Federal Home Loan Bank of Topeka
Benefit Equalization Plan
(Restated effective December 31, 2008)
This Plan amends the
Bank’s Benefit Equalization Plan, which was previously
amended and restated in its entirety effective March 23,
2006. The Bank’s prior Benefit Equalization Plan
was effective January 1, 1987 (“1987
Plan”). Any employee that was a member of the 1987
Plan and that is or becomes a Member under this Plan shall not be
entitled to receive any benefits under the 1987 Plan, but shall be
entitled to receive benefits solely under this Plan. Any
employee that was a member of the 1987 Plan and is not, nor
becomes, a Member of this Plan shall only be entitled to receive
benefits under the 1987 Plan and shall only be entitled to benefits
accrued through December 31, 1994 (i.e., based solely on years of
employment and compensation paid prior to December 31,
1994). Except as herein provided, the 1987 Plan was
terminated and replaced with this Plan effective March 23,
2006. This is an unfunded Plan that is primarily
intended to provide deferred compensation for a select group of
management or highly compensated employees, and is intended to
comply with all applicable law, including IRC Section 409A.
When used in the
Plan, the following terms shall have the following meanings:
1.01
“Account” means the account established and maintained
hereunder to record the contributions deemed to be made by the
Member and the Bank, as well as the increase in value attributable
to the earnings thereon, all as described hereafter.
1.02
“Actuary” means the independent consulting actuary
retained by the Bank to assist the Committee in its administration
of the Plan.
1.03
“Adoption Date” means the date of the adoption of the
Plan by the Board of Directors.
1.04
“Bank” means the Federal Home Loan Bank of Topeka.
1.05
“Base Salary” means the annual cash compensation
relating to services performed during any calendar year, excluding
distributions from nonqualified deferred compensation plans,
bonuses, commissions, overtime, fringe benefits, relocation
expenses, incentive payments, non-monetary awards, and automobile
and other allowances paid to a Member for employment services
rendered (whether or not such allowances are included in the
Member’s gross income). Base Salary shall be calculated
before reduction for compensation voluntarily deferred or
contributed by the Member pursuant to all qualified or nonqualified
plans of the Bank and shall be calculated to include amounts not
otherwise included in the Member’s gross income under IRC
Sections 125, 132, 402(e)(3), 402(h), or 403(b) pursuant to plans
or arrangements established by the Bank; provided, however, that
all such amounts will be included in compensation only to the
extent that had there been no such plan, the amount would have been
payable in cash to the Member. Notwithstanding anything in this
Plan to the contrary, “Base Salary” shall not include
any amount paid pursuant to a disability plan or pursuant to a
disability insurance policy.
1.06
“Beneficiary” means the beneficiary or beneficiaries
designated in accordance with Article 6 of the Plan to receive the
benefit, if any, payable upon the death of a Member of the
Plan.
1.07
“Board of Directors” means the Board of Directors of
the Bank.
1.08
“Change of Control” has the meaning set forth in IRC
Section 409A.
1.09
“Committee” means the Administrative Committee
appointed by the Board of Directors to administer the Plan.
1.10
“Deferral Agreement” means the agreement under which a
Member elects to defer compensation under the Plan in accordance
with the provisions of Section 4.04.
1.11
“Disability” or “Disabled” means the Member
meets one of the following requirements:
(a)
The Member is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be
expected to last for a continuous period of twelve (12) months.
(b)
The Member is, by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than twelve
(12) months, receiving income replacement for a period of not less
than three (3) months under an accident and health plan covering
employees of the Bank.
Member will be deemed Disabled under this
Section 1.11 if determined to be disabled by the Social Security
Administration. Furthermore, Member will be deemed
Disabled under this Section 1.11 if determined to be disabled in
accordance with a disability insurance program, provided that the
definition under such program complies with Subsection 1.11 (a) or
(b), or IRC Section 409A, as applicable.
1.12
“Distribution Event” means the date the Member retires
on or after the Member attains Retirement Age, the Member’s
death, Disability, other termination of employment with the Bank,
or Change of Control of the Bank.
1.13
“Effective Date” means January 1, 1995.
1.14
“Retirement Age” means age 62.
1.15
“Retirement Fund” means the Comprehensive Retirement
Program of the Financial Institutions Retirement Fund, a qualified
and tax exempt defined benefit pension plan and trust under
Sections 401(a) and 501(a) of the IRC, as adopted by the Bank.
1.16
“Incentive Compensation” means bonuses and other
incentive compensation payments payable to a Member under any
incentive compensation plans adopted by the Bank from time to
time.
1.17
“IRC” means the Internal Revenue Code of 1986, and any
applicable Treasury Regulations promulgated thereunder, as amended
from time to time, or any successor thereto.
1.18
“IRC Limitations” means the cap on compensation taken
into account by a plan under IRC Section 401(a)(17), the
limitations on 401(k) contributions necessary to meet the average
deferral percentage (“ADP”) test under IRC Section
5401(k)(3)(A)(ii), the limitations on employee and matching
contributions necessary to meet the average contribution percentage
(“ACP”) test under IRC Section 401(m), the dollar
limitations on elective deferrals under IRC Section 402(g) and the
overall limitations on contributions and benefits imposed on
qualified plans by IRC Section 415, as such provisions may be
amended from time to time, and any similar successor provisions of
federal tax law.
1.19
“Member” means any person included in the membership of
the Plan as provided in Article 2.
1.20
“Plan” means the Federal Home Loan Bank of Topeka
Benefit Equalization Plan, as set forth herein and amended from
time to time.
1.21
“Thrift Plan” means the Financial Institutions Thrift
Plan, a qualified and tax exempt defined contribution plan and
trust under Sections 401(a) and 501(a) of the IRC, as adopted by
the Bank.
2.01
Members of the Plan . Each of the following
employees of the Bank is hereby made a member of the
Plan: Sonia R. Betsworth, Patrick C. Doran, David S.
Fisher, Bradley P. Hodges, Andrew J. Jetter, Frank M. Tiernan, and
Mark E. Yardley.
2.02
Addition or Termination of Members . The Board of
Directors may add additional employees as Members to the Plan and
may, subject to Article 8, terminate the participation in the Plan
of any employee.
2.03
Events Upon Which Benefits Payable . A benefit
shall be payable under the Plan to or on account of a Member only
upon the occurrence of a Member’s Distribution Event, except
as provided in Section 4.10 or Article 8. If the Bank
authorizes a Member to take a paid or an unpaid leave of absence
from employment, and such leave of absence does not constitute a
termination of employment in accordance with this Plan and IRC
Section 409A, the Member shall continue to be considered eligible
for the benefits provided in Articles 3 and 4, in accordance with
the provisions of those Articles. In the event that
Member’s leave of absence from the Bank constitutes a
termination of employment in accordance with this Plan and IRC
Section 409A, the Member’s Account balance shall be
distributed to the Member in accordance with this Plan.
2.04
Top Hat Plan Exemption . This Plan is intended to
be a “top hat plan,” with a primary purpose to provide
deferred compensation for a select group of management or highly
compensated employees. No employee may be a Member of
the Plan unless the employee is an officer of the Bank having an
annual compensation greater than 50 percent of the amount in effect
under IRC Section 415(b)(1)(A) for any such plan year or is a
highly compensated employee as defined in IRC Section 414(q).
Article 3.
Amount and Payment of Pension Benefits
3.01
Annual Pension Benefit Payable . For Plan years
prior to 2009, the amount, if any, of the annual pension benefit
payable to or on account of a Member pursuant to the Plan shall
equal the excess of (a) over (b), as determined by the Committee,
where:
(a)
is the annual pension benefit (as calculated by the Retirement Fund
on the basis of the form of payment elected by the Member) that
would otherwise be payable to or on account of the Member by the
Retirement Fund if its provisions were administered
(i)
without regard to the IRC Limitations,
(ii)
with the inclusion in the definition of “Salary” for
the year deferred of any amount deferred by a Member under Section
4.01 and 4.02 of this Plan, and
(b)
is the annual pension benefit (as calculated by the Retirement Fund
on the basis of the form of payment elected by the Member) that is
payable to or on account of the Member by the Retirement Fund.
For purposes of this Section 3.01
“annual pension benefit” includes any “Active
Service Death Benefit,” “Retirement Adjustment
Payment,” “Annual Increment” and “Single
Purchase Fixed Percentage Adjustment” which the Bank elected
to provide its employees under the Retirement Fund.
For Plan years on or
after January 1, 2009, the amount, if any, of the annual pension
benefit payable to or on account of a Member pursuant to the Plan
shall equal:
(a)
the annual pension benefit (as calculated by the Retirement Fund on
the basis of the form of payment elected by the Member) that would
otherwise be payable to or on account of the Member by the
Retirement Fund if its provisions were administered:
(i)
without regard to the IRC Limitations; and
(ii)
with the inclusion in the definition of Base Salary for the year
deferred of any amount deferred by a Member under Section 4.01 and
4.02 of this Plan, and
(b)
offset by the annual pension benefit (as calculated by the
Retirement Fund on the basis of the form of payment elected by the
Member) that is payable to or on account of the Member by the
Retirement Fund, up to the applicable limitation of IRC Section
402(g).
3.02
Regular Form of Payment . Unless the Member
elects an optional form of payment under the Plan pursuant to
Section 3.03 below, the annual pension benefit, if any, payable to
or on account of a Member under Section 3.01 above, shall be
converted by the actuary and shall be payable to or on account of
the Member in the “Regular Form” of payment, utilizing
for that purpose the same actuarial factors and assumptions then
used by the Retirement Fund to determine actuarial
equivalence. For purposes of the Plan, the
“Regular Form” of payment means a lump sum paid 90 days
after the Member’s Distribution Event.
3.03
Optional Form of Payment .
(a)
A Member may elect in writing to have the Regular Form of benefit,
if any, payable to or on account of a Member under Section 3.02
above, converted by the actuary to any optional form of payment
permitted under the Retirement Fund. The actuary shall
utilize for the purpose of that conversion the same actuarial
factors and assumptions then used by the Retirement Fund to
determine actuarial equivalence. An election to receive
an optional form of benefit must be made at least twelve (12)
months before the originally scheduled Distribution Event, and
shall not commence sooner than a date that is at least five (5)
years after the originally scheduled Distribution Event.
(b)
If a Member who had elected an optional form of payment under this
Section 3.03 dies after the date the Member’s benefit
payments under the Plan have commenced, the only death benefit, if
any, payable under the Plan in respect of said Member shall be the
amount, if any, payable under the optional form of payment which
the Member had elected under the Plan. If a Member who
had elected an optional form of payment under this Section 3.03
dies before the date the Member’s benefit payments under the
Plan commence, the Member’s election of an optional form of
benefit shall be inoperative.
(c)
An election of an optional form of payment under this Section 3.03
may be made only on the form prescribed by the Committee and filed
by the Member with the Committee at least twelve (12) months before
the originally scheduled Distribution Event, and shall not commence
sooner than a date that is at least five (5) years after the
originally scheduled Distribution Event.
3.04
Death Benefit . Upon the death of a Member who
had not elected an optional form of payment under Section 3.03
above, a death benefit shall be paid to the Beneficiary in a lump
sum equal to the excess, if any, of (a) over (b), where:
(a)
is the sum of the benefit payments that would otherwise be payable
to or on account of the Member under this Plan; and and
(b)
is the sum of the benefit payments, if any, which the Member had
received under the Plan.
3.05
Death Prior to Commencement of Payments . If a
Member to whom an annual pension benefit is payable under the Plan
dies before commencement of the payment of the Member’s
benefit, the death benefit payable under Section 3.04 shall be
payable to the Beneficiary as if the payment of the Member’s
benefit had commenced on the first day of the month in which the
Member’s death occurred.
3.06
Automatic Distribution of Account Balances Less Than IRC Section
402(g) Limitation . Notwithstanding any other
provision of this Plan, in the event that a Member has experienced
a Distribution Event described in Section 2.03 and has not directed
otherwise as part of a prior election, and if the Member’s
Account balance is less than the allowable limit under IRC Section
402(g) for that year, the Member’s entire benefit shall
automatically be paid in the form of a lump sum payment, which
shall commence 90 days after the Distribution Event.
Notwithstanding the preceding sentence, if it is administratively
impracticable to make the payment by the required payment date, and
such impracticability is unforeseeable, then such payment shall be
made as soon as administratively practicable. The amount
of the lump sum payment shall be the equivalent actuarial value of
the benefit otherwise due the Member using the same actuarial
factors and assumptions then used by the Retirement Fund to
determine actuarial equivalence.
3.07
Payment of Benefits . All benefits under the Plan
shall commence 90 days after the Member’s Distribution
Event. Notwithstanding the preceding sentence, if it is
administratively impracticable to make the payment by the required
payment date, and such impracticability is unforeseeable, then such
payment shall be made as soon as administratively practicable.
Article 4.
Amount and Payment of Thrift Benefits
4.01
Thrift Contributions . During each calendar year
after 1994 and before January 1, 2009, if the Member’s 401(k)
account contributions under the Thrift Plan for such year have
reached the maximum permitted by the IRC Limitations as determined
by the Committee, and if the Member has elected to reduce the
Member’s compensation for such calendar year in accordance
with the provisions of Section 4.04, then such Member shall be
credited with an elective contribution addition under this Plan
equal to the reduction in the Member’s compensation made in
accordance with such election; provided, however, that the sum of
all such elective contribution additions for a Member with respect
to any single calendar year shall not be greater than the excess of
(a) over (b), where
(a)
is an amount equal to the maximum 401(k) account contribution
permitted under the Thrift Plan for the calendar year as determined
under the Thrift Plan if its provisions were administered without
regard to the IRC Limitations and if compensation as defined in the
Thrift Plan included any deferrals made under this Section 4.01 or
Section 4.02; and
(b)
is an amount equal to his/her regular account and 401(k) account
contributions, including contributions made from Incentive
Compensation otherwise payable during such year, actually made
under the Thrift Plan for the calendar year.
If the reduction in a Member’s
compensation under such election is determined to exceed the
maximum allowable elective contribution additions for such year,
the excess and any related earnings credited under Section 4.06
shall be paid to such Member within the first two and one half
months of the succeeding calendar year.
For each calendar year on or after January 1,
2009, each Member may make Deferral Elections to defer a percentage
of the Member’s annual Base Salary and annual Incentive
Contributions, regardless of IRC Limitations, in accordance with
Sections 4.04 and 4.05 below and subject to any maximum annual
limit of deferral that may be determined by the Board prior to the
Members’ deferral election period. Each annual
Base Salary deferral shall be offset by the Member’s actual
deferrals to the Thrift Plan for that calendar year, up to the
dollar limitation of IRC Section 402(g), including any applicable
“catch-up contributions”. Matching
contributions may be made in accordance with Section 4.05
below.
4.02
Thrift Make Up Contributions . During each
calendar year after 1994 and before 2009, if a portion of a
Member’s regular account contribution or 401(k) account
contribution to the Thrift Plan for the preceding year is returned
to a Member after the end of such preceding year on account of the
IRC Limitations, and if the Member has elected in accordance with
the provisions of Section 4.04 to reduce the Member’s
compensation for the current year by an amount up to the sum of
such Thrift Plan contributions and related earnings returned to the
Member’s for the preceding year, then such Member shall be
credited with a make up contribution addition under this Plan equal
to the reductio
