Salary Reduction Contributions

This Plan permits salary reduction contributions. Salary reduction contributions allow you to make contributions to the Plan from your compensation on a pre-tax basis or Roth basis. Pre-tax contributions are not taxed at the time they are contributed to the Plan, but rather are taxed, along with related earnings, at the time they are distributed from the Plan unless you roll them over to another qualified retirement plan or IRA (e.g., upon retirement or termination of employment). Social Security and Medicare taxes, however, apply to pre-tax contributions when they are contributed to the Plan. In contrast, Roth contributions are taxed at the time they are contributed to the Plan. However, as long as you meet certain criteria, your Roth contributions and related earnings will not be taxed at the time they are distributed from the Plan. You can also elect to make after-tax contributions to the Plan if permitted by the applicable Record Keeper.

Participation in the salary reduction portion of the Plan is wholly voluntary. If you wish to contribute, you must complete the enrollment procedures that are required to begin making contributions and designate whether such salary reductions will be pre-tax, Roth, or after-tax. However, in some cases you will be automatically enrolled in the Plan (see below); except that the automatic enrollment rules do not apply to adjunct employees.

Your election to begin making contributions can be made at any time after you become eligible and your contributions will commence as of the first payroll period administratively practicable after your election. The enrollment procedures also provide you with an opportunity to affirmatively decline participation in the Plan.

You can choose to cease contributing at any time by following the procedures for ceasing contributions, in which case your contributions will cease as of the first payroll period administratively practicable after your election. You can also change your contribution amount at any time and the change will be effective for the first payroll period administratively practicable following the Plan’s receipt of the change.

All elections to participate, to cease contributions, or change contributions must be made in accordance with the procedures established by the Plan Administrator. Generally, you can change an existing salary reduction election by completing and submitting a new salary reduction agreement and/or following such other procedures established by the Plan Administrator.

Your salary reduction contributions are limited to 80% of compensation, provided that the amount you elect to contribute cannot exceed your remaining compensation after taking into account other deductions (for example, income tax withholding or health insurance premiums).

For salary reduction contribution purposes, your “compensation” means your W-2 earnings, plus salary reduction contributions to this Plan, to a qualified transportation plan or to a cafeteria plan. However, compensation does not include severance pay, other post-termination of employment pay (although payouts of unused bona fide sick or vacation pay are included), or any amounts in excess of the compensation limit of Internal Revenue Code Section 401(a)(17) (for 2016 this amount is $265,000, and it is adjusted for cost of living changes after 2016). Contributions for a pay period will be based only on compensation payable with respect to such pay period.

NOTE: The Internal Revenue Code and its regulations impose various rules and limitations on contributions that can be made to the Plan. Accordingly, the University’s obligation to contribute to the Plan is subject to those rules and limitations.

Automatic Enrollment Contributions for Employees who are Immediately Eligible to Participate

If you are immediately eligible to participate in the Plan on your date of hire or re-hire, but you do not make a salary reduction election of any kind (neither an election to contribute to the Plan nor an affirmative election to forego making contributions), RIT will automatically withhold 2% of your compensation and contribute that amount on a pre-tax basis to an account for you under the Plan. Automatic enrollment will begin as of the first payroll period commencing 60 days after commencement of employment.

Annual Increase for all Automatically Enrolled Employees

If you have been automatically enrolled in the Plan, your contribution percentage will increase by 1% annually on the first payroll period starting on or after July 1st of the first calendar year following the Plan Year when your automatic enrollment began.

For example, assume RIT started withholding 2% of your compensation due to automatic enrollment beginning on March 1, 2016. If you did not elect to contribute a different amount or elect to cease contributions, the 2% contribution would increase to 3% on the first payroll period starting on or after July 1, 2017, to 4% on the first payroll period starting on or after July 1, 2018, to 5% on the first payroll period starting on or after July 1, 2019, to 6% on the first payroll period starting on or after July 1, 2020, etc.

Automatic Enrollment Changes

You will receive a notice setting forth the Plan’s automatic enrollment provisions on or about your date of hire (or before automatic enrollment begins if you are a current employee) and each year thereafter that you are subject to automatic enrollment. You can change the automatic contribution percentage or cease making contributions at any time by completing the necessary forms.

Other Salary Reduction Elections

The Plan Administrator may implement other procedures for making salary reduction elections. For example, the Plan Administrator may adopt procedures so that participants can elect to defer the maximum amount permitted under the Plan or to periodically automatically increase their deferral elections.

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