Section 9. TEFRA section 242(b)(2) Elections.

Section 9.1. Notwithstanding the other requirements of this article and subject to the requirements of Article _____, Joint and Survivor Annuity Requirements, distribution on behalf of any employee, including a 5% owner, who has made a designation under Act § 242(b)(2) of the Tax Equity and Fiscal Responsibility Act (a “ § 242(b)(2) election”) may be made in accordance with all of the following requirements (regardless of when such distribution commences):

(Note to reviewer: The blank above should be filled in with the section number of the plan corresponding to LRM #46.)

(a) The distribution by the plan is one which would not have disqualified such plan under Code § IRC 401(a)(9) as in effect prior to amendment by the Deficit Reduction Act of 1984.

(b) The distribution is in accordance with a method of distribution designated by the

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employee whose interest in the plan is being distributed or, if the employee is deceased, by a beneficiary of such employee.

(c) Such designation was in writing, was signed by the employee or the beneficiary, and was made before January 1, 1984.

(d) The employee had accrued a benefit under the plan as of December 31, 1983.

(e) The method of distribution designated by the employee or the beneficiary specifies the time at which distribution will commence, the period over which distributions will be made, and in the case of any distribution upon the employee’s death, the beneficiaries of the employee listed in order of priority.

Section 9.2. A distribution upon death will not be covered by this transitional rule unless the information in the designation contains the required information described above with respect to the distributions to be made upon the death of the employee.

Section 9.3. For any distribution which commences before January 1, 1984, but continues after December 31, 1983, the employee, or the beneficiary, to whom such distribution is being made, will be presumed to have designated the method of distribution under which the distribution is being made if the method of distribution was specified in writing and the distribution satisfies the requirements in subsections 9.1(a) and (e).

Section 9.4. If a designation is revoked any subsequent distribution must satisfy the requirements of Code § IRC 401(a)(9) and the Regulations thereunder. If a designation is revoked subsequent to the date distributions are required to begin, the plan must distribute by the end of the calendar year following the calendar year in which the revocation occurs the total amount not yet distributed which would have been required to have been distributed to satisfy Code § IRC 401(a)(9) and the Regulations thereunder, but for the § 242(b)(2) election. For calendar years beginning after December 31, 1988, such distributions must meet the minimum distribution incidental benefit requirements. Any changes in the designation will be considered to be a revocation of the designation. However, the mere substitution or addition of another beneficiary (one not named in the designation) under the designation will not be considered to be a revocation of the designation, so long as such substitution or addition does not alter the period over which distributions are to be made under the designation, directly or indirectly (for example, by altering the relevant measuring life).

Section 9.5. In the case in which an amount is transferred or rolled over from one plan to another plan, the rules in Treas. Reg. § 1.401(a)(9)-8 ,Q&A-14 (h)(2) and Q&A-15 (3) shall apply.

Sample Adoption Agreement Language:

(Check and complete sections 1 and 2 below if you wish to modify the rules in sections 2.2 and 4.2 of Article _____ of the plan.)

(Note to reviewer: The blank above should be filled in with the section number of the plan that corresponds to this LRM #51.)