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Summary Plan Description
QQCV003
Summary of Materials Modification (SMM) for the Teamster-UPS National 401(k) Tax
Deferred Savings Plan
January 1, 2012
The following changes are effective January 1, 2012:
Participants may request a hardship loan for the purchase of their principal residence and
may pay back their loan up to a term of 20 years. Previously, the loan term to purchase a
principal residence was 15 years.
A Participant’s claim for a loan that would satisfy an immediate and heavy financial need
which cannot be reasonably satisfied through any other means may be approved by the
Trustees or their designee.
SUMMARY PLAN DESCRIPTION
July 1, 2011
An Important Message about Investing for Retirement & Diversification
To help achieve long-term retirement security, you should give careful consideration to
the benefits of a well-balanced and diversified investment portfolio. Spreading your
assets among different types of investments can help you achieve a favorable rate of
return, while minimizing your overall risk of losing money. This is because market or
other economic conditions that cause one category of assets, or one particular security,
to perform very well often cause another asset category, or another particular security,
to perform poorly. If you invest more than 20 percent of your retirement savings in any
one company or industry, your savings may not be properly diversified. Although
diversification is not a guarantee against loss, it is an effective strategy to help you
manage investment risk. In deciding how to invest your retirement savings, you should
take into account all of your assets, including any retirement savings outside of the
Plan. No single approach is right for everyone because, among other factors, individuals
have different financial goals, different time horizons for meeting their goals, and
tolerances for risk.
It is also important to periodically review your investment portfolio, your investment
objectives and the investment options under the Plan to help ensure that your
retirement savings will meet your retirement goals. Visit the Plan website or
www.dol.gov/ebsa/investing/html for more information on individual investing and
diversification.
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TABLE OF CONTENTS
Introduction ………………………………………………………………………………………………...
Your Responsibilities as a Participant…………………………………………………………………...
Who Can Participate ……………………………………………………………………………………...
Job Transfers within UPS ………………………………………………………………………………..
Re-employment …………………………………………………………………………………………...
Eligible Compensation ……………………………………………………………………………………
Pre-Tax Contributions …………………………………………………………………………………….
Roth 401(k) Contributions………………………………………………………………………………..
Catch-Up Contributions …………………………………………………………………………………..
After-Tax Contributions …………………………………………………………………………………..
Changing Your Contribution Percentage ……………………………………………………………….
Contribution Accelerator ………………………………………………………………………………….
Rollovers from Qualified Plans………………………………………………………………………......
Participant Accounts ……………………………………………………………………………………...
Suspense Accounts ……………………………………………………………………………...............
Vesting ……………………………………………………………………………………………………..
Investments ………………………………………………………………………………………………..
Available Information ……………………………………………………………………………………..
Investment Options ……………………………………………………………………………………….
Hardship Loans ……………………………………………………………………………………………
Withdrawals and Distributions …………………………………………………………………………...
In-service Withdrawals ……………………………………………………………………………………
Hardship Withdrawals …………………………………………………………………………………….
Distributions on Account of Disability …………………………………………………………………...
Tax Consequences of a Distribution …………………………………………………………...............
Qualified Domestic Relations Orders …………………………………………………………………...
Plan Website ………………………………………………………………………………………………
Plan Information Line ……………………………………………………………………………………..
Legal Limitations on Benefits …………………………………………………………………………….
Claims Procedures ………………………………………………………………………………………..
Account Statements ………………………………………………………………………………………
Plan Expenses …………………………………………………………………………………………….
Change of Address ……………………………………………………………………………………….
Designation of Beneficiary ……………………………………………………………………………….
Plan Administration ……………………………………………………………………………………….
Pension Benefit Guaranty Corporation …………………………………………………………………
Amendment and Termination ……………………………………………………………………………
Where to Go if You Have Questions ……………………………………………………………………
Your ERISA Rights ………………………………………………………………………………………..
General Information ………………………………………………………………………………………
Special Tax Notice
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INTRODUCTION
As part of your overall savings and retirement planning, the Teamster-UPS National 401(k) Tax
Deferred Savings Plan (the "Plan") offers you a way, in addition to your pension plan, Social Security
and personal savings, to help increase your financial security.
A 401(k) plan is an effective and convenient way both to save and invest money over the long-term
for your future. Your Plan allows you to set aside a percentage of your earnings every pay period.
The amount you set aside is called an elective deferral, or simply a deferral, since you are choosing
not to receive it now, but rather to have it contributed to the Plan for investment and eventual
payment to you after you reach age 59½, leave UPS, retire or qualify for and request a hardship or
disability withdrawal.
The money you defer is invested in any of 19 core investment options and a self-managed account
(SMA), as you direct. The Plan allows you to make deferrals on either a pre-tax, after-tax or Roth
401(k) basis. With pre-tax contributions, your money goes into your account before that money is
taxed, and it grows tax deferred. This means you do not pay taxes on your pre-tax contributions and
their earnings until they are withdrawn. With regular after-tax contributions, your money goes into
your account after that money is taxed and any investment earnings are tax deferred. You can make
withdrawals at any time but you’ll pay taxes on these earnings upon withdrawal. With Roth 401(k)
contributions, your money goes into your account after that money is taxed and as long as you keep
that money in your account for at least five years and don’t withdraw it before age 59 ½, you won’t
pay any more taxes on those contributions or earnings.
UPS, the International Brotherhood of Teamsters and the Plan's Board of Trustees intend that the
Plan will comply with all requirements for a qualified 401(k) savings plan based on all applicable
sections of the Internal Revenue Code. Determinations to this effect from the Internal Revenue
Service are requested and received from time to time. The Plan is also subject to the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”). This summary plan description
describes the way the Plan operates, and replaces and supersedes any other summary plan
description previously issued to you for the Plan. Unless otherwise noted, this booklet describes the
Plan as in effect on July 1, 2011.
In describing the Plan, we have tried to avoid using the technical language of the actual Plan
document. If there is a difference between this booklet and the formal documents governing
the Plan, the formal documents will take precedence over this booklet.
Information about your participation in the Plan can be obtained through the Plan website at
www.teamsterups401kplan.com or the Plan Information Line at 1-800-537-0189. As a participant,
you will periodically receive other information that you should find helpful in understanding a 401(k)
plan and in managing your account.
YOUR RESPONSIBILITIES AS A PARTICIPANT
As an active employee or while on a leave of absence, you should make sure that you keep your
address current. You may do this through UPSers.com. Go to Edit My Profile, click on Personal
Information and follow the prompts to change your address. If you are a former employee, you need
to keep your address current with Prudential Retirement, either by sending written notification or
through the Plan Information Line. See “Change of Address” on page 25 for more details.
You need to safeguard access to your User ID and Password used to access the Plan's website
provided by Prudential Retirement. You should not allow anyone to use your User ID and Password
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on your behalf. The Plan is not responsible for any losses incurred as a result of someone using
your User ID or Password.
You must review Plan communications, confirmation statements and quarterly statements as you
are responsible for the information they provide. You must also inform the Plan of any discrepancies
in your statements within 30 days of your receipt of them or the Plan, the Board of Trustees, UPS
and Prudential may not be responsible for any losses or costs arising from the discrepancies.
WHO CAN PARTICIPATE
The Plan was established on July 1, 1988 to permit participation by UPS employees who are
represented by the International Brotherhood of Teamsters and other labor unions as approved by
the Trustees. Eligibility for UPS employees who are represented for collective bargaining purposes
by labor unions other than the Teamsters and whose participation is approved by the Trustees is
governed by certain separate agreements between specific locals and UPS.
Generally, as an eligible employee, you may enroll in the Plan as soon as you become employed by
UPS. Shortly after your employment date, you will be mailed directions on how to enroll.
Full-time employees hired, rehired, or transferred to an eligible job position on or after April 1, 2009
will be automatically enrolled 90 days after their employment/transfer date at a 2 percent pre-tax
deferral rate. The pre-tax deferral rate will be increased by 1 percent each year until it reaches 6
percent. The contributions will be invested in the Plan’s Qualified Default Investment Alternative
which currently is the age appropriate Bright Horizon Fund, based upon a retirement age of 60. You
may actively enroll at any time prior to being automatically enrolled. By actively enrolling, you can
choose your own contribution rate and investment options. You may decline enrollment at any time
prior to being automatically enrolled by going to the Plan website, www.teamsterups401kplan.com or
calling the Information Line at 1-800-537-0189.
Eligible employees may enroll immediately by accessing the Plan website,
www.teamsterups401kplan.com. Click on the link entitled “I’m Interested in joining the TeamsterUPS 401(k) Plan.” Choose the “Plan Information” link to review the Plan's enrollment materials,
select the “Enroll Now” link to begin the enrollment process and enter your Social Security Number,
date of birth and zip code. You will choose a User ID (which will take the place of your Social
Security Number when logging in to the website in the future) and a Password, and then establish
security questions. Once your information is recognized you may choose your contribution
percentages and make your investment selections.
UPS forwards eligibility information to Prudential Retirement, the Plan’s recordkeeper, on a weekly
basis. If your eligibility is not recognized when you first attempt to enroll, you will need to wait
another week until the recordkeeper receives your information.
You may also enroll using the Plan Information Line at 1-800-537-0189. You will be prompted for
your Social Security Number and you will then establish your password. You may also request
enrollment materials through the Information Line. Participant Service Representatives are available
for assistance Monday through Friday from 8 a.m. to 9 p.m. ET, except for stock market holidays.
You will also need to designate a beneficiary(ies) for your Plan account. If you do not designate a
beneficiary or your beneficiary predeceases you, your account will be paid out in accordance with
the Plan terms. Beneficiary designations must be completed either through the Beneficiary
Information section on the website or by speaking to a Participant Service Representative on a
recorded line. If you are married and designate someone other than your spouse as your primary
beneficiary, you must do so using a beneficiary form with notarized consent from your spouse.
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Forms may be printed from the Forms section of the website or requested through the Information
Line. See “Designation of Beneficiary” on page 26 for more details.
Written confirmation of your enrollment and elections will be sent to your address of record following
your enrollment online or through the Information Line. Your contributions will generally begin within
two pay periods following completion of the enrollment process.
JOB TRANSFERS WITHIN UPS
If you transfer to a position with UPS not covered by a collective bargaining agreement or one which
does not provide for your participation in this Plan, your contributions to the Plan will stop. You may
thereafter continue to direct the investment of the funds you have in this Plan, but may no longer
make contributions into your Plan account. Your account will be held as part of the Plan until your
accounts are distributed to you.
RE-EMPLOYMENT
If you stop working for UPS and are then re-employed by UPS as an eligible employee, you may reenroll immediately. You may also be subject to auto-enrollment.
ELIGIBLE COMPENSATION
Pre-tax, Roth 401(k) and voluntary after-tax contributions to the Plan are based on your “eligible
compensation,” which is generally your regular hourly wages and overtime pay before payroll
deductions are made. Contributions cannot be made from any disability or workers' compensation
payments. When you return to work and begin receiving regular payroll checks, your deferrals will
resume.
PRE-TAX CONTRIBUTIONS
As a Plan participant, you may elect to contribute from 1 to 35 percent of your eligible pre-tax
compensation (in increments of 1 percent) to the Plan on a pre-tax basis. This is called your deferral
percentage. If you elect to also make pre-tax contributions, please note that the combination of pretax and Roth 401(k) contributions may not exceed 35 percent. Your pre-tax contributions are subject
to the annual maximum dollar limit under applicable law, as described below. In addition to the 1 to
35 percent deferral of your regular earnings, you may also elect to defer all or part of any option
week pay, if you are entitled by the terms of your collective bargaining agreement to receive option
week pay. If you choose to keep working rather than take your option week off, you can elect to
defer 1 to 100 percent of your option week pay into the Plan. Option week pay may take several
different forms. In some bargaining agreements, it is an additional week of vacation; in others, it is
made up of a combination of five optional holidays and sick days.
The election to defer an option week bonus is not an annual election. Once you make an election
regarding your option week pay, the percentage you elect to defer will remain in place until you
make a change.
Because the same election process is used online or through the Information Line to elect to defer
option week pay, you will need to monitor your elections.
Pre-tax contributions will be held in a separate pre-tax contribution account established on your
behalf and will be invested in accordance with your investment directives on file with regard to your
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other money sources (such as Roth 401(k), after-tax or rollover) or you may choose to invest your
pre-tax funds in separate investment options. Pre-tax contribution percentages may be elected on
the Plan website, www.teamsterups401kplan.com, or the Plan Information Line at 1-800-537-0189.
ROTH 401(k) CONTRIBUTIONS
As a Plan participant, you may also elect to contribute from 1 to 35 percent of your eligible
compensation (in increments of 1 percent) to the Plan on a Roth 401(k) basis. If you elect to also
make pre-tax contributions, please note that the combination of pre-tax and Roth 401(k)
contributions may not exceed 35 percent. Your Roth 401(k) contributions are subject to the annual
maximum dollar limit under applicable law as described below.
Roth 401(k) contributions are not available in Puerto Rico.
Roth 401(k) contributions will be held in a separate Roth 401(k) contribution account established on
your behalf and will be invested in accordance with your investment directives on file with regard to
your other money sources (such as pre-tax, after-tax or rollover) or you may choose to invest your
Roth 401(k) funds in separate investment options. Roth 401(k) contribution percentages may be
elected on the Plan website, www.teamsterups401kplan.com, or the Plan Information Line at
1-800-537-0189.
Generally, for the distribution of earnings on Roth 401(k) contributions to be distributed tax-free, you
have to wait at least five years after making your first Roth 401(k) contribution before taking a
withdrawal and your withdrawals must begin after you have reached age 59½; you have died; or you
have become disabled. If your withdrawal does not meet these qualifications, your accumulated
Roth 401(k) earnings—but not your Roth 401(k) contributions—will be taxed, and may be subject to
a 10 percent early distribution penalty if you have not reached age 59½.
Annual Maximum Dollar Limit
In determining how much you want to defer on either a pre-tax or Roth 401(k) basis, please note that
you cannot defer more than the maximum dollar limit set each year by the Internal Revenue Service.
If you elect to make both pre-tax and Roth 401(k) contributions, please note that the combination of
your annual pre-tax and Roth 401(k) contributions may not exceed the annual maximum set by the
IRS. For 2013, this limit is $17,500 and it applies not only to your deferrals in this plan but for all
401(k) plans in which you participate. This dollar limit may be indexed each year for inflation. (See
also the section entitled “Legal Limitations on Benefits” for other limits which may apply to you.)
For participants employed in Puerto Rico, the dollar limit is $15,000 for 2013 and beyond. Roth
401(k) contributions are not available in Puerto Rico.
CATCH-UP CONTRIBUTIONS
You are eligible to defer a catch-up contribution beginning in January of the year in which you will
turn age 50. You may choose to defer from 1 to 10 percent of your eligible compensation on a pretax and/or Roth 401(k) basis, or any combination of the two, up to 10 percent. You may also defer up
to 100 percent of your option week pay as a catch-up contribution on a pre-tax or Roth 401(k) basis.
The maximum catch-up contribution in 2013 will be $5,500, after which it may be indexed each year
for inflation. Puerto Rico participants are limited to a maximum pre-tax catch-up contribution of 1 to
10 percent of eligible compensation, up to $1,500 in 2013 and beyond.
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Catch-up contributions are held with other pre-tax and/or Roth 401(k) contributions in a separate
account and are invested in accordance with your other pre-tax and/or Roth 401(k) contributions.
You may elect catch-up contribution percentages on the Plan website at
www.teamsterups401kplan.com or the Plan Information Line at 1-800-537-0189.
AFTER-TAX CONTRIBUTIONS
In addition to your pre-tax and/or Roth 401(k) contributions, the Plan accepts after-tax contributions
of up to 5 percent of your eligible compensation. After-tax contributions will be held in a separate
after-tax contribution account established on your behalf and will be invested in accordance with
your investment directives on file with regard to your other money sources (such as pre-tax, Roth
401(k) or rollover) or you may choose to invest your after-tax funds in separate investment options.
After-tax contribution percentages may be elected on the Plan website,
www.teamsterups401kplan.com, or the Plan Information Line at 1-800-537-0189.
CHANGING YOUR CONTRIBUTION PERCENTAGE
After you elect your initial contribution percentage, you may increase or decrease your contribution
percentage(s) at any time via the Plan website, www.teamsterups401kplan.com, or the Plan
Information Line at 1-800-537-0189.
CONTRIBUTION ACCELERATOR
This optional feature automatically increases your pre-tax or Roth 401(k) contributions by 1 percent
each year up to a maximum of 6 percent. The increases take place at the same time each year,
making them easy to plan for. Automatic increases will stop at 6 percent; however, you may change
your contribution percentage at any time. If you are automatically enrolled, you will also
automatically be signed up for the Contribution Rate Accelerator. You may turn off the Contribution
Rate Accelerator at any time by using your account tools on the Plan website,
www.teamsterups401kplan.com, or the Plan Information Line at 1-800-537-0189.
ROLLOVERS FROM QUALIFIED PLANS
The Plan accepts pre-tax (but not Roth 401(k) account) rollovers from other qualified plans after you
enroll in the Plan. You may use this rollover feature at any time while you remain eligible to
participate in the Plan or, if you cease to be an eligible employee because of a job transfer, and you
continue to have an account balance in the Plan.
In addition, you may utilize the rollover feature following your termination of employment provided
that your entire account balance has not been distributed from the Plan, or if your entire account
balance is $1,000 or more on your termination date. If you receive a single lump sum or other
eligible rollover distribution from another qualified retirement plan, you may instruct the trustee of
that plan to transfer all or a portion of your distribution directly to the Plan. If you receive your eligible
rollover distribution directly, you may roll over that distribution into the Plan provided you do so within
60 days of your receipt of the distribution.
You may also transfer any eligible rollover distributions held in a “conduit” individual retirement
account (“IRA”) into the Plan by instructing your IRA trustee to transfer all or a portion of your
account balance to the Plan. (A “conduit” IRA is an IRA that holds only the pre-tax assets previously
distributed from a qualified plan or plans in which you were a participant, plus earnings on those
assets. No other contributions may have been made to a conduit IRA.)
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If you receive a distribution from your conduit IRA account directly, you may roll over these funds
into the Plan, provided you do so within 60 days of your receipt of the distribution. Rollover
contributions made to the Plan must be made in cash. The Plan cannot accept stock in a rollover
contribution.
Your rollover contribution will be held in a separate rollover contribution account established on your
behalf. It will be invested in accordance with the specific investment instructions you provide for your
rollover contribution. You may also choose to invest your rollover funds in accordance with your
other money sources (such as pre-tax or after-tax contributions).
You may obtain the forms needed for a rollover through the Forms section of the Plan website,
www.teamsterups401kplan.com or the Plan Information Line at 1-800-537-0189.
PARTICIPANT ACCOUNTS
Your contributions are credited to an individual account established and maintained for you as a
Plan participant. If applicable, your account will include separate sub-accounts for your pre-tax
contributions, Roth 401(k) contributions, after-tax contributions and rollover contributions.
Your pre-tax contributions, Roth 401(k) contributions and after-tax contributions will be deposited in
the Plan as soon as practicable following each pay period, but generally no later than seven
business days after you receive the paycheck from which the deduction was made. You can obtain
information regarding your account balance at any time via the Plan website,
www.teamsterups401kplan.com, or the Plan Information Line at 1-800-537-0189.
SUSPENSE ACCOUNTS
In certain cases the Plan Trustees may make use of suspense accounts in correcting contribution
limit overages or under such other circumstances as they deem necessary.
VESTING
Your account is 100 percent vested at all times. This means that no matter how long you stay with
UPS, you are entitled to the full value of your account when you leave.
INVESTMENTS
The Plan allows you to choose among a number of investment options. Because the Trustees permit
you to direct the investment of your Plan account among these options, the Plan is intended to
conform with the requirements of Section 404(c) of the Employee Retirement Income Security Act of
1974, as amended (ERISA). By operating under section 404(c) of ERISA, the Trustees and any
other Plan investment fiduciaries may be relieved of any liability for losses due to the direct and
necessary result of your exercising control over the investment of assets in your account.
Therefore, it is important that you make an informed decision regarding your investment options.
This booklet describes in general terms each available investment option, including its principal
objectives, as well as, risk and return characteristics. This booklet also explains how to make your
initial investment decision and how and when you can make investment changes. It also describes
how you can obtain additional information regarding the investment opportunities described herein.
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Unless noted otherwise, the Plan assesses no transaction fees or charges when you select from
among the available investment options, or when you make investment changes. However, each
individual investment option may charge certain fees. Please note that the Plan's Trustees and
investment managers provide information concerning the Plan's investment options, but do not make
recommendations. You must make your own investment allocation decisions. You are strongly
encouraged to review all of the disclosure materials relating to the investment options under the Plan
before making an investment decision. You may wish to consult a professional investment advisor
regarding your individual financial situation and which investment option or options may be best for
you. As described below, each option has a different combination of potential risk and reward
characteristics. Fund information and current rates of return are also available on the Plan website,
www.teamsterups401kplan.com, or you may call the Plan Information Line at 1-800-537-0189 to
request this information. The choices you make should be based on your particular investment
objectives including the degree of risk you are willing to tolerate.
Please note that there may be an occasion when the Board of Trustees determines that it is
necessary to add, change, or remove an investment option. When this occurs, you will be provided
with a written notice mailed to your last address on file with the Plan within a reasonable period of
time before the effective date of the fund transfer. You will not only be informed of the change, but
given an opportunity to act regarding your investments. In the event one of your investment options
is removed or changed and in the absence of your taking action, the Board of Trustees may change
your investments on your behalf. You can always change your investments at any time by using the
Plan website, www.teamsterups401kplan.com, or calling the Plan Information Line at
1-800-537-0189.
AVAILABLE INFORMATION
In order to assist you in selecting from among the Plan's investment options, additional information is
available to download from the Plan website at www.teamsterups401kplan.com or upon request by
calling the Plan Information Line at 1-800-537-0189. The following information shall be provided to
you, based on the latest information available to the Plan:
a description of the investment alternatives available under the Plan and a general
description of the investment objectives, risk and return characteristics of such an
investment;
identification of any designated investment managers;
an explanation of the circumstances under which you or your beneficiary(ies) may give
investment instructions and an explanation of any specified limitations on such instructions
under the terms of the Plan;
a description of any transaction fees and expenses which affect you, or your
beneficiary(ies’)'s, account balance in connection with the purchase or sale of interests in
investment alternatives;
the name, address and phone number of the Plan fiduciary responsible for providing
information;
in the case of an investment alternative which is subject to the Securities Act of 1933, a copy
of the most recent prospectus provided to the Plan; and
any materials provided to the Plan relating to the exercise of voting, tender or similar rights
which are incidental to the investment in an investment alternative under the terms of the
Plan.
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The following information is provided upon request, based on the latest information available to the
Plan:
a description of the annual operating expenses of each investment fund, such as investment
management fees, administration fees and transaction costs, that affect the fund's rate of
return expressed as a percentage of the average net assets of the particular investment
fund;
copies of prospectuses, financial statements and reports relating to an investment
alternative, to the extent such information is provided to the Plan;
a list of the assets that comprise the Government Short-Term Investment Fund, the S&P 500
Equity Index Fund, the S&P 400 Equity Index Fund, the International Index Fund, the Russell
2000 Index Fund, the Balanced Fund, and/or the Bright Horizon Funds and the value of each
such asset (or the proportion of the fund that it comprises);
a list of the contracts and other assets that comprise the Stable Value Fund, including the
proportion of the total fund represented by such assets. This includes the name of the
issuing bank or insurance company, and the term and rate of return on the contract; and
information concerning the value of shares or units in designated investment alternatives
under the Plan, as well as past and current investment performance of such alternatives,
determined, net of expenses, on a reasonable and consistent basis.
You can also review current and historical rates of return information with respect to all investment
options, as well as information regarding the value of the investment alternatives in your own Plan
account, through the Plan website, www.teamsterups401kplan.com or you may call the Plan
Information Line at 1-800-537-0189.
INVESTMENT OPTIONS
Your pre-tax, Roth 401(k), after-tax contributions and any rollover contributions credited to your Plan
account, may be invested in one or any combination of the funds described below. Investment
allocations must be made in 1 percent increments. You may also change your investment options at
any time, if you wish, either by transferring your current account balance or redirecting your future
contributions, or both. You may also utilize the rebalancing feature to automatically rebalance your
account on a quarterly basis. To make your investment changes, use the Plan website,
www.teamsterups401kplan.com, or call the Plan Information Line at 1-800-537-0189.
Please note the following:
Your investment change or transfer request will be implemented as soon as practicable after
Prudential Retirement, the Plan's recordkeeper, receives your request. Whether you use the
Plan website or Plan Information Line, any changes you make will be confirmed by mail.
However, implementation of your request will be subject to any limitations of the investment
option you select. For example, no portion of your Plan account balance may be invested in
the Government Short-Term Investment Fund or the Self-Managed Account that has, within
the last 90 days, been invested in the Stable Value Fund.
Account activity is updated and accounts are recalculated every business day. Any activity in
your account--a change in investment elections or fund transfers--is posted to your account
at the end of each business day. This means that you always have the convenience of
knowing where your account stands at any given time.
Any assets of the Plan awaiting investment under the investment options described below
will be invested in cash and cash-equivalent interest-bearing securities. These short-term
investments may only be in short-term obligations and deposits rated at least A1 by Standard
& Poor's or P1 by Moody's at the time of acquisition.
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Any such short-term investments shall be accounted for as part of the investment fund from
which the monies making up short-term investment are derived.
In order to use the Self-Managed Account option, a minimum initial transfer of $2,500 is
required. Subsequent transfers must be at least $1,000. Additionally, you must always retain
3 percent of your assets in your core investment funds immediately following each transfer
into the Self-Managed Account. (Core investment funds include all of the Plan investment
options other than your Self-Managed Account.)
To better ensure that the International Index Fund continues to closely match the
performance of the Morgan Stanley Capital International (MSCI) Europe, Australasia, Far
East (EAFE) Index, the Plan will assess a 2 percent short-term trading fee for money
transferred out of the International Index Fund and/or paid out as a distribution within 30
days of investment in the International Index Fund. The 2 percent redemption fee is
assessed against the gross proceeds from the sales transaction and reinvested in the
International Index Fund as income.
Government Short-Term Investment Fund
The goal of the Government Short-Term Investment Fund (GSTIF) is to produce as high a level of
current income as is consistent with preserving capital and maintaining daily liquidity. To pursue this
goal, the Fund invests in securities issued, backed, or fully guaranteed by the U.S. Government or
its agencies, and repurchase agreements collateralized by U.S. Treasuries and agencies only. The
Fund uses top down quantitative analysis to determine issue selection and yield curve positioning.
The GSTIF is not guaranteed by the Board of Trustees or by the Federal Deposit Insurance
Company (FDIC) or any other government agency.
Any portion of your account balance invested in the Stable Value Fund in the past 90 days will not
be accepted for deposit in the GSTIF. This restriction is imposed by the issuers of contracts to the
Stable Value Fund to protect the issuers and the contracts from withdrawals of funds due to sudden
changes in interest rates.
The GSTIF is managed by BNY Mellon Cash Strategies (“CIS”), a division of The Dreyfus
Corporation (“Dreyfus”). Dreyfus is a wholly-owned subsidiary of The Bank of New York Mellon
Corporation (“BNY Mellon”).
Stable Value Fund
Through active management, the Stable Value Fund seeks to provide a competitive rate of return
that over time exceeds that of money market funds, while seeking to provide preservation of
principal. The Fund's duration, or average maturity, is managed between 1.5 - 3.0 years.
The Stable Value Fund invests in traditional investment contracts (GICs) issued by major insurance
companies and banks that pay interest for designated periods of time and repay the principal at the
end of the contract period. GICs are backed by the general assets of the issuing entity and,
therefore, depend on the issuer's financial well-being. This Fund also invests in synthetic investment
contracts (synthetic GICs) which represent individual, active or indexed managed fixed income
assets which are held by the plan within wrap contracts provided by a bank or an insurance
company. The wrap issuer provides book value benefit responsiveness to plan participants and
protects the participants from market volatility. The assets underlying the synthetic GICs must be
obligations of the U.S. Government or its agencies or instrumentalities, short-term investments or
debt securities of U.S. companies rated Aa3 by Moody's or AA- Standard & Poor's. Between 50 and
100 percent of the Stable Value Fund portfolio may be invested in investment contracts that are
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backed by these underlying assets. At any given time, up to 20 percent of the Stable Value Fund
portfolio may also be invested by BNY Mellon in one or more short-term investment funds. These
investments allow BNY Mellon to accumulate enough funds to provide a source of liquidity for benefit
distributions and for participants wishing to transfer their monies into other investment options as
well as purchase new investment contracts.
You should be aware that an insurance company's or bank's agreement to pay interest and principal
on an investment contract is not guaranteed by the Board of Trustees or by the Federal Deposit
Insurance Company (FDIC) or any other government agency.
BNY Mellon, the investment manager of the Stable Value Fund, carefully selects the insurance
companies and banks that issue traditional investment contracts that make up this Fund. In
accordance with investment guidelines adopted by the Board of Trustees, investment contracts will
be made with an insurance company or bank that has over $5 billion in assets and a Standard &
Poor's (S&P) credit rating of AA- or better or a Moody's credit rating of Aa3 or better. Moreover, the
Plan's investment guidelines provide that no more than 10 percent of the portfolio of this Fund can
be committed to traditional investment contracts issued by any one insurance company or bank.
The Board of Trustees retains the discretion to modify the investment guidelines for the Stable Value
Fund portfolio from time to time. Although in most cases the transfer of monies from the Stable
Value Fund into the Plan's other investment funds can be accomplished quickly, direct transfers of
monies from the Stable Value Fund to the Government Short-Term Investment Fund and the SelfManaged Account Option will not be permitted due to the contractual restrictions negotiated by the
insurance companies and banks to protect them from withdrawals of funds due to sudden changes
in interest rates. If you wish to transfer all or part of your present account balance from the Stable
Value Fund to these investment options, you must first move these amounts to one of the other
funds for at least 90 days.
Bond Market Index Fund
The Fund seeks to track the performance of the Barclays Capital U.S. Aggregate Index. To pursue
its goal, the Fund invests primarily in government, corporate, mortgage-backed and asset-backed
securities. The Fund invests in a well-diversified portfolio that is representative of the broad domestic
bond market. Financial futures may be used to provide liquidity for cash flows, to obtain exposure, to
hedge or for other purposes that facilitate meeting the fund’s objective.
While complete replication of the Index is not possible, a stratified sampling approach is employed to
build a portfolio whose broad characteristics replicate those of the Index. Individual security holdings
may differ from the Index, but tracking error is continually monitored as the Bond Market Index Fund
seeks to ensure that investors are receiving the Index returns. There are many factors that may
affect the Bond Market Index Fund's performance. This Fund's yield and unit price change daily
based on changes in interest rates and market conditions and in response to other economic,
political or financial developments. The Fund’s investments have varying levels of sensitivity to
changes in interest rates. In general, the price of a debt security can fall when interest rates rise and
can rise when interest rates fall. Securities with longer maturities and mortgage securities can be
more sensitive to interest rate changes.
The Bond Market Index Fund is a pooled investment fund managed by The Bank of New York
Mellon.
11
Balanced Fund (Equity and Fixed Income)
The Fund has a target asset allocation of 50 percent equity and 50 percent fixed income invested in
a mix of securities that together are designed to track the performance of the S&P 500 Index and the
Barclays Capital U.S. Aggregate Index. The Fund will be managed to approximate this target
portfolio mix. The Fund will be rebalanced monthly or more often when justified by significant activity
or changes in the market values of the investments, to bring the Fund back to its target mix.
However, these percentages may fluctuate away from the target weights between rebalancing.
The Balanced Fund consists of pooled investment funds managed by The Bank of New York Mellon.
Standard & Poor's (S&P) 500 Equity Index Fund
The Fund seeks to track the performance of the S&P 500 Index. To pursue its goal, the Fund
invests in all 500 stocks in the S&P 500 Index in proportion to their weighting in the Index. The
strategy of investing in the same stocks as the Index minimizes the need for trading and therefore
may reduce certain expenses. Derivatives (i.e., financial futures) may be used to gain exposure,
to provide liquidity for cash flows, to equitize dividend accruals, or for other purposes that facilitate
meeting the Fund's objective.
The S&P 500 Fund is a pooled investment fund managed by The Bank of New York Mellon.
Standard & Poor's (S&P) 400 Midcap Index Fund
The Fund seeks to track the performance of the S&P 400 Index. To pursue its goal, the Fund invests
in all 400 stocks in the S&P 400 Index in proportion to their weighting in the Index. The strategy of
investing in the same stocks as the Index minimizes the need for trading and therefore may reduce
certain expenses. Derivatives (i.e., financial futures) may be used to gain exposure, to provide
liquidity for cash flows, to equitize dividend accruals, or for other purposes that facilitate meeting the
Fund’s objective.
The S&P 400 Fund is a pooled investment fund managed by The Bank of New York Mellon.
Russell 2000 Index Fund
The Fund seeks to track the performance of the Russell 2000 Index. To pursue its goal, the Fund
may invest in securities and a combination of other investments that together are designed to track
the performance of the Russell 2000 Index. The strategy of investing in the same stocks as the
Index minimizes the need for trading and therefore may reduce certain expenses. Derivatives (i.e.,
financial futures) may be used to obtain exposure, to provide liquidity for cash flows, to hedge
dividend accruals or for other purposes that facilitate meeting the Fund's objective.
The Russell 2000 Index Fund is a pooled investment fund managed by The Bank of New York
Mellon.
International Index Fund
The Fund seeks to track the performance of the Morgan Stanley Capital International Europe,
Australasia, Far East Index (MSCI EAFE Index). To pursue its goal, the assets of the Fund may be
invested in securities, and a combination of other investments, that together are designed to track
the performance of the MSCI EAFE Index. Equity exposure may be obtained through purchases of
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foreign or domestic stocks, Global Depository Receipts or American Depository Receipts. The Fund
may use over-the-counter foreign currency forward contracts to maintain the approximate currency
exposure of the MSCI EAFE Index. Derivatives (i.e. financial futures, currency contracts) may be
used to gain exposure, to provide liquidity for cash flows, to equitize dividend accruals, or for other
purposes that facilitate meeting the Fund’s objective.
To better ensure that the International Fund continues to closely match the performance of the MSCI
EAFE Index, the Plan will assess a 2 percent short-term trading fee for money transferred out of the
International Index Fund and/or paid out as a distribution within 30 days of investment in the
International Index Fund. The 2 percent redemption fee is assessed against the gross proceeds from
the sales transaction. This short-term trading fee will only apply to a sale of the International Index
Fund due to a transfer request and/or a distribution. For this purpose, units held longest will be
liquidated first and units held the shortest will be liquidated last. The redemption fees assessed are
reinvested into the International Trust Fund for the benefit of all participants in the Plan with
balances in the International Index Fund. This fee is designed to offset market impact and other
costs associated with fluctuations in the International Index caused by short-term shareholder
trading.
The 30-day period is determined by the actual trade date. The initial trade date is considered day
one. Transactions initiated after the 4 p.m. ET stock market close on a business day will have a
trade date of the following business day.
For example, if you request a transaction on a Thursday at 1 p.m. ET, your transaction will be tradedated on Thursday. If you request the transaction at 4:01 p.m. ET on Thursday, the transaction will
be trade-dated on Friday. Transactions initiated after 4 p.m. ET on Fridays or business days prior to
stock market holidays will be trade-dated on the next business day.
Example 1:
Maria has a balance in the International Index Fund of $900, all of which has been in the
International Index Fund for 60 days. She transfers $1,000 into the International Index Fund
on Monday, August 1, 2011 at 2 p.m. ET. On Tuesday, August 30, 2011, she transfers out her
entire balance at 10 a.m. ET.
Balance
$1900
Transfer*
$900
$1000
Days Held
90 days
30 days
Fee
None
$20
Example 2:
John has a balance in the International Index Fund of $500, all of which has been in the
International Index Fund for 60 days. He transfers $600 into the International Index Fund on
Sunday, July 17, 2011. The actual trade date is Monday, July 18, 2011. On Tuesday, August
16, 2011, he transfers out $700 at 6 p.m. ET; the trade date is Wednesday, August 17, 2011.
Balance
$1100
Transfer*
$500
$200
Days Held
91 days
31 days
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Fee
None
None
Example 3:
Samantha transfers $2,000 into the International Index Fund on Friday, March 4, 2011 at 7:30
p.m. ET. The trade date is Monday, March 7, 2011. She transfers $2,000 out of the
International Index Fund on Sunday, April 3, 2011; the trade date is Monday, April 4, 2011.
Balance
$2000
Transfer*
$2000
Days Held
29 days
Fee
$40
Example 4:
Alex has a balance of $3,000 in the International Index Fund, all of which has been in the
Fund for 10 days. He transfers $4,000 into the International Index Fund on Friday, August 5,
2011 at 3 p.m. ET. He transfers $6,000 out of the International Index Fund on Saturday,
September 3, 2011 at 9 a.m. ET; the trade date is Tuesday, September 6, 2011 (Due to the
Labor Day Holiday on Monday, September 5).
Balance
$7000
Transfer*
$3000
$3000
Days Held
43 days
33 days
Fee
None
None
*The transfer amount is assumed to be the gross proceeds from the sale of the units out of the
International Index Fund.
The International Index Fund is a pooled investment fund managed by The Bank of New York
Mellon.
REIT Index Fund
The fund typically invests in all securities in the Dow Jones U.S. Select REIT Index in proportion to
their weighting in the Index. As such, the Fund seeks to maintain sector and security weightings that
closely match the Index. This replication process seeks to achieve low turnover, accurate tracking
and low costs. The Fund invests primarily in publicly traded shares of real estate investment trusts
(REITs). A REIT is a company that owns and manages real estate properties such as apartments,
office buildings, retail malls and shopping centers, hotels, and industrial buildings. REITs generate
income from rentals or lease payments and offer the potential for growth from property appreciation
and the potential for capital gains from the sale of properties.
The REIT Index Fund is a pooled investment fund managed by The Bank of New York Mellon.
Bright Horizon Funds
Bright Horizon 2010, 2015, 2020, 2025, 2030, 2035, 2040, 2045, 2050 Funds
Each Bright Horizon Fund invests in a combination of stocks and bonds, and allocates their assets
among these securities according to a predetermined asset allocation strategy. On an annual basis,
each Fund shifts assets to a more conservative strategy as its target year gets closer.
Over time, the stock portion of each Fund decreases and the bond portion increases. Six years after
its target date, each Fund will be invested in its most conservative mix of cash, bond and stock
investments and will maintain this target allocation indefinitely. The underlying investment of each
Fund is currently comprised primarily from a combination of other funds offered in the Plan. Each of
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the Bright Horizon Funds is diversified across a number of different asset classes and choosing just
one is similar to investing in several different core funds.
The chart below shows the asset allocation of each Bright Horizon Fund. As the target date
approaches, the funds’ allocations become more conservative, investing more in fixed income and
less in equities. Note how the funds with the highest percentage of equities are the ones with the
longest investment time horizons.
The Bright Horizon Funds are designed so that your fund will have a certain amount of exposure to
equities (31 percent of the Bright Horizon Income Fund’s assets) for the remainder of the time that
the assets remain in the plan following your retirement. This is intended to help participants maintain
sufficient assets for their lifetime which could last for 30-40 years following retirement and to also
help offset any risk imposed by inflation. However, there is no guarantee that investing in this fund
will not result in losses, included near or after your retirement date and there is no guarantee that
such an investment will provide adequate retirement income. If you would prefer a more
conservative approach and have less of your Plan assets invested in equities, then you should
consider other investment options when you approach your retirement age.
The Bright Horizon Funds, like most of the other Plan investment options utilize what is often
referred to as a passive investment strategy which means that each of the underlying funds tries to
achieve the return associated with its respective benchmark and is not actively managed to exceed
any particular benchmark. It is expected that such an approach will result in lower investment
management fees while providing adequate risk-adjusted returns. Each Bright Horizon Fund seeks
to achieve its objective by investing in a set of underlying BNY Mellon Capital collective trust funds
representing various asset classes.
Bright Horizon Retirement Income Fund
The Fund invests in a combination of stocks and bonds, and allocates its assets among these
securities according to a predetermined asset allocation strategy. It will maintain a conservative mix
of cash, bond and stock investments indefinitely. The underlying investments of the Fund are
currently comprised primarily from a combination of other funds offered in the Plan. Six years after
each of the other Bright Horizon Funds has met its target date, their assets will automatically transfer
to the Bright Horizon Income Fund.
The Bright Horizon Funds are investment funds managed by The Bank of New York Mellon.
15
Self-Managed Account
The Self-Managed Account (SMA) will allow you to invest a portion of your account in stocks, bonds
or mutual funds of your choice. Unlike the other investment options that are managed (either actively
or passively) by a professional manager, the SMA is managed by you. You may invest in any
securities listed on any major U.S. securities exchanges: New York Stock Exchange (NYSE),
American Stock Exchange (AMEX) and the National Association of Securities Dealers Automated
Quotations System (NASDAQ); fixed income securities such as U.S. Government securities,
mortgage-backed securities and corporate bonds; over 8,000 mutual funds from over 250 fund
families, including load funds and no-load funds (with or without a transaction fee). Voting rights
related to the investments in your SMA will be passed through to you.
Licensed registered representatives from Dreyfus Brokerage Services a division of MBSC Securities
Corporation, a registered broker/dealer and a member of FINRA, will execute your orders and
answer questions about trading in your SMA. Dreyfus representatives are available Monday through
Friday, 8 a.m. to 6 p.m. ET, except stock market holidays.
You may also use the Plan website, www.teamsterups401kplan.com. The site has a link to the
Dreyfus online system which allows you to enter orders for your SMA directly via the Internet. Or,
you may use the Plan Information Line. You may not invest your SMA in foreign stocks, non-listed
limited partnerships, commodities, futures, options, tax-free bonds and tax-free bond funds, or
precious metals. Additionally, you may not engage in short selling (selling securities that are not held
in your SMA) or trading on margin (borrowing money using securities in your SMA as collateral).
Further, the amount in your SMA will not be available for loans or withdrawals. If you wish to
increase the amount available for hardship loans or withdrawals, you may transfer funds from your
SMA to the core funds.
In order to invest in an SMA, you must have a total account value of at least $7,500 in core
investment funds (core investments include all investment options other than the SMA). The initial
transfer into your SMA must be at least $2,500. Once the initial transfer to an SMA has been made,
there is a $1,000 minimum for subsequent transfers to your SMA. Additionally, you must always
maintain 3 percent of your assets in your core investment funds following each transfer of funds into
the SMA. (Core investment funds include all of the Plan investment options other than your SMA)
Direct transfers from the Stable Value Fund into the SMA are not permitted. If you wish to transfer all
or part of your present account balance in this fund to an SMA, you must first move these amounts
to one of the other funds for a period of 90 days.
All trading fees will be deducted from your account. Eligible distributions from the SMA account may
be received as an in-kind distribution of the actual securities held in your SMA account or as cash.
An enrollment application for an SMA is available in the Forms section of the Plan website,
www.teamsterups401kplan.com, or may be requested through the Plan Information Line at
1-800-537-0189.
HARDSHIP LOANS
You may borrow up to 50 percent of your account balance in the Plan (excluding your SMA and any
portion of your Roth 401(k) account) for any of the purposes listed below. However, the maximum
hardship loan amount may not exceed $50,000, reduced by the highest outstanding loan balance
across any UPS-sponsored defined contribution plan during the 12-month period ending on the day
before the loan is made.
16
Application for a hardship loan may be made only for the following purposes:
Purchase of your principal residence.
Payment of tuition and related educational fees, including room and board expenses, for the
next 12 months of post-secondary education for yourself, your spouse or dependents. Post
secondary education is education which is neither part of, nor leads to, obtaining a high
school diploma.
Payment of unreimbursed medical expenses incurred in connection with medical care for
yourself, your spouse or any of your dependents. You may also borrow from the Plan in
order to obtain funds necessary to secure unreimbursed medical care for yourself, your
spouse or any of your dependents.
Payment to prevent eviction from, or foreclosure on, your principal residence.
Payment of expenses in connection with the adoption of a child.
Payment for burial or funeral expenses for your deceased parent, spouse, children or other
dependents.
Expenses for the repair of the damage to your principal residence that would qualify for the
casualty deduction for federal income tax purposes.
The minimum loan amount is $1,000. If you have an SMA and you wish to increase the amount you
have available for a hardship loan, you may transfer funds from your SMA to your core funds.
Interest charged on a Plan hardship loan is one percent above the prime rate as published in The
Wall Street Journal on the last business day of the quarter preceding the quarter in which the loan
application is made. The interest rate will remain fixed for the term of the loan. The maximum loan
term is five years in the case of a non-residential loan and 15 years in the case of a residential loan.
A loan may be repaid without penalty at any time. There is a $75 non-refundable loan application fee
for each loan application requested. The fee is deducted from your account. An annual loan fee of
$25 per loan will be deducted from your account each year a loan is outstanding. This fee will be
deducted quarterly. You may apply for a second loan while a first loan is outstanding, provided that
repayment on the first loan is being made in a timely manner. No more than two loans may be
outstanding at any one time. A loan will be defaulted if you are 90 days in arrears. If a loan is
defaulted, it will be treated as a distribution from the Plan and you will be responsible for any
applicable taxes or penalties. You may not receive another loan from the Plan, unless the defaulted
loan is repaid (it will, however, still be considered as a distribution).
Loan repayments must be made through payroll deductions while you are actively employed.
If you are on an approved leave of absence (other than a military leave) or you have been
discharged and have a pending grievance related to that discharge, you may continue payments on
your loan by sending a bank check or money order (no personal checks), made payable to the
Teamster-UPS National 401(k) Tax Deferred Savings Plan, to Prudential Retirement in the exact
amount of your loan payment or any multiples thereof, for deposit into your Plan account. In the case
of an approved leave of absence your loan payments may also be suspended for up to 12 months of
your leave. If you choose to suspend your loan payments, upon your return to work the loan will be
reamortized using the original interest rate and your original pay-off date. Please note that this will
cause your loan payment to increase, sometimes substantially. If you do not return to work after 12
months, your loan will be reamortized and you will be required to make payments directly to
Prudential Retirement, or your loan will be defaulted.
If you are on a military leave of absence, your loan will be suspended for the length of the military
leave, unless you choose to make payments by bank check or money order. Your loan will accrue
the lesser of the original interest rate or 6 percent during the length of your leave. Upon your return
17
to work, the loan will be reamortized. The term of your loan will be extended by the length of your
military leave once you return to active employment.
If a loan payment is not received by payroll deduction (for example, if you do not receive a paycheck
for one or more pay periods), you are responsible to make the loan payment to Prudential
Retirement directly by bank check or money order. Prudential Retirement will notify you if a loan
payment is missed. When you no longer work for UPS, a loan must be repaid or it is treated as a
distribution from your account. Hardship loans may be modeled or requested on the Plan website,
www.teamsterups401kplan.com, or through the Plan Information Line at 1-800-537-0189.
WITHDRAWALS AND DISTRIBUTIONS
A copy of the Special Tax Notice can be found in the Appendix of this document.
Lump Sum Distribution upon Separation from Service
Thirty (30) days after you retire or leave UPS, you may request a lump sum distribution of your entire
account balance by accessing the Plan website, www.teamsterups401kplan.com, or through the
Plan Information Line at 1-800-537-0189. Generally, your distribution will be processed within three
business days after your request is received.
If your Plan balance is less than $1,000 on your termination date and you do not request a
distribution within 60 days, your account balance will automatically be distributed to you in the form
of cash at your last known address. If your account balance on your termination date is equal to or
greater than $1,000, you may leave your account balance in the Plan even after you reach age 70½
when Required Minimum Distributions must begin. However, no further contributions (other than
rollovers) to your account will be permitted.
In the event of your death before you have received a distribution of your full account balance, your
remaining account balance will be paid to your designated beneficiary(ies) as soon as practicable
after the plan administrator is notified of your death. See the section of the SPD titled “Designation of
Beneficiary” for additional information. A $10 fee will be charged for each distribution from a
beneficiary account.
You should carefully review your distribution options under the Plan. This should include a review of
how you intend to use the funds, both in the short-term and long-term. The Plan offers a platform for
investing that includes low administrative and investment management fees that are usually far
below retail products. In addition, the Plan’s Bright Horizon Funds are designed to provide an
investment allocation strategy extending beyond your retirement date. Finally, the installment
payment options described later provide a variety of distribution patterns that may meet your needs
without your taking a complete distribution from the Plan.
Partial Distribution upon Separation from Service
Thirty (30) days after you retire or leave UPS, you may request a partial distribution of your account
balance in the Plan by accessing the Plan website, www.teamsterups401kplan.com, or through the
Plan Information Line at 1-800-537-0189.
Generally, your distribution will be processed within three business days after your request is
received. For distributions by check and for rollover distributions, the fee is $10.
18
Installment Payments upon Separation from Service
You are eligible to elect to receive installment payments from the Plan following separation from
service at any time (excluding SMA, if any). Installments are processed on the 15th calendar day of
each month. If the 15th calendar day falls on a weekend or holiday, the systematic payment will be
paid out on the following business day. You may elect to receive the payment wired to your bank
account at no cost. However, if you choose to receive a paper check for installments, there is a onetime $5 set-up fee.
You may choose the number of payments you want to receive monthly, quarterly, semi-annually or
annually. The period over which you receive the payments is determined by the payment method,
payment frequency and the value of your account balance. You may start receiving installment
payments at any time as long as your account balance is $1,500 or more (excluding SMA, if any),
but systematic changes (excluding address and name changes) may only be made once a year. You
may stop payments at any time.
The amount of the installment payment that you receive will be determined each pay frequency by
dividing the value of your Plan account (excluding your SMA, if any) by the number of payment
cycles remaining in the installment period; or you may elect a specific dollar amount to be distributed
(excluding SMA, if any).
Once you reach age 70½, the Plan will begin calculating your Required Minimum Distributions which
must be paid to you annually, taking into account any other distributions you may have received
during each year.
Should you die prior to completion of your installment payments, your systematic payments would
stop and normal beneficiary processing would occur.
You may request an installment distribution payment through the Plan Information Line at
1-800-537-0189.
IN-SERVICE WITHDRAWALS
When you have reached age 59½, you may withdraw all or part of your account balance even if you
are still working for UPS.
You may withdraw all or a portion of your after-tax contribution and rollover contributions plus
earnings at any time. In-service withdrawals can be requested by accessing the Plan's website,
www.teamsterups401kplan.com, or through the Plan Information Line at 1-800-537-0189.
Generally, your distribution will be processed within three business days after your request is
received. For distributions by check and for rollover distributions, the fee is $10.
Hardship Withdrawals
Prior to age 59½, you may withdraw a portion of your account balance (other than investment
earnings on your pre-tax contributions and any portion of your Roth 401(k) account) in the event of a
financial hardship. You may withdraw up to the amount necessary to meet your financial hardship,
including amounts necessary to pay anticipated federal, state or local income taxes or penalties on
your withdrawal.
19
Financial hardship is defined by federal law as financial need arising from the following specific
causes:
Payment of unreimbursed medical expenses incurred in connection with medical care for
yourself, your spouse or any of your dependents, and amounts necessary for those
individuals to obtain medical care.
Payment of tuition and related educational fees, including room and board expenses, for the
next 12 months of post-secondary education for you, your spouse, your children or other
dependents.
Costs of purchasing your principal residence, or of preventing eviction from, or foreclosure
of, your principal residence.
Payment for burial or funeral expenses for your deceased parent, spouse, children or other
dependents.
Expenses for the repair of the damage to your principal residence that would qualify for the
casualty deduction for federal income tax purposes.
To withdraw a portion of your account balance to satisfy your financial need, the law requires that
you must first exhaust all available Plan loan options (unless the loan would further increase the
hardship). If you take a hardship withdrawal from the Plan, you will be temporarily restricted from
making contributions to the Plan for a period of six months. You will be notified by Prudential
Retirement when you may begin contributing to the Plan again.
A hardship withdrawal package is available in the Forms section of the Plan website,
www.teamsterups401kplan.com, or may be requested through the Plan Information Line at
1-800-537-0189. A $10 check fee will be deducted from your account.
Hardship withdrawals may not be rolled over and therefore are not subject to mandatory federal tax
withholding by the Plan. You will, however, be liable for payment of income taxes on the distribution.
You may elect to have federal tax withheld by the Plan at the time of the distribution or you may
waive this option. If you elect to have federal tax withheld by the Plan at the time of the distribution,
10 percent of the distribution will be automatically withheld for federal and state income taxes, if
applicable. Please note that a 10 percent federal excise tax, in addition to any income tax, may also
apply to a hardship distribution.
DISTRIBUTIONS ON ACCOUNT OF DISABILITY
Prior to age 59½, you may withdraw all or any portion of your account if you have been absent from
work for more than 52 weeks on account of a disability and the disability continues up to the time
you make the withdrawal from the Plan. For these purposes, a disability means a medically
determinable physical or mental impairment as a result of which you are disabled and qualify for
disability benefits under: 1) the U.S. Social Security Act; 2) a long-term disability plan that UPS
makes contributions to on your behalf; or 3) workers compensation laws.
Request for disability distributions may be sent to the Teamster-UPS National 401(k) Tax Deferred
Savings Plan, c/o Prudential Retirement, PO Box 5640, Scranton, PA 18505. Please include
documentation of disability, as described above.
20
TAX CONSEQUENCES OF A DISTRIBUTION
Generally, before you receive a distribution from the Plan, you will receive a notice describing the tax
consequences and informing you of the Plan's obligation to withhold 20 percent from your
distribution (other than a hardship withdrawal) for federal income taxes.
You do not have to pay federal income tax on the amount of your distribution transferred directly
(called a “direct rollover”) to:
An individual retirement account or annuity; or
A qualified employer-sponsored retirement plan that accepts rollover contributions. Any
direct rollover election you choose to make must be received by the plan administrator prior
to the date of your distribution.
If you are under age 59½ at the time of the distribution, you may also be required to pay a 10
percent federal excise tax on the full taxable amount of the distribution in addition to any other taxes
you may owe. You will be responsible for payment of the 10 percent federal excise tax as well as
any other taxes.
Generally, for the distribution of earnings on Roth 401(k) contributions to be distributed tax-free, you
have to wait at least five years after making your first Roth 401(k) contribution before taking a
withdrawal and your withdrawals must begin after you have reached age 59½; you have died; or
have become disabled. If your withdrawal does not meet these qualifications, your accumulated
Roth 401(k) earnings—but not your Roth 401(k) contributions—will be taxed, and may be subject to
a 10 percent early distribution penalty if you have not reached age 59½.
In certain circumstances, the 10 percent federal excise tax on distributions may not apply. You
should consult with your tax advisor to determine if the 10 percent federal excise tax will apply to
your distribution. For example, the 10 percent federal excise tax does not apply to payments made
to you after you separate from service with UPS after the year you reach age 55.
Finally, if you take a partial distribution from the Plan and have an after-tax account balance in the
Plan, a pro-rata portion of the distribution will be treated as a return of your after-tax contribution and
will not be taxable to you.
A pro-rata portion of the earnings on your after-tax account will also be distributed and will be
considered taxable income to you if you do not roll over the distribution. Please note that the tax
rules governing distributions from qualified retirement plans are complex. As a result, you should
read the Special Tax Notice included as the Appendix of this booklet. A separate copy of the Special
Tax Notice will be provided to you when you request a distribution. It is recommended that you
consult a tax advisor before you make any elections with respect to your Plan benefits.
QUALIFIED DOMESTIC RELATIONS ORDERS
A benefit from the Plan may be assigned by a Qualified Domestic Relations Order (“QDRO”) of a
court relating to alimony, child support or marital property rights. Among other things, the QDRO
must be signed by the Court and authorize distribution to an Alternate Payee or Payees, and be
reviewed and accepted under the terms of the Plan. The Trustees have developed a set of
procedures and a model QDRO form in the event there is a need to direct a QDRO to the Plan. You
and your spouse or former spouse may obtain, without charge, a copy of the QDRO procedures and
the model QDRO form from the Teamster-UPS National 401(k) Tax Deferred Savings Plan, c/o UPS
Corporate Retirement, 55 Glenlake Parkway, NE, Atlanta, GA 30328.
21
Upon learning that a QDRO has been received or is forthcoming with respect to your account, the
Plan will place a hold on all distributions or loans from your Plan account until payment of amounts
due under the QDRO have been made or is advised that a QDRO will not, in fact, be submitted to
the Plan. If no order is submitted, the hold will be removed after 12 months.
TEAMSTER-UPS NATIONAL 401(K) TAX DEFERRED SAVINGS PLAN WEBSITE
Most Plan transactions can be accomplished over the Internet via the Plan website at
www.teamsterups401kplan.com.
You can use the website to:
Enroll in the Plan
Change your contribution rate
Reset your Password or obtain a Password reminder
Change your investment elections and transfer your investment balances
Obtain account balances and loan status
Review fund information and performance
Review fund benchmarks
Print available forms
Model and request a hardship loan
View your statement
Request a distribution
Set up automatic account rebalancing
Select the Contribution Accelerator Feature
Review and change your beneficiary(ies)
The website also includes Plan news and contains a Financial Resource Center to assist you in
achieving your savings goals.
TEAMSTER-UPS NATIONAL 401(K) TAX DEFERRED SAVINGS PLAN INFORMATION LINE
Most Plan transactions can be accomplished by calling the Information Line at 1-800-537-0189.
You can use the Information Line to:
Enroll in the Plan
Change your contribution rate
Reset your Password or obtain a Password reminder
Change your investment elections and transfer your investment balances
Obtain account balances and loan status
Review fund information and performance
Request available forms and Plan Information
Model and request a hardship loan
Request a distribution
Set up automatic account rebalancing
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Select the Contribution Accelerator Feature
Request a beneficiary form if you are married and designating someone other than your
spouse as your beneficiary
The voice response unit is generally available 24 hours a day, seven days a week. Participant
Service Representatives (PSRs) are available to assist you with Plan questions and transactions
from 8 a.m. to 9 p.m. ET, Monday through Friday, except for stock market holidays.
LEGAL LIMITATIONS ON BENEFITS
No Plan benefit may be assigned or pledged as collateral or security for a loan (other than a
hardship loan from this Plan), nor may any benefit be subject to your debts or to other legal
obligations other than, in limited circumstances, a lien for federal taxes. However, a benefit may be
assigned by a Qualified Domestic Relations Order (QDRO) of a court relating to alimony, child
support or marital property rights (please see the section entitled Qualified Domestic Relations
Orders for more information).
Contributions to the Plan, as well as the other retirement plans in which you may participate, are
subject to maximum limitations imposed by the Internal Revenue Code and its regulations. As
described in the section entitled “Pre-Tax Contributions” and “Roth 401(k) Contributions” there is a
maximum annual amount you can contribute to the Plan on a pre-tax and/or Roth 401(k) basis. If
your pre-tax and/or Roth 401(k) contributions exceed this annual limit, the excess amount (together
with any attributable income) will be returned to you. If your annual compensation causes you to be
classified as highly compensated under Internal Revenue Service rules, the IRS places limits on the
amount of pre-tax contributions, Roth 401(k) contributions and after-tax contributions that may be
made on your behalf to the Plan. These limits are intended to ensure a balanced mix of participation
among all eligible employees. If the IRS limits are exceeded, it may be necessary to make a
corrective distribution at the end of the Plan year to those highly compensated employees who
exceed the limits.
In the event you have excess pre-tax deferrals, the Plan will first automatically recharacterize those
deferrals as catch-up contributions, to the extent that you are eligible to make catch-up contributions
and the catch-up contribution limits are not exceeded, then as after-tax contributions so you may
leave them in the Plan, provided that by doing so the limits on voluntary after-tax contributions are
not exceeded. Any excess amounts that cannot be recharacterized will be returned to you.
The Internal Revenue Code (IRC) also imposes restrictions on the total amount that may be credited
on your behalf for all retirement plans (including this Plan) in which you participate as a UPS
employee. You will be notified if you are affected by these restrictions.
CLAIMS PROCEDURES
All grievances, complaints or claims concerning any aspect of the operation or administration of the
Plan, including a claim for benefits must be directed to the Board of Trustees. A participant,
beneficiary or authorized representative of a person making such a claim is called a claimant. Each
claim for benefits must be filed with the Board of Trustees, in writing, within 12 months of the date
benefit payments were requested to begin or the date of the action, or inaction, causing the claim for
benefits.
Within 90 days after the receipt of your claim, the Board of Trustees (or the committee designated
for such purpose) will notify you of its decision, unless special circumstances require an extension of
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time. If an extension of time is required, the Board of Trustees will notify you of the extension in
writing before the end of the first 90-day period. In no event may the extension be longer than 90
days from the end of the initial 90-day period. The extension notice will indicate the special
circumstances requiring the extension of time and the date by which you can expect to receive a
decision.
If the claimant is denied a benefit from the Plan, in whole or in part, the Board of Trustees will
provide the claimant with written notice setting forth the following:
the reason(s) for the denial;
the Plan provisions upon which the denial is based;
an explanation of what additional information or material, if any, is needed to perfect the
claim and why such information or material is needed;
a description of the Plan's appeals procedures and the applicable time limits; and
a statement of the right to bring civil action under ERISA Section 502(a) following an adverse
determination on appeal.
A claimant may appeal the Board of Trustees' decision by submitting a written request for review by
the Board of Trustees within 60 days after the claimant receives written notification denying the
claim. Any such request should be accompanied by documents, records or other information in
support of the appeal. In addition, the claimant may have reasonable access to, and copies of, all
documents, records and other information relevant to the claim, free of charge.
The Board of Trustees will review all relevant material, including any issues or comments submitted
in writing by the claimant (regardless of whether such information was submitted or considered in the
initial benefit determination), and will render a decision on the claim within 60 days after it receives
the claimant's written request for review. If special circumstances require an extension of time, the
Board of Trustees will notify the claimant in writing of the extension and indicate the date the review
of the appeal is expected to conclude. The Board of Trustees will render a decision no later than 120
days after it receives the request. The decision of the Board of Trustees will be in writing and
include: 1) specific reasons for the decision; 2) specific references to the pertinent Plan provisions
on which the decision is based; 3) a statement that the claimant may request copies of all relevant
documents, records and other information; and 4) a statement of the right to bring an action under
ERISA Section 502(a).
If a claim for benefits is denied, the claimant cannot bring a lawsuit to recover benefits under the
Plan unless the claimant has timely exercised all appeal rights available under the Plan's
administrative claims procedure for a denied claim and the appeal(s) seeking benefits has been
denied by the Board of Trustees.
ACCOUNT STATEMENTS
You will receive quarterly statements for your Plan account that will include information on
investment performance and Plan expenses. Statements may be viewed at any time on the Plan
website, www.teamsterups401kplan.com.
Additionally, if you invest in the SMA option, you will receive a separate statement summarizing your
SMA investments and activity on a monthly basis if you have activity or on a quarterly basis if you do
not have any activity.
24
PLAN EXPENSES
Investment management fees and asset custody expenses incurred in connection with managing
Plan's investments are charged against investment returns. Additionally, certain expenses incurred
in administering the Plan are charged to participants' accounts on a per capita basis, for example,
the cost of providing access to your account through the Plan website and Information Line and the
cost of Participant Service Representatives, as well as the printing and mailing expenses for Plan
communications. The annual fee is $23.50. In addition, there will be other reasonable Plan-related
expenses.
On an individual basis, the administrative cost of hardship loans ($75 processing fee, $25 annual
maintenance fee) and all distribution fees ($10) will be deducted from that participant's account.
Additionally, participants choosing to receive installment payments by paper check will be charged a
one-time $5 set-up fee, deducted from their account.
The amount of expenses charged to your account is set forth in your quarterly statement. You may
also view expenses charged to your account in the Transaction History section on the Plan website,
www.teamsterups401kplan.com. Participants with SMAs pay all fees associated with those
accounts. UPS pays recordkeeping charges for the Plan.
Included with your quarterly statement following the fourth quarter is an outline of investment
management and asset custody expenses, as well as the annual administrative fee. Information
regarding fees can also be found on the Plan website, www.teamsterups401kplan.com or may be
requested through the Plan Information Line at 1-800-537-0189.
The cumulative effect of fees and expenses can substantially reduce the growth of your retirement
savings. Visit the Department of Labor’s Web site for an example showing the long-term effect of
fees and expenses at http://www.dol.gov/ebsa/publications/401k employee.html. Fees and expenses
are only one of many factors to consider when you decide to invest in an option. You may also want
to think about whether an investment in a particular option, along with your other investments, will
help you achieve your financial goals.
CHANGE OF ADDRESS
If you no longer work for UPS and have not received a distribution from the Plan, you should notify
Prudential Retirement, the Plan recordkeeper, in writing promptly regarding any change in address.
This notification should be sent to:
Teamster-UPS National 401(k)
Tax Deferred Savings Plan
Prudential Retirement
PO Box 5640
Scranton, PA 18505
You may also change your address by speaking to a Participant Service Representative (PSR) on a
recorded line at 1-800-537-0189. PSRs are available to assist you during the regular business hours
of 8 a.m. to 9 p.m. ET, Monday through Friday, excluding stock market holidays.
As an active employee or while on a leave of absence, you should make sure that you keep your
address current. If you move, go to UPSers.com, select Edit My Profile, click on Personal
Information and follow the prompts to change your address.
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DESIGNATION OF BENEFICIARY
When you enroll in the Plan, you designate your beneficiary(ies) for your Plan account. Beneficiaries
may be designated on the Plan website, www.teamsterups401kplan.com or by speaking to a
Participant Service Representative on a recorded line at 1-800-537-0189. PSRs are available to
assist you during the regular business hours of 8 a.m. to 9 p.m. ET, Monday through Friday,
excluding stock market holidays. If you are married, your spouse will automatically be your
designated beneficiary. If you are married and wish to designate someone other than your spouse
as your primary beneficiary, you must complete a beneficiary designation form with your spouse's
notarized consent. The form is available on the Plan website or may be requested through the Plan
Information Line. Generally, you may change your beneficiary designation at any time.
If you fail to designate a beneficiary or if a designated beneficiary does not survive you, payment will
be made to your spouse. If you have no spouse or if your spouse does not survive you, payment will
be made in equal amounts to your surviving children. If you have no surviving children, payment will
be made to your estate. If the person designated as your beneficiary is your spouse and you
become divorced, payments will be made to your former spouse unless:
you later designate another person in his or her place; or
you remarry—in which case your prior designation will be null and void and your new spouse
will be treated as your designated beneficiary.
PLAN ADMINISTRATION
All contributions and earnings are held in a trust fund. Bank of New York Mellon serves as the
custodian. Prudential Retirement serves as the plan administrator and recordkeeper. The Plan is
jointly administered by the Board of Trustees, five members of which are appointed by UPS and five
are appointed by the International Brotherhood of Teamsters. The responsibility of the Board of
Trustees of the Plan is to act in the best interest of Plan participants at all times. The Board of
Trustees has the exclusive power and discretion to interpret the Plan document, and to decide all
matters arising in its administration and operation, including questions pertaining to eligibility for, and
the amount of, benefits to be paid by the Plan. Any such interpretation or decision will, subject to the
claims procedure described in this booklet, be conclusive and binding on all interested persons.
Such interpretations or decisions will, consistent with the Plan's terms and conditions, be applied in a
uniform manner to all similarly situated participants and beneficiaries.
The Plan is intended to comply with all requirements for a qualified retirement plan based on all
applicable sections of the Internal Revenue Code (including section 401(a) which allows participants
to make contributions on a tax-deferred basis, provides for trust earnings to accrue on a tax-deferred
basis and permits UPS to deduct the contributions you elect to have made on your behalf to the
Plan).
PENSION BENEFIT GUARANTY CORPORATION
Benefits under the Plan are not guaranteed by the Pension Benefit Guaranty Corporation or any
other federal agency.
AMENDMENT AND TERMINATION
The Plan has been established with the intent of being maintained indefinitely. There is no intention
to terminate the Plan at this time. However, the Board of Trustees has the right to amend or
terminate the Plan at any time.
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WHERE TO GO IF YOU HAVE QUESTIONS
In describing the Plan, we have tried to avoid using the legal words and phrases that are in the
actual Plan document. If, in our efforts to make things clear, we have inadvertently omitted or
misstated any of the Plan's provisions, the Plan document will be the final authority. If you have any
questions, please contact the plan administrator at the following address:
Teamster-UPS National 401(k) Tax Deferred Savings Plan
Prudential Retirement
PO Box 5640
Scranton, PA 18505
Toll-free 1-800-537-0189
YOUR ERISA RIGHTS
As a participant in the Teamster-UPS National 401(k) Tax Deferred Savings Plan, you are entitled to
certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA).
ERISA provides all Plan participants the right to:
Examine, without charge, at the Board of Trustees' office and at other specified locations,
such as your Human Resources office or Union Local office, all documents governing the
Plan, including collective bargaining agreements, insurance contracts and a copy of the
latest annual report (Form 5500 Series) filed by the Plan with the U.S. Department of Labor
and available at the Public Disclosure Room of the Employee Benefits Security
Administration.
Obtain, upon written request to Prudential Retirement or the Board of Trustees, copies of
documents governing the operation of the Plan, including insurance contracts, a copy of the
latest annual report (Form 5500 Series) and updated summary plan description. The Board
of Trustees may make a reasonable charge for the copies.
Receive a summary of the Plan's annual financial report. The Plan Administrator is required
by law to furnish each participant with a copy of this summary annual report.
Obtain a statement telling you whether you have a right to receive a benefit from the Plan
and if so, the value of your account balance. This statement must be requested in writing and
is not required to be given more than once every 12 months. The Plan must provide this
statement free of charge.
In addition to creating rights for Plan participants, ERISA imposes duties on the people who
are responsible for the operation of the Plan. The people who operate your Plan, called
fiduciaries, have a duty to do so prudently and in the best interest of you and other Plan
participants and beneficiaries. No one, including your employer, your union, the Board of
Trustees or any other person, may fire you or otherwise discriminate against you in any way
to prevent you from obtaining a benefit or from exercising your ERISA rights. If your claim for
a benefit from this Plan is denied or ignored, in whole or in part, you have a right to know
why this was done, to obtain copies of documents relating to this decision without charge,
and to appeal any denial, all within certain time schedules.
Under ERISA, there are steps you can take to enforce these rights. For instance, if you
request a copy of Plan documents or the latest annual report from the Plan and do not
receive them within 30 days, you may file suit in a federal court. In such case, the court may
require the Board of Trustees to provide the requested materials and pay you up to $110 a
day until you receive the materials, unless the materials were not sent because of reasons
beyond the control of the Board of Trustees. If you have a claim for benefits which is denied
or ignored, in whole or in part, you may file suit in a state or federal court after you have
exhausted the claims appeal procedures described in this summary plan description and in
27
the Plan document. In addition, if you disagree with the Plan's decision or lack thereof
concerning the qualified status of a domestic relations order, you may file suit in a federal
court. If it should happen that the Plan fiduciaries misuse the Plan's money, or if you are
discriminated against for asserting your rights, you may seek assistance from the U.S.
Department of Labor or you may file suit in a federal court. The court will decide who should
pay court costs and legal fees. If you are successful, the court may order the person you
have sued to pay these costs and fees. If you lose, the court may order you to pay the costs
and fees. Any legal process related to this Plan should be directed to: Board of Trustees,
Teamster-UPS National 401(k) Tax Deferred Savings Plan, 55 Glenlake Parkway, NE
Atlanta, GA 30328.
Legal process may also be served on the plan administrator at the address shown in the General
Information section of this booklet.
If you have any questions about your Plan, you should contact Prudential Retirement or the Board of
Trustees. If you have any questions about this statement or about your rights under ERISA, or if you
need assistance obtaining the documents from the Board of Trustees, you should contact the
nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in
your telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits
Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington,
D.C. 20210. You may also obtain certain publications about your rights and responsibilities under
ERISA by calling the publications hotline of the Employee Benefits Security Administration. Unless
pre-empted by federal law, the Plan shall be governed by the laws of the state of Georgia.
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GENERAL INFORMATION
Name of Plan: Teamster-UPS National 401(k) Tax Deferred Savings Plan
Plan Number: 003
Type of Plan: Defined Contribution 401(k) Plan
Plan Effective Date: July 1, 1988
Plan Year: January 1 through December 31
Plan Valuation Date: December 31 of each year, or more frequently as required
Employer and Plan Sponsor:
United Parcel Service of America, Inc.
55 Glenlake Parkway, N.E.
Atlanta, GA 30328
404-828-6000
Employer Identification Number (EIN): 95-1732075
Type of Administration: Prudential Retirement provides administrative and recordkeeping services
to the Plan
Board of Trustees:
Plan Administrator:
Teamster-UPS National 401(k)
Tax Deferred Savings Plan
Prudential Retirement
PO Box 5640
Scranton, PA 18505
Toll-free 1-800-537-0189
Board of Trustees
Teamster-UPS National 401(k)
Tax Deferred Savings Plan
c/o Prudential Retirement
PO Box 5640
Scranton, PA 18505
Board of Trustees:
UPS Trustees:
Chris Langan, Co-Chair
Daniel H. Dismukes
Allen Gudim
Brian McCabe
Michael J. Rosentrater
Teamster Trustees:
Ken Hall, Co-Chair
William Lichtenwald
Sean O’Brien
John Slatery
Kenneth W. Wood
UPS
55 Glenlake Parkway, N.E.
Atlanta, GA 30328
International Brotherhood of Teamsters
25 Louisiana Avenue, N.W.
Washington, DC 20001
29
Applies to Sections 401 and 403
SPECIAL TAX NOTICE REGARDING PLAN PAYMENTS
Retain For Your Records
This notice is provided to you by Prudential Financial, Inc., on behalf of the plan administrator (“Plan Administrator”).
Right to Defer Distributions from Defined Contribution Plans
You may be eligible to receive a distribution from your employer's retirement plan now. Instead of taking a distribution now, you may elect to defer receiving a
distribution until a later date -- typically as late as age 70-1/2. (If your account balance does not exceed $5,000 (or the amount of your plan’s cashout threshold),
you may not have a right to defer payment.) If you defer receiving a distribution, the plan investment options available to you thereafter (including related fees)
generally will be the same as those available to active employees. However, certain plan features, such as the right to repay or take a loan from the plan, may
not be available if you have terminated employment. Please refer to your summary plan description and fund fact sheets for more information about plan
investment options, investment related expenses, any plan restrictions or charges applicable to terminated employees, payment options, and any other special
rules that may impact your distribution decision. If you elect to receive a distribution that you roll over to another eligible retirement plan such as an IRA, the
investment options offered under your current employer's plan (e.g., mutual funds, employer stock) may not be available to you or, if available, are likely to carry
higher expenses if transferred to an IRA. If you elect to receive a distribution but do not roll it over to another eligible retirement plan, such action triggers
taxation (possibly including a 10% penalty), results in loss of future tax-deferred earnings (if any), and may diminish the funds available to you for retirement
purposes. For additional information about plan investment options (and related fees), plan restrictions or charges applicable to terminated employees who defer
receiving a distribution, or if you have other questions regarding your right to defer a distribution, and the consequences of failing to defer, please contact
Prudential at the number provided on your benefit statement.
For Payments Not From a Designated Roth Account
This notice describes the rollover rules that apply to payments from your employer’s plan (the “Plan”) that are not
from a designated Roth account (a type of account with special tax rules in some employer plans). A different notice
is provided for payments from a designated Roth account.
YOUR ROLLOVER OPTIONS
This notice is provided to you because all or part of the payments that you may receive from the Plan may be eligible for rollover to an IRA or an eligible
employer plan. This notice is intended to help you decide whether to do such a rollover. If you have additional questions after reading this notice, you can
contact your Plan Administrator.
Rules that apply to most payments from a plan are described in the “General Information About Rollovers” section. Special rules that only apply in certain
circumstances are described in the “Special Rules and Options” section.
GENERAL INFORMATION ABOUT ROLLOVERS
How can a rollover affect my taxes?
You will be taxed on a payment from the Plan if you do not roll it over. If you are under age 59½ and do not do a rollover, you will also have to pay a 10%
additional income tax on early distributions (unless an exception applies). However, if you do a rollover, you will not have to pay tax until you receive payments
later and the 10% additional income tax will not apply if those payments are made after you are age 59½ (or if an exception applies).
Where may I roll over the payment?
You may roll over the payment to either an IRA (an individual retirement account or individual retirement annuity) or an employer plan (a tax-qualified plan,
section 403(b) plan, or governmental section 457(b) plan) that will accept the rollover. The rules of the IRA or employer plan that holds the rollover will
determine your investment options, fees, and rights to payment from the IRA or employer plan (for example, no spousal consent rules apply to IRAs and IRAs
may not provide loans). Further, the amount rolled over will become subject to the tax rules that apply to the IRA or employer plan.
How do I do a rollover?
There are two ways to do a rollover. You can do either a direct rollover or a 60-day rollover.
If you do a direct rollover, the Plan will make the payment directly to your IRA or an employer plan. You should contact the IRA sponsor or the administrator of
the employer plan for information on how to do a direct rollover.
If you do not do a direct rollover, you may still do a rollover by making a deposit into an IRA or eligible employer plan that will accept it. You will have 60 days
after you receive the payment to make the deposit. If you do not do a direct rollover, the Plan is required to withhold 20% of the payment for federal income
taxes (up to the amount of cash and property received other than employer stock). This means that, in order to roll over the entire payment in a 60-day rollover,
you must use other funds to make up for the 20% withheld. If you do not roll over the entire amount of the payment, the portion not rolled over will be taxed and
will be subject to the 10% additional income tax on early distributions if you are under age 59½ (unless an exception applies).
Ed. 3/2011
How much may I roll over?
If you wish to do a rollover, you may roll over all or part of the amount eligible for rollover. Any payment from the Plan is eligible for rollover, except:
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Certain payments spread over a period of at least 10 years or over your life or life expectancy (or the lives or joint life expectancy of you and your
beneficiary)
Required minimum distributions after age 70½ (or after death)
Hardship distributions
ESOP dividends
Corrective distributions of contributions that exceed tax law limitations
Loans treated as deemed distributions (for example, loans in default due to missed payments before your employment ends)
Cost of life insurance paid by the Plan
Contributions made under special automatic enrollment rules that are withdrawn pursuant to your request within 90 days of enrollment
Amounts treated as distributed because of a prohibited allocation of S corporation stock under an ESOP (also, there will generally be adverse tax
consequences if you roll over a distribution of S corporation stock to an IRA).
The Plan Administrator or the payor can tell you what portion of a payment is eligible for rollover.
If I don’t do a rollover, will I have to pay the 10% additional income tax on early distributions?
If you are under age 59½, you will have to pay the 10% additional income tax on early distributions for any payment from the Plan (including amounts withheld
for income tax) that you do not roll over, unless one of the exceptions listed below applies. This tax is in addition to the regular income tax on the payment not
rolled over.
The 10% additional income tax does not apply to the following payments from the Plan:
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Payments made after you separate from service if you will be at least age 55 in the year of the separation
Payments that start after you separate from service if paid at least annually in equal or close to equal amounts over your life or life expectancy (or the
lives or joint life expectancy of you and your beneficiary)
Payments made due to disability
Payments after your death
Payments of ESOP dividends
Corrective distributions of contributions that exceed tax law limitations
Cost of life insurance paid by the Plan
Contributions made under special automatic enrollment rules that are withdrawn pursuant to your request within 90 days of enrollment
Payments made directly to the government to satisfy a federal tax levy
Payments made under a qualified domestic relations order (QDRO)
Payments up to the amount of your deductible medical expenses
Certain payments made while you are on active duty if you were a member of a reserve component called to duty after September 11, 2001 for more
than 179 days
If I do a rollover to an IRA, will the 10% additional income tax apply to early distributions from the IRA?
If you receive a payment from an IRA when you are under age 59½, you will have to pay the 10% additional income tax on early distributions from the IRA,
unless an exception applies. In general, the exceptions to the 10% additional income tax for early distributions from an IRA are the same as the exceptions listed
above for early distributions from a plan. However, there are a few differences for payments from an IRA, including:
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There is no exception for payments after separation from service that are made after age 55.
The exception for qualified domestic relations orders (QDROs) does not apply (although a special rule applies under which, as part of a divorce or
separation agreement, a tax-free transfer may be made directly to an IRA of a spouse or former spouse).
The exception for payments made at least annually in equal or close to equal amounts over a specified period applies without regard to whether you
have had a separation from service.
There are additional exceptions for (1) payments for qualified higher education expenses, (2) payments up to $10,000 used in a qualified first-time
home purchase, and (3) payments after you have received unemployment compensation for 12 consecutive weeks (or would have been eligible to
receive unemployment compensation but for self-employed status).
Will I owe State income taxes?
This notice does not describe any State or local income tax rules (including withholding rules).
SPECIAL RULES AND OPTIONS
If your payment includes after-tax contributions
After-tax contributions included in a payment are not taxed. If a payment is only part of your benefit, an allocable portion of your after-tax contributions is
generally included in the payment. If you have pre-1987 after-tax contributions maintained in a separate account, a special rule may apply to determine whether
the after-tax contributions are included in a payment.
You may roll over to an IRA a payment that includes after-tax contributions through either a direct rollover or a 60-day rollover. You must keep track of the
aggregate amount of the after-tax contributions in all of your IRAs (in order to determine your taxable income for later payments from the IRAs). If you do a
direct rollover of only a portion of the amount paid from the Plan and a portion is paid to you, each of the payments will include an allocable portion of the aftertax contributions. If you do a 60-day rollover to an IRA of only a portion of the payment made to you, the after-tax contributions are treated as rolled over last.
For example, assume you are receiving a complete distribution of your benefit which totals $12,000, of which $2,000 is after-tax contributions. In this case, if you
roll over $10,000 to an IRA in a 60-day rollover, no amount is taxable because the $2,000 amount not rolled over is treated as being after-tax contributions.
You may roll over to an employer plan all of a payment that includes after-tax contributions, but only through a direct rollover (and only if the receiving plan
separately accounts for after-tax contributions and is not a governmental section 457(b) plan). You can do a 60-day rollover to an employer plan of part of a
payment that includes after-tax contributions, but only up to the amount of the payment that would be taxable if not rolled over.
If you miss the 60-day rollover deadline
Generally, the 60-day rollover deadline cannot be extended. However, the IRS has the limited authority to waive the deadline under certain extraordinary
circumstances, such as when external events prevented you from completing the rollover by the 60-day rollover deadline. To apply for a waiver, you must file a
private letter ruling request with the IRS. Private letter ruling requests require the payment of a nonrefundable user fee. For more information, see IRS
Publication 590, Individual Retirement Arrangements (IRAs).
If your payment includes employer stock that you do not roll over
If you do not do a rollover, you can apply a special rule to payments of employer stock (or other employer securities) that are either attributable to after-tax
contributions or paid in a lump sum after separation from service (or after age 59½, disability, or the participant’s death). Under the special rule, the net
unrealized appreciation on the stock will not be taxed when distributed from the Plan and will be taxed at capital gain rates when you sell the stock. Net
unrealized appreciation is generally the increase in the value of employer stock after it was acquired by the Plan. If you do a rollover for a payment that includes
employer stock (for example, by selling the stock and rolling over the proceeds within 60 days of the payment), the special rule relating to the distributed
employer stock will not apply to any subsequent payments from the IRA or employer plan. The Plan Administrator can tell you the amount of any net unrealized
appreciation.
If you have an outstanding loan that is being offset
If you have an outstanding loan from the Plan, your Plan benefit may be offset by the amount of the loan, typically when your employment ends. The loan offset
amount is treated as a distribution to you at the time of the offset and will be taxed (including the 10% additional income tax on early distributions, unless an
exception applies) unless you do a 60-day rollover in the amount of the loan offset to an IRA or employer plan.
If you were born on or before January 1, 1936
If you were born on or before January 1,1936 and receive a lump sum distribution that you do not roll over, special rules for calculating the amount of the tax on
the payment might apply to you. For more information, see IRS Publication 575, Pension and Annuity Income.
If you are an eligible retired public safety officer and your pension payment is used to pay for health coverage or qualified long-term care insurance
If the Plan is a governmental plan, you retired as a public safety officer, and your retirement was by reason of disability or was after normal retirement age, you
can exclude from your taxable income plan payments paid directly as premiums to an accident or health plan (or a qualified long-term care insurance contract)
that your employer maintains for you, your spouse, or your dependents, up to a maximum of $3,000 annually. For this purpose, a public safety officer is a law
enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew.
If your plan offers Roth contributions and also permits Roth In-Plan Rollovers
If you roll over the payment to a designated Roth account in the Plan, the amount of the payment rolled over (reduced by any after-tax amounts directly rolled
over) will be taxed. However, the 10% additional tax on early distributions will not apply (unless you take the amount rolled over out of the designated Roth
account within the 5-year period that begins on January 1 of the year of the rollover).
If you roll over the payment to a designated Roth account in the Plan, later payments from the designated Roth account that are qualified distributions will not be
taxed (including earnings after the rollover). A qualified distribution from a designated Roth account is a payment made both after you attains age 59½ (or after
your death or disability) and after you have had a designated Roth account in the Plan for a period of at least 5 years. The 5-year period described in the
preceding sentence begins on January 1 of the year your first contribution was made to the designated Roth account. However, if you made a direct rollover to a
designated Roth account in the Plan from a designated Roth account in a plan of another employer, the 5-year period begins on January 1 of the year your first
contribution was made to the designated Roth account in the Plan or, if earlier, to the designated Roth account in the plan of the other employer. Payments from
the designated Roth account that are not qualified distributions will be taxed to the extent allocable to earnings after the rollover, including the 10% additional tax
on early distributions (unless an exception applies).
If you roll over your payment to a Roth IRA
If you roll over the payment to a Roth IRA, a special rule applies under which the amount of the payment rolled over (reduced by any after-tax amounts) will be
taxed. However, the 10% additional income tax on early distributions will not apply (unless you take the amount rolled over out of the Roth IRA within 5 years,
counting from January 1 of the year of the rollover). If you roll over the payment to a Roth IRA, later payments from the Roth IRA that are qualified distributions
will not be taxed (including earnings after the rollover). A qualified distribution from a Roth IRA is a payment made after you are age 59½ (or after your death or
disability, or as a qualified first-time homebuyer distribution of up to $10,000) and after you have had a Roth IRA for at least 5 years. In applying this 5-year rule,
you count from January 1 of the year for which your first contribution was made to a Roth IRA. Payments from the Roth IRA that are not qualified distributions
will be taxed to the extent of earnings after the rollover, including the 10% additional income tax on early distributions (unless an exception applies). You do not
have to take required minimum distributions from a Roth IRA during your lifetime. For more information, see IRS Publication 590, Individual Retirement
Arrangements (IRAs).
If you are not a plan participant
Payments after death of the participant. If you receive a distribution after the participant’s death that you do not roll over, the distribution will generally be taxed in
the same manner described elsewhere in this notice. However, the 10% additional income tax on early distributions and the special rules for public safety
officers do not apply, and the special rule described under the section “If you were born on or before January 1, 1936” applies only if the participant was born on
or before January 1, 1936.
If you are a surviving spouse. If you receive a payment from the Plan as the surviving spouse of a deceased participant, you have the same
rollover options that the participant would have had, as described elsewhere in this notice. In addition, if you choose to do a rollover to an IRA, you
may treat the IRA as your own or as an inherited IRA.
An IRA you treat as your own is treated like any other IRA of yours, so that payments made to you before you are age 59½ will be subject to the
10% additional income tax on early distributions (unless an exception applies) and required minimum distributions from your IRA do not have to
start until after you are age 70½.
If you treat the IRA as an inherited IRA, payments from the IRA will not be subject to the 10% additional income tax on early distributions. However,
if the participant had started taking required minimum distributions, you will have to receive required minimum distributions from the inherited IRA.
If the participant had not started taking required minimum distributions from the Plan, you will not have to start receiving required minimum
distributions from the inherited IRA until the year the participant would have been age 70½.
If you are a surviving beneficiary other than a spouse. If you receive a payment from the Plan because of the participant’s death and you are a
designated beneficiary other than a surviving spouse, the only rollover option you have is to do a direct rollover to an inherited IRA. Payments from
the inherited IRA will not be subject to the 10% additional income tax on early distributions. You will have to receive required minimum distributions
from the inherited IRA.
Payments under a qualified domestic relations order. If you are the spouse or former spouse of the participant who receives a payment from the Plan under a
qualified domestic relations order (QDRO), you generally have the same options the participant would have (for example, you may roll over the payment to your
own IRA or an eligible employer plan that will accept it). Payments under the QDRO will not be subject to the 10% additional income tax on early distributions.
If you are a nonresident alien
If you are a nonresident alien and you do not do a direct rollover to a U.S. IRA or U.S. employer plan, instead of withholding 20%, the Plan is generally required
to withhold 30% of the payment for federal income taxes. If the amount withheld exceeds the amount of tax you owe (as may happen if you do a 60-day
rollover), you may request an income tax refund by filing Form 1040NR and attaching your Form 1042-S. See Form W-8BEN for claiming that you are entitled
to a reduced rate of withholding under an income tax treaty. For more information, see also IRS Publication 519, U.S. Tax Guide for Aliens, and IRS Publication
515, Withholding of Tax on Nonresident Aliens and Foreign Entities.
Other special rules
If a payment is one in a series of payments for less than 10 years, your choice whether to make a direct rollover will apply to all later payments in the series
(unless you make a different choice for later payments).
If your payments for the year are less than $200 (not including payments from a designated Roth account in the Plan), the Plan is not required to allow you to do
a direct rollover and is not required to withhold for federal income taxes. However, you may do a 60-day rollover.
Unless you elect otherwise, a mandatory cashout of more than $1,000 (not including payments from a designated Roth account in the Plan) will be directly
rolled over to an IRA chosen by the Plan Administrator or the payor. A mandatory cashout is a payment from a plan to a participant made before age 62 (or
normal retirement age, if later) and without consent, where the participant’s benefit does not exceed $5,000, or the amount of your plan’s cashout threshold (not
including any amounts held under the plan as a result of a prior rollover made to the plan) .
You may have special rollover rights if you recently served in the U.S. Armed Forces. For more information, see IRS Publication 3, Armed Forces’ Tax Guide.
If you expatriate from the U.S., you may be subject to special rules, and should consult with your personal tax advisor to determine if you are required to provide
Prudential with IRS Form W-8CE.
FOR MORE INFORMATION
You may wish to consult with the Plan Administrator or payor, or a professional tax advisor, before taking a payment from the Plan. Also, you can find more
detailed information on the federal tax treatment of payments from employer plans in: IRS Publication 575, Pension and Annuity Income; IRS Publication 590,
Individual Retirement Arrangements (IRAs); and IRS Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans). These publications are available from a local
IRS office, on the web at www.irs.gov, or by calling 1-800-TAX-FORM.
Applies to Sections 401 and 403
SPECIAL TAX NOTICE REGARDING PLAN PAYMENTS
Retain For Your Records
This notice is provided to you by Prudential Financial, Inc., on behalf of the plan administrator (“Plan Administrator”).
Right to Defer Distributions from Defined Contribution Plans
You may be eligible to receive a distribution from your employer's retirement plan now. Instead of taking a distribution now, you may elect to defer receiving a
distribution until a later date -- typically as late as age 70-1/2. (If your account balance does not exceed $5,000 (or the amount of your plan’s cashout threshold),
you may not have a right to defer payment.) If you defer receiving a distribution, the plan investment options available to you thereafter (including related fees)
generally will be the same as those available to active employees. However, certain plan features, such as the right to repay or take a loan from the plan, may
not be available if you have terminated employment. Please refer to your summary plan description and fund fact sheets for more information about plan
investment options, investment related expenses, any plan restrictions or charges applicable to terminated employees, payment options, and any other special
rules that may impact your distribution decision. If you elect to receive a distribution that you roll over to another eligible retirement plan such as an IRA, the
investment options offered under your current employer's plan (e.g., mutual funds, employer stock) may not be available to you or, if available, are likely to carry
higher expenses if transferred to an IRA. If you elect to receive a distribution but do not roll it over to another eligible retirement plan, such action triggers
taxation (possibly including a 10% penalty), results in loss of future tax-deferred earnings (if any), and may diminish the funds available to you for retirement
purposes. For additional information about plan investment options (and related fees), plan restrictions or charges applicable to terminated employees who defer
receiving a distribution, or if you have other questions regarding your right to defer a distribution, and the consequences of failing to defer, please contact
Prudential at the number provided on your benefit statement.
For Payments From a Designated Roth Account
This notice describes the rollover rules that apply to payments from your employer’s plan (the “Plan”) that are from a
designated Roth account. A different notice is provided for payments not from a designated Roth account.
YOUR ROLLOVER OPTIONS
This notice is provided to you because all or part of the payments that you may receive from a designated Roth account in the Plan may be eligible for rollover
to a Roth IRA or designated Roth account in an eligible employer plan. This notice is intended to help you decide whether to do such a rollover. If you have
additional questions after reading this notice, you can contact your Plan Administrator.
Rules that apply to most payments from a designated Roth account are described in the “General Information About Rollovers” section. Special rules that only
apply in certain circumstances are described in the “Special Rules and Options” section.
GENERAL INFORMATION ABOUT ROLLOVERS
How can a rollover affect my taxes?
After-tax contributions included in a payment from a designated Roth account are not taxed, but earnings might be taxed. The tax treatment of earnings
included in the payment depends on whether the payment is a qualified distribution. If a payment is only part of your designated Roth account, the payment
will include an allocable portion of the earnings in your designated Roth account.
If the payment from the Plan is not a qualified distribution and you do not do a rollover to a Roth IRA or a designated Roth account in an employer plan, you will
be taxed on the earnings in the payment. If you are under age 59½, a 10% additional income tax on early distributions will also apply to the earnings (unless an
exception applies). However, if you do a rollover, you will not have to pay taxes currently on the earnings and you will not have to pay taxes later on payments
that are qualified distributions.
If the payment from the Plan is a qualified distribution, you will not be taxed on any part of the payment even if you do not do a rollover. If you do a rollover,
you will not be taxed on the amount you roll over and any earnings on the amount you roll over will not be taxed if paid later in a qualified distribution.
A qualified distribution from a designated Roth account in the Plan is a payment made after you are age 59½ (or after your death or disability) and after you
have had a designated Roth account in the Plan for at least 5 years. In applying the 5-year rule, you count from January 1 of the year your first contribution
was made to the designated Roth account. However, if you did a direct rollover to a designated Roth account in the Plan from a designated Roth account in
another employer plan, your participation will count from January 1 of the year your first contribution was made to the designated Roth account in the Plan or, if
earlier, to the designated Roth account in the other employer plan.
Ed. 12/2009
Where may I roll over the payment?
You may roll over the payment to either a Roth IRA (a Roth individual retirement account or Roth individual retirement annuity) or a designated Roth account in
an employer plan (a tax-qualified plan or section 403(b) plan) that will accept the rollover. The rules of the Roth IRA or employer plan that holds the rollover will
determine your investment options, fees, and rights to payment from the Roth IRA or employer plan (for example, no spousal consent rules apply to Roth IRAs
and Roth IRAs may not provide loans). Further, the amount rolled over will become subject to the tax rules that apply to the Roth IRA or the designated Roth
account in the employer plan. In general, these tax rules are similar to those described elsewhere in this notice, but differences include:

If you do a rollover to a Roth IRA, all of your Roth IRAs will be considered for purposes of determining whether you have satisfied the 5-year rule
(counting from January 1 of the year for which your first contribution was made to any of your Roth IRAs).

If you do a rollover to a Roth IRA, you will not be required to take a distribution from the Roth IRA during your lifetime and you must keep track of the
aggregate amount of the after-tax contributions in all of your Roth IRAs (in order to determine your taxable income for later Roth IRA payments that
are not qualified distributions).
Eligible rollover distributions from a Roth IRA can only be rolled over to another Roth IRA.

How do I do a rollover?
There are two ways to do a rollover. You can either do a direct rollover or a 60-day rollover.
If you do a direct rollover, the Plan will make the payment directly to your Roth IRA or designated Roth account in an employer plan. You should contact the
Roth IRA sponsor or the administrator of the employer plan for information on how to do a direct rollover.
If you do not do a direct rollover, you may still do a rollover by making a deposit within 60 days into a Roth IRA, whether the payment is a qualified or
nonqualified distribution. In addition, you can do a rollover by making a deposit within 60 days into a designated Roth account in an employer plan if the
payment is a nonqualified distribution and the rollover does not exceed the amount of the earnings in the payment. You cannot do a 60-day rollover to an
employer plan of any part of a qualified distribution. If you receive a distribution that is a nonqualified distribution and you do not roll over an amount at least
equal to the earnings allocable to the distribution, you will be taxed on the amount of those earnings not rolled over, including the 10% additional income tax on
early distributions if you are under age 59½ (unless an exception applies).
If you do a direct rollover of only a portion of the amount paid from the Plan and a portion is paid to you, each of the payments will include an allocable portion of
the earnings in your designated Roth account.
If you do not do a direct rollover and the payment is not a qualified distribution, the Plan is required to withhold 20% of the earnings for federal income taxes (up
to the amount of cash and property received other than employer stock). This means that, in order to roll over the entire payment in a 60-day rollover to a Roth
IRA, you must use other funds to make up for the 20% withheld.
How much may I roll over?
If you wish to do a rollover, you may roll over all or part of the amount eligible for rollover. Any payment from the Plan is eligible for rollover, except:

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Certain payments spread over a period of at least 10 years or over your life or life expectancy (or the lives or joint life expectancy of you and your
beneficiary)
Required minimum distributions after age 70½ (or after death)
Hardship distributions
ESOP dividends
Corrective distributions of contributions that exceed tax law limitations
Loans treated as deemed distributions (for example, loans in default due to missed payments before your employment ends)
Cost of life insurance paid by the Plan
Contributions made under special automatic enrollment rules that are withdrawn pursuant to your request within 90 days of enrollment
Amounts treated as distributed because of a prohibited allocation of S corporation stock under an ESOP (also, there will generally be adverse tax
consequences if S corporation stock is held by an IRA).
The Plan administrator or the payor can tell you what portion of a payment is eligible for rollover.
If I don’t do a rollover, will I have to pay the 10% additional income tax on early distributions?
If a payment is not a qualified distribution and you are under age 59½, you will have to pay the 10% additional income tax on early distributions with respect to
the earnings allocated to the payment that you do not roll over (including amounts withheld for income tax), unless one of the exceptions listed below applies.
This tax is in addition to the regular income tax on the earnings not rolled over.
The 10% additional income tax does not apply to the following payments from the Plan:

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Payments made after you separate from service if you will be at least age 55 in the year of the separation
Payments that start after you separate from service if paid at least annually in equal or close to equal amounts over your life or life expectancy (or the
lives or joint life expectancy of you and your beneficiary)
Payments made due to disability
Payments after your death
Payments of ESOP dividends
Corrective distributions of contributions that exceed tax law limitations
Cost of life insurance paid by the Plan
Contributions made under special automatic enrollment rules that are withdrawn pursuant to your request within 90 days of enrollment


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
Payments made directly to the government to satisfy a federal tax levy
Payments made under a qualified domestic relations order (QDRO)
Payments up to the amount of your deductible medical expenses
Certain payments made while you are on active duty if you were a member of a reserve component called to duty after September 11, 2001 for more
than 179 days
If I do a rollover to a Roth IRA, will the 10% additional income tax apply to early distributions from the IRA?
If you receive a payment from a Roth IRA when you are under age 59½, you will have to pay the 10% additional income tax on early distributions on the
earnings paid from the Roth IRA, unless an exception applies or the payment is a qualified distribution. In general, the exceptions to the 10% additional income
tax for early distributions from a Roth IRA listed above are the same as the exceptions for early distributions from a plan. However, there are a few differences
for payments from a Roth IRA, including:




There is no special exception for payments after separation from service.
The exception for qualified domestic relations orders (QDROs) does not apply (although a special rule applies under which, as part of a
divorce or separation agreement, a tax-free transfer may be made directly to a Roth IRA of a spouse or former spouse).
The exception for payments made at least annually in equal or close to equal amounts over a specified period applies without regard to
whether you have had a separation from service.
There are additional exceptions for (1) payments for qualified higher education expenses, (2) payments up to $10,000 used in a
qualified first-time home purchase, and (3) payments after you have received unemployment compensation for 12 consecutive weeks
(or would have been eligible to receive unemployment compensation but for self-employed status).
Will I owe State income taxes?
This notice does not describe any State or local income tax rules (including withholding rules).
SPECIAL RULES AND OPTIONS
If you miss the 60-day rollover deadline
Generally, the 60-day rollover deadline cannot be extended. However, the IRS has the limited authority to waive the deadline under certain extraordinary
circumstances, such as when external events prevented you from completing the rollover by the 60-day rollover deadline. To apply for a waiver, you must file a
private letter ruling request with the IRS. Private letter ruling requests require the payment of a nonrefundable user fee. For more information, see IRS
Publication 590, Individual Retirement Arrangements (IRAs).
If your payment includes employer stock that you do not roll over
If you receive a payment that is not a qualified distribution and you do not roll it over, you can apply a special rule to payments of employer stock (or other
employer securities) that are paid in a lump sum after separation from service (or after age 59½, disability, or the participant’s death). Under the special rule, the
net unrealized appreciation on the stock included in the earnings in the payment will not be taxed when distributed to you from the Plan and will be taxed at
capital gain rates when you sell the stock. If you do a rollover to a Roth IRA for a nonqualified distribution that includes employer stock (for example, by selling
the stock and rolling over the proceeds within 60 days of the distribution), you will not have any taxable income and the special rule relating to the distributed
employer stock will not apply to any subsequent payments from the Roth IRA or employer plan. Net unrealized appreciation is generally the increase in the
value of the employer stock after it was acquired by the Plan. The Plan Administrator can tell you the amount of any net unrealized appreciation.
If you receive a payment that is a qualified distribution that includes employer stock and you do not roll it over, your basis in the stock (used to determine gain
or loss when you later sell the stock) will equal the fair market value of the stock at the time of the payment from the Plan.
If you have an outstanding loan that is being offset
If you have an outstanding loan from the Plan, your Plan benefit may be offset by the amount of the loan, typically when your employment ends. The loan
offset amount is treated as a distribution to you at the time of the offset and, if the distribution is a nonqualified distribution, the earnings in the loan offset will
be taxed (including the 10% additional income tax on early distributions, unless an exception applies) unless you do a 60-day rollover in the amount of the
earnings in the loan offset to a Roth IRA or designated Roth account in an employer plan.
If you receive a nonqualified distribution and you were born on or before January 1, 1936
If you were born on or before January 1, 1936, and receive a lump sum distribution that is not a qualified distribution and that you do not roll over, special rules
for calculating the amount of the tax on the earnings in the payment might apply to you. For more information, see IRS Publication 575, Pension and Annuity
Income.
If you receive a nonqualified distribution, are an eligible retired public safety officer, and your pension payment is used to pay for health coverage
or qualified long-term care insurance
If the Plan is a governmental plan, you retired as a public safety officer, and your retirement was by reason of disability or was after normal retirement age, you
can exclude from your taxable income nonqualified distributions paid directly as premiums to an accident or health plan (or a qualified long-term care insurance
contract) that your employer maintains for you, your spouse, or your dependents, up to a maximum of $3,000 annually. For this purpose, a public safety officer is
a law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew.
If you are not a plan participant
Payments after death of the participant. If you receive a distribution after the participant’s death that you do not roll over, the distribution will generally be taxed in
the same manner described elsewhere in this notice. However, whether the payment is a qualified distribution generally depends on when the participant first
made a contribution to the designated Roth account in the Plan. Also, the 10% additional income tax on early distributions and the special rules for public safety
officers do not apply, and the special rule described under the section “If you receive a nonqualified distribution and you were born on or before January 1, 1936”
applies only if the participant was born on or before January 1, 1936.
If you are a surviving spouse. If you receive a payment from the Plan as the surviving spouse of a deceased participant, you have the
same rollover options that the participant would have had, as described elsewhere in this notice. In addition, if you choose to do a rollover to
a Roth IRA, you may treat the Roth IRA as your own or as an inherited Roth IRA. A Roth IRA you treat as your own is treated like any other
Roth IRA of yours, so that you will not have to receive any required minimum distributions during your lifetime and earnings paid to you in a
nonqualified distribution before you are age 59½ will be subject to the 10% additional income tax on early distributions (unless an exception
applies). If you treat the Roth IRA as an inherited Roth IRA, payments from the Roth IRA will not be subject to the 10% additional income tax
on early distributions. An inherited Roth IRA is subject to required minimum distributions. If the participant had started taking required
minimum distributions from the Plan, you will have to receive required minimum distributions from the inherited Roth IRA. If the participant
had not started taking required minimum distributions, you will not have to start receiving required minimum distributions from the inherited
Roth IRA until the year the participant would have been age 70½.
If you are a surviving beneficiary other than a spouse. If you receive a payment from the Plan because of the participant’s death and you
are a designated beneficiary other than a surviving spouse, the only rollover option you have is to do a direct rollover to an inherited Roth
IRA. Payments from the inherited Roth IRA, even if made in a nonqualified distribution, will not be subject to the 10% additional income tax
on early distributions. You will have to receive required minimum distributions from the inherited Roth IRA.
Payments under a qualified domestic relations order. If you are the spouse or a former spouse of the participant who receives a payment from the Plan under a
qualified domestic relations order (QDRO), you generally have the same options the participant would have (for example, you may roll over the payment as
described in this notice).
If you are a nonresident alien
If you are a nonresident alien and you do not do a direct rollover to a U.S. IRA or U.S. employer plan, instead of withholding 20%, the Plan is generally required to
withhold 30% of the payment for federal income taxes. If the amount withheld exceeds the amount of tax you owe (as may happen if you do a 60-day rollover),
you may request an income tax refund by filing Form 1040NR and attaching your Form 1042-S. See Form W-8BEN for claiming that you are entitled to a
reduced rate of withholding under an income tax treaty. For more information, see also IRS Publication 519, U.S. Tax Guide for Aliens, and IRS Publication 515,
Withholding of Tax on Nonresident Aliens and Foreign Entities.
Other special rules
If a payment is one in a series of payments for less than 10 years, your choice whether to make a direct rollover will apply to all later payments in the series
(unless you make a different choice for later payments).
If your payments for the year (only including payments from the designated Roth account in the Plan) are less than $200, the Plan is not required to allow you to
do a direct rollover and is not required to withhold for federal income taxes. However, you can do a 60-day rollover.
Unless you elect otherwise, a mandatory cashout from the designated Roth account in the Plan of more than $1,000 will be directly rolled over to a Roth IRA
chosen by the Plan Administrator or the payor. A mandatory cashout is a payment from a plan to a participant made before age 62 (or normal retirement age, if
later) and without consent, where the participant’s benefit does not exceed $5,000, or the amount of your plan’s cashout threshold (not including any amounts
held under the plan as a result of a prior rollover made to the plan).
You may have special rollover rights if you recently served in the U.S. Armed Forces. For more information, see IRS Publication 3, Armed Forces’ Tax Guide.
If you expatriate from the U.S., you may be subject to special rules, and should consult with your personal tax advisor to determine if you are required to provide
Prudential with IRS Form W-8CE.
FOR MORE INFORMATION
You may wish to consult with the Plan Administrator or payor, or a professional tax advisor, before taking a payment from the Plan. Also, you can find more
detailed information on the federal tax treatment of payments from employer plans in: IRS Publication 575, Pension and Annuity Income; IRS Publication 590,
Individual Retirement Arrangements (IRAs); and IRS Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans). These publications are available from a local
IRS office, on the web at www.irs.gov, or by calling 1-800-TAX-FORM.