you contribute of the first 4% of your Earnings as pre-tax contributions or Roth after-tax contributions in each pay period. At the end of the calendar year, if your per-pay-period matching contributions are less than 50 for each dollar you contributed as pre-tax contributions or Roth after-tax contributions up to 4% of your Earnings for the calendar year as a whole, the Railroad will make an additional true-up contribution so that your matching contributions for the calendar year are equal to 50 for each dollar you contributed of the first 4% of your Earnings for the calendar year. Your contributions in excess of 4% of Earnings will not be matched. Neither catch-up contributions nor rollover contributions are matched. The per-pay-period match will be made at the same time your pre-tax or Roth after-tax contributions are made and will be invested in the same way those contributions are invested. The true-up matching contribution, if any, will be made at the end of the calendar year and will be invested as you have directed the investment of new contributions. Matching contributions are subject to a vesting schedule. See Vesting on page 9. INVESTMENT OF YOUR PLAN ACCOUNT The Plan Recordkeeper is The Vanguard Group, Inc. ( Vanguard ). Vanguard (with its affiliates) provides the trust and recordkeeping services and is the investment manager for most of the investment fund options offered by the Plan. Investment Choices The Plan offers several investment choices. You may invest your account(s) in one fund or you may divide it among any combination of funds in increments of 5%. You may also make separate investment elections for your existing account balance and any future Plan contributions. Current fund choices are described in detail in an investment packet available from the Plan s Recordkeeper. Your packet describes how to make investment elections. If you provide no instructions regarding how your contributions are to be invested, they will be invested in the age appropriate Target Date Retirement Fund. You will receive a general description of the investment objectives, risk and return characteristics and information about the type and diversification of the assets of each investment option under the Plan. Prior to, or immediately following, your initial investment in a fund, subject to the Securities Act of 1933, you will receive a copy of the most recent prospectus of that fund. 6

9 You may request additional information from Vanguard including the following, which will be provided based on the latest information available: A description of the annual operating expenses of the investment funds offered under the Plan which are charged to your account, expressed as a percentage of average net assets (e.g., investment management fees, trustees fees, administrative fees, and transaction costs). Copies of any prospectuses, financial statements and reports or other materials relating to investment options available under the Plan to the extent provided to the Plan. A list of the assets contained in the portfolio of each investment fund, the value of each asset and the percentage of the overall fund which it represents, and with respect to an asset which is a fixed rate investment contract, the name of the bank or insurance company issuing the contract, the term of the contract and the rate of return under the contract. Information about the value of the shares or units in mutual funds offered under the Plan, together with past and current investment performance information, determined net of expenses. Information concerning the value of shares or units in your account. This information may be requested by calling Vanguard. See Recordkeeper on page 18 for contact information. Investment Risks and Control of Your Account There are risks associated with the investment of your contributions under this Plan. You control the investment of your account. It is intended that any fiduciaries of the Plan (the members of the resented Tax Deferred Savings Committee, and the trustee) will be relieved of liability for any loss incurred as the result of your investment instructions. You should keep in mind the following when choosing and monitoring your investments in the available investment choices: The Plan does not guarantee the performance of any of your investments. Their value depends on the market value and interest or dividend yield. You assume all the risk related to your investments. The Railroad is not responsible for any loss that results from the exercise of control over your account and your choice of investments. Past performance is no guarantee of future results. The fact that a fund receives a high rating based on past performance provides no guarantee that future performance will continue. 7

10 The Railroad cannot, and will not, provide you with investment advice. In making your investment choices, you must rely on your own research or on an expert that you trust. The Railroad has engaged Vanguard and its associate, Financial Engines, to offer investment advice services to participants. Both a free and an asset-based fee advice program are available and both are optional on the part of participants. All investments carry the risk of loss. The stable value fund is the least volatile and offers the lowest risk of the investment options available under this Plan. It may not be wise to invest everything in one investment choice. You are responsible for selecting a mix of investments which appropriately balances your return objectives with your tolerance for risk and is diversified. (You may want to consider one of the Vanguard Target Retirement Funds offered in your Plan which provide an already diversified investment mix.) Consider the investment objectives, risk and return characteristics, and historical performance information for each investment choice. Before investing, study the prospectus for the applicable investment choice carefully. Fees and expenses are two factors that will affect your investment return and retirement income. Compare all services received with the total cost. Cheaper is not necessarily better. Trying to time the market usually doesn t work. Pick an asset allocation strategy that suits your tolerance for risk. The Target Retirement Funds offer an investment mix based upon an asset allocation model with each fund designed to reflect a particular tolerance for risk and investment horizon. One of these funds may offer you an asset allocation strategy that suits you. Review information about general financial and investment concepts, such as risk and return, diversification, the effects of inflation, estimates of retirement needs, and risk tolerance. Each asset class (e.g., equities, bonds and cash) has different risks and objectives, and performs differently during various market cycles. Interactive investment materials may help you to develop your investment strategy. These include workshops, questionnaires, and software, such as Financial Engines, designed to help you estimate your retirement needs and consider the effect of various asset choices on your retirement income. These are available through Vanguard. You also have access to personal financial advisors through Vanguard, including free financial advice for participants age 50 and older. See Recordkeeper on page 18 for contact information. The above statements about general investment information are not a recommendation as to the advisability of buying or selling any investments. If you want advice tailored to 8

11 your specific situation, ask an investment advisor. The Railroad does not endorse any individuals or entities providing investment advice. Changing Your Investments Future Contributions: You may change your investment choices for future contributions from your pay as often as daily by use of the telephone voice response system or Internet system of Vanguard. See Recordkeeper on page 18 for contact information. Any change will be effective on the first biweekly payday that is at least 14 days after the last change you made. Past Contributions (Account Balance): You may change your investment choices for past contributions (account balance) as often as daily by use of the telephone voice response system or Internet system of Vanguard. See Recordkeeper on page 18 for contact information. The change will be effective on the day the instruction is given, or the next business day, depending on the time submitted. You incur no transaction fees or expenses as a result of re-allocating your contributions from one investment fund under the Plan to another or by transferring from one investment fund to another. However, there may be restrictions on transfers between certain funds. If there are any restrictions, you will be notified of them. Vanguard will provide you with instructions on using the telephone voice response system, VOICE, and provide you with a Personal Identification Number ( PIN ). You can also establish Internet account access. Valuing Your Plan Account Your Plan account will be valued daily, with the gains or losses on your investments allocated to your account. Each quarter you will receive a written or electronic statement of your account showing your contributions and investment gains or losses, as well as the total value of your account. VESTING Vesting is a form of ownership - a right to receive a payment in the future. You are always fully vested in the value of your own contributions (pre-tax, Roth after-tax, catch-up, and rollover), including any related investment earnings. You will not forfeit this money for any reason (although investment losses could reduce the amount due to you). Your employer matching contribution account is subject to a vesting schedule. You must have a one-year period of service with the Railroad in order to become entitled to the balance of this account. Prior to attaining a one-year period of service, you are not entitled to the balance in this account. You receive service credit for all of your time with the Railroad before and after becoming a participant including the time prior to the amendment of the Plan to provide for matching contributions. Separate periods of service are aggregated, and periods of temporary termination are included in your service if you return to work with the Railroad within one year. 9

12 Hours of service are hours for which you are paid by the Railroad. Under certain circumstances, you may qualify for credit for hours for which you are not paid such as when you are serving in the military. Notwithstanding the vesting requirement, your matching contribution account will become vested and non-forfeitable upon separation from employment as a result of death, retirement under either the Railroad s Pension Plan (early or normal) or the federal retirement plan, permanent and total disability, or layoff exceeding 365 days. It is important to remember that you cannot withdraw the Railroad s matching contributions (and related investment earnings) while you are still employed by the Railroad; and you cannot withdraw your own contributions (and related investment earnings) while you are still employed by the Railroad and prior to age 59½, except for withdrawing pre-tax contributions and pre-tax catch-up contributions (and related investment earnings) upon documented and approved financial hardship. This is explained under Receiving Payment from the Plan on page 11. However, you may request a loan as described below. LOAN PROVISIONS You can borrow money from your account if you are actively working. Even if you are normally laid off each year, you may borrow from your account if the loan is made while you are actively working. You may borrow from your pre-tax contribution account, your pre-tax catch-up contribution account, and your pre-tax rollover contribution account. You may not borrow from your Roth after-tax contribution account, your Roth catch-up account, your Roth rollover account, or your employer matching contribution account. Although your account investments are liquidated to provide the loan amount, your account balance is not permanently reduced since you must repay the loan. Therefore, a loan provides you with access to your account while you are employed but preserves your savings for retirement. The total loan amount cannot exceed one-half of your combined pre-tax contribution account, pre-tax catch-up contribution account, and pre-tax rollover account balances, and in no case can the loan amount be more than $50,000 (reduced by your highest loan balance in the preceding year) or less than $1,000. You cannot have more than one loan from the Plan at a time, and you must repay an outstanding loan before applying for another. A General Purpose Loan can have a term of up to five years. A loan made for the express purpose of purchasing your primary residence can have a term of up to fifteen years. Periods of layoff and leave of absence may be taken into consideration when amortizing the loan payoff and recipients may be required to make payments during leave/layoff periods, or such payments may be suspended if allowed by law. Loan payments will not be required if you are on extended sick leave without pay (unless required by law). If loan payments are suspended, the loan may be re-amortized upon return to work. The five-year limit for General Purpose Loans will still apply unless the leave was for military service. 10

13 Your loan will be repaid through payroll deductions at a fixed interest rate periodically set by the resented Tax Deferred Savings Committee. Once the rate is established, it will not be changed even though the interest rate applicable to new loans may change. You agree upon a repayment schedule at the time you take the loan. Lump sum payoff of loans may be made at any time. Additional full or partial principal payments may be made directly to Vanguard. See Recordkeeper on page 18 for contact information. Loan payments are reinvested in the investment fund options you have currently elected for future contributions. There is currently a $40 loan origination fee for loans originated through Vanguard s automated system or by phone through Vanguard s VOICE network. Loans originated through a Vanguard Associate incur a $90 origination fee. There is also a $25 annual administrative fee each year any portion of a loan is outstanding. Payment of loan fees is the responsibility of the participant. A written loan policy is available from Human Resources or Vanguard. Contact Vanguard for further information about loan requirements under the Plan. RECEIVING PAYMENT FROM THE PLAN While Still Employed at the Railroad If you reach age 59½ and are still working, you may request withdrawal of all or a part of your pre-tax contribution account, Roth after-tax contribution account, pre-tax catch-up contribution account, Roth catch-up account, pre-tax rollover account and Roth rollover account. Contact Vanguard to request an age 59½ withdrawal. You may not withdraw from your matching contribution account until termination, death or disability. If you experience financial hardship you may apply for withdrawal, from your pre-tax contribution account and your pre-tax catch-up contribution account, of an amount needed to meet the emergency. Note, however, that you are not permitted to take a hardship withdrawal until you have first obtained a loan, if available. Hardship withdrawal is subject to the following tests: Test 1: You must have an immediate and heavy financial need. The following expenses are "deemed" to constitute immediate and heavy financial needs: 1) Medical expenses incurred by you, your spouse, dependents or beneficiary. 11

14 2) Costs directly related to the your purchase (excluding mortgage payments) of a principal residence. 3) Payment of tuition for the next 12 months of post-secondary education for you, or your spouse, children, dependents or beneficiary. 4) Payments necessary to prevent eviction from your principal residence or foreclosure of the mortgage of that residence. 5) Payments of burial or funeral expenses for your deceased parent, spouse, child, dependent or beneficiary. 6) Expenses for the repair of damage to your principal residence that would qualify for a tax deduction as a casualty loss (without regard to the otherwise applicable 10% limit on such a deduction). Test 2: The withdrawal must be necessary to satisfy the financial need. The withdrawal is deemed to be necessary to satisfy an immediate and heavy financial need if: 1) The distribution is not in excess of the amount of the immediate and heavy financial need (including any amount necessary to pay taxes or penalties that will result from the distribution); and 2) You have obtained all distributions (other than hardship distributions) and all nontaxable loans available under the Plans maintained by the employer; and 3) You are not allowed to contribute to the Plan until the first biweekly payday that is at least 14 days after a six-month waiting period after receipt of the hardship withdrawal. You must certify in writing that you meet the tests. You will not be allowed to contribute to the Plan for six months following a financial hardship withdrawal. Following the six-month suspension period, your contributions will automatically resume based on your most recent elections. If you believe your situation will meet the tests described above and you wish to apply for a hardship withdrawal, contact Vanguard to request a Hardship Withdrawal Application. See Recordkeeper on page 18 for contact information. 12

15 After Termination of Employment: The total value of your vested accounts is eligible for distribution when your employment with the Railroad terminates. You have the following options for when and how your distribution is made: If your account balance is $1,000 or less at the time you terminate your employment with the Railroad, you are required to take distribution of your account balance in a lump sum or by rolling your balance into another eligible plan. If you do not request distribution, your account will be distributed to you in a lump sum distribution by the end of the quarter following the termination of your employment. If your account balance, excluding any amount you transferred to the Plan through a rollover, is in excess of $1,000, you may leave the account balance in the Plan until a later date or you can request distribution. If you choose to maintain your account, you will no longer be able to add money to your account, but you may still make investment allocation changes. Federal law requires that you begin taking distributions from your account by the later of April 1st following the year you attain age 70½ or the termination of your employment. Distributions The following distribution payment methods are available for both Roth and Non-Roth accounts: Installment distributions monthly, quarterly, semiannual or annual payments Partial lump sum distributions payment of any portion of your account balance Full lump sum distribution Rollover distribution Note: If you choose the installment distribution or the lump sum distribution, you may not make another distribution election for one month. If you elect to receive annual installments to be paid out over 10 years or more, you cannot roll over those distributions. Non-Roth Accounts Your accounts will be subject to income tax and possibly to an early withdrawal penalty. Roth Accounts Your Roth after-tax contributions, Roth catch-up contributions, and any Roth rollover contributions that were originally Roth after-tax contributions will be distributed tax and penalty-free. However, the earnings attributable to such contributions may be subject to ordinary income tax and possibly a 10% early withdrawal penalty tax unless your 13

16 account was established for at least five years and the withdrawal is being taken after age 59½ or as a result of permanent disability or death. However, you may avoid such taxes and penalties to the extent that you roll over your Roth accounts to a Roth IRA, or to the designated Roth account of another employer s plan that accepts such rollovers. Payment will be made as soon as administratively possible following: Vanguard s receipt of the ARRC s confirmation of your termination date and final payroll information, and Vanguard s receipt of your completed distribution request. Please see Taxation of Your Payment on page 15 and the enclosed Special Tax Notice Regarding Plan Distributions for information about the tax consequences of a distribution. QUALIFIED DOMESTIC RELATIONS ORDER (QDRO) Benefits under the Plan may be paid to someone other than the participant or beneficiary, pursuant to a QDRO issued in accordance with the Plan and IRS regulations. Generally, a QDRO is a judgment, decree or order (including approval of a property settlement agreement) that provides child support, alimony payments or marital property rights to a spouse, former spouse, child or other dependent of the participant. QDRO s must meet the requirements of the Plan. For a free copy of the Plan s procedures for processing such orders, contact Human Resources. IN CASE OF DEATH Naming Your Beneficiary Your beneficiary is the person you name to receive benefits in the event of your death. Your beneficiary can be anyone you choose. If you do not name a beneficiary, or your beneficiary does not survive you, benefits would be payable in the following order: Your spouse or Partner (as defined below) Your children, in equal shares Your parents, in equal shares Your brothers and sisters, in equal shares Your estate You will be asked to name a beneficiary, or beneficiaries, when you complete the enrollment form for the Plan. You may change your beneficiary at any time by completing a new Beneficiary Designation form available from the Human Resources Department, or online at 14

17 Your Partner is your same sex partner who has submitted satisfactory evidence, including an affidavit and any documentation required by the resented Tax Deferred Savings Committee, to establish the existence of the Partner relationship. TAXATION OF YOUR PAYMENT If you make pre-tax contributions No federal income taxes are withheld from your pre-tax contributions or the earnings on those pre-tax contributions while your money remains in your Plan account. You will have to pay income taxes on your contributions and earnings when you receive a distribution from the Plan although there are some exceptions to this rule. If you make Roth after-tax contributions You pay federal income tax on your Roth after-tax contributions when they are withheld from your pay. You will not pay income tax on such contributions when you withdraw them. You also will not pay income tax on related earnings if your Roth account was established for at least five years (from the date of your first Roth 401(k) contribution) and the withdrawal is either taken after age 59½ or as a result of total and permanent disability or death. The Special Tax Notice Regarding Plan Distributions attached to this Summary Plan Description summarizes the federal tax rules that may apply to contributions to, and withdrawals from, this Plan. You should read it carefully when considering participation in the Plan. When you become eligible to receive a distribution from the Plan, you will be given another copy of the notice. Tax laws can be complex. You may wish to consult with a professional tax advisor prior to making a decision on how to have benefits paid to you from this Plan. HOW TO FILE FOR DISTRIBUTION OF YOUR ACCOUNT When you leave the Railroad for any reason, the Railroad will notify Vanguard of your change in status. Vanguard will notify you by mail of your distribution options and how to contact them to request distribution or to ask any questions about your account. In addition, you may request distribution or other account assistance from the Railroad s Human Resources Department, at the following address: Human Resources Department P. O. Box Anchorage, AK In the event of your death, your beneficiary must file a claim for payment. 15

18 IN CASE YOUR CLAIM FOR BENEFITS IS DENIED A claim is considered filed when a written request is submitted to the ARRC Human Resources Department or Vanguard. If the Plan s Claims Administrator denies your claim for benefits, you will be notified in writing or electronically within a reasonable period of time after the claim is filed. Any notice of denial of your claim for benefits will include the specific reasons for denial, references to the relevant Plan provisions on which the denial was based, an explanation of the appeal process, a description of any additional material or information necessary to perfect the claim, and an explanation of its necessity. Within 60 days after receiving a denial, you or your authorized representative may appeal the decision in writing to the resented Tax Deferred Savings Committee. If you do not appeal within that 60-day period, you lose your right to appeal. You or your authorized representative shall be provided, and may review free of charge, documents, records and other information relevant to your claim for benefits. You may submit additional information related to the claim. The Committee will consider all information submitted, without regard to whether the information was previously submitted or considered in the initial benefit determination. A decision on your appeal will be given to you as soon as possible. A special hearing may be scheduled to consider your appeal. A copy of the final decision will be sent to you explaining the specific reasons for the decision and the specific Plan provisions on which it is based. PROTECTION OF BENEFITS It is important you understand that although you are always fully vested in your employee contribution account, you are not protected against investment losses either in your own contribution account or the employer matching contribution account. Your account balance is generally not available to you before you retire or leave the Railroad. Benefits under this plan cannot be assigned, sold, transferred or encumbered, and are not subject to debts. They cannot be subject to attachment, garnishment or any other legal process. However, enforcement of state domestic relations orders that satisfy the Qualified Domestic Relations Order ( QDRO ) requirements of federal tax law is allowed. A domestic relations order is a judgment, decree or order that relates to child support, alimony payments, or marital property rights. IMPACT OF TAX LAW CHANGES Some features of the Plan are intentionally based on certain federal regulations that allow favorable tax treatment. No assumptions can be made about whether or not the laws will change, the savings rates will be reduced, or withdrawal privileges will be restricted. 16

19 IF THE PLAN TERMINATES Although the Railroad intends to continue this Plan indefinitely, it reserves the right to change, amend, or terminate the Plan at any time. The Plan cannot be changed in a way that would reduce the benefits you have accrued under the Plan prior to the change. Plan assets cannot be used for any purpose other than to provide benefits to participants and beneficiaries and to pay Plan administration expenses. If the Plan is terminated, your employee contribution account will continue to be 100% vested and non-forfeitable. If you are employed with the Railroad when the Plan is terminated, your employer matching contribution account will become vested and non-forfeitable. Thereafter, distribution shall be made to participants as directed by the resented Tax Deferred Savings Committee. PLAN DOCUMENTS This benefit booklet was written to provide you with a summary of the major provisions of the Plan. Of course, the booklet cannot cover every circumstance as it would apply to you. Therefore, if you would like a more detailed explanation, you can review the Plan documents and other materials pertaining to the Plan by contacting the Human Resources Department. In case of a conflict, the actual Plan document governs all matters. If you have any questions, please contact the Human Resources Department staff. Please read your booklet carefully and keep it for future use. IF YOU HAVE QUESTIONS If you have any questions regarding your benefits as a participant, you should contact: resented Committee P. O. Box Anchorage, AK (907)

20 ADMINISTRATIVE FACTS ABOUT YOUR PLAN PLAN NAME: PLAN NUMBER: TYPE OF PLAN: PLAN FISCAL YEAR: PLAN EFFECTIVE DATE: PLAN SPONSOR AND EMPLOYER: SPONSOR S IDENTIFICATION NUMBER: PLAN ADMINISTRATOR: PLAN ADMINISTRATION: RECORDKEEPER: FUNDING OF THE PLAN: 18 for resented Employees 002 Defined Contribution 401(k) Plan January 1 - December 31 September 1, resented 401(k) Tax Deferred Savings Plan Committee P. O. Box Anchorage, AK (907) The Plan Administrator administers the Plan in accordance with the Plan Document. Plan assets are invested in accordance with participant elections as described in the investment packet (available from the Plan Recordkeeper). The investment options are described in the investment packet and the prospectuses for each investment option. The Vanguard Group, Inc. P.O. Box 1101 Valley Forge, PA The Plan is funded by employees through a pre-tax salary reduction or Roth after-tax deduction agreement and by employer matching contributions.

21 PLAN EXPENSES: PLAN TRUSTEE: Paid by the Plan, unless paid by the Railroad Vanguard Fiduciary Trust Company P.O. Box 2600 Valley Forge, PA AGENT FOR LEGAL PROCESS: CLAIMS ADMINISTRATOR: General Counsel P. O. Box Anchorage, AK (Service of process may also be made on the Plan Administrator or on the Trustee.) Manager, ARRC Retirement Plans and Retirement Specialist P.O. Box Anchorage, AK ,