Limitations on Benefits

The Internal Revenue Code imposes certain limitations on the annual pension benefits the Plan may pay to a Participant and the compensation used to determine those benefits. These limits are applied on an “employer-by-employer” basis which means that the limits are applied separately to each Employer (along with its affiliated employers) for whom the Participant has worked.

Limitation on Compensation
Beginning in 1989, the law imposes a limit (on an “employer-by-employer” basis) on the amount of Covered Earnings in any Plan Year which the Plan may recognize for purposes of calculating a Participant’s accrued retirement and/or death benefits. The limit, which started at $200,000 for the 1989 Plan Year, was indexed to the cost of living each year. The 1996 limit was $254,080.

However, effective January 1, 1997, the limit on compensation was reduced by law to $160,000. The limit is indexed to the cost of living. For the years 1998 and 1999 the limit has remained $160,000. For the years 2000 thru 2003, it is $170,000, which will not be indexed for cost of living adjustments. Beginning January 1, 2004, the annual compensation limit set forth in the Plan was $205,000, which will not be indexed for cost of living adjustments, where it has remained to date.

Remember, this limit is applied separately to each Employer (and its affiliated employers) so in 1999, for example, the Plan will recognize up to $160,000 in compensation from each Employer for whom you work. If you earn more than $160,000 from one Employer in 1999, no pension benefits or death benefits will be paid on the contributions attributable to those excess earnings. On the other hand, if you earn $145,000 from each of two different unaffiliated Employers, the Plan will recognize $290,000 in compensation for the year.

PLEASE NOTE: This maximum is different from the maximum described under Covered Earnings.

Limitation on Annual Benefits
The Plan is also required to limit (on an “employer-by-employer” basis) the amount of the annual benefit payable to Participants. The maximum benefit payable is based on the amount payable at social security retirement age and is reduced if benefits start earlier or the benefit is paid in a form other than a Five-Year Certain and Life Annuity or increased if benefits start later. For the year 2004, the limit is about $148,322 at age 65. The annual benefit limits will not be indexed to the cost of living.

If the annual retirement benefit exceeds the maximum benefit permitted, the Participant’s benefit will be reduced. This limitation is also applied to each Employer (along with its affiliated employers) separately. Prior to January 1, 2000, benefits paid from terminated pension and profit sharing plans of your Employers (including a loan-out company) were aggregated with benefits from the Plan for this purpose. When you retire, you will be required to certify as to benefits provided by other defined benefit plans of your Employers.