How the Plan Works

How the Plan Works

The Plan is a defined benefit pension plan.

Prior to January 1, 1998, the Plan was a "traditional" defined benefit pension plan where Plan benefits were based, among other things, on a Participant's service with the Company and the Compensation paid to a Participant prior to his or her retirement.

Effective as of January 1, 1998, the Plan became a cash balance defined benefit pension plan. As a result, if you were an active Participant prior to January 1, 1998, a Cash Balance Account was established on your behalf on January 1, 1998. If you were not an active Participant on January 1, 1998, and became an active Participant on or after January 1, 1998 and prior to January 1, 2012, a Cash Balance Account was established on your behalf when you became an active Participant. 

Effective as of January 1, 2012, all future benefit accruals under the Plan were frozen, which means that no further Contribution Credits or Supplemental Contribution Credits will be credited for Compensation earned on or after January 1, 2012, and no Supplemental Quarterly Credits will be credited on or after January 1, 2012.  If you were an Employee of Toshiba America Electronic Components, Inc. or Toshiba America Information Systems, Inc., however, your Contribution Credits and Supplemental Contribution Credits may have been frozen at an earlier date.

Your "Cash Balance Account" is a hypothetical bookkeeping-only account which is used solely for keeping track of your benefits. Cash Balance Accounts do not actually contain funds used for paying benefits under the Plan. Instead, they are created solely for the purpose of tracking each Participant's Plan benefit. Company contributions or interest, earnings, gains or losses are not actually deposited into a separate Cash Balance Account for you. Company contributions and gains and losses on Company contributions are held in a separate trust and are generally unavailable to the Company or its creditors.

How Your Cash Balance Account Grows

Your Cash Balance Account will grow by the addition of Interest Credits. Prior to January 1, 2012, your Cash Balance Account may have been credited with Contribution Credits, Supplemental Contribution Credits, and Interest/or Supplemental Quarterly Credits. Your Cash Balance Account may also have been entitled to an additional credit if you were an active Participant on December 31, 1997. These different types of credits are explained below.

Contribution Credits

Prior to January 1, 2012 (or an earlier date, as described below), your Cash Balance Account was credited with Contribution Credits for each payroll period during which you were an active Participant.

Your Cash Balance Account was credited with a Contribution Credit equal to the sum of:

• 4% of your Compensation for each payroll period, until your Compensation for the Plan Year reached the Social Security wage base, and
• 8% of Compensation for each payroll period, after your Compensation for the Plan Year reached the Social Security wage base.

The Social Security wage base is the maximum compensation on which you and the Participating Employers pay Social Security taxes. This number may change from year-to-year. For the 2011 Plan Year, which was the last Plan Year for which Contribution Credits were credited, the Social Security wage base was $106,800.

You earned Contribution Credits as you were paid throughout the year. If your employment terminated during the year, your Contribution Credits reflected your Compensation through the date of your termination. You did not earn Contribution Credits after you ceased to be an active Participant.

You will not earn Contribution Credits for Compensation paid on or after January 1, 2012.  Please note that you may have ceased earning Contribution Credits prior to January 1, 2012.  If you:

• Were an Employee of Toshiba America Electronic Components, Inc., you ceased earning Contribution Credits for Compensation earned on or after April 1, 2009; or
• Were an Employee of Toshiba America Information Systems, Inc., you ceased earning Contribution Credits for Compensation earned on or after January 1, 2010; or
• Terminated employment with Toshiba America Electronic Components, Inc. or  Toshiba America Information Systems, Inc. upon becoming disabled, as defined in "Cash Balance Credits During Disability," below, you ceased earning Contribution Credits for Compensation assumed to have been earned on or after April 1, 2010.

Interest Credits

Your Cash Balance Account will be created with Interest Credits as of the end of each calendar quarter—March 31, June 30, September 30, and December 31.

Interest Credits are calculated and credited in two steps.

First, the Plan will calculate the interest rate that is used to determine quarterly Interest Credits. This interest rate will equal 25% of the current annual yield on one-year Treasury Constant Maturities for the first day of the month preceding each calendar quarter. For example:

Second, the Plan will credit your Cash Balance Account with an Interest Credit that is equal to the interest rate described in the first step multiplied by the balance in your Cash Balance Account on the first day of the calendar quarter.

Your Cash Balance Account will be credited with Interest Credits each quarter. You will continue to be credited with Interest Credits after your employment terminates. However, you will stop receiving Interest Credits when you begin receiving a distribution of your benefits under the Plan.

Cash Balance Credits During Disability

If you become totally and permanently disabled prior to retirement, you may be eligible to receive Interest Credits during your "disability." Prior to January 1, 2012, you may have been eligible to receive Contribution Credits, Supplemental Contribution Credits, Interest Credits, or Supplemental Quarterly Credits during your "disability." You are considered "disabled" if you have been determined to be entitled to disability benefits under the Social Security Act. You may be required to recertify that you continue to be entitled to disability benefits under the Social Security Act from time-to-time.

Prior to January 1, 2012, because Contribution Credits and Supplemental Contribution Credits were based on your Compensation each Plan Year, the Plan provided that, while you were "disabled," you were assumed to earn Compensation at an annual rate that equaled your Compensation for the Plan Year before the Plan Year in which your disability began (or, if greater, the annual rate of your Compensation for the Plan Year in which your disability began).  The annual rate of your Compensation for the Plan Year in which your disability began was your Compensation for that Plan Year, multiplied by a factor. The factor equaled 12, divided by the number of months in that Plan Year that you received Compensation prior to your disability.

You will cease to be eligible for disability on the earliest of the date of your recovery, your retirement, or your death.

Definition of Compensation

For purposes of computing contributions to your Cash Balance Account, compensation generally means your wages, salaries, and other amounts received for personal services actually rendered in the course of your employment with a Participating Employer to the extent that such amounts are included in your gross income for federal tax purposes. Your compensation will also include any Employee pre-tax contributions you make to your Participating Employer's 401(k) plan (such as the Toshiba America, Inc. 401(k) Savings Plan) and any salary reductions you make under the Company's cafeteria plan or another plan similar to these plans.

Compensation does not include any employer contributions to a deferred compensation plan that are not taxable in the year in which contributed or distributions from such a plan. Compensation also does not include fringe benefits (cash and non-cash), moving expenses, car allowances, welfare benefits (including severance pay), and other reimbursements or other expense allowances, regardless of whether these amounts are included in your taxable income. Tax laws also limit the amount of compensation that may be taken into account each Plan Year. The maximum amount for the 2012 calendar year is $250,000 (this dollar amount is subject to adjustment each year).

Special Rules

Special Rules For Individuals Who Were Active Participants On December 31, 1997

If you were an active Participant as of December 31, 1997, the following special rules apply to you:

• Your Cash Balance Account was credited with an opening account balance based on the Plan benefits you had earned as of that date;
• You were eligible to have Supplemental Contribution Credits credited to your Cash Balance Account as of each payday;
• You were eligible to have Supplemental Quarterly Credits credited to your Cash Balance Account when Interest Credits were credited to your account; and
• You were eligible to have an extra Contribution Credit credited to your Cash Balance Account at the end of the day on December 31, 2011, if you were a Participant (but not a terminated vested Participant) on such date.

Opening Account Balance

If you were an active Participant as of December 31, 1997, your Cash Balance Account was created and was credited with an opening account balance as of January 1, 1998.

The value of your opening account balance was an amount equal to the actuarial equivalent value of the normal retirement benefit you had accrued as of December 31, 1997. The "actuarial equivalent value" of your December 31, 1997, normal retirement benefit was calculated using a 7% interest rate and the 1983 Group Annuity Mortality table, 50% male and 50% female. You can contact the Toshiba America, Inc. Retirement Plans Office at 912-444-0071 for more information about how your opening account balance was calculated.

In addition, your opening account balance was increased by:

• 1% for each whole year of age over 45, determined as of December 31, 1997 (up to a maximum increase of 15% because of age); and
• 1% for each whole year of benefit service (as determined under the terms of the Plan in effect on December 31, 1997), determined as of December 31, 1997 (up to a maximum increase of 15% because of benefit service).

If you are a Participant who was employed at the toner manufacturing facility of Minnesota Mining & Manufacturing Company in Mitchell, South Dakota and who became an Employee on October 2, 1986, or if your Compensation exceeded the Internal Revenue Service's limits on Compensation taken into account for benefit purposes in years prior to 1994, and you were an active Participant of the Plan as of December 31, 1997, another opening balance formula may have applied to you. You can contact the Toshiba America, Inc. Retirement Plans Office at 912-444-0071 for more information about the opening balance formula that applied to you.

Supplemental Contribution Credits

Prior to January 1, 2012 (or an earlier date, as described below), if you were an active Participant as of December 31, 1997, you were entitled to receive Supplemental Contribution Credits for each payroll period, determined as follows:

• 4% of your Compensation for the payroll period, if you were at least 60 years old and had at least 5 Years of Service as of December 31, 1997,
• 3% of your Compensation for the payroll period, if you were at least 55 years old and had at least 10 Years of Service as of December 31, 1997,
• 2% of your Compensation for the payroll period, if you were at least 50 years old and had at least 10 Years of Service as of December 31, 1997,
• 1% of your Compensation for the payroll period, if you were at least 45 years old and had at least 15 Years of Service as of December 31, 1997.

If you did not satisfy any of the above conditions, you did not receive any ongoing Supplemental Contribution Credits.

Only Compensation paid while you were an active Participant was taken into account when calculating your Supplemental Contribution Credits. Compensation paid while you were an inactive Participant was not taken into account.

You earned Supplemental Contribution Credits as you were paid throughout the year. If your employment terminated during the year, your Supplemental Contribution Credits reflected your Compensation through the date of your termination. You did not earn Supplemental Contribution Credits after your employment terminated, but were eligible to resume Supplemental Contribution Credits if you were rehired at a later date.

You will not earn Supplemental Contribution Credits for Compensation paid on or after January 1, 2012.  Please note that you may have ceased earning Supplemental Contribution Credits prior to January 1, 2012.  If you:

• Were an Employee of Toshiba America Electronic Components, Inc., you ceased earning Supplemental Contribution Credits for Compensation earned on or after April 1, 2009; or
• Were an Employee of Toshiba America Information Systems, Inc., you ceased earning Supplemental Contribution Credits for Compensation earned on or after January 1, 2010; or
• Terminated employment with Toshiba America Electronic Components, Inc. or  Toshiba America Information Systems, Inc. upon becoming disabled, as defined in "Cash Balance Credits During Disability" above, you ceased earning Supplemental Contribution Credits for Compensation assumed to have been earned on or after April 1, 2010.

Supplemental Quarterly Credits

Prior to January 1, 2012, if you were an active Participant as of December 31, 1997, and met certain age and service requirements as of that date, you were eligible to have Supplemental Quarterly Credits made to your Cash Balance Account when Interest Credits were credited to your account at the end of each calendar quarter. These additional credits were equal to an applicable percentage determined as described below minus the interest rate in effect for the applicable calendar quarter. In no event did you receive a negative additional credit.

Your applicable percentage was determined as follows:

• 2%, if you had reached age 60 and completed at least 5 Years of Service as of December 31, 1997,
• 2%, if you had reached age 55 and completed at least 10 Years of Service as of December 31, 1997,
• 1.875%, if you had reached age 50 and completed at least 10 Years of Service as of December 31, 1997,
• 1.75%, if you had reached age 45 and completed at least 15 Years of Service as of December 31, 1997.

If you did not meet any of these criteria, you were not eligible for a Supplemental Quarterly Credit.

For example, you were an active Participant on December 31, 1997, had reached age 55 and had completed 10 Years of Service as of December 31, 1997, you were eligible for Supplemental Quarterly Credit of the difference between 2% and the Interest Credit interest rate in effect for the quarter. Assuming that the Interest Credit interest rate in effect for the calendar quarter was 1.2%, you would have received a Supplemental Quarterly Credit of 0.8% (2% - 1.2%) time the sum of your Cash Balance Account on the first day of the calendar quarter plus one-half of the Contribution Credits during the calendar quarter, at the same time your Interest Credit was credited to your Cash Balance Account.

Please note, you were only eligible for supplements to your Interest Credits through the end of the calendar quarter in which you ceased to be an active or inactive Participant, even if you remained a terminated vested Participant after the end of the calendar quarter.

In all events, you will not earn Supplemental Quarterly Credits on or after January 1, 2012.

Extra Contribution Credit

If you were an active Participant as of December 31, 1997, and you were an active or inactive Participant (but not a terminated vested Participant), on December 31, 2011, you were entitled to receive an extra Contribution Credit as of the end of the day on December 31, 2011, determined as follows:

• 8% of your Cash Balance Account on December 31, 2011 (determined prior to this extra Contribution Credit), if you were at least 60 years old and had at least 5 Years of Service as of December 31, 1997,
• 8% of your Cash Balance Account on December 31, 2011 (determined prior to this extra Contribution Credit), if you were at least 55 years old and had at least 10 Years of Service as of December 31, 1997,
• 7.5% of your Cash Balance Account on December 31, 2011 (determined prior to this extra Contribution Credit), if you were at least 50 years old and had at least 10 Years of Service as of December 31, 1997,
• 7% of your Cash Balance Account on December 31, 2011 (determined prior to this extra Contribution Credit), if you were at least 45 years old and had at least 15 Years of Service as of December 31, 1997.

If you did not satisfy any of the above conditions, you did not receive an extra Contribution Credit.  

Please note that because the extra Contribution Credit was calculated after any Interest Credits or Supplemental Quarterly Credits were credited for the quarter ending December 31, 2011, no Interest Credits or Supplemental Quarterly Credits were credited with respect to the extra Contribution Credit for the quarter ending December 31, 2011.

This extra Contribution Credit was a one-time credit and not an on-going credit.

Special Rule for Individuals Who First Became Active Participants in 1998

If you were an Employee working for a Participating Employer but not yet an active Participant on December 31, 1997, and you first became an active Participant in 1998, your Cash Balance Account was created and was credited with an opening account balance as of the date you became an active Participant.

The value of your opening account balance was an amount equal to the actuarial equivalent value of the normal retirement benefit you would have accrued on December 31, 1997 (under the terms of the Plan in effect on December 31, 1997), had you been an active Participant in the Plan since your first day of employment with a Participating Employer in a position otherwise eligible to participate in the plan. The "actuarial equivalent value" of your December 31, 1997, normal retirement benefit was calculated using a 7% interest rate and the 1983 Group Annuity Mortality table, 50% male and 50% female.

In addition, your opening account balance was increased by:

• 1% for each whole year of age over 45, determined as of December 31, 1997 (up to a maximum increase of 15% because of age); and
• 1% for each whole year of benefit service (as determined under the terms of the Plan in effect on December 31, 1997), determined as of December 31, 1997 (up to a maximum increase of 15% because of benefit service).

Lastly, when you became an active Participant, your Cash Balance Account was credited with the Contribution Credits and Interest Credits you would have received had you been an active Participant for the period beginning January 1, 1998 through the date you became an active Participant.

Special Rule for Individuals Who Were Participants But No Longer Active Participants on December 31, 1997

If you were an inactive or terminated vested Participant, but not an active Participant as of December 31, 1997, and again became an active Participant in the Plan after December 31, 1997, and prior to January 1, 2012, your Cash Balance Account was created and was credited with an opening account balance as of the date you again became an active Participant.

The value of your opening account balance was an amount equal to the actuarial equivalent value of the normal retirement benefit you had accrued as of the date you again became an active Participant.

The "actuarial equivalent value" of your December 31, 1997, normal retirement benefit was calculated using the following assumptions:

• The annual interest rate which is determined in accordance with section 417(e)(3) of the Internal Revenue Code; and
• The Internal Revenue Service's "applicable mortality table" at the time you again became an active Participant.

Effective January 1, 2012, if you were an inactive or terminated vested Participant, but not an active Participant as of December 31, 1997, you are not eligible to become an active Participant and a Cash Balance Account will not be created for you.