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AMENDMENT AND RESTATEMENT TO THE UPS DEFERRED COMPENSATION PLAN

Employee Benefits Plan Agreement

AMENDMENT AND RESTATEMENT TO THE UPS DEFERRED COMPENSATION PLAN | Document Parties: UNITED PARCEL SERVICE INC You are currently viewing:
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UNITED PARCEL SERVICE INC

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Title: AMENDMENT AND RESTATEMENT TO THE UPS DEFERRED COMPENSATION PLAN
Governing Law: Georgia     Date: 2/27/2009
Industry: Air Courier     Sector: Transportation

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Exhibit 10.10

AMENDMENT AND RESTATEMENT

TO THE

UPS DEFERRED COMPENSATION PLAN

WHEREAS, United Parcel Service of America, Inc. established the UPS Deferred Compensation Plan (“Plan”); and

WHEREAS, United Parcel Service of America, Inc. desires to amend and restate the Plan to comply with changes to the Internal Revenue Code.

NOW THEREFORE, the UPS Deferred Compensation Plan is hereby amended and restated in the form attached effective as of January 1, 2008.

IN WITNESS WHEREOF, the undersigned certify that United Parcel Service of America, Inc. based upon action by the Board of Directors on December 19, 2008 has caused the attached amendment and restatement of the UPS Deferred Compensation Plan to be adopted.

 

ATTEST:

 

 

UNITED PARCEL SERVICE OF AMERICA, INC.

/s/ Teri P. McClure

 

 

/s/ D. Scott Davis

Teri P. McClure

 

 

D. Scott Davis

Secretary

 

 

Chairman


UPS Deferred Compensation Plan

Rules Governing 2005 and Beyond Salary Deferrals

This communication summarizes the UPS Deferred Compensation Plan as it is in effect beginning January 1, 2008. As a result of changes to the Internal Revenue Code, the UPS Deferred Compensation Plan permits only salary deferrals on and after January 1, 2005 (the 2005 and Beyond Salary Deferral Feature). For the rules governing salary and stock option deferrals made prior to January 1, 2005 (into the 2004 and Before Salary Deferral Feature or the Stock Option Deferral Feature), you must refer to the 2004 Summary Plan Description. (A copy of the 2004 Summary Plan Description may be obtained on the Plan Web site at http://upssavings.csplans.com or from the Corporate Compensation Department.)

The UPS Deferred Compensation Plan is a non-qualified plan that does not meet the tax code requirements for a qualified retirement plan and is not subject to most of the requirements of ERISA. Amounts deferred under the Plan remain part of UPS’s general assets and are subject to the claims of UPS’s and your employer’s creditors. In the event of UPS’s or your employer’s insolvency or bankruptcy, your benefit under this Plan could be entirely lost.

This booklet constitutes part of the official prospectus covering securities that have been registered under the Securities Act of 1933.

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved the securities offered by this prospectus or determined that this prospectus is accurate or complete.

Any representation to the contrary is a criminal offense.


2009 UPS Deferred Compensation Plan  |  1

 

UPS Deferred Compensation Plan

 

Table of Contents

  

 

PLAN DESCRIPTION

  

2

Eligibility

  

4

Investment Options

  

10

Distribution Options

  

12

Withdrawal Options

  

15

Taxes

  

16

Enrollment Process

  

17

ADDITIONAL INFORMATION

  

18

Plan Administrator

  

18

Plan Amendment or Termination

  

19

Miscellaneous

  

19

Where You Can Find Additional Information

  

21


2  |  Summary Plan Description

 

Summary Plan Description:

2009 UPS Deferred Compensation Plan

PLAN DESCRIPTION

Q. What is the UPS Deferred Compensation Plan?

A. The UPS Deferred Compensation Plan (the “Plan”) is a non-qualified plan that has been established to allow you to defer up to 35 percent of your monthly or semi-monthly compensation. You may also elect to defer up to 100 percent of your half month bonus and the cash portion of your MIP award, and 100 percent of any UPS Savings Plan Average Deferral Percentage (“ADP”) refund for the 2009 Plan Year.

During the Plan’s annual enrollment period (August 25, 2008 at 4:01 p.m. {Eastern Time} - September 26, 2008 at 4 p.m. {Eastern Time}), you may elect to defer from your 2009 monthly or semi-monthly compensation, 2009 half month bonus, the cash portion of your 2009 MIP award, and any 2009 ADP refund.

Even if you do not choose to participate in the Deferred Compensation Plan from your direct pay, you may want to consider electing to defer 100 percent of any refund of pre-tax contributions you may receive from the UPS Savings Plan in the event the Savings Plan fails the ADP Test for Plan Year 2009. Earnings received as the result of the refund will not be deferred to the Deferred Compensation Plan and will be taxable for 2009.

Should the UPS Savings Plan fail the 2009 ADP Test, distributions will occur in March 2010 but are taxable on the 2009 tax return. By electing to defer any pre-tax refund resulting from the 2009 ADP Test, you will defer taxation on the distribution. You will be issued a W2-C in March 2010 for the filing of your 2009 tax return. Roth 401(k) contributions distributed to satisfy the 2009 ADP Test may not be deferred to the Plan.

Please note that your deferrals into the Deferred Compensation Plan will be in addition to your deferrals into the UPS Savings Plan. You may defer one to 35 percent of your monthly or semi-monthly pay, up to 100 percent of your half month bonus and the cash portion of your 2009 MIP award on a pre-tax basis into the Savings Plan, up to the annual maximum. If you are age 50 by the end of 2009, you may also elect a catch-up contribution to the Savings Plan, up to the annual maximum.

For 2009, we anticipate that the annual contribution limits for regular and catch-up contributions will be indexed for inflation. However, the limits have not yet been announced by the Internal Revenue Service. For purposes of illustration, this booklet will use the annual 2008 maximums: $15,500 for regular pre-tax contributions and $5,000 for catch-up contributions.


2009 UPS Deferred Compensation Plan  |  3

 

The Plan also allows non-employee directors of United Parcel Service, Inc. to defer 100 percent of their retainer and meeting fees.

Q. What is a non-qualified plan?

A. A non-qualified plan is a plan which does not meet the tax code requirements for a qualified retirement plan and is not subject to most ERISA requirements. Amounts contributed to a non-qualified plan remain part of the company’s general assets. These assets are subject to the claims of UPS’s and your employer’s creditors, and in the event of UPS’s or your employer’s insolvency or bankruptcy, your interest in the Plan could be entirely lost.

Because of the additional risk associated with non-qualified plans, only non-employee directors and senior level employees may be offered the opportunity to participate.

Example:

A manager’s base salary is $11,750 per month plus half month pay of $5,875 plus a MIP cash portion of $23,500 (for illustration purposes only, the MIP factor is assumed to be 2) for total annual eligible compensation of $170,375. The manager would like to defer the maximum 35 percent of monthly or semi-monthly pay, 100 percent of the half month bonus, and 100 percent of the cash portion of MIP to the UPS Deferred Compensation Plan versus only contributing the maximum $15,500 (actual amount to be determined) per year in the UPS Savings Plan. The manager also elects to defer any return of excess pre-tax contributions distributed as the result of an ADP Test failure for UPS Savings Plan year 2009.

 

 

  

UPS Savings Plan
and UPS Deferred
Compensation Plan

  

UPS Savings Plan
(only)

Total Pay

  

$

170,375

  

$

170,375

Salary Deferrals:

  

  

UPS Savings Plan (max. $15,500)

  

 

-15,500

  

 

-15,500

UPS Deferred Compensation Plan (35 percent)

  

 

-49,350

  

 

N/A

Half Month Bonus (100 percent)

  

 

-5,875

  

 

N/A

Cash Portion of MIP (100 percent)

  

 

-23,500

  

 

N/A

  

 

 

  

 

 

Taxable Income

  

$

76,150

  

$

154,875

Should the UPS Savings Plan fail the 2009 ADP Test, distributions will occur in March 2010 but are taxable on the 2009 tax return. By electing to defer any pre-tax refund resulting from the 2009 ADP Test, the manager will defer 2009 taxation on the pre-tax refund.


4  |  Summary Plan Description

 

Q. How does salary deferral under the qualified UPS Savings Plan differ from the salary deferral under the non-qualified UPS Deferred Compensation Plan?

 

Principal Characteristics:

  

UPS Deferred
Compensation Plan

 

UPS Savings
Plan

Deferral on pre-tax basis

  

Yes

 

Yes

FICA/Medicare withheld on deferrals

  

Yes

 

Yes

Earnings accumulate tax free

  

Yes

 

Yes

Actual funds or assets held in trust safe from creditors

  

No

 

Yes

Distributions subject to income taxes

  

Yes

 

Yes

Federal income tax withholding on lump sum payments

  

Yes

 

Yes

Rollover into an IRA allowed

  

No

 

Yes

10 year income tax averaging available

  

No

 

Yes 1

Hardship withdrawals available

  

Yes 2

 

Yes

Loans against accounts available

  

No

 

Yes

Q. Does this mean I will have separate salary deferral accounts for the UPS Savings Plan and the UPS Deferred Compensation Plan?

A. Yes, the UPS Savings Plan and the UPS Deferred Compensation Plan are two separate plans. You will receive a separate itemized annual statement for each account you have in the UPS Deferred Compensation Plan. Statements may be viewed online at any time through the UPS Savings Advantage Web site, http://upssavings.csplans.com (the Plan Web site).

Eligibility

Q. Who is eligible to participate in the UPS Deferred Compensation Plan?

A. You are eligible to participate in the UPS Deferred Compensation Plan if, as of August 25, 2008, you are a region department manager or have equal or greater managerial responsibilities at UPS or one of the UPS authorized subsidiaries, are eligible to participate in the UPS Savings Plan and are not domiciled in Puerto Rico. In addition, non-employee directors of United Parcel Service, Inc. are eligible to participate in the Plan.

You will cease to be eligible to make new deferral elections in the Plan if you no longer meet the eligibility requirements above or you separate from service with UPS and each of its subsidiaries that is treated under Section 409A of the Internal Revenue Code (the “Code”) and related IRS regulations and guidance (the “409A Rules”) as a single employer with UPS for purposes of determining whether a “separation from service” has occurred (“UPS”). However, your deferrals will continue to be deducted from your compensation, half-month bonus, the cash portion of your MIP award and your ADP refund until the end of the calendar year.

 

1

If not rolled over.

 

2

“Hardship” definition is more stringent than in UPS Savings Plan.


2009 UPS Deferred Compensation Plan  |  5

 

For example, if you elect to contribute monthly to the Plan in 2009 and are subsequently demoted, your contributions will continue for the duration of 2009. Should you elect to defer a 2009 Savings Plan ADP refund, that deferral will be made to the Plan in March 2010, even if you are no longer an eligible employee or you have a separation from service.

Q. Can I participate if I am promoted mid-year?

A. No, you must be eligible to participate in the Plan as of the date the enrollment period begins (for 2009, the enrollment period begins on August 25, 2008).

Deferral Elections

Q. When can I make an election to defer?

A. Elections are made during the annual enrollment period. For 2009, you can elect to defer up to 35 percent of your monthly or semi-monthly salary, up to 100 percent of your half month bonus and/or up to 100 percent of the cash portion of your MIP award.

You may also elect to defer 100 percent of a UPS Savings Plan return of excess pre-tax contributions, should the Savings Plan fail the 2009 ADP Test. Since the ADP Test will be applied to the Savings Plan in 2009, an ADP deferral you elect now will be made in March 2010.

The enrollment period this year begins August 25, 2008 at 4:01 p.m. (Eastern Time) and ends September 26, 2008 at 4:00 p.m. (Eastern Time).

During the enrollment period, non-employee directors may elect to defer 100 percent of their retainer and meeting fees. New non-employee directors may make their initial deferral election within 30 days after being named a director.

Q. Should I maximize my contribution into the UPS Savings Plan before making a contribution to this Plan?

A. Generally, yes. The UPS Savings Plan is a qualified retirement plan where assets are held in trust for future payment to you. Depending upon which UPS subsidiary you work for, you may be eligible for matching contributions on your pre-tax contributions to the UPS Savings Plan. Additionally, distributions from the UPS Savings Plan are eligible for special tax treatment (e.g., rollover to an IRA). Because the UPS Deferred Compensation Plan is non-qualified these benefits will be subordinate to the claims of UPS’s and your employer’s creditors. Distributions to you from the Plan will be subject to immediate taxation and are not eligible for special tax treatment (e.g., rollover, loan, IRA). If you do not take full opportunity of your contributions to the UPS Savings Plan, you may miss the opportunity to receive the maximum amount of matching contributions that you can receive.


6  |  Summary Plan Description

 

Salary Deferral Feature Example 1:

This manager elects to defer 12 percent from monthly salary, 50 percent from the half month bonus and 50 percent of the cash portion of MIP into the Salary Deferral Feature (for illustration purposes only, the MIP factor is assumed to be 2) and 100 percent of any return of excess contributions as the result of the UPS Savings Plan failure of the 2009 ADP Test. The manager also elects to defer 12 percent of monthly salary into the UPS Savings Plan.

 

Manager’s base salary is $11,750 per month x 12 months

  

$

141,000

Manager’s half month pay

  

 

5,875

Manager’s cash portion of MIP

  

 

23,500

  

 

 

Total Annual Eligible Compensation

  

$

170,375

Here’s what the monthly activity would look like for the UPS Deferred Compensation Plan and the UPS Savings Plan in this example.

 

2009

  

UPS Savings
Plan

 

 

UPS Deferred
Compensation Plan

 

  

 

12

%

 

 

12

%

January

  

$

1,410.00

 

 

$

1,410.00

 

February

  

$

1,410.00

 

 

$

1,410.00

 

March

  

$

1,410.00

 

 

$

1,410.00

 

April

  

$

1,410.00

 

 

$

1,410.00

 

May

  

$

1,410.00

 

 

$

1,410.00

 

June

  

$

1,410.00

 

 

$

1,410.00

 

July

  

$

1,410.00

 

 

$

1,410.00

 

August

  

$

1,410.00

 

 

$

1,410.00

 

September

  

$

1,410.00

 

 

$

1,410.00

 

October

  

$

1,410.00

 

 

$

1,410.00

 

November

  

$

1,400.00

 

 

$

1,410.00

 

December

  

$

0.00

 

 

$

1,410.00

 

Half month

  

$

0.00

 

 

$

2,937.50

 

Cash portion of MIP

  

$

0.00

 

 

$

11,750.00

 

TOTAL

  

$

15,500.00

 

 

$

31,607.50

 

TOTAL DEFERRED

  

 

$ 47,107.50

 

Should the UPS Savings Plan fail the 2009 ADP Test, distributions will occur in March 2010 but are taxable on the 2009 tax return. By electing to defer any pre-tax refund resulting from the 2009 ADP Test, the manager will defer 2009 taxation on the distribution of the pre-tax refund.

Before calculating any amount to be deferred to the UPS Deferred Compensation Plan, it is recommended that you choose a percentage that results in the contribution of the maximum permissible contribution to the UPS Savings Plan. In 2008, the maximum was $15,500, or $20,500 if you were over 50. You also may receive Savings PLUS, the match on certain amounts deferred under the UPS Savings Plan.


2009 UPS Deferred Compensation Plan  |  7

 

Salary Deferral Feature Example 2:

This manager elects to defer the maximum 35 percent from base salary and 100 percent from half month pay and the cash portion of MIP into the Salary Deferral Feature (for illustration purposes only, the MIP factor is assumed to be 2) and 100 percent of any return of excess pre-tax contributions as the result of the UPS Savings Plan failure of the 2009 ADP Test. The manager also elects to defer 12 percent of base salary into the UPS Savings Plan.

 

Manager’s base salary is $11,750 per month x 12 months

  

$

141,000

Manager’s half month pay

  

 

5,875

Cash portion of MIP

  

 

23,500

  

 

 

Total Annual Eligible Compensation

  

$

170,375

Here’s what the monthly activity would look like for the UPS Savings Plan and the UPS Deferred Compensation Plan in this example.

 

2009

  

UPS Savings
Plan

 

 

UPS Deferred
Compensation Plan

 

  

 

12

%

 

 

35

%

January

  

$

1,410.00

 

 

$

4,112.50

 

February

  

$

1,410.00

 

 

$

4,112.50

 

March

  

$

1,410.00

 

 

$

4,112.50

 

April

  

$

1,410.00

 

 

$

4,112.50

 

May

  

$

1,410.00

 

 

$

4,112.50

 

June

  

$

1,410.00

 

 

$

4,112.50

 

July

  

$

1,410.00

 

 

$

4,112.50

 

August

  

$

1,410.00

 

 

$

4,112.50

 

September

  

$

1,410.00

 

 

$

4,112.50

 

October

  

$

1,410.00

 

 

$

4,112.50

 

November

  

$

1,400.00

 

 

$

4,112.50

 

December

  

$

0.00

 

 

$

4,112.50

 

Half Month

  

$

0.00

 

 

$

5,875.00

 

Cash portion of MIP

  

$

0.00

 

 

$

23,500.00

 

TOTAL

  

$

15,500.00

 

 

$

78,725.00

 

TOTAL DEFERRED

  

 

$ 94,225.00

 

Should the UPS Savings Plan fail the 2009 ADP Test, distributions will occur in March 2010 but are taxable on the 2009 tax return. By electing to defer any pre-tax refund resulting from the 2009 ADP Test, the manager will defer 2009 taxation on the distribution of the pre-tax refund.


8  |  Summary Plan Description

 

Before calculating any amount to be deferred to the UPS Deferred Compensation Plan, it is recommended that you choose a percentage that results in the contribution of the maximum permissible contribution to the UPS Savings Plan. In 2008, the maximum was $15,500, or $20,500 if you were over 50. You also may receive Savings PLUS, the match on certain amounts deferred under the UPS Savings Plan.

Salary Deferral Feature Example 3:

This manager elects to defer 5 percent from base salary, zero percent from half month pay and 100 percent of the cash portion of MIP into the Salary Deferral Feature (for illustration purposes only, the MW factor is assumed to be 2) and 100 percent of any return of excess pre-tax contributions as the result of the UPS Savings Plan failure of the 2009 ADP Test. The manager also elects to defer 12 percent of base salary into the UPS Savings Plan.

 

Manager’s base salary is $11,750 per month x 12 months

  

$

141,000

Manager’s half month pay

  

 

5,875

Cash portion of MIP

  

 

23,500

  

 

 

Total Annual Eligible Compensation

  

$

170,375

Here’s what the monthly activity would look like for the UPS Savings Plan and the UPS Deferred Compensation Plan in this example.

 

2009

  

UPS Savings
Plan

 

 

UPS Deferred
Compensation Plan

 

  

 

12

%

 

 

5

%

January

  

$

1,410.00

 

 

$

587.50

 

February

  

$

1,410.00

 

 

$

587.50

 

March

  

$

1,410.00

 

 

$

587.50

 

April

  

$

1,410.00

 

 

$

587.50

 

May

  

$

1,410.00

 

 

$

587.50

 

June

  

$

1,410.00

 

 

$

587.50

 

July

  

$

1,410.00

 

 

$

587.50

 

August

  

$

1,410.00

 

 

$

587.50

 

September

  

$

1,410.00

 

 

$

587.50

 

October

  

$

1,410.00

 

 

$

587.50

 

November

  

$

1,400.00

 

 

$

587.50

 

December

  

$

0.00

 

 

$

587.50

 

Half Month

  

$

0.00

 

 

$

0.00

 

Cash portion of MIP

  

$

0.00

 

 

$

23,500.00

 

TOTAL

  

$

15,500.00

 

 

$

30,550.00

 

TOTAL DEFERRED

  

 

$ 46,050.00

 

Should the UPS Savings Plan fail the 2009 ADP Test, distributions will occur in March 2010 but are taxable on the 2009 tax return. By electing to defer any pre-tax refund resulting from the 2009 ADP Test, the manager will defer 2009 taxation on the distribution of the pre-tax refund.


2009 UPS Deferred Compensation Plan  |  9

 

Before calculating any amount to be deferred to the UPS Deferred Compensation Plan, it is recommended that you choose a percentage that results in the contribution of the maximum permissible contribution to the UPS Savings Plan. In 2008, the maximum was $15,500, or $20,500 if you were over 50. You also may receive Savings PLUS, the match on certain amounts deferred under the UPS Savings Plan.

Q. Will I need to wait until my UPS Savings Plan pre-tax deferral reaches the maximum for 2009 before I begin to defer funds into the UPS Deferred Compensation Plan?

A. No. However, it is to your advantage to defer the maximum amount into the UPS Savings Plan. Before you decide what percentage to defer into the UPS Deferred Compensation Plan, make sure you will be deferring the maximum limit into the UPS Savings Plan. If you will be 50 or older in 2009, you will also want to make a catch-up contribution to the UPS Savings Plan. The amount you defer into the UPS Savings Plan can be changed monthly. Your deferral percentage into the UPS Deferred Compensation Plan cannot be changed for the entire calendar year.

Q. When will my salary deferrals under the UPS Deferred Compen


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