Help for item A.20a.

GENERAL:

This definition of Compensation is generally used for allocating contributions. See item A.26 for the definition of Testing Compensation that is used applying plan limits (e.g., Code section 415, Key Employee). The responses to questions regarding "Compensation" will have no effect on the definition "Testing Compensation".

The options include:

W-2. Wages within the meaning of Code section 3401(a) and all other payments of compensation to an Employee by the Employer (in the course of the Employer's trade or business) for which the Employer is required to furnish the Employee a written statement under Code sections 6041(d), 6051(a)(3), and 6052.

Withholding. Wages within the meaning of Code section 3401(a) for the purposes of income tax withholding at the source.

415 Safe Harbor. Only those items specified in Treas. Reg. section 1.415(c)-2(b)(1) and excluding all those items listed in Treas. Reg. section 1.415(c)-2(c).

BASIC PLAN DOCUMENT:

Article 2 Definitions:

"Compensation" shall have the meaning set forth in the Adoption Agreement.

Compensation must be determined without regard to any rules under Code section 3401(a) that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code section 3401(a)(2)). For any Self-Employed Individual covered under the Plan, Compensation will mean Earned Income.

For Limitation Years beginning on or after July 1, 2007, or such earlier date as specified in the Effective Date Addendum to the Adoption Agreement, Compensation for a year shall also include compensation paid by the later of 2-1/2 months after an Employee's severance from employment with the employer maintaining the Plan or the end of the year that includes the date of the employee's severance from employment with the employer maintaining the plan, if the payment is regular compensation for services during the employee's regular working hours, or compensation for services outside the employee's regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments, and, absent a severance from employment, the payments would have been paid to the employee while the employee continued in employment with the employer.

Except as provided in the Adoption Agreement, any payments not described above shall not be considered Compensation if paid after severance from employment, even if they are paid by the later of 2-1/2 months after the date of severance from employment or the end of the year that includes the date of severance from employment. Notwithstanding the foregoing and to the extent provided in the Adoption Agreement, Compensation includes: (a) payments made to an individual who does not currently perform services for the employer by reason of qualified military service (within the meaning of section 414(u)(1)) to the extent these payments do not exceed the amounts the individual would have received if the individual had continued to perform services for the employer rather than entering qualified military service; and (b) payments made to a Participant who is permanently and totally disabled, as defined in Code section 22(e)(3), provided that salary continuation applies to all Participants who are permanently and totally disabled for a fixed or determinable period.

Back pay, within the meaning of Treas. Reg. section 1.415(c)-2(g)(8), shall be treated as Compensation for the year to which the back pay relates to the extent the back pay represents wages and compensation that would otherwise be included under this definition.

To the extent provided in the Adoption Agreement, Compensation shall also include "deemed section 125 compensation". Deemed section 125 compensation is an amount that is excludable under Code section 106 that is not available to a Participant in cash in lieu of group health coverage under a Code section 125 arrangement solely because the Participant is unable to certify that he or she has other health coverage. Amounts are deemed section 125 compensation only if the employer does not request or otherwise collect information regarding the Participant's other health coverage as part of the enrollment process for the health plan.

For any Plan Year, the annual compensation of each Participant taken into account in determining allocations for any Plan Year beginning after December 31, 2001, shall not exceed $200,000, as adjusted for cost-of-living increases in accordance with Code section 401(a)(17)(B). Annual compensation means Compensation during the Plan Year or such other consecutive 12-month period over which Compensation is otherwise determined under the Plan (the determination period). The cost-of-living adjustment in effect for a calendar year applies to annual compensation for the determination period that begins with or within such calendar year.

If a determination period consists of fewer than 12 months, the annual Compensation limit is an amount equal to the otherwise applicable annual Compensation limit multiplied by a fraction, the numerator of which is the number of months in the short determination period, and the denominator of which is 12.

The foregoing is only intended to be a brief overview of applicable plan provisions. You should carefully review the entire Adoption Agreement and the entire Basic Plan Document to ensure that your responses to the Adoption Agreement questions accurately reflect the intended design of the plan.

Compensation