415 COMPLIANCE APPENDIX
TO
STERLING CHEMICALS, INC. AMENDED AND RESTATED HOURLY PAID
EMPLOYEES’ PENSION PLAN
This Appendix
incorporates the elections made in the 415 Compliance Election Form
adopted by the Sponsor for purposes of amending the Plan to comply
with modifications to the Code Section 415 limits made by the
Pension Funding Equity Act of 2004 (the “PFEA”), the
Pension Protection Act of 2006 (“PPA”) and final
regulations released on April 4, 2007 under Code
Section 415 (“final 415 regulations”). This
Appendix, together with the 415 Compliance Election Form, is
intended as good faith compliance with the requirements of the
PFEA, PPA, and final 415 regulations.
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1.
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Effective
beginning the first day of the first limitation year beginning on
or after July 1, 2007, the following supersedes and replaces
the provisions of Article XII of the Plan.
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ARTICLE XII
MAXIMUM RETIREMENT BENEFITS
For purposes of
this Article XII, the following terms have the following
meanings.
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(a)
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An
“ affiliated employer ” means any corporation or
business, other than an Employer, which would be aggregated with an
Employer for a relevant purpose under Code Section 414 as
modified by Code Section 415(h).
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(b)
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A
Participant’s “ aggregate annual retirement
benefit ” means the sum of his “annual retirement
benefit” under the Plan and his “annual retirement
benefit”, if any, under any and all other “defined
benefit plans” (whether or not terminated) maintained by an
Employer, any “affiliated employer”, or a
“predecessor employer” that are required to be
aggregated with the Plan in accordance with the provisions of
Treasury Regulations Section 1.415(f)-1.
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For
purposes of applying the “defined benefit compensation
limitation”, a Participant’s “aggregate annual
retirement benefit” shall exclude any benefits accrued by the
Participant under a multiemployer plan. For purposes of applying
the “defined benefit dollar limitation”, a
Participant’s “aggregate annual retirement
benefit” shall exclude benefits accrued by the Participant
under a multiemployer plan, except to the extent such benefits are
provided by the Employer (or an “affiliated
employer”).
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(c)
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A
Participant’s “ annual retirement benefit
” means the amount of retirement benefit attributable to
Employer contributions which is payable to him annually under the
Plan adjusted to the actuarially equivalent straight life annuity
form using the factors prescribed in the following paragraphs if
such benefit is to be paid in a manner other than to the
Participant for his life only. A Participant’s “annual
retirement benefit” includes Social Security supplements
described in Code Section 411(a)(9) and benefits transferred
from another “defined benefit plan”, other than
transfers of distributable benefits pursuant to Treasury
Regulations Section 1.411(d)-4, Q&A-3(c), but shall not
include benefits attributable to a Participant’s
“employee contributions.”
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For
purposes of determining a Participant’s “annual
retirement benefit”, the following shall apply:
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(i)
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If
payment is to be made in a form other than to the Participant for
his life only, and such form is not subject to the requirements of
Code Section 417(e)(3), the actuarially equivalent straight
life annuity shall be determined in accordance with the provisions
of subparagraph (A) or (B) below, as
applicable.
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(A)
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For
“limitation years” beginning before July 1, 2007,
the annual amount of straight life annuity commencing on the same
Annuity Starting Date with the same actuarial present value as the
Participant’s form of payment computed using the following
factors, whichever produces the greater amount: (I) the
interest rate and mortality table otherwise used under the Plan for
purposes of determining Actuarial Equivalence of optional forms not
subject to the requirements of Code Section 417(e)(3) or
(II) the “applicable mortality table” and
5 percent.
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(B)
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For
“limitation years” beginning on and after July 1,
2007, the greater of (I) the annual amount of straight life
annuity, if any, payable to the Participant under the Plan
commencing at the same Annuity Starting Date as the
Participant’s form of payment or (II) the annual amount
of straight life annuity commencing at the same Annuity Starting
Date that has the same actuarially equivalent present value as the
Participant’s form of payment computed using the
“applicable mortality table” and an interest rate of 5
percent.
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(ii)
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If
payment is to be made to the Participant in a form that is subject
to the requirements of Code Section 417(e)(3), the actuarially
equivalent straight life annuity form shall be:
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(A)
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For
distributions with an Annuity Starting Date in the 2004 or 2005
Plan Year, the annual amount of straight life annuity commencing on
the same Annuity Starting Date that has the same actuarially
equivalent present value as the Participant’s form of payment
determined using the following, whichever provides the greater
annual amount: (I) the mortality table and interest rate
otherwise used under the Plan for purposes of determining Actuarial
Equivalence of such optional form or (II) the
“applicable
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mortality
table” and an interest rate of 5.5 percent; provided,
however, that for distributions with an Annuity Starting Date on or
after the first day of the 2004 Plan Year and before
January 1, 2005 Plan Year, use of the interest rate specified
in clause (II) shall not reduce the benefit payable to the
Participant below the amount determined using the “applicable
interest rate” in effect as of the last day of the last Plan
Year beginning before January 1, 2004. For purposes of this
subparagraph (A), the “applicable interest rate” means
the annual rate of interest on 30-year Treasury securities for the
second calendar month preceding the Plan Year in which the Annuity
Starting Date occurs.
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(B)
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For
distributions with an Annuity Starting Date after the 2005 Plan
Year, the annual amount of straight life annuity commencing on the
same Annuity Starting Date that has the same actuarially equivalent
present value as the Participant’s form of payment determined
using the following, whichever provides the greatest annual amount:
(I) the mortality table and interest rate otherwise used under
the Plan for purposes of determining Actuarial Equivalence of such
optional form; (II) the “applicable mortality
table” and an interest rate of 5.5 percent; or
(III) the “applicable mortality table” and the
“417(e) interest rate” determined as of the second
calendar month preceding the Plan Year in which the distribution is
made, divided by 1.05. For purposes of this subparagraph (B), the
“417(e) interest rate” means the following:
(1) prior to the Plan Year beginning in 2008, the
“applicable interest rate” described in subparagraph
(A) above and (2) for Plan Years beginning on and after
January 1, 2008, the adjusted first, second and third segment
rates applied under Code Section 430(h)(2)(C), computed
without regard to a 24 month average; provided, however, that
for Plan Years beginning in 2008, 2009, 2010, and 2011, such rate
shall be blended with the “applicable interest rate”
described in subparagraph (A) above, as provided in Code
Section 417(e)(3)(D)(ii) and (iii).
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(iii)
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A
form of payment is not subject to the requirements of Code
Section 417(e)(3) if the form of payment is either (A) a
nondecreasing annuity (other than a straight life annuity) payable
for a period not less than the life of the Participant (or in the
case of a Qualified Preretirement Survivor Annuity, the life of the
Participant’s Spouse) or (B) an annuity that decreases
during the life of the Participant merely because of (I) the
death of the Participant’s Beneficiary under a joint and
survivor annuity, but only if the reduction is not below
50 percent of the benefit payable before the death of the
Beneficiary or (II) cessation or reduction of Social Security
supplements or qualified disability payments, as defined in Code
Section 411(a)(9).
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(iv)
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No
actuarial adjustment shall be made hereunder for (A) survivor
benefits payable to a surviving Spouse under a Qualified Joint and
Survivor Annuity to the extent such benefits would not be payable
if the Participant’s benefit were paid in another form,
(B) benefits that are not directly related to retirement
benefits (such as qualified disability benefits, preretirement
incidental death benefits, and
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post-retirement medical benefits),
or (C) the inclusion in the form of payment of an automatic
benefit increase feature, provided that (I) the form of
payment is not subject to Code Section 417(e)(3) and would
otherwise satisfy the limitations of this Article and (II) the
Plan provides that the amount payable under the form of payment in
any “limitation year” shall not exceed the limits of
this Article applicable as of the Annuity Starting Date, increased
in subsequent years pursuant to Code Section 415(d). For
purposes of clause (C), an automatic benefit increase feature is
included in a form of payment if the form of payment provides for
automatic, periodic increases to benefits paid in that
form.
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(v)
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If
a Participant has or will have distributions commencing at more
than one Annuity Starting Date, the “annual retirement
benefit” shall be determined as of each Annuity Starting Date
(and shall satisfy the limitations of this Article as of each such
date), actuarially adjusting for past and future distributions of
benefits commencing as of other Annuity Starting Dates. For
purposes of this paragraph (v), the determination of whether a new
Annuity Starting Date has occurred shall be made without regard to
Treasury Regulations Section 1.401(a)-20, Q&A 10(d), but
with regard to Treasury Regulations
Sections 1.415(b)-1(b)(1)(iii)(B) and (C).
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(d)
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The
“ applicable mortality table ” means the
following: (i) prior to the first day of the first Plan Year
beginning on or after January 1, 2008, the table prescribed by
the Secretary of the Treasury, which is the table specified in
Revenue Ruling 2001-62 and (ii) on and after the first day of
the first Plan Year beginning on or after January 1, 2008, the
applicable Code Section 417(e)(3) mortality table.
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(e)
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“ Defined benefit plan
” and “ defined contribution plan ” have
the meanings given such terms in Code
Section 415(k).
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(f)
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“ Defined benefit
compensation limitation ” means 100 percent of a
Participant’s average “415 compensation” for his
high three consecutive calendar years of service. In the case of a
Participant who has fewer than 10 years of service with the
employer, the “defined benefit compensation limitation”
shall be multiplied by a fraction, (i) the numerator of which
is the number of years (or part thereof, but not less than one) of
service with the employer and (ii) the denominator of which is 10.
For purposes of this subsection, a Participant is credited with a
“year of service” (computed to fractional years) for
each Service Computation Period for which he is credited with the
number of Hours of Service required to accrue Credited Service
under the terms of the Plan, taking into account service with the
Employers, any “affiliated employer”, or a
“predecessor employer.”
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(g)
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“ Defined benefit dollar
limitation ” means $160,000, as adjusted , effective
January 1 of each year, under Code Section 415(d) in such manner as
the Secretary of the Treasury shall prescribe, and payable in the
form of a straight life annuity. A limitation adjusted under Code
Section 415(d) will apply to “limitation years” ending
with or within the calendar year for which the adjustment applies.
A Participant’s “annual retirement benefit
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