THE ARCHDIOCESE OF CINCINNATI LAY EMPLOYEES OF THE ARCHDIOCESE OF CINCINNATI PENSION PLAN PLAN SUMMARY

Transcription

1 THE ARCHDIOCESE OF CINCINNATI LAY EMPLOYEES OF THE ARCHDIOCESE OF CINCINNATI PENSION PLAN PLAN SUMMARY As in effect on September 1, 2004

2 LAY EMPLOYEES OF THE ARCHDIOCESE OF CINCINNATI PENSION PLAN Table of Contents Page INTRODUCTION... 1 A. THE PLAN IN GENERAL... 1 B. PLAN PARTICIPATION... 2 C. VESTING... 3 D. NORMAL RETIREMENT BENEFIT... 5 E. DETERMINING MONTHS OF SERVICE... 7 F. COMMENCEMENT OF RETIREMENT BENEFITS... 8 G. RETIREMENT BENEFIT ANNUITY FORMS H. ACTUAL AMOUNT OF THE RETIREMENT BENEFIT I. SPOUSAL & DEPENDENT PRERETIREMENT DEATH BENEFIT J. SPECIAL CIRCUMSTANCES K. TERMINATION PRIOR TO VESTING L. FUNDING AND ADMINISTRATION M. ADDITIONAL INFORMATION Defined Term Reference Table Compensation... Question D Dependent Children... Question I Dependent Children Survivor Benefit... Question A-2, I-1, I , 13, 14 Early Retirement Date... Question F Eligible Employee... Question B Full-Time Employee... Question B Future Service Career Compensation... Question D Hour of Service... Question E Joint And Survivor Annuity... Question G Lay Employee... Question B Life And Period Certain Annuity... Question G ii -

3 Lump Sum Payment... Question G Minimum Pension Formula... Question D Month of Service... Question E Months of Future Service... Question D Months of Past Service... Question D Normal Retirement Age... Question C Normal Retirement Benefit... Question D Normal Retirement Date... Question F Past Service Career Compensation... Question D Plan... Introduction... 1 Post-NRD Part-Time Employment Date... Question F Qualified Joint And Survivor Annuity... Question G Qualified Leave of Absence... Question E Reemployment Date... Question K Regular Pension Formula... Question D Required Beginning Date... Question F Retirement Benefit... Question A Rule of Parity Break In Service... Question K Severance Date... Question K Severance Period... Question K Single Life Annuity... Question G Split Marital Single Life Annuity... Question G Spouse... Question A Spousal Preretirement Death Benefit... Question A-2, I-1, I , 13, 14 Teacher... Question B Totally and Permanently Disabled... Question E iii -

4 LAY EMPLOYEES OF THE ARCHDIOCESE OF CINCINNATI PENSION PLAN INTRODUCTION The Lay Employees of the Archdiocese of Cincinnati Pension Plan (the Plan ) provides a pension benefit to eligible employees of the Archdiocese and participating Archdiocese locations. This booklet describes the Plan s pension benefit and provides you a summary of the important features of the Plan. Please read the booklet carefully and keep it for reference. The Plan was originally effective on January 1, This booklet reflects the Plan as in effect as of April 1, This booklet also reflects certain historical provisions of the Plan. The details of the Plan are set forth in an official Plan document. If there are any inconsistencies or ambiguities between this booklet and the official Plan document, the official Plan document will control. Upon your request, the official Plan document will be made available for your review at the offices of your employer. Also, upon payment of copying costs, you may obtain a copy of this document. If you have any questions concerning the Plan, please contact the Pension Committee, c/o The Archdiocese of Cincinnati, 100 East Eighth Street, Cincinnati, Ohio 45202, (513) , Attention: Finance Office. You also can contact the contract administrator of the Plan, Administrative Services Group, Inc., Attn: Pension Department, 333 West Vine Street, Suite 500, Lexington, KY 40507, or (888) A. THE PLAN IN GENERAL 1. What Is The History and Purpose Of The Plan? Since January 1, 1973, the Archdiocese of Cincinnati has maintained the Plan for the benefit of eligible lay employees and their beneficiaries. The Plan is a defined benefit qualified retirement plan for tax law purposes. The Plan provides a pension benefit which is intended to be a supplement to Social Security and any other personal retirement savings of the retired lay employee of the Archdiocese. It is not envisioned to be by itself adequate to meet all income needs of the retired employee. The Plan s pension benefit has always been, and continues to be, entirely funded by your Archdiocese employer. You contribute nothing for your benefit under the Plan. 2. What Is the Plan s Pension Benefit? How Will My Pension Benefit Be Paid? A Plan s pension benefit is paid in the form of a series of monthly payments to you during your retirement or to your beneficiary following your death. Your pension benefit will be paid either as a - 1 -

5 retirement benefit or a spousal preretirement death benefit (as described below), depending upon the timing of your death. Retirement Benefit: In most situations, your pension benefit will be paid as a retirement benefit, i.e., a monthly amount paid to you commencing after your termination of employment and upon your retirement age. Upon your death, a survivor benefit may be provided to your surviving beneficiary, generally paid in a continued monthly amount, depending upon the annuity form you selected. In limited instances, your benefit may also be paid in a lump sum distribution. Spousal Preretirement Death Benefit: However, if you die prior to commencing your retirement benefit, your pension benefit will be paid as a spousal preretirement death benefit, i.e., a reduced monthly amount paid to your surviving spouse. Payment of this benefit will begin on the date elected by your surviving spouse, but not earlier than the first day of the month after your death. For purposes of the Plan, your "spouse" is a person of the opposite sex to whom you are legally married under the laws of the state in which you reside. Dependent Children Survivor Benefit: If you die prior to commencing your retirement benefit and you are unmarried but have dependent children, your pension benefit will be paid as a "dependent children survivor benefit", i.e., a reduced monthly amount paid to the guardian of your dependent children until your dependent children die or reach age 18. The remainder of this booklet explains in more detail the Plan s pension benefit and the manner in which the pension benefit is calculated and paid to you and your beneficiary. 3. Does The Archdiocese Fund The Plan? Yes. The Archdiocese and the Archdiocese locations make all contributions to fund the benefits under the Plan. You pay nothing under the Plan. The Archdiocese appoints an actuary who advises how much should be contributed each year by the Archdiocese and each Archdiocese location. 4. Does The Plan Permit Employee Contributions? No. The Plan does not permit employee contributions to the Plan. Nor does the Archdiocese sponsor a plan for employee contributions. While the Archdiocese encourages employees to save for retirement, the Archdiocese does not wish to undertake responsibility for the investment of employee personal savings. An employee nevertheless may be eligible to make individual retirement account (IRA) contributions or tax sheltered annuity (TSA) contributions. For further information on IRAs, see IRS Publication 590, and on TSAs, see IRS Publication 571. You can view IRS publications at B. PLAN PARTICIPATION 1. Who Is Eligible To Participate In The Plan? Generally full-time lay employees. You are eligible to participate in the Plan if you are an eligible employee (defined below) of the Plan. Eligible Employee: An eligible employee means a lay employee of the Archdiocese or a participating Archdiocese employer who is employed in a permanent position on a full-time basis

6 Lay Employee: A lay employee refers to an employee who is not a priest or religious. Full-Time Employee: A full-time employee refers to an employee who, as designated on the personnel records of the Archdiocese or the Archdiocese employer, regularly works at least 20 hours per week or, in the case of a teacher, at least 12 class hours per week, in either case for a normal work year. The hours of an employee of two or more Archdiocese employers are aggregated for purposes of determining whether the employee is employed on a full-time basis. Teacher: A teacher refers to an individual with primary instructional control of a classroom. NOTE: A teacher s aide, for example, therefore must meet the general 20 hour per week standard to be considered full-time and thereby an eligible employee of the Plan. 2. When Do I Become A Participant? If you are an eligible employee, you will immediately become a participant of the Plan. Once a participant, you will begin to accrue a pension benefit under the Plan. 3. Does The Plan Permit Waivers Of Participation? No. The Plan does not permit an otherwise eligible employee to waive participation in the Plan. Employees are not permitted by law to waive participation in a defined benefit plan that is wholly employer provided to all who meet the criteria of an eligible group. Moreover, the IRS has ruled that such a waiver is ineffective for making deductible IRA contributions. The Plan also may not accept a request from a participant to voluntarily waive, assign or forfeit any benefit under the Plan. C. VESTING 1. Why Is Vesting Important? Pension benefit entitlement purposes. To be entitled to receive a pension benefit, whether paid as a retirement benefit or a spousal preretirement death benefit, you must be vested under the terms of the Plan. 2. How Do I Become Vested? Two ways. You can become vested if you have five years (or in some cases ten years) of full-time employment--see Question 3. You also can become vested if you are still employed on your normal retirement age--see Question Will I Become Vested Upon Five Years Of Full-Time Employment? Yes, if you worked for the Archdiocese as an Eligible Employee for at least one month in 1992 or in any later year, you will become vested under the Plan at the time you have been credited with 60 months of service (defined in Part E and generally referring to full-time employment). Participants who did not work for the Archdiocese in 1992 or in any later year became vested after 120 months of service (defined in Part E and generally referring to full-time employment)

7 4. Will I Be Vested If I Am Still Employed On My Normal Retirement Age? Yes. You will become vested under the Plan if you are still employed on your normal retirement age (see below) under the Plan. Employed on your Normal Retirement Age: You will be considered employed on your normal retirement age if, on any day on or after your normal retirement age (defined below), you (a) have an hour of service as an employee (without regard to whether you are an eligible employee), (b) are on a qualified leave of absence or (c) are totally and permanently disabled having been so continually since your termination of service. Normal Retirement Age: Your normal retirement age under the Plan is the date on which you both (a) reach your 65th birthday and (b) meet one of two minimum service requirements: (a) 60 Uninterrupted Months of Employment: You have been credited with 60 uninterrupted months of employment (whether as an employee or an eligible employee). For this purpose, the term uninterrupted means the absence of the participant s intervening termination of employment. This minimum service requirement applies only to any participant who is eligible for the new five year vesting requirement having been considered employed in 1992 or thereafter (see Question 3 above). The purpose of this particular minimum service requirement is so that a participant with five years of employment near his or her 65th birthday can retire on or shortly after his 65th birthday without having to work the full five years of full-time service necessary to become vested under the Plan. NOTE: As noted above, this minimum service requirement applies only to a participant who is eligible for the new five year vesting. Other participants should refer to the 60 continuous months requirement in part (b) immediately below. (b) 60 Continuous Months of Service: You have been credited with 60 continuous months of service (defined in Part E). For this purpose, the term continuous means the absence of an intervening calendar month for which the participant is not credited with a month of service. This minimum service requirement applies to any participant who was considered employed in 1987 or thereafter having, on or after January 1, 1987, either (a) an hour of service as an employee (without regard to whether as an eligible employee) or (b) one day of a qualified leave of absence. The purpose of this minimum service requirement was, as used during the time 10 years were required for vesting, so that a participant with five years of full-time employment near his or her 65th birthday could retire on or shortly after his 65th birthday without having to work the full 10 years necessary to become vested under the Plan. NOTE: This minimum service requirement continues to be applicable to a participant who is not eligible for the new five year vesting and who thereby is subject to the former 10 year vesting requirement. Note: In any event, if you are already vested by the time you reach your 65th birthday (due, for example, to having 60 months of service or 120 months of service--see Question 3 above), then your normal retirement age under the Plan is your 65th birthday

8 D. NORMAL RETIREMENT BENEFIT 1. How Is My Pension Benefit Determined? Is It Based on My Normal Retirement Benefit? Your pension benefit under the Plan, whether paid as a retirement benefit or a spousal preretirement death benefit, is determined by first calculating your normal retirement benefit under the Plan. Normal Retirement Benefit: Your normal retirement benefit is a monthly amount calculated under the Plan s pension formulas (see Questions 2 and 3 below) based upon your cumulative compensation and service with the Archdiocese and the Archdiocese employers. Your normal retirement benefit, therefore, increases with your continued employment. Your normal retirement benefit represents a monthly amount payable for your lifetime commencing on your normal retirement date under the Plan (generally age 65; see Question F-1). 2. What Are The Plan s Pension Formulas? The Plan has two pension formulas--a regular or compensation based formula (see Question 3) and a minimum or service based formula (see Question 4). Your normal retirement benefit will be equal to the greater of the amounts determined under these two formulas. Note: The pension formulas and benefit rates in effect at the time of your pension commencement date will apply to the calculation of your normal retirement benefit under the Plan. Accordingly, the application of the Plan s pension formulas will not be based upon when you terminate employment, but rather by when you commence the payment of your retirement benefit. 3. What Is The Plan s Regular Pension Formula? The Plan s current regular or compensation based pension formula is shown below. Regular Pension Formula: If your pension commencement date is on or after January 1, 2003, your normal retirement benefit under the regular pension formula is equal to the following amount: Onetwelfth (1/12) of the sum of (a) 1.17% of your past service career compensation (defined below) and (b) 2.33% of your future service career compensation (defined below) earned through December 31, 1999 and (c) 2.02% of your future service career compensation earned on and after January 1, Past Service Career Compensation: Your past service career compensation means your monthly rate of compensation (defined below) in effect as of January 1, 1973 times your months of past service (defined in Question 4 below). Future Service Career Compensation: Your future service career compensation means your aggregate compensation (defined below) for all periods on and after January 1, Compensation: Your compensation means your earnings from your Archdiocese employer actually paid or made available to you that are subject to Social Security payroll (FICA) taxes, determined without regard to the applicable FICA tax dollar limitation

9 4. What Is The Plan s Minimum Pension Formula? The Plan s current minimum or service based pension formula is shown below. Minimum Pension Formula: If your pension commencement date is on or after January 1, 2003, your normal retirement benefit under the minimum pension formula is equal to the following amount: Onetwelfth (1/12) of the sum of (1) $8.12 times your months of past service (defined below) and (2) $25.00 times your months of future service (defined below). Months of Past Service: Your months of past service means your months of service (see Part E) prior to January 1, Months of Future Service: Your months of future service means your months of service (see Part E) on and after January 1, Note: Please remember that months of service are defined by reference to full-time employment (see Part E), so that part-time service credit will not qualify for months of service credit. 5. Has The Archdiocese Increased The Rates Used In These Pension Formulas? Yes. When Plan funding permits, the Archdiocese has increased the rates used in the Plan s regular and minimum pension formulas. However, there is no guarantee that the Archdiocese will continue to do so. 6. Example--Calculation of Normal Retirement Benefit Assume John Williams was employed by an Archdiocese employer on January 1, 1970 and has been continuously employed on a full-time basis with the Archdiocese until his retirement on June 20, As of January 1, 1973, John made $500 a month. Prior to January 1, 1973, John worked for the Archdiocese for 36 months. Accordingly, his past service career compensation is $18,000 ($500 per month x 36 months). On and after January 1, 1973, John worked for 377 months (months of future service). His aggregate compensation on and after January 1, 1973 is $400,000 (future service career compensation through 12/31/1999), plus $80,000 (future service career compensation in 2000 through 2004). Regular Pension Formula: John s normal retirement benefit under the regular pension formula is 1/12 of the amounts calculated below using the Plan s regular pension formula in effect on his pension commencement date. 1.17% x $ 18,000 (past service career compensation) $ % x $ 400,000 (future service career compensation thru 12/31/99) 9, % x $ 80,000 (future service career compensation after 12/31/99) 1, Total $11, Divided by 12 $

10 Minimum Pension Formula: John s normal retirement benefit under the minimum pension formula is 1/12 of the amounts calculated below using the Plan s minimum pension formula in effect on his pension commencement date. $ 8.12 x 36 (months of past service) $ $ x 377 (months of future service) 9, Total $ 9, Divided by 12 $ The greater of these amounts is $ per month. Accordingly, John s normal retirement benefit is $ monthly, which represents the amount he would receive as a single life annuity commencing on his normal retirement date (generally age 65). To determine when John s retirement benefit is paid, see Part F, and how his retirement benefit is paid, see Part G. To determine the actual amount of John s retirement benefit, see Part H. E. DETERMINING MONTHS OF SERVICE 1. How Are Months Of Service Used Under The Plan? What Is A Month of Service? Your months of service are used for purposes of determining your vested status under the Plan (see Part C) and calculating your normal retirement benefit (see Part D). Month of Service: In general, a month of service is a calendar month during which you have been credited with at least one hour of service as an eligible employee (see Part B). Because the term eligible employee is defined generally as someone employed full time, you will receive credit for months of service for full-time employment (and not, for example, for part-time employment). In addition, months of service include time during a qualified leave of absence and for total and permanent disability. See Questions 3 and 4 below. Hour of Service: An hour of service means each hour for which you are: (a) paid or entitled to payment for services performed for the Archdiocese or other Archdiocese employer, (b) paid or entitled to payment for no services performed for the Archdiocese or other Archdiocese employer (such as for vacation, holiday, sickness, etc.) or (3) receive back pay from the Archdiocese or other Archdiocese employer. 2. Is There a Special Month of Service Conversion For School Employees? Yes. If you are a contract employee of a primary or secondary school (as a teacher or otherwise), you will receive 12 months of service for a school year if you are credited with a month of service for each month of the school year. For example, if you are a teacher with 12 classroom hours per week and you have an hour of service during each calendar month of the school year (for example, August through May), you will be credited with 12 months of service, even though you may otherwise have received only 10 months of service

11 3. Do Months of Service Include Time For Certain Leaves of Absences? Yes. A month of service also includes a calendar month during which you have at least one day of a qualified leave of absence (defined below). The foregoing leave service credit counts for purposes of both vesting and calculating your normal retirement benefit. Qualified Leave of Absence: A qualified leave of absence means the days following a disability compensable under a worker s compensation act or occupational diseases act or service in any armed force of the United States, provided that, in either such case, pension service credit is required by law. A qualified leave of absence also includes a leave of absence granted by the employer, an absence due to vacation not exceeding 180 days in a year or an absence due to sickness or injury not exceeding 180 days in one year, provided that, in any foregoing case, the employer continues to compensate the participant with his or her regular compensation and continues the participant s eligibility in other benefit plans of the Archdiocese. 4. Do Months of Service Include Time For Certain Disabilities? Yes. A month of service also includes a calendar month which you have been continually totally and permanently disabled (defined below) since your termination of service with the Archdiocese or Archdiocese employer. To be eligible for this continued service credit, you must have terminated your service due to becoming totally and permanently disabled. The foregoing disability service credit is limited solely to vesting purposes. It does not count for purposes of calculating your normal retirement benefit. Totally and Permanently Disabled: Totally and permanently disabled means having a physical or mental condition which totally and permanently prevents the participant from engaging in any occupation or employment for remuneration or profit, with the exclusion of certain disabilities enumerated in the Plan. The determination of whether a participant is totally and permanently disabled will be made by objective standards provided in the Plan as applied by the Pension Committee. F. COMMENCEMENT OF RETIREMENT BENEFITS 1. I Am A Vested Participant. When Can I Begin Receiving My Retirement Benefit? Generally, you may begin to receive your retirement benefit upon reaching your retirement date. Specifically, if you are vested, you can begin to receive your retirement benefit after you terminate employment with the Archdiocese, but no sooner than as of your early retirement date or your normal retirement date. Early Retirement Date: Your early retirement date is the first day of the month coinciding with or next following the date you reach your 55th birthday. If you wish to begin receiving retirement benefits, you must make a written election to do so. Normal Retirement Date: Your normal retirement date is the first day of the month coinciding with or next following your "normal retirement age" as defined in Question C-4. In general, your normal retirement date is your 65th birthday. However, if you are not already vested on your 65th birthday, your normal retirement date is the time you complete the applicable minimum service requirement

12 However, if your benefit has an actuarial value of less than $10,000.00, you may receive an immediate lump sum payment of the value of your Plan benefit. See Question G-4, below. 2. What If I Am Still Employed After My Normal Retirement Date? If you continue working after your normal retirement date, your retirement benefit will begin, upon your election, as of the first day of the month after you terminate the employment of the Archdiocese. If you do not so elect, your retirement benefit will be actuarially adjusted so that it is actuarially equivalent to the benefit which you would have received had you commenced your retirement benefit as of this date. If you continue working after your normal retirement date, but you are no longer an eligible employee (see Question 5, below), your retirement benefit will begin, upon your election, as of your post-nrd parttime employment date. If you do not so elect, your retirement benefit will be actuarially adjusted so that it is actuarially equivalent to the benefit which you would have received had you commenced your retirement benefit as of your post-nrd part-time employment date. Post-NRD Part-time Employment Date: If you have not yet terminated employment, this is the first day of the first month following your normal retirement date in which you are no longer a full-time employee. 3. I Am A Disabled Participant. When Can I Commence My Retirement Benefits? Just as any other participant. Specifically, if you are a participant who is totally and permanently disabled and are eligible for the continued vesting service credit under the Plan (see Question E-4), you can commence your retirement benefit at the same time as any other participant under the Plan (see Question 1 above). Please Note: if you are covered under the Archdiocese Long Term Disability Plan, you may receive long term disability benefits under such plan generally until your 65th birthday. At that time, you could commence your retirement benefit under the Plan. 4. Are There Amount Adjustments? Yes. The actual amount of your retirement benefit will vary depending upon the time you commence payment of your retirement benefit. The reason for this is that benefits under the Plan must be actuarially equivalent. For example, if you have reached your early retirement date and you decide to commence payment at age 62, your retirement benefit payments will be less than what you would receive if you decided to wait to commence payment as of your age What Happens If I Return To Work After I Begin Receiving Retirement Benefits? If you are reemployed by the Archdiocese after your retirement benefit has commenced, your retirement benefit payments will be suspended until your employment with the Archdiocese again ends. However, if you are reemployed by the Archdiocese as an on-call substitute teacher, so long as the service is intermittent or temporary in nature, your retirement benefits will not be suspended. Also, if you are reemployed by the Archdiocese as a part-time or temporary employee and you perform less than 500 hours of service within a plan year, your retirement benefits will not be suspended. Finally, if you are - 9 -

13 reemployed by the Archdiocese after you have reached your required beginning date, your retirement benefits will not be suspended. Required Beginning Date: In general, your required beginning date is the April 1st following the calendar year you retire or reach age 70 1/2, whichever is later. G. RETIREMENT BENEFIT ANNUITY FORMS 1. What Are My Choices As To Annuity Forms Of Distribution? There are several annuity forms of payment, depending on your marital status. Specifically, within 90 days prior to your pension commencement date (i.e., the date on which your retirement benefit actually commences), you can choose the annuity form in which your retirement benefit is to be paid to you. As such, this choice is not necessarily made at the time you terminate employment with the Archdiocese. 2. I Am Married. Is It Possible For My Retirement Benefit To Be Paid As A Qualified Joint And Survivor Annuity? Yes. If you are married on your pension commencement date, your retirement benefit will be paid in the form of a qualified joint and survivor annuity (defined below), unless you and your spouse waive this option. Qualified Joint And Survivor Annuity: A qualified joint and survivor annuity is an annuity which pays you a monthly payment for your lifetime and, after your death, your spouse at the time of commencement (if still living) will receive monthly payments equal to 50% of your monthly payment for his or her lifetime. 3. Are There Alternate Annuity Forms? Yes. You may request to receive your retirement benefit in one of several alternate annuity forms: a single life annuity, a joint and survivor annuity, a life and period certain annuity and a split marital single life annuity. If married, your spouse must consent to the alternate annuity form. The last two of these forms provide for survivor protection to a beneficiary whom you appoint at the time you elect the alternate annuity form. Single Life Annuity: A single life annuity means you will receive monthly pension payments for your lifetime. After your death, no further payments will be made to anyone. Joint And Survivor Annuity: A joint and survivor annuity means you will receive monthly pension payments for your lifetime. After your death, your appointed survivor beneficiary will receive monthly payments equal to 50%, 66-2/3%, or 100% (in accordance with your election) of your monthly pension payment for his or her lifetime. Life And Period Certain Annuity: A life and period certain annuity means you will receive monthly pension payments for your lifetime with a guarantee that 60, 120, or 180 (in accordance with your election) monthly payments will be made to either you, your appointed survivor beneficiary or your estate. Accordingly, in the event of your death before receiving all of the guaranteed payments, your appointed survivor beneficiary (or, if none, your estate) will receive the balance of the payments as they fall due

14 Split Marital Single Life Annuity: A split marital single life annuity means you and your spouse will concurrently receive a monthly pension payment for your lifetime and your spouse s lifetime, with no further payments being made to either of you after your respective deaths. 4. Can I Receive a Lump Sum Payment of the Value of My Benefit Under the Plan? Yes, so long as the benefit payable from the Plan to the Participant, Spouse or Dependent Children has an actuarial present value less than Ten Thousand Dollars ($10,000), it may be paid in the form of a lump sum. Lump Sum Payment: A "lump sum payment" means a single cash lump sum payment which is equal to the actuarial present value of the benefit otherwise payable from the Plan. 5. Is My Spouse Required To Consent To An Alternate Annuity Form or a Lump Sum Payment? Yes. If you are married and you do not wish to receive the qualified joint and survivor annuity, you and your spouse must sign a written statement consenting to one of the Plan s alternate annuity forms or, if the actuarial value of your benefit is more than $5,000.00, the lump sum payment. This spousal consent is required even if your spouse is the beneficiary of your alternate annuity form. The spouse s written consent must acknowledge both the alternate annuity form and, if another beneficiary is appointed, the different beneficiary by name. Also, the consent must acknowledge the effect of the consent, i.e., the loss of a spouse s direct right to any portion of the participant s retirement benefit. Finally, the spouse s signature must be witnessed by a notary or a representative of the Plan. 6. Is There A Plan Survivor Benefit? Yes, depending upon the annuity form you choose. Many of the Plan s annuity forms, such as the joint and survivor annuity for example, provide a survivor benefit to your beneficiary, i.e., continued payments to your appointed survivor beneficiary in the event of your death after your retirement benefit has begun. This survivor benefit is based solely upon the annuity form you choose. For example, if you are married and you elect the five year certain and life annuity to which your spouse consented in writing, then, upon your death after five years, your spouse will not be entitled to any survivor benefit whatsoever. 7. Are There Amount Adjustments? Yes. The actual amount of your retirement benefit will vary depending upon the annuity form used to pay your retirement benefit. The reason for this is that all annuity forms under the Plan must be actuarially equivalent. For example, if you elect a joint and survivor annuity, your retirement benefit payment will be less than what it would for a single life annuity

15 H. ACTUAL AMOUNT OF RETIREMENT BENEFIT 1. What Is The Actual Amount Of My Retirement Benefit? The actual amount of your retirement benefit is your normal retirement benefit adjusted to reflect, to the extent applicable, (a) the early payment of your retirement benefit and (b) the form of payment of your retirement benefit. 2. What Is The First Adjustment For Time Of Payment? As noted previously, your normal retirement benefit is an amount determined as of your normal retirement date. Accordingly, if you elect the payment of your retirement benefit to begin prior to your normal retirement date, there is an actuarial reduction to your normal retirement benefit. If you elect the payment of your retirement benefit to begin on or after your early retirement date and prior to your normal retirement date, your normal retirement benefit will be decreased actuarially by an amount equal to one half of one percent (.005) for each month for which commencement of your retirement benefit precedes your normal retirement date. If your retirement benefit is paid beginning as of your normal retirement date, your normal retirement benefit will neither be reduced or increased. Similarly, if you continue to work after your normal retirement date, your normal retirement benefit will not be adjusted actuarially to reflect the late commencement of the retirement benefit (but you may continue to earn additional retirement benefits). 3. Example Early Commencement As an example, assume that John Williams (from Question D-6) left the Archdiocese at age 62 after his early retirement date. John decides to begin payment of his retirement benefit on his 63rd birthday and makes an election to do so. John s normal retirement benefit of $ is reduced 12% (.005 times the 24 months that the commencement of his retirement benefit precedes his normal retirement date) to $ His retirement benefit, as adjusted to reflect the early commencement of payment of his retirement benefit, is therefore $ ($9, annually). 4. What Is The Adjustment For The Annuity Form Of Payment? Your normal retirement benefit is an amount payable as a single life annuity. Accordingly, if your retirement benefit is paid in a form which is different than a single life annuity, then there must be an actuarial adjustment to your normal retirement benefit to reflect either the different length of time and/or guaranteed amount of your retirement benefit. This adjustment is necessary to assure that all retirement benefit forms are actuarially equivalent. If your retirement benefit is paid in the form of a qualified joint and survivor annuity, then your normal retirement benefit will be decreased to reflect the additional survivor protection provided to your surviving spouse under this benefit form. If you receive your retirement benefit in the form of a single life annuity, there will be no actuarial adjustment to your normal retirement benefit with regard to the form of payment

16 If you receive your retirement benefit in one of the alternate forms permitted by the Plan, such as the joint and survivor annuity or the life and period certain annuity, then there will be an actuarial adjustment (either a decrease or increase, as the case may be), depending upon the annuity form you select. The administrator will provide you with exact calculations as to these actuarial adjustments upon your request. 5. Example Qualified Joint and Survivor Annuity As an example, assume John Williams (from Question D-6 and Question H-3) is married and his wife s age is four years younger (age 59). Since John elected to commence his retirement benefit at age 63 (rather than at the normal retirement benefit of age 65), his normal retirement benefit of $ monthly is adjusted to $ (see Question H-3). If John s retirement benefit is paid to him in a qualified joint and survivor annuity with a 50% spousal survivor annuity, a further adjustment must be made. The actual amount of John s retirement benefit paid to him during his lifetime will be $ monthly ($ x 89.28%, i.e., the actuarial adjustment factor for a qualified joint and survivor annuity with a surviving spouse 4 years younger than the participant). Upon John s death, John s surviving spouse at the time of commencement of his retirement benefit (if still living) would receive $ monthly ($ x 50%) for her lifetime. I. SPOUSAL & DEPENDENT CHILDREN PRERETIREMENT DEATH BENEFIT 1. If I Die Before I Begin Receiving Retirement Benefits, Will The Plan Pay A Preretirement Death Benefit? Yes, but only to your surviving spouse or the legal guardian of your dependent minor children if you die unmarried. Specifically, a spousal preretirement death benefit will be paid only if (a) you are vested under the Plan, (b) you should die prior to the time your retirement benefit has actually begun to be paid to you (e.g., you die during employment or you die after your termination of employment but prior to commencement of your retirement benefit) and (c) you are married at the time of your death, then your surviving spouse will be entitled to receive a preretirement death benefit under the Plan. Accordingly, you must be married or have dependent minor children in order for this death benefit to be paid. You will be considered married if you and your spouse have a marriage license recognized by your state of residency. If you are not married and have no dependent children, then no death benefit is paid from the Plan. If you die unmarried, the dependent children preretirement death benefit will be paid to the legal guardian of your dependent children if (a) you are vested under the Plan, (b) you should die prior to the time your retirement benefit has actually begun to be paid to you (e.g., you die during employment or you die after your termination of employment but prior to commencement of your retirement benefit) and (c) you have dependent children but do not have a spouse on the date of your death. Also, if your retirement benefit has begun to be paid to you, your surviving spouse or other beneficiary may be entitled to a Plan survivor benefit, depending upon the annuity form you elected to receive your retirement benefit. See Question G

17 2. When Does My Spousal Preretirement Death Benefit Begin? How Is It Paid? Payment of the spousal preretirement death benefit will begin after your surviving spouse elects to receive payments. This may occur as soon as the first day of the month after your death. The preretirement death benefit is paid in a 50% survivor annuity. Specifically, your death benefit is a 50% survivor annuity which is an annuity for your spouse s lifetime and is equal to 50% of the amount you would have received under the qualified joint and survivor annuity if you had retired and begun to receive benefits at age 55 (or, if later, the date of your death). See Question G-2 and G-3. The 50% survivor annuity is based upon your normal retirement benefit as of your death. Then, just like retirement benefits, your death benefit will be reduced actuarially for early commencement prior to your normal retirement date. In addition, your death benefit will be adjusted for the qualified joint and survivor benefit based upon the age of your spouse. See Questions H-2 and H When Does My Dependent Children Survivor Benefit Begin? How Is It Paid? Payment of the dependent children survivor benefit will begin after the legal guardian of your dependent children elects to receive payments. This may occur as soon as the first day of the month after your death. Dependent Children: "dependent children" means your natural or adopted children who have not yet reached the age of 18. The dependent children survivor benefit is equal to 50% of the monthly benefit that would have been payable to you had you under the qualified joint and survivor annuity if you had retired and begun to receive benefits at age 55 (or, if later, the date of your death). See Question G-2. The monthly benefit is equal to the monthly benefit under the 50% survivor annuity and is based upon your normal retirement benefit as of your death. Thus, just like retirement benefits, your dependent children survivor benefit will be reduced actuarially for early commencement prior to your normal retirement date. (However, if your death occurs before you reach age 55, your benefit will be reduced as if you had reached age 55 on the date of your death.) See Questions H-2 and H-4. The dependent children survivor benefit will cease either upon the death of your children or your dependent children reaching age Can I Designate A Beneficiary? Because only your spouse or the legal guardian of your dependent children are entitled to receive a preretirement death benefit, there is no need for you to designate a beneficiary under the Plan until you begin receiving benefits from the Plan. If you have retired and begun receiving benefits, the Plan may permit you to designate a beneficiary to receive a survivor benefit, if the form of benefit you choose includes a survivor benefit. Accordingly, when you elect your annuity form for distribution for your retirement benefit, you may, depending on your annuity form, be asked to designate a beneficiary for your Plan survivor benefit. See Question G

18 J. SPECIAL CIRCUMSTANCES 1. What Happens If My Employment Status Changes? If you cease to be an eligible employee while still employed by the Archdiocese or an Archdiocese employer (e.g., you become a part-time employee), you will continue to be a participant. However, you will no longer receive credit for months of service and therefore your service will cease to count for determining your vested status and normal retirement benefit under the Plan. In addition, your compensation will cease to count for determining your normal retirement benefit. You will not be considered as having incurred a break in service and therefore you will not lose credit for any existing months of service. In any event, you will not cease to be an eligible employee if you go on a qualified leave of absence. In this case, you will continue to accrue service credit for vesting and normal retirement benefit purposes. You will also accrue compensation credit for normal retirement benefit purposes, but based only upon whatever compensation you are receiving during the qualified leave of absence. 2. What Happens When I Terminate Employment? If you terminate employment with the Archdiocese and you are vested under the Plan, you will continue to be a participant until your pension benefit under the Plan has been completely distributed to you or your beneficiary. If you leave the Archdiocese and you are vested in your pension benefit, then you will never lose credit for your prior months of service for vesting and pension benefit purposes, regardless of the length of your break in employment. You are sometimes referred to as a deferred vested participant and, if you were ever reemployed by the Archdiocese, you would simply pick up where you left off with respect to your months of service and your pension benefit. However, if you leave the Archdiocese prior to becoming vested, then you will cease to be a participant immediately upon your termination of employment. See Part K for more details concerning participants who terminate prior to becoming vested. 3. If My Plan Pension Benefit Does Not Exceed $10,000, May I Receive A Lump Sum Distribution? Yes. If you are a vested terminated Participant and the actuarial value of your pension benefit is not more than $10,000, upon application, the Plan will pay your pension benefit in the form of a single lump sum payment. If you have not yet reached your Early Retirement Date or Normal Retirement Date, you will be eligible for a lump sum payment six months after your termination of employment. This lump sum payment will constitute the full satisfaction of the Plan s obligation to provide you a pension benefit, whether as a retirement benefit or a spousal preretirement death benefit. If you are receiving the lump sum payment from the Plan, you should promptly contact a tax adviser concerning the distribution. You have only 60 days from the time of your receipt of a lump sum payment to rollover the lump sum payment to an IRA or another qualified plan (if such plan accepts rollover contributions) to avoid being currently taxed on the distribution

19 You have the option to directly transfer the lump sum payment to an IRA or another qualified retirement plan (if such plan accepts direct transfers). If you decide to forego the direct transfer and actually receive the lump sum payment, the distribution will be subject to a mandatory 20% federal income withholding tax. If the actuarial value of your pension benefit is not more than $5,000.00, then your benefit will automatically be paid in the form of a lump sum, whether or not you request it. K. TERMINATION PRIOR TO VESTING 1. What Happens When I Terminate Employment? If you terminate employment with the Archdiocese prior to becoming vested, then you will cease to be a participant immediately upon your termination of employment. 2. What Happens To My Months Of Service When I Terminate Employment? If you leave the Archdiocese and are not yet vested, your months of service and your pension benefit will be conditionally disregarded as of the date of your termination of employment. If you are ever reemployed by the Archdiocese and you have not incurred a rule of parity break in service, your prior months of service and pension benefit will be reinstated. If you incur a rule of parity break in service (defined below), then your prior months of service and pension benefit will be permanently disregarded. In this case, it will be as if you were never employed by the Archdiocese and you will have to start all over again with respect to both vesting and your normal retirement benefit. Rule of Parity Break In Service: A rule of parity break in service is a severance period which is equal to or greater than your existing months of service, but no less than 60 months. Severance Period: A severance period means a period of time, measured in completed months, beginning on a severance date and ending on a reemployment date during which you do not have an hour of service for the Archdiocese. Severance Date: A severance date means the date on which you terminate employment with the Archdiocese. If you are on a qualified leave of absence, your severance date will be the last day of your qualified leave of absence, but no later than the first anniversary date of your absence from service. Reemployment Date: Your reemployment date is the first day, following a severance date, on which you again perform an hour of service for the Archdiocese. 3. Example Rule of Parity Break In Service As an example, assume you first begin working as a teacher at an Archdiocese school on August 10, 1995 and you work continuously as an eligible employee until July 15, 1999, at which time you leave the Archdiocese and have 48 months of service. You are not vested under the Plan and, therefore, are entitled to no pension benefit under the Plan

20 If you are reemployed by the Archdiocese anytime prior to August 1, 2004 (60 months after you leave the Archdiocese), you will not lose credit for your prior 48 months of service. In this case, you will pick up where you left off with your months of service beginning with your reemployment date. Also, your pension benefit will be unaffected by your break in employment. On the other hand, if you are reemployed by the Archdiocese on or after August 1, 2004, you will lose credit for your prior 48 months of service. In this case, you will start all over again with respect to vesting and months of service. In other words, it will be as if you were never employed by the Archdiocese. L. FUNDING AND ADMINISTRATION 1. Are The Plan s Assets Held In A Trust? Yes. The Plan s assets are held in a trust separate and apart from the Archdiocese s general assets pursuant to a trust agreement with U.S. Bank, 425 Walnut Street, Cincinnati, Ohio In addition, an annual audit of the trust fund is conducted each year by an independent public accounting firm selected by the Archdiocese. Historically, the Plan s trustee has invested a portion of the trust fund while the remaining portion has been invested by investment managers. In addition, the Archdiocese uses the services of an independent financial service to evaluate the investment performance of the trust fund as invested by the plan trustee and investment managers. 2. How Is The Plan Administered? The Archdiocese of Cincinnati, 100 East Eighth Street, Cincinnati, Ohio 45202, telephone number (513) sponsors and administers the Plan. The employer identification number (EIN) of the Archdiocese is The Archbishop has appointed a Pension Committee to serve in an advisory capacity concerning the administration of the Plan. The Archdiocese has employed Administrative Services Group, Inc. as a contract administrator to perform administrative services for the Plan. Under the terms of the Plan, the Archdiocese, and the Pension Committee as its designated representative, possesses the sole and absolute discretionary authority to interpret and construe the provisions of the Plan. Further, the determination of the Archdiocese (or the Pension Committee as its representative) as to the interpretation of the Plan or any disputed question shall be conclusive on all interested parties. 3. What Is The Claims Procedure Under The Plan? If a participant (or a beneficiary) feels that he is entitled to a benefit which has not been paid or disputes the amount of benefit paid by the Plan, he may file a written claim as to such benefit with the Pension Committee. The Pension Committee will decide the merits of the claim. If a claim is denied, the claimant will receive, generally within 90 days, a written notice from the Plan Administrator setting forth (1) a specific reason or reasons for the denial, (2) a specific reference to pertinent Plan provisions on which the denial is based, (3) a description of any additional material or