THE IRC's NEW RETIREMENT PROGRAM:
PLANNING FOR THE FUTURE
SUMMARY
Effective January 1, 2007, the IRC is changing the way we help our employees save and plan
for retirement. We know many of you are wondering how the new program will work and what it
will mean for you.
Below, you’ll find a short set of questions and answers explaining the new program and its
impact as simply and straightforwardly as possible. Our goal is to make this transition as
smooth as possible for each and every eligible IRC employee.
What is the new program? 
The IRC is significantly enhancing the 403(b) Savings Plan by making a base contribution
according to your age and years of employment with the IRC. This will be in addition to the
existing matching contribution that the IRC makes when you contribute a portion of your salary
to your Savings Plan account. The IRC will make the base contribution regardless of whether you
make your own contribution. At the same time, the IRC is closing down its traditional pension
plan, also referred to as the Retirement Plan. Instead of funding the old Retirement Plan, the
IRC will make increased contributions to the 403(b) Savings Plan. IRCs new retirement program
will be exclusively focused on the enhanced 403(b) Savings Plan, which as of January 1, 2007,
will be called the IRC 403(b) Retirement Savings Plan.
Can you explain the current program?
Currently, the IRCs retirement program is made up of two separate plans.
1. A defined benefit plan - the IRC Retirement Plan
This is a traditional pension plan, managed and administered by the IRC, which defines the
benefits employees will receive when they retire based on their age, earnings and length
of service. Eligible employees participate in the plan after one year of IRC service and
are 100% vested in their plan benefits after three years of IRC service. Being "vested"
means being entitled to receive a lifetime retirement benefit, or a lump sum distribution.
2. A defined contribution plan - the IRC 403(b) Savings Plan
This plan helps you to accumulate funds for your retirement. Unlike a traditional pension
plan, however, a savings plan builds a visible, material account balance from the start -
you decide how much to save, and how to invest. Currently, the IRC plan allows for
employee contributions (a deduction from salary), a part of which is matched by the
organization. All employees may participate in the 403(b) Savings Plan immediately after
being hired and are 100% vested in their total plan value from that point forward.
Can you explain the new program?
Under the new program, the IRC's Retirement Plan will be closed down and essentially
consolidated into the enhanced IRC Retirement Savings Plan, which will have several
key features:
1. Employee Contributions/Employer Match
The IRC will continue to match employee contributions equal to 100% of the first 3% of
base pay that an employee contributes to the Plan, plus 50% of the next 3% of base pay
contributed. If an employee makes his or her maximum contribution, 6% of base pay, IRC's
matching contribution will amount to 75% of the employees contribution. Employees will
continue to be eligible to participate immediately after hire and will have immediate 100%
vesting in the value of their Plan account.
2. Additional Employer Base Contribution
For all employees who are eligible to participate in the current Retirement Plan, IRC will
make a monthly base contribution. The base contribution for each eligible employee is
based on the employees age and length of service. IRC will begin making base contributions
for eligible employees on January 1, 2007. Participants will be 100% vested in the value
of these funds after three years of IRC employment. Pre-2007 IRC employment will be
counted towards your vesting of base contribution funds.
3. New Rollover Feature
The enhanced plan will allow employees to rollover pre-tax funds held in other
IRS-qualified savings plans into any of the investment options in our Savings Plan.
Therefore, as one of the options available, you may elect to have your benefit under the
terminating Retirement Plan rollover into the enhanced Retirement Savings Plan.
4. New Hardship Withdrawal Feature
In cases of sudden and immediate severe medical expense, Plan participants will be able to
withdraw a portion of the current value of their own Savings Plan contributions to satisfy
certain financial needs. More information regarding these new features and further updates
will be provided prior to the January 1, 2007 effective date.
Who will be eligible to participate in the enhanced Retirement Savings Plan?
All employees are eligible to make contributions to the plan and to receive IRC’s matching
contributions. Eligibility for the “base contribution” portion of the plan will be limited to
all full-time regular employees and part-time regular employees, who are regularly scheduled
to work a minimum of 20 hours each week. Part-time employees (working under 20 hours per
week) and Temporary employees will still be eligible to make contributions to the Plan and
receive IRC’s matching contributions. The Retirement Plan’s current eligibility requirement
of one year of IRC service is being removed for the enhanced IRC 403(b) Retirement Savings
Plan. Eligible employees will receive “base contributions” beginning with their first IRC
paycheck.
IRC volunteers, interns, consultants, part-time employees (working under 20 hours per week)
and temporary employees will not be eligible to receive base contributions.
How do I know what my base contribution will be?
Each year, IRC will set your base contribution rate for the upcoming year, based on your age
and length of IRC at that time. The following chart defines base annual contributions
according to age and length of service.
| AGE + YEARS OF SERVICE | BASE CONTRIBUTION |
| 25 | 3% of Base Pay |
| 35 | 4% of Base Pay |
| 45 | 5% of Base Pay |
| 55 | 6% of Base Pay |
| 65 | 7% of Base Pay |
For example, if you are presently age 40 and have worked for the IRC for 14 years as of
December 31, 2006, you have a total of 54 points. You will receive a base contribution of 5%
monthly beginning January 2007. During 2007, your total points will increase to 56 (your age
of 41, plus 15 years of service). Your base contribution will then increase to 6% of
compensation, effective January 2008.
Please note that under this approach, your “points” actually increase by two each calendar year.
What do I have to do?
There is nothing for you to do at this time. In a short time, you will be receiving an
official notice from the IRC informing you of its intent to freeze benefits under the
Retirement Plan and terminate the plan. This notice is a legal requirement of the Internal
Revenue Service with which the IRC must comply. No such
notice is required for the 403(b) Plan improvements.
Later, you will be given information regarding the value of your accrued benefits under the
Retirement Plan as of December 31, 2006 and you will be informed of the various options
available to you. At that time, you will be required to complete some paperwork informing
the IRC of the option you select.
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