Pension Plan SUMMARY PLAN DESCRIPTION. Effective January 1, Pension Plan Summary Plan Description Effective January 1, of 26

Transcription

1 Pension Plan SUMMARY PLAN DESCRIPTION Effective January 1, 2013 Pension Plan Summary Plan Description Effective January 1, of 26

2 Table of Contents Table of Contents... 2 Introduction... 3 Definitions... 4 Plan Participation... 7 When Plan Participation Begins... 7 The Cost of the Plan... 7 Service and Vesting... 8 Vested Service... 8 Benefit Service... 8 Break in Service... 8 Plan Benefits... 9 Benefit Formula... 9 How to Start Your Benefit Payments... 9 Payment of Small Benefits Normal Retirement Early Retirement Retirement After Age Disability Pension Benefits Deferred Vested Pension Benefits Reemployment After Benefit Payments Begin Reemployment After Termination Special Rules for Reemployed Veterans Forms of Payment Automatic Forms of Payment Optional Forms of Payment Death Benefit Former Circuit City Employees How To Apply For Pension Benefits When No Pension Benefits Are Paid Qualified Domestic Relations Orders Claims Procedure Filing a Claim for Benefits Time for Decision on a Claim Notification of Denial Right to Review Review Procedures Time for Decision on Review Notification of Determination on Review Deadline to Bring Legal Action General Information Participant s Rights Under ERISA Pension Plan Summary Plan Description Effective January 1, of 26

3 Introduction The CarMax, Inc. Pension Plan (the Plan ) is a defined benefit plan designed to help Associates meet their income goals for their retirement years. This document is the Summary Plan Description ( SPD ) and describes the Plan as in effect on January 1, This SPD is a summary of the Plan s most important features. It is intended to be a guide to the Plan s major benefits and provisions. It is not a contract of employment and does not include every detail of the Plan. This SPD will be revised as the Plan is changed in the future. The Plan Document, as amended, rather than this SPD, will be used by the Benefits Administrative Committee in determining all claims. In the event of a conflict between this SPD and the Plan Document, the language of the Plan document will prevail. The laws relating to qualified plans, like the Pension Plan, may change from time to time. Whenever a Plan provision is inconsistent with any change in the law, the Plan will be administered according to the new law, regardless of the terms of the Plan Document or this SPD. CarMax, Inc. reserves the right to terminate, suspend, change the level and type of benefits, or modify the Plan, in whole or in part, at any time. You should read this SPD carefully, share it with your family and keep it handy for easy reference. If you have any questions about the Plan, or if you would like a copy of the Plan document, please call the MYKMXHR Service Center at , option 7. Effective December 31, 2008, this Plan was frozen. After this date, Associates will not accrue additional benefits under the Plan and no Associate may become a Plan participant. However, Associates will still be able to claim the benefits earned as of December 31, 2008 if vested. Pension Plan Summary Plan Description Effective January 1, of 26

4 Definitions These definitions apply when the following terms are capitalized in this Summary Plan Description. Accrued Benefit A monthly benefit based on your Highest Average Earnings, your years of Benefit Service (maximum 35 years) as of the date of computation, and the benefit formula in effect on that date. Annuitant The designated recipient of a pension benefit paid in the form of an annuity. Associate Any person employed by the Company as a common law employee on the Company s United States payroll. The term Associate shall not include persons who are independent contractors, outside directors or who are considered to be self-employed individuals under IRS Code Section 401(c). Beneficiary The person, persons, or trust, as named by a Participant, to receive any benefits payable upon the Participant s death. Benefit Service The service upon which your Accrued Benefit calculation is based. Company CarMax, Inc. and its subsidiary business entities, and any successor by merger, purchase, consolidation or otherwise. Early Retirement Date The date on which you satisfy the requirements for Early Retirement described in the Early Retirement section of this summary. Earnings The total earnings you receive from the Company during a Plan Year before January 1, 2009 for personal services. Earnings include, but are not limited to, base pay, bonuses, overtime, commissions, and any amount you could have received as cash instead of elective deferrals under a cafeteria plan, 401(k) plan or certain other types of plans that allow pre-tax elective employee contributions. The following are excluded from Earnings: amounts awarded under any stock purchase plan, stock option plan or performance share incentive plan, Company contributions to or benefits paid under the Plan or any other plan of deferred compensation maintained by the Company (except for amounts deferred under a cash or deferred arrangement qualified under Code section 401(k)). Earnings also exclude amounts such as reimbursements and other expense allowances, certain fringe benefits, moving expenses, welfare benefits, and differential earnings paid to individuals on military leave. Effective for the Plan Year beginning January 1, 2008, earnings in excess of $230,000 (as indexed by the IRS) may not be taken into account for purposes of the Plan. Effective for Plan Years after January 1, 2009, no Earnings after December 31, 2008 will be taken into account under the Plan. ERISA The Employee Retirement Income Security Act of Pension Plan Summary Plan Description Effective January 1, of 26

5 Definitions (cont.) Highest Average Earnings The average of your five highest consecutive years Earnings over the last 10 consecutive calendar years of service (prior to and including the date on which the calculation is performed). Generally, Highest Average Earnings is determined on your date of retirement, disability or termination. For purposes of determining consecutive years, Plan Years during which a Participant does not receive credit for one year of Benefit Service will be disregarded. Highest Average Earnings does not include earnings after December 31, Hour of Service You are credited with an Hour of Service for each hour that you are paid, or entitled to payment, for services performed for the Company, including hours for which you are paid for vacation, holiday, layoff, jury duty, illness or incapacity. Each week that you perform at least one Hour of Service, you will be credited with a certain number of Hours of Service depending on whether you are classified by the Company as full-time or part-time. If you are classified as full-time, you will be credited with 45 Hours of Service per week. If you are classified as part-time, you will be credited with 29 Hours of Service per week. Under certain circumstances, Hours of Service may also be credited during periods in which no duties are performed, but only to determine whether the Associate has incurred a One-Year Break in Service or as required by law. Hours credited may be up to 501 or 1,001, depending on the reason for the absence, subject to Break in Service rules. Normal Retirement Date The date on which you satisfy the requirements for Normal Retirement described in the Normal Retirement section of this summary. Participant An Associate who has completed the Plan s eligibility requirements, or a former Associate who is Vested, but has not yet received his or her entire Accrued Benefit. Plan Year The consecutive 12-month period beginning on January 1 and ending on December 31. Before January 1, 2006, the Plan was administered with a Plan Year beginning on March 1 and ending the last day of February of the following year. An Associate received double-credit for Hours of Service performed between January 1, 2006 and February 28, 2006 for purposes of crediting one year of Vesting Service and Benefit Service. Social Security Covered Compensation The average of the Social Security taxable wage bases for the 35 calendar years preceding and ending with the year you reach Social Security normal retirement age, as published annually by the IRS in the unrounded covered compensation table. Your Social Security Covered Compensation will be determined as of the last day of the Plan Year in which you were credited with a year of Benefit Service. Spouse The person of the opposite sex to whom a participant is legally married, provided the marriage has not been absolutely dissolved by a final decree of a court having valid jurisdiction. The existence of an interlocutory decree that has not finally dissolved the marriage, or of any separation decrees, or separation agreements shall not prevent a person from being considered a Spouse. A former Spouse may be considered a Spouse for purposes of this Plan, pursuant to the terms of a Qualified Domestic Relations Order. Pension Plan Summary Plan Description Effective January 1, of 26

6 Definitions (cont.) Vested The status of a Participant who has a non-forfeitable right to Plan benefits under the provisions of the Plan, even if he or she terminates employment before retirement. Vested Service The service that determines when you have a non-forfeitable right to Plan benefits. Pension Plan Summary Plan Description Effective January 1, of 26

7 Plan Participation When Plan Participation Begins Effective December 31, 2008, an individual who was not a participant before January 1, 2009 may not become a Participant under the Plan. Associates who had reached age 21 and who had been credited with the number of Hours of Service specified below in a specified 12-month period are eligible to participate in the Plan: Associates who were classified as full-time for the full 12-month period became participants if they had been credited with at least 1,000 Hours of Service. Associates who were classified as part-time for any portion of the 12-month period became participants if they had been credited with at least 870 Hours of Service. You will not be a Participant if you are covered by a collective bargaining agreement under which the Company contributes to a retirement fund, or if you are in a collective bargaining unit that negotiates with the Company for wages, or conditions of employment unless the bargaining agreement provides for Plan participation. You will remain a Participant until you retire, die or otherwise terminate employment, and your Vested interest, if any, in the Plan has been distributed to you in full. If you terminate employment after you have become a Participant and are later rehired, you will re-qualify as a Participant as of your date of reemployment but, like all other Participants you will not accrue additional benefits under the Plan after December 31, The Cost of the Plan The Company pays 100% of the cost of the benefits you receive from the Plan. You are not required or permitted to contribute to the Plan. Amounts contributed to the Plan are held and invested under a trust agreement with the Plan s Trustee. Pension Plan Summary Plan Description Effective January 1, of 26

8 Service and Vesting Vested Service Generally, you will receive one year of Vested Service for each Plan Year in which you are credited with the number of Hours of Service specified below: Associates who are classified as full-time for the full Plan Year earn a year of Vested Service if they are credited with at least 1,000 Hours of Service. Associates who are classified as part-time for any portion of the Plan Year earn a year of Vested Service if they have been credited with at least 870 Hours of Service. You must have five years of Vested Service in order to become Vested in your Accrued Benefits. If you have less than five years of Vested Service when you terminate employment, you will not be entitled to any benefit under this Plan. If you are a current Plan participant, but not yet Vested, you will continue to earn Vested Service after December 31, 2008, while you remain a CarMax Associate. Benefit Service Years of Benefit Service are used to determine your benefit under the Plan. You were credited one year of Benefit Service for each Plan Year before January 1, 2009, in which you were credited with the number of Hours of Service specified below: Associates who were classified as full-time for the full Plan Year earned a year of Benefit Service if they were credited with at least 1,000 Hours of Service. Associates who were classified as part-time for any portion of the Plan Year earned a year of Benefit Service if they were credited with at least 870 Hours of Service. In the event that you were not credited with the minimum required number of Hours of Service (1,000 Hours if you were classified as full-time and 870 if you were classified as part-time), no Benefit Service was granted for that Plan Year. Benefit Service does not include any service performed after December 31, Break in Service You will incur a Break in Service if you have a series of five or more consecutive One-Year Breaks in Service. The Break in Service is used to determine if prior Vested and Benefit Service will be counted if you are reemployed. One-Year Break in Service For eligibility purposes: A 12 consecutive month period in which you are not credited with at least 500 Hours of Service (435 Hours of Service for Associates who are classified for any part of this period as part-time). For vesting purposes: A Plan Year in which you are not credited with at least 500 Hours of Service (435 Hours of Service for Associates who are classified for any part of the Plan Year as part-time). Pension Plan Summary Plan Description Effective January 1, of 26

9 Plan Benefits Benefit Formula You are eligible to receive a pension benefit if your employment terminates after you have become 100% Vested in your Accrued Benefit. The pension benefit is based on a formula. To calculate your pension, the formula uses your Highest Average Earnings, your years of Benefit Service, and the Social Security Covered Compensation in effect when you retire or terminate. Your monthly pension is the sum of (a) plus (b), multiplied by (c), divided by 12 as follows. (a) (b) (c).0085 multiplied by the Participant s Final Average Earnings PLUS.0065 multiplied by the excess of the Participant s Final Average Earnings over the Participant s Social Security Covered Compensation. MULTIPLIED BY The Participant s years of Benefit Service, not to exceed 35 years; DIVIDED BY 12 Change to Benefit Formula Plan benefits were frozen as of December 31, Service after December 31, 2008 and compensation earned after December 31, 2008 will not be taken into account when determining your Plan benefit. The service and pay earned as of December 31, 2008 will be used to calculate your pension benefit when you retire or leave the Company. However, you will still be able to claim the benefits earned as of December 31, How to Start Your Benefit Payments Termination of Employment Before Normal Retirement Date If you leave the Company before your Normal Retirement Date and have a Vested pension, you may elect to begin receiving your pension benefits at any time after your Early Retirement Date, subject to Early Retirement rules. However, your pension must begin no later than your Normal Retirement Date. When you are ready to start receiving benefit payments, you must submit your written request to the CarMax Benefits Department approximately 180 days (but not less than 30 days), before the date you want the payments to begin (see How to Apply for Pension Benefits ). The date you want your payments to begin is your Annuity Starting Date. The Company will send you Benefit Election forms to complete. The forms will provide you with actuarial calculations of your monthly benefit based on the forms of payment available under the Plan. The calculations will be made assuming your pension payments actually begin on your Annuity Starting Date. However, no payments will be made until after the Company receives and processes your completed election forms. If payments begin after your Annuity Starting Date, the first payment will include amounts to which you are entitled retroactive to your Annuity Starting Date. If you do not complete and return the election forms within 180 days after they are sent to you, you will need to select a new Annuity Starting Date for the Company to use to calculate your monthly benefit. Pension Plan Summary Plan Description Effective January 1, of 26

10 Plan Benefits (cont.) Termination of Employment at Normal Retirement Date If you plan to retire when you attain age 65, you must submit your written request to the CarMax Benefits Department approximately 180 days, but not less than 30 days, before your 65th birthday (see How to Apply for Pension Benefits ). The CarMax Benefits Department will send you Benefit Election forms to complete. The forms will provide you with actuarial calculations of your monthly benefit based on the forms of payment available under the Plan. The calculations will be made assuming your pension payments begin on the first day of the month following your termination date. This date is your Annuity Starting Date. However, no payments will be made until after the Company receives and processes your election forms. If the Company receives your forms within 180 days after they were sent to you, payments will begin on your Annuity Starting Date or as soon as practicable after the forms are received. If the first payment is after your Annuity Starting Date, the first payment will include any amounts to which you are entitled retroactive to your Annuity Starting Date. If you do not complete and return the election forms within 180 days after they are sent to you, you will need to complete new forms with pension benefits actuarially calculated on an Annuity Starting Date that is later than the first day of the month following your termination date. Termination of Employment After Normal Retirement Date If you continue to work after you attain age 65, payment of your pension benefit will not begin until you terminate employment. However, if you were credited with at least one year of Benefit Service before March 1, 2005, you may elect to begin pension payments while you are employed, but only if you work less than 40 hours a month for the Company. You may contact the CarMax Benefit Department to obtain detailed information about the calculation of your pension and the available payment dates if you decide to continue to work after you attain age 65. Payment of Small Benefits There are some exceptions to the payment rules if the total present value of your pension benefit is $5,000 or less: If the present value of your total pension benefit is $1,000 or less when you terminate employment, you will receive your benefit as a lump sum payment as soon as administratively practicable after your termination date. If the present value of your total pension benefit is between $1,001 and $5,000, your benefit may, at the discretion of the Benefits Administrative Committee, be transferred to an Individual Retirement Account ( IRA ) established in your name with an outside financial institution. If your benefit is not transferred to an IRA, it will be held in the Plan until the date your benefit becomes payable at your Early Retirement Date or Normal Retirement Date. If the present value of your total pension benefit is greater than $1,000, but less than $5,000, you may elect to receive your benefit as a lump sum payment as soon as practicable after you terminate employment. Lump sum payments made to you may be directly rolled over to an IRA, Roth IRA, or to another employer's tax-qualified plan, if that plan accepts rollovers, or paid to you in a cash distribution. If you do not complete the appropriate forms to make a rollover, the benefit will be paid to you as cash. In such cases, Federal law requires that 20 percent of the payment be withheld for Federal income taxes. State laws vary with respect to the state income tax withholding requirements of such cash distributions. This tax rule may also apply to certain Beneficiaries who receive lump sum payments. Lump sum payments made to you that are not rolled over may be subject to a penalty if you receive the payment before you reach age 59-1/2. In addition to regular income tax, you may have to pay an extra tax equal to 10 percent of the taxable portion of the payment. There are certain exceptions to this rule; see your tax advisor for more information. Pension Plan Summary Plan Description Effective January 1, of 26

11 Plan Benefits (cont.) Normal Retirement If you retire on or after your Normal Retirement Date, your monthly normal retirement benefit will be calculated based on your Highest Average Earning and Benefit Service as of January 1, 2009 (the date the Plan was frozen). Your Normal Retirement Date is the later of: 1. Your 65th birthday, or 2. The earlier of (a) the date that is five years from the date you commenced participation in the Plan, or (b) the date you are credited with five years of Vested Service. Following are two examples of how your normal pension benefit would be calculated. Normal Retirement Calculation Examples Example 1 Calculation Year of Birth x $30,000 x 30 years $7, Year of Retirement 2005 Highest Average Earnings $30, x ($30,000 - $46,344) x 30 years $0.00 Social Security Covered Compensation* Benefit & Vesting Service $46, years Annual Benefit $7, Monthly Benefit $ *2006 Social Security Covered Compensation Table used. Since the Highest Average Earnings is less than Social Security Covered Compensation, the second part of the formula is zero. Example 2 Calculation Year of Birth x $48,000 x 30 years $12, Year of Retirement 2005 Highest Average Earnings $48, x ($48,000- $46,344) x 30 years $ Social Security Covered Compensation* Benefit & Vesting Service $46, years Annual Benefit $12, Monthly Benefit $1, *2006 Social Security Covered Compensation Table used. Pension Plan Summary Plan Description Effective January 1, of 26

12 Plan Benefits (cont.) Early Retirement You are eligible to receive your Pension benefit prior to age 65 if you meet one of the following conditions: 1. If you have completed ten (10) or more years of Vested Service in the Plan, you may begin receiving your monthly Pension benefit as early as the first of the month following your 55th birthday, as long as you are no longer working for the Company. 2. If you have completed seven (7) or more years of Vested Service in the Plan, you may begin receiving your monthly Pension benefit as early as the first of the month following your 62nd birthday, as long as you are no longer working for the Company. To reflect the longer payout period, your pension benefits will be reduced for each year your pension benefit payments are paid before your Normal Retirement Date. Benefits are reduced approximately 3% for each of the first three years your pension starts before your Normal Retirement Date and approximately 4.5% for each additional year. For example, in most instances, if your pension benefits start at age 60, the benefit available at age 65 will be reduced 18%: (3% for three years = 9%) plus (4.5% for two years = 9%). You may obtain the table of factors used to compute this reduction and the method of computation by contacting the Plan Administrator. Example: If the normal retirement monthly pension benefit is $ and the Associate retires early at age 55, his monthly benefit would be $ ($ x.595). If the same Associate retires early at age 60, his monthly benefit would be $ ($ x.82). The monthly pension benefit you actually receive may be further adjusted based on the form of benefit payment you select. Refer to the section titled Forms of Payment for a description of the ways in which your benefit may be paid. Retirement After Age 65 If you continue to work for the Company after your Normal Retirement Date, you generally may not elect to begin payment of your pension until you actually terminate employment with the Company. If you work past your Normal Retirement Date, your pension benefit will begin when you leave the Company and will be the greater of: 1. Your Accrued Benefit at your Normal Retirement Date actuarially increased to the date you actually retire, or 2. A benefit based on your years of Benefit Service, Final Average Earnings, and Social Security Covered Compensation at your actual retirement date. Again, no Earnings or Service after December 31, 2008 will be taken into account for purposes of calculating your Plan benefit. If you have been credited with one or more years of Benefit Service before March 1, 2005, and you continue to work after your Normal Retirement Date, you may elect to begin receiving payment of your pension while you are still working, but only if you are scheduled to work less than 40 hours per month. If you are Actively at Work with the Company when you reach age 70½ and are Vested, your pension will begin no later than the April 1 following the calendar year in which you reach age 70½, unless you specifically elect to defer payment to a later date. If you elect to defer, your pension payments will become payable as of the first of the month following the date you terminate employment with the Company. Disability Pension Benefits You will be considered permanently disabled if you meet all the following criteria: 1. You are judged to have become permanently disabled by the Social Security Administration while you were employed by the Company; 2. You have at least five years of Vested Service at the time you incur the disability; 3. You have been credited with at least 1,000 hours of service in the 12-month period immediately before you incur a disability; and 4. You are absent from employment on account of such disability for six consecutive months. Pension Plan Summary Plan Description Effective January 1, of 26

13 Plan Benefits (cont.) Each year the Company contacts Participants who have been classified as permanently disabled to request documentation to certify their continued disability status. The Company will make its determination regarding disability status based on the documentation provided and any other appropriate information. If the Company determines that you are permanently disabled, the following will apply: You will be credited with one year of Benefit Service for each year you are determined to be disabled, up through the earlier of (a) your Normal Retirement Date, (b) the last day of the month preceding the date you elect to begin receiving benefits under the Plan, or (c) December 31, The monthly disability pension benefits you receive will be calculated in the same way as your normal retirement benefit. Your Highest Average Earnings and Social Security Covered Compensation shall be computed as of the date you were determined to be disabled by Social Security and Benefit Service shall be determined as of your Normal Retirement Date, provided that no Benefit Service will be credited for years after December 31, 2008 including your period of permanent disability. You may elect to begin receiving your disability pension benefit before your Normal Retirement Date if you meet the age and service requirements for Early Retirement. In this case, your benefit will be reduced in the same manner as benefits are reduced under the early retirement provisions. Your disability pension benefit will not be reduced due to Social Security benefits, insurance benefits, workers compensation benefits or benefits payable on account of any other state or Federal statute. Deferred Vested Pension Benefits If you terminate employment with the Company and you have completed five or more years of Vested Service, you will be entitled to receive pension benefits as of your Normal Retirement Date. Your pension is based on your Vested Accrued Benefit as of the date you terminate employment. You will receive Benefit Election Forms to begin payment of your Deferred Vested pension between 180 and 30 days before your Normal Retirement Date. If you met the age and service requirements for Early Retirement, you may elect to receive a reduced pension as described in the Early Retirement section. The forms of payment available to you at Early or Normal Retirement are described in the section titled Forms of Payment. Reemployment After Benefit Payments Begin If you are receiving an Early or Normal Retirement pension, Disability pension or a Deferred Vested pension, and later return to work for the Company, your pension benefits will continue to be paid in the same form and amount elected prior to your reemployment. When you retire again, your monthly pension benefit will be recalculated on the basis of your total years of Benefit Service and the benefit formula in effect when you again retire. Your monthly benefit will be the greater of: 1. The monthly Pension you have already been receiving; or 2. A monthly Pension based on your Final Average Earnings, Social Security Covered Compensation, and Benefit Service determined as of the date of your most recent separation from service, provided that Benefit Service and Earnings after December 31, 2008 are not taken into account. Pension Plan Summary Plan Description Effective January 1, of 26

14 Plan Benefits (cont.) Reemployment After Termination Generally, if you terminate employment before you have earned five years of Vested Service towards your Accrued Benefit and you are reemployed by the Company, your years of Vested Service before your termination of employment will be reinstated only if you do not have a Break in Service. If your Vested Service is not reinstated, your Benefit Service also will not be reinstated. If you are Vested at the time you terminate employment and are later rehired, you will re-qualify as a Participant on your date of reemployment. Your pension benefit when you ultimately terminate employment or retire may be based on both periods of employment (subject to the limitations discussed below). If you are rehired as an Associate of the Company after having received distribution of all or any portion of your benefits under this Plan, you will have two options: 1. You can choose to repay the Plan for all pension benefits paid to you plus interest. The interest rate is determined by the Internal Revenue Service and is applicable to the period beginning with the distribution date through the repayment date. If you elect this option, the repayment must occur within five years of the later of (a) the date you are rehired, or (b) the date the lump sum distribution was made to you. If you elect to repay the Plan for any pension distributions paid to you, your final calculation of benefits at a subsequent termination or at your retirement will include all your Benefit Service, including the Service for which you were previously paid. OR 2. You can choose not to repay the Plan for benefits received. If you elect not to repay the Plan, only the Benefit Service earned after your rehire date will be used to calculate your pension benefit, provided that no Benefit Service may be earned after December 31, Special Rules for Reemployed Veterans If you are a veteran and are reemployed under the Uniformed Services Employment and Reemployment Rights Act of 1994, your qualified military service may be considered Vested Service and Benefits Service for purposes of the Plan, provided that no Benefit Service may be earned after December 31, If you are affected by this law, you should contact the CarMax Benefits Department for further details. If you die on or after January 1, 2007 while performing "qualified military service" (as defined in the Code), your survivors will be entitled to any additional benefits (other than benefit accruals relating to the period of military service) provided under the Plan as if you had resumed employment and then died. Pension Plan Summary Plan Description Effective January 1, of 26

15 Forms of Payment When you are eligible to begin receiving payments, you will have the opportunity to elect either the automatic form of payment or an optional form of payment. All forms of payment are actuarially equivalent. The different forms of payment are explained below. Automatic Forms of Payment Qualified Joint and Survivor Annuity (QJSA) If you are married on the date your pension benefit begins, your benefit will automatically be paid in the form of a Qualified Joint and Survivor Annuity unless you select another form of payment with your Spouse s written consent. Under a Qualified Joint and Survivor Annuity, you will receive reduced monthly payments for your lifetime. After your death, monthly payments equal to 50% of the monthly payments you received will be paid to your surviving Spouse for his or her lifetime. If your Spouse predeceases you after you start receiving payments, you will continue to receive your pension during your remaining lifetime, and the last payment will be paid on the first day of the month in which you die. Single Life Annuity If you are not married on the date your pension benefit begins, your benefit under the Plan will automatically be paid in the form of a Single Life Annuity unless you select another form of payment. If you are married and both you and your Spouse have declined the Qualified Joint and Survivor Annuity, your benefit under the Plan will automatically be paid in the form of a Single Life Annuity unless you select another form of payment. Regardless of your marital status, under the terms of a Single Life Annuity, payments will be paid to you for your lifetime. No payments will be made after your death. Optional Forms of Payment If you are married and your Spouse s written consent is obtained, you may elect one of the optional forms of payment instead of an automatic form of payment. Period Certain and Continuous Option This option provides a reduced monthly benefit for your lifetime, with a guaranteed minimum number of monthly payments (60, 120, or 180) to your Beneficiary. If you die before the guaranteed number of payments has been made, your reduced monthly benefit will continue to be paid to your Beneficiary until the guaranteed number of payments is made. Joint and Last Survivor Option This option provides a reduced monthly benefit during your lifetime. Upon your death, a designated percentage of your benefit amount will be paid to your Beneficiary for his or her lifetime. You may elect a 50%, 75%, or 100% Joint and Last Survivor Annuity. Lump Sum Pension Payment As a general rule, lump sum payments are not available under the Plan. However, if the present value of your Vested pension is $5,000 or less, your pension will be treated as a Small Pension Benefit (see Payment of Small Benefits ). Pension Plan Summary Plan Description Effective January 1, of 26

16 Forms of Payment (cont.) Death Benefit Married Participants If you are married, have five years of Vested Service, and die before your pension benefits have started to be paid, your surviving Spouse will be entitled to receive a Qualified Pre-Retirement Survivor Annuity (QPSA). The QPSA will be the survivor annuity your Spouse would have received under the 50% Qualified Joint and Survivor Annuity based on the benefit formula in effect as of the earlier of (a) the date on which you terminate employment, or (b) the date of your death. Payments under a QPSA to a Participant s surviving Spouse shall begin no later than the month in which the Participant could have retired under the Plan or the date of the Participant s death, whichever is later. If you meet the requirements for Early Retirement, your Spouse is eligible to begin payments as of the month in which you could have started receiving your payment under the Early Retirement provisions of the Plan. Your Spouse may elect to delay the start of payments until the date that would have been your Normal Retirement Date. If payments begin before your Normal Retirement Date, they will be reduced in the same manner as benefits are reduced under the Early Retirement provisions. If the present value of the QPSA is $5,000 or less, the benefit will be distributed to your Spouse in accordance with the rules that apply to distributions of Small Benefits. If you became employed by CarMax before March 1, 2005, and you die before your pension benefits have started to be paid, your surviving Spouse may elect to receive one of the optional forms of payment described above instead of the QPSA. Unmarried Participants If you are not married at the time of your death, no death benefit will be payable under the Plan. Pension Plan Summary Plan Description Effective January 1, of 26

17 Former Circuit City Employees The following special Plan provisions apply to certain Associates who were formerly employed by Circuit City Stores, Inc., and who were eligible to participate or participated in the Retirement Plan of Circuit City Stores, Inc. (the Circuit City Plan ). The special rules apply to you if your benefits were transferred to the CarMax Plan from the Circuit City Plan and you fall into one of the following three categories: 1. You were a CarMax Associate on February 28, 2002 (at that time CarMax was a subsidiary of Circuit City Stores, Inc.) and you had an accrued benefit under the Circuit City Plan; 2. You are a former CarMax Associate who was not employed by Circuit City Stores, Inc. on or before February 28, 2003; or 3. You were employed by Circuit City at any time after February 28, 2002, and you became a CarMax employee between October 1, 2002, and February 28, The special rules that apply to you if you satisfy one of these conditions are as follows: Participation: If you were a CarMax Associate on February 28, 2002, and a Participant in the Circuit City Plan on that date, you automatically became a Participant in the CarMax Plan as of March 1, Hours of Service: For purposes of satisfying the Hours of Service requirement to participate in the CarMax Plan after February 28, 2003, you will be credited with Hours of Service for periods of service completed before February 28, 2003 as an employee of Circuit City Stores, Inc. in accordance with the terms of the Circuit City Plan if you became a CarMax Associate before March 1, Benefit Formula: If you were a participant in the Circuit City Plan on March 1, 1989, or March 1, 1993, your benefit under the Plan may never be less than your benefit under the Circuit City Plan immediately prior to these dates. Benefit Service: You will be credited with one year of Benefit Service for each year of Benefit Service accrued under the Circuit City Plan before March 1, 2003, if you became a CarMax Associate before March 1, Vested Service: You will be credited with one year of Vested Service for each year of Vested Service you earned under the Circuit City Plan before March 1, 2003, if you became a CarMax Associate before March 1, If you are a former employee of Circuit City Stores, Inc. and you became a CarMax Associate before March 1, 2005, you will be credited with Vested Service you earned under the Circuit City Plan before March 1, 2005, even though your benefits were not transferred to the CarMax Plan from the Circuit City Plan. Pension Plan Summary Plan Description Effective January 1, of 26

18 How To Apply For Pension Benefits You should contact the CarMax Benefits Department in writing at the following address between 180 and 30 days prior to your expected retirement date to obtain the Benefit Election forms. You must provide your name, Social Security number, your Spouse s date of birth, and the date you want payments to begin. CarMax, Inc. Attn: Benefits Department/Pension Plan Administrator Tuckahoe Creek Parkway Richmond, VA Under the Plan, you can make or change your election any time prior to the commencement of your benefit. However, in order to process a change after you terminate employment, you should notify the Company in writing no more than 180 days, but not less than 30 days, prior to the commencement date of your pension benefits. You also have the right to reconsider your decision regarding your application for pension benefits during this period of time. You may waive your right to the 30-day review period and elect to commence your benefits within 30 days from the date you complete the Benefit Election forms. Per IRS regulations, once benefit payments have commenced, a participant or beneficiary is not permitted to change the election. Pension Plan Summary Plan Description Effective January 1, of 26

19 When No Pension Benefits Are Paid No pension benefits will be paid to you, your Spouse or your Beneficiaries if any of the following events occur: You terminate employment and are not Vested. You die while employed and are not Vested. You terminate employment and are Vested, but you die before your benefits begin and you are not married. Pension Plan Summary Plan Description Effective January 1, of 26

20 Qualified Domestic Relations Orders A Qualified Domestic Relations Order (QDRO) is a court order that creates or recognizes an Alternate Payee s (i.e., Spouse, Former Spouse, or child) right to all or part of your Plan benefits. While ERISA generally protects Plan benefits against creditors, Qualified Domestic Relations Orders are an exception. Such an order can compel payment of Vested benefits even though the Plan prohibits distributions earlier than retirement, termination or death. The Plan Administrator will notify you if the Plan receives a Domestic Relations Order that may affect your benefits. A hold will be placed on your Accrued Benefit while the Plan Administrator determines whether the order is qualified. You and each Alternate Payee will be notified of the decision if the order is determined to be qualified. The affected portion of your Accrued Benefit will be transferred into a separate account for the Alternate Payee. If you expect to submit a Domestic Relations Order to the Plan, it is recommended that you contact the CarMax Benefits Department at , option 7, and request a QDRO kit prior to requesting a court to enter a Domestic Relations Order. This will help assure that you meet Plan requirements for a Qualified Domestic Relations Order prior to incurring court expenses. Pension Plan Summary Plan Description Effective January 1, of 26

21 Claims Procedure You do not need to file a formal request or claim to receive your benefits under the Plan. When an event occurs that entitles you to a distribution of your benefits under the Plan (such as termination of employment), the Committee will notify you automatically regarding your distribution rights. However, if you disagree with the Committee s determination of the amount of your benefits under the Plan or with respect to any other decision the Committee may make regarding your interest in the Plan, you have the right to file a claim to have the decision reconsidered. The following information describes the process for filing benefit claims. Filing a Claim for Benefits A claim for benefits under the Plan should be made in writing to the Committee. You may designate (in writing) an authorized representative to act on your behalf in pursuing your claim for benefits. Time for Decision on a Claim If you have submitted a claim for benefits and your claim is denied, in whole or in part, you will receive written notice of the denial within 90 days after receipt of your claim, or within 180 days after such receipt if special circumstances require an extension of time. If special circumstances require an extension of time, you will be furnished written notice prior to the end of the initial 90-day period. The notice of extension will explain the special circumstances requiring an extension of time and the date by which the Committee expects to render a decision. Notification of Denial The written notice of denial will contain the following: the specific reason or reasons for denial; a reference to specific Plan provisions on which the denial is based; a description of any additional material or information necessary for the claimant to perfect the claim, and an explanation of why the material or information is necessary; and an explanation of the claims review procedure and the time limits applicable to such procedures, including a statement of your right to bring a civil action under ERISA Section 502(a) following a denial upon review of the claim. Right to Review Review may be requested at any time within 90 days following the date you received written notice of the denial. A failure to file a request for review within 90 days will constitute a waiver of your right to have the denial of your claim reviewed. Review Procedures Your petition for review should be made in writing to the Benefits Administrative Committee and should state your name and address, the fact that you are disputing the denial of a claim, the date of the initial notice of denial, and the reason(s), in clear and concise terms, for disputing the denial. During the review process, the Committee will: provide, upon request and free of charge, reasonable access to and copies of all documents, records and other information relevant to the claim; permit you to submit written comments, documents, records and other information relating to the claim; and provide a review that takes into account all comments, documents, records and other information submitted by you, without regard to whether such information was submitted or considered in the initial determination. Pension Plan Summary Plan Description Effective January 1, of 26

22 Claims Procedure (cont.) Time for Decision on Review Unless special circumstances require an extension of time for processing, you will be notified of the decision on review within 60 days after receipt of your written petition for review. If an extension is necessary due to special circumstances, you will be given a written notice of the required extension prior to the expiration of the initial 60-day period. The notice will indicate the circumstances requiring the extension and the date by which the Committee expects to render a decision. The extension may be for up to 60 additional days. Notification of Determination on Review If your claim is denied upon review, the written notice will contain the following information: the specific reason for the decision and specific reference to the provisions of the Plan on which the decision is based; a statement that you are entitled to receive, upon request and free of charge, copies of all documents, records and other information relevant to the claim for benefits; and a statement explaining your right to bring a civil action under Section 502(a) of ERISA following the denial. Deadline to Bring Legal Action You must complete the claims and review processes described above before you may bring legal action. Once you have completed these processes, you must file any lawsuit related to your claim within one year of the Plan's final decision on review. You may not file suit after this one-year period expires. Pension Plan Summary Plan Description Effective January 1, of 26

23 General Information Name of the Plan CarMax, Inc. Pension Plan Type of Plan A defined benefit plan under section 401(a) of the Internal Revenue Code. Employer and Plan Sponsor/Administrator CarMax, Inc Tuckahoe Creek Parkway Richmond, VA Telephone: (804) The Plan is administered on behalf of the Company by the Committee, which is the Plan Administrator for ERISA purposes. Employer Identification Number Effective Date The original effective date is March 1, 2002; The Plan was amended and restated effective January 1, Plan Year Each year from January 1 through December 31. Plan Number 004 Agent for Service of Legal Process Process may be served by writing to: Attn: Corporate Secretary CarMax, Inc Tuckahoe Creek Parkway Richmond, VA Service of legal process may also be made upon the Plan Administrator or Trustee. Trustee Name and Address Wells Fargo 1021 East Cary Street, 6th Floor Richmond, VA Telephone: (800) Plan Document Controls The benefits described in this SPD do not constitute or imply contracts or any other contractual obligations between the Company and its Associates and/or other individuals eligible to participate in this Plan. CarMax, Inc. retains the rights to modify or terminate this Plan at any time for any reason without the consent of Associates and/or other individuals eligible to participate in this Program. The Company maintains this Plan by choice, not obligation. Pension Plan Summary Plan Description Effective January 1, of 26

24 General Information (cont.) Administration The Chief Executive Officer of the Company shall appoint at least three individuals, called the Benefits Administrative Committee (the Committee ), to administer the Plan. The Committee makes all decisions regarding benefit eligibility and amounts. You have the right to ask the Committee questions concerning the Plan or Plan documentation. The Committee has the express discretionary authority to interpret the terms of the Plan and to decide factual and other questions relating to the Plan and its benefits, including without limitation, factual questions relating to eligibility for, entitlement to, and payment of benefits. The Committee s reasonable interpretations of the Plan and factual determinations concerning benefit issues are binding on Participants and Beneficiaries. The Committee may delegate certain administrative or record-keeping functions as it deems appropriate. Contributions This Plan is funded by contributions from the Company. The amount the Company contributes to the Plan is based upon the recommendation of a consulting actuary appointed by the Committee. The actuary bases its determination regarding the amount of contributions to be made to the Plan on the funding policy established for the Plan, as well as the provisions of ERISA relating to minimum and maximum contributions. Plan Amendment or Termination The Plan may be amended by the Board of Directors of the Company or the Committee at any time for any reason; provided, however, that any amendment that is financially material to CarMax or its shareholders must be approved by the Board of Directors of CarMax, Inc. The Plan may be terminated by the Board of Directors at any time for any reason. The Plan also may be terminated by the Pension Benefit Guaranty Corporation if certain events occur such as (a) the Company is unable to make the required contributions to the Plan, or (b) the Plan is unable to pay benefits to Participants when they become due. In the event the Plan is terminated, affected Participants will be fully vested in the Accrued Benefits regardless of their years of Vesting Service. Expenses relating to Plan termination may be paid from the trust fund before any payments are made to you or your Beneficiary. Benefit payments from the Plan will be made in the order required by ERISA. Top-Heavy Rules A plan is top-heavy if the sum of the accounts of key employees is more than 60% of all of the accounts. Key employees are generally employees who are officers of the Company and other employees who are among the most highly paid of the Company and have the highest percentage of ownership of the Company. If the Plan is top-heavy, special rules apply that relate to minimum benefits and the amount of compensation that may be considered in making contributions to the Plan. For each Plan Year that the Plan is top-heavy, the Company must provide a minimum benefit to non-key employees. At this time, it is not expected that the Plan will be top-heavy. Pension Plan Summary Plan Description Effective January 1, of 26