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Pension Plan
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Break in Service

What is a Break in Service?

If a Participant does not earn a required amount of service over a specified period of time, he or she will incur a Break in Service. Prior to January 1, 1998, if the Break was prolonged beyond specified limits, it could become permanent and, unless the Participant had already met the requirements for vesting, resulted in the loss of previously earned Qualified Years A Plan Year in which the Participant earned at least eight Credited Weeks. and benefits (for all purposes except Normal Death Benefits). Effective January 1, 1998, this rule continues to apply for purposes of determining a Participant's Normal Retirement Date Normal Retirement Date is the first day of the month following the date the Participant has both reached age 65 and completed the required participation in the Plan. but no longer applies to vesting. However, service and benefits forfeited prior to 1998 due to these rules will remain forfeited for retirement and vesting purposes. Additionally, even after January 1, 1998, a Participant will still need to become vested in order to receive a retirement benefit.

One-Year Break in Service

A Participant will incur a one-year Break in any Plan Year The term Plan Year means the calendar year. that he or she does not earn a Qualified Year (eight Credited Weeks Generally, a week of employment covered by the Plan.).

Permanent Break in Service

Prior to January 1, 1998, if a Participant who was not vested incurred too many consecutive One-Year Breaks in Service, the Break in Service became permanent. In addition, the Participant lost all of the Qualified Years and accrued benefits he or she had previously earned and his participation in the Plan was terminated. A Participant could have more than one Permanent Break in Service. While Qualified Years and benefits forfeited prior to 1998 will not be reinstated, beginning January 1, 1998, a Break in Service will no longer result in a forfeiture of Qualified Years and benefits. However, it may still impact whether a Participant has reached his or her Normal Retirement Date if he or she is not otherwise vested.

Example 1:

Paul Participant earned two Qualified Years in 1987 and 1988. However, Paul did not earn an additional Qualified Year from 1989 to 1993. Paul thus incurred a Permanent Break in Service at the end of 1993. As a result, Paul lost credit for the two Qualified Years and benefits he previously earned in 1987 and 1988.

Assume Paul earns two more Qualified Years in 1996 and 1997 and then leaves the Industry for five years. Under the Plan rules in effect prior to January 1, 1998, at the end of 2002, he would have lost credit for 1996 and 1997 service and benefits. However, under the rules that became effective January 1, 1998, Paul retains credit for the earlier two years since he did not have a Permanent Break in Service as of January 1, 1998 with regard to the Qualified Years earned in 1996 and 1997. If he earns three more Qualified Years at any time, he will be vested. Moreover, his vested benefits will include the benefits earned in 1996 and 1997. However, Paul is not reinstated with his earlier service or benefits earned for 1987 and 1988.

Example 2:

Polly Participant earned Qualified Years in 1991, 1992 and 1993. She stopped working from 1994 through 1998 and attained age 65 in 1999. At the end of 1998 she had a Permanent Break in Service because she did not work for five consecutive years. As a result, she is not eligible to retire at 65 because she incurred a Permanent Break in Service before reaching 65. (If Polly had attained age 65 in 1998, she would have attained her Normal Retirement Age because she attained age 65 before having a Permanent Break in Service.)

Under the rules in effect prior to January 1, 1998, Polly would also have lost all of her Qualified Years because of the Permanent Break in Service. However, under the rules that became effective January 1, 1998, Polly retains the three Qualified Years she had earned since Polly's Permanent Break in Service was after January 1, 1998. Thus, she can vest (and retire) by returning to work at any time and earning two more Qualified Years. Her Normal Retirement Age will be the first of the month after she earns her second additional Qualified Year.

Between January 1, 1974 and December 31, 1985, a Break in Service becomes permanent if the Participant has at least three consecutive One-Year Breaks and the number of such One-Year Breaks equals or exceeds the number of Qualified Years the Participant had previously accrued.

For example, if a Participant had accrued two Qualified Years as of December 31, 1978 and then suffered three One-Year Breaks in Service because you did not earn a Qualified Year in 1979, 1980 and 1981, the Break in Service would be permanent. The Participant would be terminated and he or
she would lose the two Qualified Years previously earned. The
Participant will also lose credit for the contributions attributable to Covered EarningsEarnings for employment as a writer that is covered by the Plan. Work for which there is no employee-employer relationship is not covered. Royalties, options, clips, program fees, character payments, theatrical residuals, publication fees, separated rights payments, and sale of original material are also not considered covered earnings. However, for periods on and after May 2, 1998, sales of literary material are considered covered earnings if the Employer also employs the writer to do a rewrite or polish on the material. on or prior to December 31, 1981. However, if a Participant had accrued four Qualified Years as of December 31, 1978, the Break in Service would not be permanent because the number of Qualified Years the Participant had earned exceeded the number of One-Year Breaks incurred.

The above Break in Service rules apply to Breaks in Service between January 1, 1974 and December 31, 1985, even if such One-Year Break in Service A Plan Year in which a Participant fails to earn a Qualified Year. began before January 1, 1974, unless the Participant completed a subsequent Qualified Year prior to January 1, 1977. Permanent Breaks in Service under this Plan do not commence before January 1, 1974.

For example, if a Participant had earned three Qualified Years A Plan Year in which the Participant earned at least eight Credited Weeks. in 1969, 1970 and 1971, but did not earn a Qualified Year from 1972 to 1974, he or she would have experienced a Permanent Break in Service on December 31, 1974. The Participant would be terminated and he or she would lose the three Qualified Years previously earned. The Participant would also lose credit for contributions attributable to Covered Earnings on or prior to December 31, 1974. However, if the Participant returned to work and earned a Qualified Year in 1976, the break effective December 31, 1974 would not be permanent because an additional Qualified Year was earned before January 1, 1977. In such case, if the Participant later becomes vested before experiencing a Permanent Break in Service, the benefit would include the benefits earned in 1969, 1970 and 1971.

Between January 1, 1986 and December 31, 1997, a Break in Service becomes permanent if the Participant is not vested and has at least five consecutive One-Year Breaks in Service and the number of such One-Year Breaks equals or exceeds the number of Qualified Years the Participant had previously accrued.

For example, if a Participant had accrued four Qualified Years as of December 31, 1992 and then incurred five One-Year Breaks by failing to earn a Qualified Year from 1993 to 1997, the Break in Service would be permanent because there had been at least five consecutive One-Year Breaks and the number of One-Year Breaks exceeded the number of Qualified Years accrued. The Participant would also lose credit for all contributions attributable to Covered Earnings on or prior to December 31, 1997.

On the other hand, if a Participant had accrued four Qualified Years and then incurred four One-Year Breaks, the Break in Service would not be permanent because there were less than five consecutive One-Year Breaks. However, if the Participant then incurred another One-Year Break, for a total of five consecutive One-Year Breaks in Service, the Break in Service would be permanent.

Grace Periods

A Participant may be eligible for a grace period if his or her failure to earn a Qualified Year is because of disability or family or parental leave as described below. This grace period extends the time a Participant has to earn the required service; it does not add to the Qualified Years he or she has accrued. It is a period which is disregarded in determining whether a Break in Service is permanent. For example, if a Participant incurred One-Year Breaks in 2009 thru 2011, but had a grace period in 2010, the Plan will ignore 2010, and treat 2009 and 2011 as consecutive One-Year Breaks.

Beginning January 1, 1986, the Plan provides a grace period for Participants who fail to earn a Qualified Year because of the Participant's pregnancy, birth or adoption of a child (or if a child is placed for adoption with the Participant), or for purposes of caring for the child of the Participant during the period immediately following the birth or placement for adoption including time involved for a trial period prior to such adoption.

Beginning January 1, 1991, a grace period is also provided for Participants who fail to earn a Qualified Year because they are totally disabled. In order to be considered totally disabled, the Participant must be entitled to Social Security Disability benefits under Title II of the Social Security Act for at least one month during the year

Beginning February 5, 1994, a grace period is also provided to certain Participants who fail to earn a Qualified Year on account of taking a family leave covered by the Family and Medical Leave Act of 1993 and return to employment at the end of the leave (unless the failure to return is due to the continuation, recurrence or onset of a serious health condition for reasons beyond the Participant's control).

For complete details regarding these grace periods, contact the Administrative Office.

Curing a Break in Service

Because Breaks in Service continue to affect whether a Participant may receive a retirement benefit if the Participant is not vested at attainment of age 65, curing a Break in Service remains relevant even after 1997. A One-Year Break or a series of One-Year Breaks will be cured if the Participant earns a Qualified Year before the Break in Service becomes permanent. For example, suppose a Participant incurs four One-Year Breaks and then earns a Qualified Year. The Qualified Year would repair the four previous One-Year Breaks. Thereafter, the Participant would not incur a Permanent Break in Service unless and until a new string of at least five consecutive One-Year Breaks occurs, which exceeds the number of Qualified Years the Participant has accrued at that time.

Participation After a Permanent Break in Service

If a Participant had a Permanent Break in Service prior to 1998, new participation in the Plan will begin on the January 1 when an Employer contributes on his or her behalf after the Break in Service; provided, however, that effective as of January 1, 2002, reinstatement shall not occur until the first January 1 on or following the date that the Employer was required to contribute on the Participant's behalf after the Break in Service. As such, he or she shall be generally treated as a new Participant without any prior Qualified Years or accrued benefits. Prior to January 1, 1998, if a Participant did not complete a Qualified Year in the five years after the Permanent Break in Service, a second Permanent Break in Service would occur and the contributions made during these five years would be forfeited as well.