Amazon.com 401(k) Plan Summary Plan Description January 1 ...
401(k) Plan Summary Plan Description
January 1, 2011
24976-0353/LEGAL17872256.5
Introduction
Amazon Corporate LLC (the "Plan Sponsor") maintains the 401(k) Plan ("Plan"), which is designed to help you meet your financial needs during your retirement. The Plan was originally effective November 1, 1996, and the Plan sequence number is 001, which identifies the number of qualified plans the Plan Sponsor currently maintains or has previously maintained.
To become a Participant in the Plan, you must meet the Plan's eligibility requirements. Once you become a Participant, you may elect to reduce your annual taxable income by deferring a portion of your Compensation into the Plan as Elective Deferrals. In addition, the Employer may make contributions to the Plan. The Plan's Trustee will maintain an Individual Account for you. Your Individual Account will be adjusted to reflect contributions, gains, losses, etc., on each business day the New York Stock Exchange is open for trading. The percentage of your Individual Account to which you will be entitled when you terminate employment depends on the Plan's vesting schedule. These features are explained further in the following pages.
The actual Plan is a legal document that has been written in the manner required by the Internal Revenue Service ("IRS") and is referred to as the "Plan Document." This document is called a Summary Plan Description ("SPD"). This SPD explains and summarizes the important features of the Plan Document as in effect on January 1, 2011 and applies to eligible employees employed by the Employer and certain Related Employers (other than , Inc. ("Zappos")) on or after that date. If your employment with the Employer and such Related Employers terminated prior to January 1, 2011, portions of this SPD may not apply to you. Generally, your rights to benefits are governed by the terms of the Plan as in effect at the time your employment terminates. If you are (or have been) employed by Zappos, this SPD does not apply to any benefits under the Plan you may accrue (or may have accrued) during your Zappos employment; for such benefits you should instead refer to the SPD for Zappos employees and the other summaries specified therein.
Please keep in mind that this SPD is only a summary of the principal features of the Plan Document. Although every effort has been made to make this SPD as complete and accurate as possible, it is not a substitute for the Plan Document itself. The detailed provisions of the Plan Document, not this SPD, govern the administration of the Plan and the actual rights and benefits to which you are, or may become, entitled. Accordingly, in the case of any conflict between this SPD and the terms of the Plan Document, the Plan Document will control.
If at any time you have specific questions about the Plan as it applies to you, please bring them to the attention of the Plan Administrator, whose address and telephone number appear in Section Eight of this SPD. You may also examine the Plan Document itself at a reasonable time by making arrangements with the Plan Administrator.
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Contents of the Summary Plan Description
SECTION ONE: DEFINITIONS ...............................................................................................................................................1
SECTION TWO: ELIGIBILITY AND PARTICIPATION .......................................................................................................2 Eligible Classes of Employees .................................................................................................................2 Age and Service Requirements ................................................................................................................3 How Hours of Service Are Counted.........................................................................................................3 When You May Participate In the Plan....................................................................................................3
SECTION THREE: PLAN FUNDING AND ADMINISTRATION .........................................................................................3 Plan Contribution Sources, Allocations and Limitations..........................................................................3 Compensation ........................................................................................................................................... 7 Plan Administration..................................................................................................................................8 Self-Direction of Investments...................................................................................................................8
SECTION FOUR: DISTRIBUTION OF BENEFITS AND VESTING...................................................................................11 Benefit Distribution EVENTS ...............................................................................................................11 Distribution of Benefits..........................................................................................................................12 Determining Your Vested Amount.........................................................................................................14
SECTION FIVE: CLAIMS PROCEDURE ..............................................................................................................................15 What to Do to Receive Benefits.............................................................................................................15 How to File a Claim ...............................................................................................................................15
SECTION SIX: MISCELLANEOUS .......................................................................................................................................17 Loans ...................................................................................................................................................... 17 Plan Amendment and Termination.........................................................................................................17 Employment Rights................................................................................................................................17 Top Heavy Provisions ............................................................................................................................17 Loss or Denial of Benefits......................................................................................................................18 Inalienability of Benefits ........................................................................................................................18
SECTION SEVEN: RIGHTS UNDER ERISA ........................................................................................................................18 The Rights and Protections to Which a Participant Is Entitled Under ERISA .......................................18
SECTION EIGHT: GENERAL INFORMATION ...................................................................................................................20
APPENDIX A: RELATED EMPLOYERS NOT PARTICIPATING IN THE 401(K) PLAN................... A1
APPENDIX B: ELIGIBLE EMPLOYEES SUBJECT TO THE AUTOMATIC CONTRIBUTION ARRANGEMENT ........................................................................................................................................... B1
APPENDIX C: SPECIAL TAX NOTICE REGARDING PLAN DISTRIBUTIONS ............................................................ C1
APPENDIX D: PARTICIPANT LOAN PROGRAM ............................................................................................................. D1
APPENDIX E: SAVER'S CREDIT ......................................................................................................................................... E1
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SECTION ONE: DEFINITIONS
The following definitions are used in the text of this SPD. These words and phrases are capitalized throughout the SPD for ease of reference.
Catch-up Contributions - means additional Elective Deferrals not to exceed the applicable dollar limit for a given year (as further described in Section Three under "Plan Contribution Sources, Allocations and Limitations ? Limits on Elective Deferrals"), made under the Plan by Participants who attain age 50 before the close of the calendar year.
Code - means the Internal Revenue Code of 1986, as amended.
Company Stock - means the common stock of , Inc., a Delaware corporation, which is traded on NASDAQ and which is allocated to Matching Contribution accounts in the Company Stock Fund.
Company Stock Fund - means an investment fund that is designed to invest exclusively in Company Stock.
Compensation - means the earnings paid to you by the Employer that are taken into account for purposes of the Plan and described further in Section Three under "Compensation."
Disability or Disabled - means the inability 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 which has lasted or can be expected to last for a continuous period of not less than 12 months. The permanence and degree of such impairment must be supported by medical evidence. The Plan Administrator will determine whether you satisfy the definition of Disability.
Elective Deferrals - means the money you put into the Plan as Pre-tax Contributions and/or Roth (after-tax) Contributions (defined under "Plan Contribution Sources, Allocations and Limitations ? Elective Deferrals" in Section Three). Your total Elective Deferrals (combined Pre-tax and Roth Contributions) cannot exceed the applicable individual dollar limit for a given year as described under " Plan Contribution Sources, Allocations and Limitations ? Limits on Elective Deferrals" in Section Three. Pre-tax and Roth Contributions (and their respective earnings) are credited to separate accounts under your Individual Account.
Eligibility Computation Period - means the 12-consecutive-month period beginning on your hire date. Succeeding 12consecutive-month periods are measured by reference to each anniversary of the first day of the Plan Year that includes the first anniversary of your employment date (or reemployment date following an Eligibility Computation Period in which you complete 500 hours of service or less).
Employee - means any person employed by the Employer or a Related Employer.
Employer - means the Plan Sponsor and the Participating Employers.
ERISA - means the Employee Retirement Income Security Act of 1974, as amended.
Highly Compensated Employee - means, any Employee who (a) was a greater than 5% owner at any time during the current year or the preceding year or (b) had compensation from the Employer in excess of $110,000 during 2010 for purposes of the 2011 Plan Year and was in the top-paid group of Employees. The $110,000 amount may be adjusted in future years for changes in the cost-of-living index.
Individual Account - means the contribution account(s) established and maintained for you that is made up of all contributions made by you or on your behalf.
Matching Contribution - means a contribution made by the Employer to the Plan on your behalf that is based on your Elective Deferrals (but not your Catch-up Contributions).
Normal Retirement Age - means age 65.
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Participant - means an Employee who has met the eligibility requirements, has entered the Plan, and has become eligible to make or receive a contribution to his or her Individual Account.
Participating Employer - means all Related Employers other than those listed in Appendix A of this SPD, as of the date specified therein and as may be updated from time to time.
Plan - means the 401(k) Plan. The Plan is governed by the Plan Document, a legal document containing various technical and detailed provisions. The Plan Administrator has a copy of the Plan Document.
Plan Administrator - The Plan Administrator is responsible for directly administering the Plan. The Plan Sponsor's investment and administrative committee is the Plan Administrator of the Plan and is therefore responsible for the day-to-day administration and management of the Plan. The Plan Administrator has the discretionary authority to (a) determine whether and to what extent Participants and beneficiaries are entitled to Plan benefits and (b) construe the Plan terms. The Plan Administrator will be deemed to have properly exercised such discretionary authority unless the Plan Administrator has abused its discretion by acting arbitrarily and capriciously. To ensure efficient and sound operation and management of the Plan, the Plan Administrator has the discretionary authority to appoint other persons as may be necessary to act on its behalf or assist in performing its responsibilities.
Plan Sponsor - means Amazon Corporate LLC.
Plan Year - means the calendar year.
QDRO or qualified domestic relations order - means a court order issued under state domestic relations law and approved by the Plan Administrator, relating to divorce, legal separation, or custody or support proceedings, that awards all or a portion of your benefit under the Plan to an alternate payee and as further described in Section Six under "Inalienability of Benefits."
Related Employer - means an employer that is a member of the controlled group of corporations that includes the Plan Sponsor.
Trustee - means the person(s) or entity(ies) appointed by the Plan Sponsor and who agrees to serve as trustee of the trust established pursuant to the Plan. The current Trustee is named in Section Eight.
SECTION TWO: ELIGIBILITY AND PARTICIPATION
ELIGIBLE CLASSES OF EMPLOYEES
You will generally be allowed to become a Participant in the Plan after having satisfied the age and service requirements described below. Even if you satisfy the eligibility criteria, however, you are not eligible to become a Participant in the Plan if you are:
classified by the Employer as (a) regularly scheduled to work less than 30 hours per week or (b) temporary, intern or seasonal; however, even if you are classified pursuant to clause (a) or (b), you will still be allowed to become a Participant in the Plan if you complete 1,000 or more hours of service during your Eligibility Computation Period;
not on the U.S. payroll of the Employer; an Employee of a Related Employer that is not participating in the Plan (as listed in Appendix A); an Employee of a Related Employer who is eligible to participate in a plan, separate from the Plan, that is
maintained by the Related Employer and intended to be qualified under Code Section 401(a); an Employee who is a nonresident alien with no U.S.-source earned income from the Employer or a Related
Employer; classified as other than an Employee of the Employer or a Related Employer (including an individual performing
services for the Employer but paid by a temporary or other staffing agency) at the time you perform services for the Employer or a Related Employer, even if it is later determined that you were an Employee of the Employer or a Related Employer during such period;
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an Employee who is included in a unit of employees covered by a collective bargaining agreement; a leased employee; an Employee who would be a leased employee if you were not a common law employee of the Employer or a
Related Employer; or a greater than 5% owner of , Inc. within the meaning of Code Section 416, for purposes of Matching
Contributions only.
AGE AND SERVICE REQUIREMENTS
If you are an eligible Employee as described above and you are a full-time employee, you will become a Participant in the Plan on the later of your hire date or the date you attain age 18.
If you are an eligible Employee as described above and you are a part-time employee scheduled to work less than 30 hours per week or you are classified as "temporary," "intern" or "seasonal," you will become eligible to participate in the Plan on the later of the date you attain age 18 or the end of the Eligibility Computation Period during which you first complete at least 1,000 hours of service. Your Eligibility Computation Period is the 12-month period beginning on your hire date (or rehire date following a break in service). Subsequent Eligibility Computation Periods are based on the Plan Year, starting with the Plan Year that begins in your first Eligibility Computation Period. You will have a break in service if you have less than 501 hours of service in your Eligibility Computation Period.
Examples: Sally is over age 18 and is hired as a part-time employee on June 5, 2010. Sally completes at least 1,000 hours of service by June 4, 2011. She is therefore eligible for the Plan on June 5, 2011. Ed is over age 18 and is also hired as a parttime employee on June 5, 2010, but Ed only completes 800 hours of service by June 4, 2011. However, during the Plan Year beginning January 1, 2011 and ending December 31, 2011, Ed completes at least 1,000 hours of service. Ed is eligible for the Plan on January 1, 2012.
HOW HOURS OF SERVICE ARE COUNTED
Your hours of service for eligibility and vesting purposes are generally counted on the basis of the actual number of hours you work or for which you are entitled to Compensation. In calculating your hours of service, you will receive credit for (a) each hour for which you are directly or indirectly paid, or entitled to payment, for the performance of duties for the Employer or a Related Employer, (b) each hour for which you are directly or indirectly paid, or entitled to payment, by the Employer or a Related Employer on account of a period of time during which you do not perform duties for the Employer or a Related Employer due to vacation, holiday, illness, incapacity, Disability, layoff, jury duty, military duty or leave of absence (provided that no more than 501 hours will be counted for any single continuous period during which no duties are performed, and (c) each hour for which back pay is agreed to by the Employer or a Related Employer.
WHEN YOU MAY PARTICIPATE IN THE PLAN
You will become a Participant in the Plan on the date that you meet the eligibility requirements described above.
SECTION THREE: PLAN FUNDING AND ADMINISTRATION
PLAN CONTRIBUTION SOURCES, ALLOCATIONS AND LIMITATIONS
Elective Deferrals
Elective Deferrals are amounts that you elect to contribute to the Plan rather than receive as cash compensation. These contributions are made by payroll deduction. You may elect to have amounts withheld from your Compensation as Pre-tax Contributions or as Roth (after-tax) Contributions. The combined percentage of your Pre-tax and Roth Contributions may not exceed 90% of your Compensation.
Pre-tax Contributions. Pre-tax Contributions are Elective Deferrals that you irrevocably designate as Pre-tax Contributions when you make your Elective Deferral election. Pre-tax Contributions are not subject to federal (and in most cases, state)
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income tax until they are distributed to you. They are, however, subject to social security taxes. Later, when the Plan distributes the Pre-tax Contributions and earnings to you, you will pay the income taxes on those Pre-tax Contributions and earnings. Therefore, federal (and in most cases, state) income taxes on the Pre-tax Contributions and earnings are only postponed. Eventually, you will have to pay income taxes on these amounts.
Roth Contributions. Roth Contributions are Elective Deferrals that you irrevocably designate as Roth Contributions when you make your Elective Deferral election. Roth Contributions are deducted from your Compensation after the imposition of federal (and state, if applicable) income and social security taxes. Roth Contributions, and in most cases, earnings on Roth Contributions are not subject to federal (and in most cases, state) income taxes when distributed to you. However, for the earnings to be distributed tax-free, there must be a "qualified distribution" from your Roth Contribution account.
A distribution from your Roth Contribution account is a "qualified distribution" only if it occurs after (a) your attainment of age 59?, (b) your disability (as defined by the Code), or (c) your death. In addition, the distribution must occur after the fivetaxable-year period beginning with the first taxable year in which you made Roth Contributions to the Plan (or to a prior employer's qualified plan if such amount was rolled over into this Plan). It is not necessary to make a Roth Contribution in each of the five years. For example, if you make a Roth Contribution to the Plan on December 15, 2011, the five-taxable-year period will end on December 31, 2015.
To begin making Elective Deferrals, you have the following options: Complete an enrollment form and fax it to 484-582-2929; Call Vanguard Participant Services at 1-800-523-1188; or Log onto .
Examples: How Elective Deferrals will affect your pay. Assume your Compensation each pay period is $1,000: If you elect to make Pre-tax Contributions equal to 5% of your Compensation, the Employer will pay you $950 as gross taxable income and deposit 5% of your Compensation ($50) into the Plan each pay period. While your Pre-tax Contribution is subject to social security taxes, it is not subject to income tax on the $50 Pre-tax Contribution and any related earnings until you later withdraw them from the Plan. If you elect to make Roth Contributions equal to 5% of your Compensation, the Employer will pay you $950 and deposit 5% of your Compensation ($50) into the Plan each pay period. You will have gross taxable income of $1,000 because the $50 Roth Contribution is taxed when contributed. The Roth Contributions are not subject to income tax when distributed from the Plan. In addition, if you meet the requirements for a "qualified distribution" (described above), you will not be taxed on any earnings on the Roth Contributions when you later withdraw the earnings from the Plan. If you elect to make Pre-tax Contributions equal to 5% of your Compensation and Roth Contributions equal to 5% of your Compensation, the Employer will pay you $900 and deposit 10% of your Compensation ($100) into the Plan each pay period. For the reasons described in the above examples, you will have gross taxable income for such pay period of $950.
Elective Deferrals (other than Catch-up Contributions) you contribute to the Plan as Pre-tax and/or Roth Contributions are eligible for Matching Contributions described under "Matching Contributions" below in this Section Three.
Automatic Contribution Arrangement for Certain Employees
Beginning on and after August 1, 2010, you will be automatically enrolled in the Plan to contribute 4% of your Compensation each pay period as Pre-tax Contributions effective as of your "automatic enrollment date" (described below) and to the extent provided in Appendix B of this SPD, if you (a) are an Employee assigned to work at a location listed in Appendix B, (b) are an eligible Employee who has met the age and service requirements for participating in the Plan (described in Section Two), and (c) have not already elected to make or not make Elective Deferrals to the Plan as of your automatic enrollment date. Appendix B may be updated from time to time.
Your "automatic enrollment date" is the first administratively practicable pay date following the 31-day period starting the latest of (a) the effective date for the location to which you are assigned to work as listed in Appendix B, (b) the date you
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meet the eligibility requirements for the automatic contribution arrangement described in the above paragraph, and (c) the date you perform an hour of service at the location listed in Appendix B to which you are assigned to work.
You will be notified of your automatic enrollment no more than 90 days before it is scheduled to take place. This will give you an opportunity to elect out of automatic enrollment or to elect to contribute a different percentage of your Compensation before the first automatic contribution takes place by logging onto or by calling Vanguard Participant Services at 1-800-523-1188. If you do not elect out of automatic enrollment or elect a different contribution level, then 4% of your Compensation will be taken from your paycheck each pay period and contributed to the Plan as Pre-tax Contributions. The automatic Pre-tax Contributions will continue each pay period even if you transfer to a location not listed in Appendix B.
If you do not contact Vanguard in time to prevent automatic contributions, you can nevertheless elect to withdraw any automatic contributions (adjusted for gain or loss) that are made by contacting Vanguard within 30 days of the date on which the first automatic contribution is withheld from your paycheck. Matching Contributions with respect to the amount withdrawn (adjusted for gain and loss) are forfeited.
You can elect to not make the automatic Pre-tax Contributions or elect to make Pre-tax Contributions (or effective on and after January 1, 2011, Roth Contributions) at a different percentage level at any time by logging onto or by calling Vanguard Participant Services at 1-800-523-1188. When you make such an affirmative election, the automatic contribution arrangement will no longer apply. Keep in mind that the Employer will match $0.50 for each dollar you contribute that is between 1% and 4% of your Compensation as described below under "Matching Contributions" in this Section Three. So, to get the most from the Employer Matching Contributions, you must contribute at least 4% of your Compensation each pay period.
Your automatic Pre-tax Contributions will be invested in the Plan's qualified default investment fund as described below under "Self-Direction of Investments" in this Section Three, unless you choose a different investment option(s).
If you are eligible for the automatic contribution arrangement, the Employer will provide you a notice that explains the arrangement in more detail before your automatic enrollment date and before the beginning of each Plan Year.
Saver's Credit for Eligible Savers
Depending on your income level, you may be entitled to a tax credit, called the "saver's credit" based on your Elective Deferrals. Please refer to Appendix E of this SPD, as may be updated from time to time, for additional details regarding the saver's credit.
Limits on Elective Deferrals
In addition to the Plan's percentage limit on your Elective Deferrals described above, federal tax laws limit the amount of Elective Deferrals that you may make. Specifically, federal law places two annual limits on the amount you may defer into a 401(k) plan: an individual limit and an average limit.
Individual Limit. Federal tax law limits the amount of Elective Deferrals you may contribute to the Plan during each of your tax years (generally, a calendar year). This limit is $16,500 for 2011 and may be adjusted in future years for changes in the cost-of-living index. This limit applies to all Elective Deferrals you make during your tax year to the Plan as well as any other deferral plans maintained by your present or former employers.
If you are age 50 or older at any time during the calendar year, you may make additional Elective Deferrals called Catch-up Contributions in excess of the $16,500 limit (as adjusted) explained above. You may contribute an additional $5,500 in 2011 as Catch-up Contributions. This amount may be adjusted in future years for changes in the cost-of-living index. Once your Elective Deferrals for the calendar year exceed the individual or average limits, subsequent Elective Deferrals will be treated as Catch-up Contributions as they are deferred, provided they do not exceed the applicable limit for Catch-up Contributions for the calendar year.
If you defer more than you are allowed to defer in a calendar year, you must submit a written request for the return of the excess to the Plan Administrator no later than the following April 1.
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