CSX CORPORATION 401(k) PLAN
(CSXtra)
SUMMARY PLAN DESCRIPTION
This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.
January 1, 2014
NAI-102596543v7
401(k) Plan (CSXtra)
Summary Plan Description Table of Contents
1. Your CSX 401(k) Plan ...... 1 2. Who Is Eligible? ...... 2 3. Access to Plan Information ...... 3 4. Contributing to Your Account ...... 5 5. Company Contributions to Your Account ...... 10 6. Managing Your Investments ...... 11 7. How Your Account Can Grow ...... 19 8. Withdrawals From Your Account ...... 21 9. Plan Loans ...... 25 10. Receiving Distributions from Your Account ...... 31 11. Circumstances That Could Affect Your Benefits ...... 34 12. Taxes on Your Account ...... 35 13. Plan Administration & Your ERISA Rights ...... 41 14. Prospectus Information and Documents Incorporated by Reference ...... 49
CSXtra Page i Summary Plan Description (January 1, 2014) NAI-102596543v7
1. Your CSX 401(k) Plan
The CSX 401(k) Plan, known as CSXtra, is designed to help you build financial security for the future.
Saving for your future can be challenging. But if you are going to be financially secure, especially in retirement, it is necessary. CSX Corporation (“CSX” or the “Company”) wants to help you save for retirement. To assist you, CSX sponsors the 401(k) Plan (“CSXtra” or the “Plan”), which allows you to save on both a pre-tax and after-tax basis. Saving through pre-tax contributions allows you to reduce your current income taxes at the same time. Unless you choose the “Roth” contribution feature (which will be available as of January 1, 2015), your savings are deducted from your paycheck before income taxes are withheld, reducing your taxable income and your taxes. See the example under the “Contributing to Your Account” section of this Summary. Earnings and gains on your and CSX’s contributions also accumulate tax free until withdrawn. If you contribute on a “Roth” basis, your savings will be deducted after income taxes are withheld, but the distribution including earnings will be tax-free when withdrawn, if you wait 5 years to withdraw those amounts and certain other requirements are met.
CSXtra also offers a loan feature that essentially allows you to “borrow” money from yourself and pay it back into your account over time. In addition, regular in-service withdrawals permitted under the Plan may be withdrawn twice a year. “Hardship withdrawals” are also available for certain expenses including the purchase of a home, education costs, or medical expenses that insurance will not cover. See the sections entitled “Plan Loans” and “Withdrawals From Your Account.”
This document reflects the major provisions of CSXtra, as amended and restated effective January 1, 2014. The Plan initially was effective December 1, 1985. Although CSX expects to maintain the Plan indefinitely, CSX retains the right to make additional amendments to CSXtra or to terminate CSXtra at any time. Such actions may be taken at any time for any reason in any manner not prohibited by law.
This document summarizes in non-technical terms how CSXtra works and how you become eligible to receive benefits under CSXtra, and is referred to herein as the “Summary Plan Description” or the “Summary.” This Summary Plan Description is only a summary of the main provisions of CSXtra. It does not take the place of the Plan document. If there is a conflict between the provisions of the Plan document and this Summary, the Plan document provisions will control in all cases. In particular, the explanations in this Summary Plan Description cannot alter, modify, or otherwise change the controlling Plan document nor can any rights accrue by reason of any statements or omissions herein. Any amendment to CSXtra to comply with a change in the law, and any provisions in this Summary describing those changes, is subject to the approval of the Internal Revenue Service.
CSXtra Page 1 Summary Plan Description (January 1, 2014) NAI-102596543v7
The Plan Administrator has delegated the authority for the day-to-day administration of the Plan to the CSX Benefits Department. Certain administrative responsibilities relating to the Plan have also been outsourced to Empower Retirement.*
*IMPORTANT NOTICE EFFECTIVE August 30, 2014, Empower Retirement has acquired J.P. Morgan Retirement Plan Services, LLC. Please note that J.P. Morgan Retirement Plan Services is no longer affiliated with JP Morgan Chase & Co. and now operated under the name Empower Retirement.
The Plan document is available for your review upon request. If you would like to see a copy of the Plan document, contact CSX Benefits at (904) 359-2345 or e-mail [email protected]. For more information about CSXtra, you may log onto the 401(k) Savings Plan website from the link on the Employee Gateway (https://csxgateway.csx.com), and select Health, Pay & Benefits > Benefits > Management Benefits > Savings & Retirement > 401(k) Savings Plan, or you may log on directly at www.retireonline.com or call an Empower Retirement Customer Service Representative at 1-888-CSX-401k (888-279-4015) weekdays between the hours of 8 a.m. and 9 p.m. ET. The TDD number for members with a hearing impairment is 800-345-1833.
2. Who Is Eligible?
Generally, all non-union employees are eligible to become members.
All non-union employees of CSX, or of an adopting affiliated company, are eligible to participate in the Plan. If you are eligible, you become a member when you are enrolled.
You are not eligible to become a member in the Plan if:
you are a leased employee;
you are covered by a collectively bargained agreement;
you are classified by CSX or an adopting affiliated company as an independent contractor (regardless of whether such classification is ultimately determined to be correct as a matter of law); or
you are a non-resident alien (with respect to the United States) without U.S. source income, within the meaning of Sections 911(d)(2) and 861(a)(3) of the Internal Revenue Code.
CSXtra Page 2 Summary Plan Description (January 1, 2014) NAI-102596543v7
3. Access to Plan Information
You can inquire about your account and perform most transactions using the www.retireonline.com website or by calling the CSX Savings Line and using the automated options or by speaking with an Empower Retirement Customer Service Representative.
Once you are eligible for membership in CSXtra, you may start making contributions by accessing your account, as described below.
How Do You Access Your Account?
You can access your account through the 401(k) Savings Plan link on the Employee Gateway (https://csxgateway.csx.com) by selecting Health, Pay & Benefits > Benefits > Management Benefits > Savings & Retirement > 401(k) Savings Plan, or by using a computer with Internet access to log on at www.retireonline.com, or by calling the CSX Savings Line 888-CSX-401k (888-279-4015) and speaking with an Empower Retirement Customer Service Representative.
The first time you access your account by phone or Web use your Social Security Number as your User ID and a temporary access code consisting of the last four digits of your Social Security Number and the MMDD of your date of birth (e.g., “0720” for July 20). The system will instruct you to establish security access information and a permanent personal access code.
The personal access code you establish can be used for both the website and the CSX Savings Line.
If you forget your existing personal access code, go to www.retireonline.com and click on Forgot your Personal Access Code or call the CSX Savings Line and use the automated options to request a reset of your Personal Access Code or speak with an Empower Retirement Customer Service Representative to create a new one. You will be advised when you can access your account.
If you do not have access to a pushbutton phone or a computer with Internet access, contact an Empower Retirement Customer Service Representative.
You will be asked to register the primary computer you use to access your account. If you log onto your account from a different computer, you will be asked to provide additional security information and send an access code for that computer.
CSXtra Page 3 Summary Plan Description (January 1, 2014) NAI-102596543v7
To make contributions, you must indicate the:
Amount of your contributions;
Type of contributions (pre-tax, Roth (on and after January 1, 2015), or combination); and
Investment fund elections.
You must also designate a beneficiary either on-line at www.retireonline.com or by completing a beneficiary designation form. If you are married, your spouse must be your beneficiary unless he or she consents in writing to your choice of a different beneficiary. For this purpose, your spouse is the person to whom you are legally married, determined based on the applicable laws of the state where you were married or the ceremony was performed. If you die without naming a beneficiary, the deemed beneficiary will be determined in the following order: your surviving spouse, children, parents, brothers and sisters, or estate.
If you do not have access to the Company Intranet, or the Internet, call the CSX Savings Line and hit # 0 twice to speak with an Empower Retirement Customer Service Representative.
If you do not affirmatively elect whether or not to contribute to the Plan, and if you are subject to the Plan’s automatic enrollment provisions, you will be automatically enrolled in the Plan at an initial default contribution rate of 6%. You may stop or change your deferral rate at any time through the www.retireonline.com website or the CSX Savings Line. See section 4 below under “Automatic Enrollment and Automatic Contribution Rates“ for an explanation of whether these rules apply to you and how they work.
Please see the following chart for sample transactions and related access methods.
BY BY BY WHAT YOU CAN DO INTERNET PHONE REP
(Please note: a representative can issue a new password on-the-spot; if you request a password via the automated phone system, it will be mailed to your address of record.)
Enroll in the Plan
Create, reset, or change personal access code
Set or change contribution rate
Set or change investment elections
Reallocate or transfer existing account balances among the investment funds in percentages
CSXtra Page 4 Summary Plan Description (January 1, 2014) NAI-102596543v7
BY BY BY WHAT YOU CAN DO INTERNET PHONE REP
Obtain information on fund performance
Obtain up-to-date account balances
Request a statement on demand
Access account transaction detail
Determine how much you may borrow and the amount of repayment for your repayment period
Request a General Purpose Loan
Request a Primary Residence Loan application
Request early loan payoff information
Request a Regular Withdrawal (must speak with an Empower Retirement Customer Service Representative if Pre-1987 After-Tax)
Request a distribution upon severance from employment.
Update beneficiary information by Internet or form
Request a hardship withdrawal form
Plan information
Elect to receive dividends in cash
4. Contributing to Your Account
You may make contributions from your base pay on a pre-tax basis or, after January 1, 2015, on a Roth after-tax basis.
Base Pay
Your contributions are based on your “base pay,” which includes your regular salary, wages, overtime pay, commissions and salary continuance during a short-term disability. Base pay also includes any differential wage payments made by the Company during your active military duty of more than 30 days in the uniformed services. Base pay excludes awards, bonuses, severance
CSXtra Page 5 Summary Plan Description (January 1, 2014) NAI-102596543v7
payments, and all other incentives or special payments, and it excludes earnings paid to you prior to the date you become a member in the Plan or after you cease being an eligible member.
Automatic Enrollment and Automatic Contribution Rates
To encourage savings and increase participation, the Plan has an automatic enrollment feature. This feature is described in an information packet mailed to your home address. This is how auto enrollment works:
You will be given 30 days to either (i) opt out of a 6% pre-tax auto enrollment contribution rate, (ii) elect another contribution rate or (iii) elect to contribute on a Roth after-tax basis (after January 1, 2015). If you do not opt out, or elect another contribution rate, your contribution for the “initial period” will be at a 6% pre-tax contribution rate.
Your “initial period” begins on your pay date on which your automatic contributions are first withheld and ends on the one year anniversary. Beginning on the one-year anniversary and each year thereafter, your automatic contributions increase by 1% of pay to an annual default maximum of 10% of pay.
You may opt out of automatic deferrals, the automatic rate increase program, or select an alternative deferral percentage at any time through the www.retireonline.com website or by calling the CSX Savings Line.
Optional Contribution Rates
You are not limited to the default contribution rates described above. Instead, you may elect to contribute on a pre-tax basis or on a Roth after-tax basis (or on some combination of the pre-tax basis and the after-tax basis) from 1% to 50% of your base pay, in 1% multiples, up to the elective deferral limit described below.
Changing Your Contributions
You may increase, decrease or suspend your pre-tax contributions at any time. You may increase decrease, or suspend your Roth after-tax contributions at any time on or after January 1, 2015.
You may also elect to have your contribution rate automatically increased by the percentage of your choice in any future month. If you do not make any changes, the contribution rate increases will occur automatically at the same time each year until you reach the Plan’s automatic contribution limits or you turn off the feature. To enroll, change your contribution rate, change from pre-tax contributions to Roth contributions or vice versa, or turn the automatic increase feature on or off, use the www.retireonline.com website or call the CSX Savings Line. If you do not have access to a pushbutton phone or a computer with Internet access, contact an Empower Retirement Customer Service Representative for assistance. Enrollments and changes become effective as soon as administratively practicable after entry.
CSXtra Page 6 Summary Plan Description (January 1, 2014) NAI-102596543v7
Changes in your base pay automatically change the dollar amount of your contributions. For example, if you save 6% and your annual base pay increases from $75,000 to $80,000, your annual contributions will increase from $4,500 to $4,800.
Pre-Tax Elective Deferral Contributions
When you make pre-tax contributions (also commonly known as elective deferrals) the money goes into the Plan before federal income taxes (and, in most cases, where applicable, state and local income taxes) are withheld. In effect, your contributions reduce the amount of your earnings subject to current income taxes. You do, however, pay Social Security or Railroad Retirement taxes on your contributions. Income taxes are paid on the remaining portion of your pay, not on your total pay. As long as these contributions and any associated earnings remain in the Plan, they will not be subject to income taxes.
For example, if you earn $80,000 and contribute 6%, or $4,800, to the Plan, the $4,800 goes into the Plan before federal taxes are withheld. As a result, you pay federal income taxes currently on only $75,200 ($80,000 minus $4,800), not $80,000. When you receive a distribution of your contributions and any earnings from the Plan, you will be taxed as described in the “Taxes on Your Account“ section of this Summary.
Roth (After-Tax) Contributions
If you choose to make all or part of your contributions after January 1, 2015 on the “Roth basis,” then those contributions are made after-tax. Consequently, when you make such contributions after January 1, 2015, the money goes into the plan after federal, state and local income taxes (if any) are withheld. Your contributions (unlike the pre-tax contribution described above) do not reduce the amount of your earnings subject to current income taxes, and you also pay Social Security or Railroad Retirement taxes on your contributions. However, having paid the tax on the contributions “up front,” you are not taxed on those amounts again or on investment earnings when you withdraw them from the Plan (often at retirement age).
For example, if you earn $80,000 and contribute 6%, or $4,800, to the Plan, the $4,800 goes in to the Plan after federal taxes are withheld. As a result, you pay federal income taxes currently on the full $80,000, not $75,200 as in the example above for pre-tax contributions. When you receive a distribution of your contributions and any earnings from the Plan, you will be taxed as described in the “Taxes on Your Account” section of this Summary. Because the pre-tax contributions and the Roth contributions are treated the same way under the Plan and under the law (except for the tax treatment), in the rest of this summary, the words “elective deferrals” and “elective deferral contributions” refer to both types of contributions, unless we specifically say otherwise.
Catch-Up Contributions
If you have attained (or will attain) age 50 before the end of the calendar year, you will be eligible to make “Catch-Up Contributions” that year and each year thereafter. Catch-Up Contributions are additional pre-tax contributions and/or Roth contributions (starting in 2015) that are permitted to exceed otherwise applicable limits under the Plan. Even if you have contributed the maximum contribution you can make based on other Plan limitations, you may
CSXtra Page 7 Summary Plan Description (January 1, 2014) NAI-102596543v7
still make Catch-Up Contributions for the applicable calendar year up to the Catch-Up Contribution limit described below under “Contribution Limits.” Subject to any otherwise applicable Plan limitations, Catch-Up Contributions are eligible for matching contributions made by the Company.
Adjustment to Your Contributions
If you are eligible to make Catch-Up Contributions, and if you reach the annual elective deferral limits described below before the end of the year, your pre-tax and Roth contributions will automatically be treated as Catch-Up Contributions.
If you do not want your contributions automatically treated as Catch-Up Contributions upon reaching your annual elective deferral limit, go to the www.retireonline.com website or call the CSX Savings Line and suspend your contributions. If you do suspend your contributions, be sure to reactivate your contributions in the following year if you wish to continue contributing to the Plan.
Limit on Compensation Taken Into Account for Contributions
The law sets limits on the amount of your compensation that can be taken into account in accruing benefits under the Plan in any Plan Year. It is periodically adjusted by the Internal Revenue Service for changes in the cost-of-living. For 2015, the statutory compensation limit is $265,000.
Contribution Limits
Elective Deferral Limit. The Internal Revenue Code limits the amount of elective deferrals (pre-tax and Roth contributions) you may make each year. The 2015 elective deferral limit is $18,000 . This limit is updated periodically for changes in the cost-of- living index. The elective deferral limit is an aggregate limit that applies to all pre-tax contributions and all Roth contributions you make during the tax year to any 401(k) plan maintained by CSX or another employer. So, for 2015 you may be able to contribute $9,000 on a pre-tax basis and $9,000 on a Roth basis, and still stay within the legal limit. However, the $18,000 limit does not include Catch-Up Contributions.
If your total elective deferrals exceed the elective deferral limit, the excess amount for the Plan Year is known as “excess elective deferrals” and cannot remain in the Plan. To avoid excess elective deferrals, you should notify the Plan Administrator of any year-to- date pre-tax contributions made to another plan in which you participated. If excess elective deferrals have to be returned to you to avoid paying excise tax, you may want to designate from which plan any excess elective deferrals and any related earnings are to be returned. You should provide the Plan Administrator notice of any excess elective deferrals as early as possible in order to ensure return of such amounts before April 15th of the year following the Plan Year such contributions were made. Corrections after that date will have adverse tax consequences.
Catch-Up Contribution Limit. The Internal Revenue Code limits the amount of Catch- Up Contributions you may make each year. In 2015, the Catch-Up Contribution limit is
CSXtra Page 8 Summary Plan Description (January 1, 2014) NAI-102596543v7
$6,000. This limit is also updated periodically for changes in the cost-of-living index. The annual Catch-Up Contribution limit applies to all Catch-Up Contributions (both pre- tax contributions and Roth contributions) you make during the tax year to any 401(k) plans maintained by CSX or another employer.
Contribution Testing Limit. The Internal Revenue Code ordinarily requires a plan to be tested annually to ensure that contributions to the plan do not discriminate in favor of “highly compensated employees,” unless the plan’s design and operation satisfy certain safe harbor requirements. Since January 1, 2011, the Plan has been designed to satisfy the safe harbor requirements by virtue of the Company’s matching contributions made on behalf of all eligible employees who make contributions, as described in the section entitled “Company Contributions to Your Account.” In the unlikely event the Plan does not satisfy the safe harbor for a Plan Year, the Plan will have to be tested to ensure that contributions for highly compensated employees do not exceed certain limits relative to contributions for non-highly compensated employees. In that event, CSX will provide you with additional information if any such limits apply to you.
Rollover and Transferred Contributions
Rollover Contributions. Subject to certain limitations, you may roll over pre-tax amounts from another plan qualified under Section 401(a) of the Internal Revenue Code (“Code”), an individual retirement account (“IRA”), a Code Section 457 governmental plan or a Code Section 403(b) tax deferred annuity plan into this Plan and thereby further postpone income taxes. The Plan will also accept a rollover of Roth contributions that you receive from another employer’s qualified plan. The Plan will not accept a rollover of after-tax contributions from a “Roth IRA.” Special rules and time limits are imposed by the government on rollover contributions. For instance, an indirect rollover contribution must be paid to the Plan’s trustee no later than 60 days after the day it was received by you. If you are considering making a rollover contribution, access the www.retireonline.com website or call the CSX Savings Line.
Transferred Contributions. If you previously participated in the CSX Corporation Capital Builder Plan and you subsequently become eligible for CSXtra, your accounts. including any outstanding loan, will automatically be transferred to CSXtra within 30 days after your eligibility unless you initiate an earlier transfer date. If necessary, any loan will be re-amortized to match payroll timing differences. The maturity date for any loan, however, will not change.
USERRA Contributions
If your employment with CSX is interrupted by a period of military service that lasts less than 5 years and you return to service with CSX in accordance with the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”), you will have the right to make pre-tax and/or Roth contributions (for periods of absence after January 1, 2015) and, if applicable, catch-up “restoration” contributions for the period of your military leave. If this situation applies to you, contact an Empower Retirement Customer Service Representative for more information about the contributions that you can make to the Plan during your account restoration period.
CSXtra Page 9 Summary Plan Description (January 1, 2014) NAI-102596543v7
5. Company Contributions to Your Account
CSX adds to your savings through matching contributions.
CSX adds to your savings through Company matching contributions. Earnings on matching contributions are sheltered from taxes until you actually withdraw them.
Each payroll period, CSX adds $1.00 to each $1.00 of the first 1% of your contributions plus 50¢ to each $1.00 greater than 1% and not more than 6% of your contributions. The match applies to the base pay you contribute (including Catch-Up Contributions). That means if you contribute 6% of your base pay, your Company Matching Contribution will equal 3.5% of your base pay.
Assume, for example, your annual base pay is $80,000 and you save 6%, or $4,800 a year. CSX matches: 100% on 1% of your base pay contributed: $800 50% on the next 2 to 6% of your base pay contributed: $2,000
Total matching contributions: $2,800
Although Company matching contributions are made on a payroll basis, after the end of each Plan Year, the Plan Recordkeeper performs a test to verify that you have received a Company matching contribution on your contributions of up to 6% of total base pay for the Plan Year. You will be notified if you are due an additional Company matching contribution, or if you received more than the maximum Company matching contribution, and the corrective action to be taken.
Company matching contributions, described above, will be considered “safe harbor contributions” that are deemed to satisfy certain annual non-discrimination tests otherwise required under the Internal Revenue Code. You will be provided a “safe harbor” notice prior to the beginning of each Plan Year in which the Company intends to satisfy the safe harbor.
You may direct how matching contributions allocated to your account are invested. See the section entitled “Managing Your Investments.”
USERRA Contributions
If your employment with CSX is interrupted by a period of military service that lasts less than 5 years and you return to service with CSX in accordance with USERRA, CSX will make matching contributions on any pre-tax or Roth restoration contributions, including Catch-Up contributions, you make for the period of your military leave. If this situation applies to you, contact an Empower Retirement Customer Service Representative by going to www.retireonline.com website or by calling the CSX Savings Line.
CSXtra Page 10 Summary Plan Description (January 1, 2014) NAI-102596543v7
6. Managing Your Investments
You may choose to invest your accounts, your contributions and Company matching contributions among eight core funds or a pre-mixed targeted retirement fund based on your assumed retirement age.
Investment Choices
The Plan is designed to comply with Section 404(c) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Generally, this means that you are responsible for the investment choices you make under the Plan. Thus, it is important to consider your investment decisions carefully.
When planning your investment strategy, there are two elections you make – first, the investment mix for your future contributions, and second, your investment mix for your existing account balance. Keep in mind that you can choose an investment mix for future contributions to the Plan that is the same or different from your existing account balance. The investment mix you choose for future pre-tax, Roth and Company matching contributions must, however, be the same.
You may invest in any or all of the funds set forth below, but the allocation to any fund must be in 1% increments. Core funds allow you to customize your portfolio using a mix of specific investment options representing different asset classes and different classifications within each asset class. Pre-mixed targeted funds are designed to reflect asset allocations based on your age at any given point in your career and an assumed retirement age of 65.
For information on changing your investment choices for future contributions, or reallocating your existing account, see “Changes in Your Investments” below.
Investment Funds
For information on changing your investment choices for future contributions, or reallocating your existing account, see “Changes in Your Investments” below.
The most current fund descriptions and performance information for the Core Investment Funds and T. Rowe Price Pre-Mixed Targeted Retirement Funds listed below are available on the www.retireonline.com Website. Or call the CSX Savings Line 888-CSX-401k (888-279-4015) and to speak with an Empower Retirement Customer Service Representative.
CSXtra Page 11 Summary Plan Description (January 1, 2014) NAI-102596543v7
Investment Funds
Stable Value Fund. The money in this fund is invested in synthetic Guaranteed Interest Contracts (“GICs”). A synthetic GIC is a professionally managed alternative to GICs and can best be described as the unbundling of a traditional GIC. GICs consist of two basic components:
a diversified portfolio of high quality, marketable, fixed income securities managed within plan approved investment guidelines, and owned by the plan, and
a contract issued by an insurance company or bank called a “wrap” contract to absorb market fluctuation and provide a stable rate of return.
This fund’s investment objective is to protect the member’s principal and provide a stable rate of return over a long period of time.
Balanced Fund (Vanguard Wellington Fund). This fund is a balanced fund that seeks to conserve capital and to provide moderate long-term growth in capital and income. Fund assets are divided between common stocks and bonds. The fund invests 60% to 70% of its assets in dividend paying stocks of established large and medium-size companies. In choosing these companies, the fund seeks those that appear to be undervalued but have improving prospects. These stocks are commonly referred to as value stocks. The remaining 30% to 40% of assets are invested primarily in high-quality, long-term corporate bonds, with some exposure to U.S. Treasury, government agency and mortgage-backed bonds.
Large Cap Value Fund (Dodge & Cox Managed Account Fund). The objective of this fund is to seek long-term growth of principal and income. A secondary objective is to achieve a reasonable current income. The diversified portfolio is invested primarily in common stocks. In selecting investments, the portfolio invests in companies that, in Dodge & Cox’s opinion, appear to be temporarily undervalued by the stock market but have a favorable outlook for long-term growth. The portfolio focuses on the underlying financial condition and prospects of individual companies, including future earnings, cash flow and dividends. Various other factors, including financial strength, economic condition, competitive advantage, quality of the business franchise and the reputation, experience and competence of a company’s management are weighted against valuation in selecting individual securities. Its shares are not publicly traded on the stock exchange.
S&P 500 Index Fund (Vanguard Institutional Index Fund). This fund consists of common stock issued by corporations. Its investment objective is to duplicate the performance of the stock market as a whole, as measured by the Standard & Poor’s 500 Stock Index. This index is frequently cited as representative of the equity markets as a whole, since the S&P 500 companies make up about 75% of the equity value of all listed companies in the United States.
Large Cap Growth Fund (Loomis Sayles Managed Account Fund). This fund is a domestic equity fund that invests in large U.S. companies whose share prices are expected to increase. Stocks held in these funds typically have a market cap greater than $5 billion and a combined Price/Earnings ratio plus Price/Book value greater than 2.25. This fund seeks long-term capital appreciation using a multimanager approach that provides exposure to a broad universe of large-
CSXtra Page 12 Summary Plan Description (January 1, 2014) NAI-102596543v7
and mid-capitalization U.S. growth stocks. The fund’s three investment advisors use distinct approaches – one is fundamental and two are quantitative – to manage independent subportfolios. The multi-manager structure provides broad diversification and the potential for less volatility than in similar single-manager funds, while allowing individual managers the opportunity to strive to generate superior returns for the asset class. Vanguard may invest the fund’s cash flows in equity index futures and exchange-traded funds to manage liquidity needs while ensuring that the fund remains fully invested.
Small Cap Value Institutional Fund (Wellington Managed Account Fund). Fund assets are invested primarily in conservatively valued securities of high qualify, small cap companies. These companies generally have strong cash flow that can be used to build the value of the business or be used in other ways to bring value to shareholders. This fund focuses on the investment fundamentals of companies, rather than reacting to market events. The portfolio can be expected to hold between 60 to 90 stocks. The portfolio holdings will be structured in accordance with industry and economic sector guidelines in order to further diversity individual security risks. The fund seeks long-term total returns in excess of the Russell 2000 Value Index. This is a private investment account managed by Wellington for CSX Corporation. Its shares are not publicly traded on the stock exchange.
International Equity Fund (Morgan Stanley & Vontobel International Equity Fund). This fund consists exclusively of stocks of foreign companies. The objective of this fund is long-term growth over time by participating in the growth of various worldwide companies.
CSX Stock Fund. This fund is invested in CSX Corporation common stock. The value of this fund will fluctuate with the value of CSX common stock. Purchase and sale requests based on fund-to-fund transfers, dividends, contributions, distributions, or other transactions are aggregated by the Plan Recordkeeper and orders are sent to the trustee for execution. Orders are typically sent to the trustee at the end of the business day the requests are received. The price of the shares purchased or sold will be based on the closing market price on the business day the transaction occurs. Because the fund invests in a single stock, it should be considered more volatile and a high risk. Dividends on CSX stock that you do not elect to have paid to you are reinvested in additional CSX shares.
You may confidentially instruct the Plan trustee how to vote the CSX shares allocated to your account. Before each shareholders’ meeting, you will receive all the necessary voting materials. Shares for which no voting instructions are received will be voted proportionally based on the shares on which voting instructions are received. In addition, if a tender offer is made to the trustee (i.e., an offer is made to purchase CSX stock from the Plan), you may instruct the trustee to tender any or all CSX shares allocated to your account. If you do not provide tender instructions to the trustee, no shares from your account will be tendered.
You should carefully and objectively evaluate the CSX Stock Fund as an investment option and not allow your relationship with CSX or knowledge about the Company – gained through the performance of your job responsibilities – to unduly influence your investment decision. The Board and management of CSX may have information affecting its businesses that has not yet been made public. Such information cannot be made available to Plan members before it is
CSXtra Page 13 Summary Plan Description (January 1, 2014) NAI-102596543v7
made public. You should take this into account in deciding whether to invest in CSX common stock.
T. Rowe Price Pre-Mixed Targeted Retirement Funds
The investment strategy of each of the T. Rowe Price Targeted Retirement Funds assumes, as a guideline, retirement in the year in question at age 65. The funds all seek the highest total return over time by emphasizing capital growth and income based on each fund’s investment horizon and assumed retirement at age 65. Each fund is made up of a diversified portfolio of up to 14 T. Rowe Price stock (domestic and international) and bond mutual funds which contain different percentages of stocks and bonds. As a result, each fund will have some exposure to risks in many different sectors of the market. Asset allocation is rebalanced to an increasingly conservative fund mix over time both prior to and after the targeted retirement date. The underlying funds are actively managed and are diversified as to investment style and market capitalization. The funds offer a convenient diversified and rebalanced portfolio of stocks and bonds with a general age appropriate asset mix. Because the fund contains stocks, there is a risk of principal loss, but the stock portion of the fund declines over time and is replaced with fixed income.
T. Rowe Price Retirement 2005 Fund T. Rowe Price Retirement 2035 Fund T. Rowe Price Retirement 2010 Fund T. Rowe Price Retirement 2040 Fund T. Rowe Price Retirement 2015 Fund T. Rowe Price Retirement 2045 Fund T. Rowe Price Retirement 2020 Fund T. Rowe Price Retirement 2050 Fund T. Rowe Price Retirement 2025 Fund T. Rowe Price Retirement 2055 Fund T. Rowe Price Retirement 2030 Fund
Retirement Income Fund. (T. Rowe Price). The Retirement Income Fund is a no-load portfolio of funds designed to satisfy the current income needs of investors who have already retired. The exposure to equities has been reduced and replaced with an increased weighting in fixed-income investments and short-term cash equivalents. A small weighting in equities remains in order to help retirement savings keep pace with inflation.
For information on quarterly and annual investment returns for the Core Investment Funds, refer to Appendix B at the end of this Summary Plan Description. You may also obtain up-to-date information on fund performance by using the www.retireonline.com website or calling the CSX Savings Line 888-CSX-401k (888-279-4015) and using the automated options or speaking with an Empower Retirement Customer Service Representative.
Default Investment Provisions
You are strongly encouraged to make investment elections with respect to your Plan accounts. If you fail to do so, you will be deemed to have elected to have your accounts invested in the T. Rowe Price Targeted Retirement Fund which is closest to your assumed retirement age of 65. If a fund for the year in which you will reach age 65 has not been established, the then existing fund with the longest investment time horizon will be used, e.g., currently the T. Rowe Price Retirement 2055 Fund.
CSXtra Page 14 Summary Plan Description (January 1, 2014) NAI-102596543v7
Prospectuses
You will be provided with a copy of a prospectus or specific fund literature relating to each of the investment funds. This Summary Plan Description constitutes part of the prospectus for CSX Corporation common stock that is held in the CSX Stock Fund. See the “Prospectus Information and Documents Incorporated by Reference“ in this Summary for more information. The offer to invest in those funds is made only pursuant to such materials, not by this Summary, and you are urged to read such materials carefully before electing to have any portion of your account invested in any such fund.
Personalized Advice Services
If you like managing investments in your Plan account, but want some help, the Personal Online Advisor, powered by Financial Engines, offers a step-by-step action plan for selecting investments and how much to invest in each. The education and advice is objective, clear and customized to your CSXtra Account and the financial goals you identify. This advice is available at no cost to you. When the Personal Online Advisor believes there is something you should consider concerning your CSXtra Account, you will receive for your consideration, an Advice Light alert by email with a link to the updated advice.
Empower Retirement Personal Asset Manager*
If you want professional advice and would like to have someone manage your CSXtra Account, you may be interested in purchasing the Empower Retirement Personal Asset Manager program. A team of investment professionals will develop a customized strategy just for you with the core funds. The Empower Retirement Personal Asset Manager will choose your investments and manage your accounts to keep your investments in line with your investment strategy. Current fees for the program are:
Account Balance Annual Fee Up to $100,000 0.6% Next $150,000 0.45% Amounts over $250,000 0.3% Fees will be deducted quarterly from your account
*Provided by Advised Assets Group, LLC, an Empower Retirement Company.
Making Your Investment Decision
Before making your investment decision, you should carefully consider your financial goals, time horizon, and risk tolerance level. The investment decision is yours. No employee or officer of CSX is authorized to give investment advice, nor is the information contained in this Summary or the updated performance information you receive from time to time intended as investment advice. More specifically, the availability of the CSX Stock Fund as an investment
CSXtra Page 15 Summary Plan Description (January 1, 2014) NAI-102596543v7
alternative under the Plan does not constitute a recommendation to invest in the CSX Stock Fund by CSX or its affiliates, or any committee, employee, officer or director of CSX or an affiliate.
Asset Classes
Successful investing requires selecting investments whose risk and reward characteristics fit your financial goals and time horizon. Appropriate asset allocation can help you reduce your portfolio’s overall risk, given your individual investment objectives.
Generally, there are three basic asset classes: Cash equivalents, fixed-income and equity. Each one has different advantages and disadvantages. Cash equivalents provide stability of principal but low yield opportunity. Fixed-income investments, like bonds, provide the opportunity for a higher yield than cash but don’t give you stability of principal. Equity investments, like stocks, are subject to dramatic short-term value fluctuations but in the long term have historically grown faster than inflation.
Diversification
How you allocate your investments among asset classes may be the most important investment decision you make and may have the biggest effect on achieving your financial goals. Diversification is an investment strategy to help manage portfolio risk and protect you against a single, devastating loss. Spreading your assets among different types of investments can help you achieve a favorable rate of return, while minimizing your overall risk of losing money. This is because market or other economic conditions that cause one category of assets, or one particular security, to perform very well at any point in time often cause another asset category, or another particular security, to perform poorly. For example, if you were to invest more than 20% of your retirement savings in any one company, industry or fund, your savings may not be properly diversified. Although diversification is not a guarantee against loss, it is an effective strategy to help you manage investment risk.
Diversification also lets you take advantage of the different investment objectives of the investment options you select. A successful diversification program balances a mix of investments with your long-term financial goals and personal tolerance for risk. When you decide how to diversify your retirement portfolio, consider all your investments, not just those in your accounts under the Plan. No single approach is right for everyone because, among other factors, individuals have different financial goals, different time horizons for meeting their goals, and different tolerances for risk. Therefore, you should carefully consider the investment options available under the Plan and how they can be used to accomplish your objectives.
As noted above, there are special issues for you to consider when investing in the CSX Stock Fund. As an employee of CSX, you may be familiar with CSX and its operations, which might make you feel comfortable in investing a significant portion of your account balance in the CSX Stock Fund. You should note that the CSX Stock Fund is an investment option in the equity asset class that is essentially comprised solely of CSX stock. As an investment in a single company’s performance, the CSX Stock Fund is not a diversified investment, and therefore, the market risk of the CSX Stock Fund is greater than investing in a diversified portfolio. By itself, the CSX Stock Fund is the riskiest investment in the Plan. When making a decision to invest in
CSXtra Page 16 Summary Plan Description (January 1, 2014) NAI-102596543v7
the CSX Stock Fund, you should be objective in analyzing the risk and return characteristics of CSX Stock and make your decisions as part of a carefully planned asset allocation plan, not just because you work for CSX.
It is also important to periodically review (at least annually) your investment portfolio, your investment objectives, and the investment options you have selected under the Plan at any given time to help ensure that your objectives are consistent with any changes in your life or retirement goals.
Over time investment returns may require rebalancing your account to maintain your asset allocation. You can elect to enroll in an automatic rebalancing feature that will rebalance your account quarterly to maintain your asset allocation consistent with your long-term goals. To enroll use the www.retireonline.com website or call the CSX Savings Line.
Morningstar fund analyses describing most of the funds and their top ten holdings are available through the www.retireonline.com website or an Empower Retirement Customer Service Representative. Finally, you should consider going to the Department of Labor’s website at http://www.dol.gov/ebsa/investing.html for more information on investing and diversification.
Trading by Certain Officers of CSX (“Insiders”)
Before engaging in certain transactions in the Plan involving CSX common stock, members who are officers of CSX subject to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (“Insiders”) should carefully consider the “short swing profit” provisions of the Exchange Act. These provisions generally restrict an Insider’s ability to engage in “discretionary transactions” under the Plan. Transactions in the Plan such as a cash withdrawal involving the liquidation of interests in the CSX Stock Fund or transfers between the CSX Stock Fund and the Plan’s other investment funds may be deemed to be “discretionary transactions” under the short swing profit rules. The short swing profit rules are complex and all Insiders are strongly urged to consult with their legal advisors and the General Counsel of CSX before engaging in transactions involving CSX common stock and to contact the Manager of Savings Plans in the Benefits Department for assistance with executing your transaction.
Changes in Your Investments
Your Investment of Future Contributions to the Plan. You may make or change your investment elections applicable to future contributions to the Plan as often as you wish. Future contributions include both your elected future deferrals into the Plan and any Company contributions (like match) on such deferrals.
To change how future contributions are invested, use the www.retireonline.com Website or call the CSX Savings Line. Such changes become effective as soon as administratively practicable.
Reallocation of Your Existing Account Balances. Subject to certain restrictions, you may also reallocate your account balance as often as you want, in multiples of 1%, amongst the available investment funds.
CSXtra Page 17 Summary Plan Description (January 1, 2014) NAI-102596543v7
If a reallocation instruction is submitted before the close of the stock market, normally 4:00 p.m. (Eastern Time) on any business day, the funds will be reallocated by the close of business that day; otherwise, the funds will be reallocated by the next following close of business.
Restrictions: With the exception of the Stable Value Fund, if you sell or exchange an amount out of investment options, you will not be permitted to repurchase shares of the same investment option through investment fund transfers for 30 calendar days. As for the Stable Value Fund you may transfer funds or repurchase shares at any time without restriction.
The Plan’s Investment Committee may from time to time, in its sole discretion, also impose additional restrictions on the number or timing of such transactions, impose suspension periods or transaction fees deemed appropriate to eliminate or discourage market timing or other trading practices deemed to have or which may have an adverse impact on other Plan members or otherwise violate, or possibly violate, the law or the policies of an investment option available under the Plan.
How the Restrictions Work
Restriction Period. The 30-day restriction period begins on the date you transfer money out of the fund. If you make an election to move out of a fund after the close of business, your restriction period begins the next business day. The restriction period is calculated in calendar days.
This policy is not intended to restrict your ability to diversify your account. In fact, you are encouraged to periodically review your account to maintain a balanced portfolio that meets the needs of your age and circumstances. You are free to reinvest in a restricted fund after the 30 day restriction period has ended. In addition, the trading restriction does not apply to investments made through your payroll contributions, loan repayments, employer contributions or rollovers to your account. It also does not affect your ability to receive withdrawals, loans or distributions.
The Plan Trustee
The trustee of the trust fund holding all of the assets in the investment funds is an institutional trustee engaged by the Plan’s Investment Committee. Although the trustee is independent, it is simply a “directed” trustee. This means that it acts solely on instructions from CSX employees authorized under the Plan to direct it and by the Plan’s Investment Committee and does not make discretionary fiduciary decisions about the Plan or its investments. The trustee’s responsibilities and obligations are set forth in a trust agreement.
CSXtra Page 18 Summary Plan Description (January 1, 2014) NAI-102596543v7
7. How Your Account Can Grow
The value of your account at any time depends on a number of factors. Although no one can predict how the investment funds will perform in the future, the following example illustrates how your savings might grow based on various earnings assumptions.
Factors that Influence Fund Growth
The factors you should consider in order to determine the future value of your account are:
How much and how long you plan to save;
Company matching contributions made on your behalf;
Investment gains (or losses); and
Any loans or in-service withdrawals you make.
Quarterly statements from the end of the most recent quarter through the quarter ending September 2007, are available through the www.retireonline.com website under the menu item, “Account Statements”, or by calling the CSX Savings Line. Quarterly statements will not be mailed to your home address unless you request the mailing through an Empower Retirement Customer Service Representative. Weekly, monthly, or daily statements for any period from one day up to 18 months are also available under the menu item, On-Demand Statements. In addition to the statements, you can review current activity – including contributions, reallocations, withdrawals, loan payments, and so forth – in your Plan account and your current balance in each investment fund as often as you choose. Convenient, continuous access is available online through a secure website to help you monitor your account and ensure your investment choices still reflect your personal financial objectives.
Example of Fund Growth
Assume that your annual base pay is $80,000 and that you decide to save 9% of that amount. This means that you will receive a matching contribution equal to 100% of the first 1% of your base pay plus 50% of the next 2% to 6% of your base pay for a maximum of 3.5% company matching contribution.
Your annual contributions are $7,200 ($80,000 x 9%) Plus the company match of $2,800 (100% of $800) + (50% of $4,000) For a total annual investment of $10,000
CSXtra Page 19 Summary Plan Description (January 1, 2014) NAI-102596543v7
Here is an example of what could happen to a $10,000 annual investment at various rates of return. For purposes of this example, assume that these earnings and contribution rates remain constant in the future.
Years in Plan Total Contributions Total Value if Money Grows at: (Yours and CSX’s) 3% 6% 8% 5 $ 50,000 $ 53,900 $ 58,100 $ 61,200 10 $ 100,000 $ 116,500 $ 136,600 $ 152,500 15 $ 150,000 $ 189,100 $ 242,300 $ 288,400 20 $ 200,000 $ 273,600 $ 385,000 $ 490,900 25 $ 250,000 $ 371,700 $ 577,500 $ 792,500 30 $ 300,000 $ 484,600 $ 837,100 $ 1,242,000
Remember that there is no guarantee that the funds will grow at the rates shown, or that the funds will not decline in value. These figures are used solely for illustration purposes.
Further, there can be no assurance that past investment performance of a fund is indicative of its future performance. Fluctuations in the value of the underlying securities of a fund could reduce your account balance to an amount below your total investment. Thus, there can be no guarantee that the benefits ultimately distributed to you from the Plan will equal your and CSX’s contributions over the years. You assume the risk in connection with any appreciation or depreciation of the funds in which your accounts are invested. Likewise, there is no guarantee that the value of your accounts under the Plan will be equal to or greater than the purchase price of the interests in the investment funds you select, and you assume the risk of any decrease in the value of the investments selected by you. You should also remember that both the investment and market risk of investing in a single company stock fund, such as the CSX Stock Fund, is much greater than investing in a diversified fund. Of course, the type of diversified fund affects this comparison.
Again, Morningstar fund analyses are available through the www.retireonline.com website or an Empower Retirement Customer Service Representative.
Administrative Expenses
Administrative expenses are incurred to manage the investment funds, audit the Plan, maintain and provide accurate records of member accounts, perform functions as directed by the member and perform trustee functions. Except for recordkeeping fees, which are charged to Members on a per-capita basis, these expenses are assessed against the earnings of the investment funds. Gross expense fees will vary among the funds. Your overall individual expense ratio will be determined by the number of investment funds in which you elect to invest, the amount you invest in the fund(s), and the fund(s)’ gross expense ratio(s). The gross expense ratio for each of the investment funds is provided in the Appendix to this document and is also displayed on the Plan portal website, www.retireonline.com under the menu item “Fund Information.” The
CSXtra Page 20 Summary Plan Description (January 1, 2014) NAI-102596543v7
expense ratio is expressed in basis points. A basis point is a unit of measurement for dollar amounts smaller than one percent. One percent equals 100 basis points.
8. Withdrawals From Your Account
The Plan is designed for long-term retirement savings. However, subject to certain restrictions, you may withdraw a portion of your account while you are working.
The Plan allows you to withdraw funds from your account under certain circumstances. The minimum amount you may withdraw is $250 or the balance of your available account, if it is less. The following paragraphs describe how in-service withdrawals work under the Plan.
Regular Withdrawals
Each contribution under the Plan is subject to its own withdrawal restrictions. You generally have the right to make regular withdrawals from the following sources within your account, if applicable, in the following order:
Unmatched, traditional after-tax contributions that you made prior to January 1, 2011, (which may or may not include earnings on the contributions, depending on when you made your contributions and your prior history of withdrawals from your after-tax account).
Matched, traditional after tax contributions that you made after 1988 (with the earnings also) cannot be withdrawn unless the contributions have been in the Plan for at least 24 months or, if you have been a Member for at least 60 months or have attained age 59½, then without regard to the 24-month restriction.
Rollover contributions (including earnings). First, Roth rollover contributions and, if exhausted, non-Roth rollover contributions.
Company profit sharing contributions. Certain Company contributions may be withdrawn including earnings, if the contributions have been held by the Plan for at least 24 months or, in the case of a member who has been a member for at least 60 months or attained age 59 ½, without regard to the 24-month restriction.
Pre-1994 Company matching contributions (including earnings) if you are (1) a former member of the American Commercial Lines, Inc. Thrift Plan, (2) a former member employed by Customized Transportation, Inc. or (3) a former Member of the Sea-Land Plan.
Roth after-tax contributions (including earnings) if you are at least age 59½.
Pre-tax contributions (including earnings) if you are at least age 59½.
CSXtra Page 21 Summary Plan Description (January 1, 2014) NAI-102596543v7
Other Company Match Account if you are at least 59 ½.
Regular withdrawals are limited to two per year and may be made only while you are employed by CSX or an affiliate. You must withdraw all available funds from each source before you withdraw from the next source. Within each source, the withdrawal will be taken proportionally from each of your investment funds. For an explanation of the tax consequences of regular withdrawals, see the “Taxes on Your Account“ section of this Summary.
If you are contemplating a withdrawal, please contact an Empower Retirement Customer Service Representative to discuss the applicable rules.
Hardship Withdrawal
A hardship withdrawal is allowed only after you have withdrawn all of the money available to you at the time under the Plan’s regular withdrawal rules or you have taken the maximum number of regular withdrawals available in a calendar year and received or elected payment of available dividends on CSX common stock. In addition, you must have taken all of the Plan loans (see the “Plan Loans“ section of this Summary) for which you can qualify. You must also be able to demonstrate that you have a “heavy and immediate financial need,” and you must certify to the Plan Administrator that the hardship withdrawal is “necessary to satisfy the financial need” as described below.
Heavy and Immediate Financial Need
An immediate and heavy financial need includes financial needs related to the following:
Costs directly related to the purchase of your primary residence, excluding mortgage payments.
Payments necessary to prevent the foreclosure of the mortgage on, or eviction from, your primary residence.
Payments of tuition, related educational fees, and room and board expenses for the next 12 months of post-secondary education for you, your spouse, children or dependents (as defined in Section 152 of the Internal Revenue Code (“Code”), without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)).
Expenses for (or necessary to obtain) medical care as defined under Code Section 213(d) that were previously incurred by you, your spouse, or any dependents of yours (as defined in Code Section 152).
Satisfaction of tax liens or defaulted loans.
Payment of unpaid child support or alimony/maintenance obligations.
Payment of expenses relating to adoption of a child or placement of a relative in an extended care facility.
CSXtra Page 22 Summary Plan Description (January 1, 2014) NAI-102596543v7
Reimbursement for the loss of, or payment for the restoration of, a significant asset of yours destroyed by natural disaster or casualty.
Payments for burial or funeral expenses for your death or that of a family member.
Payment of expenses for preservation or renovation of your principal residence.
Hardship Withdrawal Necessary to Satisfy Financial Need
A hardship withdrawal will be deemed necessary to satisfy the financial need if you certify to the Plan Administrator that you have obtained or requested all currently available distributions from the Plan, other than distributions available only on account of hardship, and all nontaxable loans currently available under all plans sponsored by CSX or an affiliate. In addition, for this requirement to be satisfied, your contributions under any plan sponsored by CSX or an affiliate will be suspended for 6 months from the effective date of the hardship withdrawal.
Order of Withdrawals. If you qualify, you may make a hardship withdrawal at any time. As with regular withdrawals, hardship withdrawals will be taken proportionally from each of your investment funds within a source. Assuming exhaustion of your regular withdrawal opportunities, hardship withdrawals will be taken from your Roth contributions account (if, after January 1, 2015, you have a Roth contributions account) and then from your pre-tax contribution account. Notwithstanding the foregoing, the following sources (which is not an exhaustive list) may not be available for hardship withdrawals: post-1988 earnings on your pre-tax account or Roth account.
The amount of a hardship withdrawal cannot exceed the amount required to meet your financial need plus the amount reasonably anticipated to be needed to pay any federal, state, or local income taxes or penalties imposed on your withdrawal.
If you make a hardship withdrawal, your contributions to the Plan will be suspended for six months. At the end of the six-month suspension you may resume your contributions by electing to do so by contacting an Empower Retirement Customer Service Representative through the CSX Savings Line or entering your election on-line through www.retireonline.com.
Dividends on CSX Common Stock
A portion of CSXtra is designated as and intended to constitute an employee stock ownership plan, or “ESOP.” Thus, you may elect to receive in cash any dividends paid on CSX common stock, based on your interest, if any, in the CSX Stock Fund.
For a particular quarter, unless you enter your election to receive such dividends through the www.retireonline.com website or CSX Savings Line by the ex-dividend date, dividends will be paid to your Plan account and invested on your behalf in the CSX Stock Fund. Once the ex-dividend date for a particular quarter has passed, you may not change your election for that quarter, but you may change your election for future quarters.
It is expected that dividend distributions, if any, will be made as soon as practicable after the dividend payment date, but in any event will be made at least annually (not more than 90 days
CSXtra Page 23 Summary Plan Description (January 1, 2014) NAI-102596543v7
after the end of each Plan Year) to members who have elected to receive them. You will receive additional information about this from time to time.
Taxes on Withdrawals
Keep in mind that any amounts you withdraw while working, other than after-tax contributions made prior to January 1, 2011, and other than Roth contributions (plus earnings thereon) that meet certain requirements will be taxable to you. Also, in most cases, pre-tax contributions, rollover contributions, Company contributions and all investment earnings withdrawn before age 59½ will be subject to a 10% federal excise tax (but not dividends on CSX stock pursuant to an election described above). See the “Taxes on Your Account“ section of this Summary.
Withdrawal Procedures
You may make a regular withdrawal request through the www.retireonline.com website or an Empower Retirement Customer Service Representative through the CSX Savings Line.
If you are applying for a hardship withdrawal, you must complete a Hardship Withdrawal Form and submit it to Empower Retirement Plan Services at the address shown on the back of the form. You will be required to provide evidence of hardship. Empower Retirement Plan Services will decide if you qualify for a hardship withdrawal under IRS and Plan rules. Withdrawal forms may be obtained through the www.retireonline.com website or an Empower Retirement Customer Service Representative through the CSX Savings Line (refer to the section entitled “Access to Plan Information“).
Division of Your Account in the Event of Divorce
There are specific legal requirements for dividing a member’s benefits under a qualified retirement plan, such as CSXtra, in the event of divorce. Benefits can only be divided in accordance with a qualified domestic relations order (“QDRO”) issued by a court of competent jurisdiction. A domestic relations order is a judgment, order, or decree that is made under state domestic relations law that provides for child support, alimony payments, or marital property rights for the benefit of a spouse, former spouse, child, or other dependent of a member who is an “alternate payee.” A domestic relations order that is “qualified” (that is, a QDRO) creates or recognizes the alternate payee’s right to receive all or a portion of the member’s benefits payable under the Plan and meets certain statutory requirements.
A fee of $500 is charged to the affected Plan member for the review and processing of each domestic relations order relating to CSXtra. Empower Retirement Plan Services determines whether a domestic relations order satisfies the requirements of a QDRO. You will be notified if the Plan receives a domestic relations order in your name. You or your attorney can obtain assistance in drafting a QDRO for CSXtra from Forms on the CSX Employee Gateway, Empower Retirement Plan Services QDRO Team at P. O. Box 419784, Kansas City, MO 64141- 6784 or by calling 1-888-279-4015.
If You Are Still Employed at Age 70½
If you are employed by CSX when you reach age 70½, you will have to make a choice:
CSXtra Page 24 Summary Plan Description (January 1, 2014) NAI-102596543v7
Begin distribution of your account balance; or
Postpone distribution of your account balance until you actually retire.
If you take a distribution prior to retirement, you remain a full member in the Plan (able to make and receive contributions) as long as you continue to meet the eligibility requirements.
9. Plan Loans
You may borrow a portion of the money in your account. You repay the loan, plus interest, over time.
Eligibility. Active members may borrow a portion of their Plan accounts and repay the loan, with interest, in accordance with these procedures. Former employees and beneficiaries are not eligible to obtain loans under the Plan.
Types of Loans Available. There are two types of loans available:
1. Principal Residence Loan. You can obtain a principal residence loan to finance the purchase of your principal residence (house, condominium or co-op). You cannot, however, obtain a principal residence loan to refinance another loan or pay off an existing mortgage.
2. General Purpose Loan. You can obtain a general purpose loan for any other reason.
Loan Restrictions. You may have only one principal residence loan outstanding at any time. Unless as of April 1, 2014, you already have three active loans, you cannot have more than two outstanding loans at any given time. If you have two (or more) loans outstanding, you may not apply for a new loan until you have no more than one active loan. Refer to the “Transfers of Employment” section for additional rules.
Loan Amounts
Minimum Amount. The minimum amount for a general purpose loan is $1,000. For a principal residence loan, the minimum is $2,000.
Maximum Amount. The amount of any loan may not exceed the lesser of:
50% of the value of your vested account balance reduced by the outstanding balance of all your loans from the Plan at the time of the loan, or
$50,000 reduced by the highest outstanding balance of all your loans from the Plan during the one-year period preceding the loan.
CSXtra Page 25 Summary Plan Description (January 1, 2014) NAI-102596543v7
Example: If you have $20,000 in your pre-tax account and $10,000 in your match account (and assuming you have no outstanding Plan loan balance in the year preceding the loan), the maximum loan you could take is $15,000 (50% of $30,000).
Applying for a Loan
Before applying for a loan, you can determine the amount available for a loan, and the payroll period repayment amount (based on a specific loan amount and repayment period), through the www.retireonline.com website, by calling the CSX Savings Line and using the automated options or speaking with an Empower Retirement Customer Service Representative. You will need to include the $50 loan origination fee in your calculation. Residents of the State of Florida also need to include the documentary stamp tax of $0.35 on each $100 (or fraction thereof) of their loan amount in the calculation. For example, a loan of $10,000 to a Florida resident will require a documentary stamp tax of $35.00. The tax would be $175.00 on a $50,000 loan.
General Purpose Loan. You may apply for a general purpose loan from the Plan electronically via the www.retireonline.com website, or telephonically using the CSX Savings Line or speaking with an Empower Retirement Customer Service Representative, without the necessity of any prior written application or execution of loan documents.
Loans will be processed each business day. Calls and online requests must be completed by the close of the stock market (normally 4 p.m. Eastern Time) to be processed that day. Once you complete the call or the online request, the loan request cannot be changed or cancelled, and you will be legally obligated to repay the loan in accordance with the applicable rules and procedures.
Principal Residence Loan. To apply for a principal residence loan, you will need to complete a written application and submit the application with the required documentation to the Plan Administrator or its delegate. The details will be set forth in the application. To obtain the necessary forms, access the www.retireonline.com website, call the CSX Savings Line and use the automated options or speak with an Empower Retirement Customer Service Representative. Forms received for principal residence loans will be processed as soon as administratively practicable.
Loan Approval. Your loan request will be approved automatically if it meets the rules described above for loan amount, maximum number of loans, and payment period (and in the case of a principal residence loan, if you submit the required documentation with the completed forms). Normally, checks will be received 7-10 days after the processing date, and a payroll deduction repayment schedule will be established. A Truth in Lending Disclosure/Promissory Note will be issued for your loan. By endorsing and cashing a loan check, you are agreeing to repay the loan in accordance with the Promissory Note, and you are consenting to the Plan’s security interest in your Plan accounts.
Security. The Plan will have a security interest in your Plan accounts with respect to loans from the Plan. The security interest will not exceed 50% of your account balance at the time of the loan.
CSXtra Page 26 Summary Plan Description (January 1, 2014) NAI-102596543v7
How Your Loan Interest Rate Is Determined. Loan interest rates will be calculated using the prime rate published in the Wall Street Journal as of the first business day of the current month plus 1%. The interest rate in effect when you apply for the loan will remain in effect for the term of that loan. It will not change even though the interest rate applicable to new loans may change. Interest begins to accrue on your loan immediately.
Sources for Your Loan. Loans will be withdrawn from your accounts in the following order:
Elective contributions - pre-tax and Roth amounts
Rollover contributions
Company matching contributions transferred from the Sea-Land Plan, or from the American Commercial Lines, Inc. Thrift Plan
Company matching contributions
Profit sharing contributions
Traditional after-tax contributions
Within each of the above accounts, loan amounts are withdrawn from the investment funds in the same percentages as the account is invested.
For example, assume you apply for a general purpose loan for $1,000: If your account is invested Then, the money for your loan as follows: will be taken from your account as follows: Stable Value Fund 25% $250 Balanced Fund 50% $500 Large Cap Growth Fund 25% $250
Repaying Your Loan
Payroll Deductions. Loans are repaid with interest in equal installments through after-tax payroll deductions. If you are paid weekly or biweekly, the deduction is made from each paycheck. Please notify Empower Retirement Customer Service immediately if your loan deductions do not appear in your paycheck within two pay cycles of the date your received your loan. It is your responsibility to monitor the timely payment of installments.
Applying Repayments to Your Accounts. Your loan principal is repaid to your accounts in the reverse of the order in which monies are withdrawn. Loan interest payments are allocated in proportion to the outstanding loan balance in each of the categories. Repayments will be reinvested according to your current investment directions. See the “Investment Choices“ section of this Summary.
CSXtra Page 27 Summary Plan Description (January 1, 2014) NAI-102596543v7
Prepaying Your Loan. A loan can be prepaid in full at any time by submitting the loan payoff amount to Empower Retirement Plan Services. Partial prepayments are not permitted. You can obtain the loan repayment amount from the www.retireonline.com website or by calling the CSX Savings Line and using the automated options or speaking with an Empower Retirement Customer Service Representative. Prepayment must be by cashier’s check, certified check or money order payable to the CSX Corporation 401(k) Plan. Personal checks will not be accepted.
Time Limit on Loans. You must repay a general purpose loan within five years. A principal residence loan may be repaid over a period of up to 25 years. All loans must be repaid by the end of the year in which you reach age 70½. If upon severance from employment you have an outstanding loan, you may continue making payments via The Automated Clearing House Network (ACHN) for the term of the loan. (See “Termination of Employment” section of this Summary) If you do not make loan repayments through the ACHN, you must repay the entire balance within 3 months from the end of the month in which your employment terminates or the loan will be considered in default and the outstanding balance will be a deemed distribution from the Plan taxable to you.
Leave of Absence. If you take a leave of absence (either unpaid or at a rate of pay that is insufficient to cover repayment amounts), the Plan Administrator may, in its discretion, permit you to:
continue making repayments of principal and interest during your absence; or
suspend your obligation to repay the loan for a period not to exceed 12 months so long as:
. loan repayments resume after the suspension period,
. the amount and frequency of repayments following the suspension period is not less than under the terms of the original loan, and
. the loan is repaid in full (including interest that accrued during the suspension period) by no later than 5 years from the original date of a general purpose loan or 25 years from the original date of a principal residence loan.
Military Service. If you take a leave of absence to perform military service, the Plan Administrator may, in its discretion, permit you to suspend loan repayments for any part of the period of military service, in the same way as an unpaid leave of absence, except that (a) the suspension period may last longer than 12 months, and (b) your loan may be repaid by the end of the period equal to the original term of the loan plus the period of military service (that is, the loan term may extend beyond the applicable 5 or 25 year loan period by your period of qualifying military service). As with other leaves of absence, interest will accrue during the period of military service, and the amount and frequency of repayments following military service may not be less than under the terms of the original loan. Decisions regarding suspension of loan repayments during military service will be made in a uniform and nondiscriminatory manner and in accordance with USERRA.
CSXtra Page 28 Summary Plan Description (January 1, 2014) NAI-102596543v7
Default and Remedies
Period for Curing Missed Repayments. In the event you miss any scheduled repayment, your loan will not be in default if you cure the missed repayment by the final day of the calendar quarter following the calendar quarter in which the repayment was originally due. For example, any repayments unpaid in the months of January, February or March must be cured by June 30th. Interest will accrue on missed repayments until cured, and will be added to the outstanding balance, and the loan will be re-amortized through the end of the loan term.
Default and Deemed Distribution. If you do not cure a missed repayment within the cure period, your loan will be declared in default as of the last day of the cure period, and the entire balance of your loan including accrued interest will be a “deemed distribution” from the Plan. Upon a deemed distribution, your entire outstanding loan balance, including accrued interest through the date of default, will be reported as income on Form 1099-R, and you will owe taxes on that amount in the year the default occurs. In addition, you could be subject to a 10% tax on certain early distributions.
Although only principal and interest through the end of the cure period is counted as a “deemed distribution” for tax purposes, interest will continue to accrue on the outstanding loan following default until the debt is satisfied. The outstanding balance, including interest, could limit the amount of any future loans you may receive. You may repay any part, or all, of your loan balance, subject to the right of the Plan Administrator to satisfy the debt as described below under “Remedies.” If you repay part or all of your defaulted loan after a deemed distribution, your tax basis under the Plan will increase by the amount of the repayments. A member with a defaulted loan will not be permitted to initiate a new loan until the defaulted loan is repaid. Refer to the “Taxes on Your Account“ section.
Remedies. If your loan is in default, the Plan Administrator may execute upon the Plan’s security interest in your accounts under the Plan to satisfy the debt, but is not obligated to do so. If the Plan Administrator, in its discretion, levies against any portion of your accounts, it may do so only at such time as a distribution of your outstanding loan balance, including interest, could otherwise be made under the Plan. The Plan Administrator may, in its sole discretion, take the following steps or any other action it considers appropriate to collect the unpaid balance of a loan in default:
If you have attained age 59½, the outstanding loan balance, including interest, will be treated as a distribution from the Plan.
If you are under the age of 59½, the outstanding loan balance, including interest, will be treated in the following manner:
. first, as a regular withdrawal, to the extent the unpaid balance of the loan is not attributable to your pre-tax contributions and/or Roth contributions, and
. second, as a hardship withdrawal, to the extent the unpaid balance of the loan is available for such a withdrawal.
CSXtra Page 29 Summary Plan Description (January 1, 2014) NAI-102596543v7
If the unpaid balance, including interest, cannot be satisfied in full pursuant to the above procedures, the remaining amount will be subject to collection pursuant to appropriate legal remedies and will also be subject to offset from subsequent withdrawals and distributions from your Plan accounts.
Termination of Employment. Upon severance from employment for any reason, if you have an outstanding loan, you may continue making payments through the term of the loan via ACHN. If you do not make loan repayments through ACHN, you will need to obtain the repayment form from the www.retireonline.com website or by speaking with an Empower Retirement Customer Service Representative either before or as soon as possible after your severance from employment. If you do not pay off your loan in full in a single payment, it must maintain a monthly amortization repayment schedule. The repayment due date will be calculated from the loan initiation date, not the last loan repayment date. Loan repayments will be deducted from your designated bank account on the 15th of each month until the loan is repaid or you stop the repayment. If you do not make loan repayments through ACHN, you must pay the entire balance within 3 months after the end of the month in which you separated or the loan will be considered in default and the outstanding balance will be a deemed distribution from the Plan. (The cure period described previously does not apply in this case.)
Transfers of Employment. If you change jobs within the Company or an affiliated company so that you become an eligible employee under this Plan or the CSX Capital Builder Plan, your loan note will be transferred along with the other amounts constituting your account balance. Any such transferred loan note will be treated as an exception, if necessary, to the two loan limit set forth in the “Loan Restrictions” section. Regardless of an exception, you still may not apply for a new loan until you have no more than one active loan outstanding.
The transferred loan will be re-amortized in accordance with any change in your pay frequency. Payment of principal and interest will continue to be deducted from your paycheck in accordance with the receiving plan’s terms and the re-amortized loan.
If you transfer to employment with a corporation affiliated with your Employer that does not participate in the Plan or in the CSX Capital Builder Plan, or to an employment status with your Employer that is ineligible for membership in the Plan or in the CSX Capital Builder Plan, repayments of principal and interest will continue to be deducted from your paycheck in accordance with your pay frequency at the new employer (i.e., the loan will be re-amortized as necessary to match any new payment frequency). If you transfer from employment to a position ineligible to participate in the Plan or the Capital Builder Plan as described in the preceding sentence, you may still borrow from the Plan in accordance with the loan program.
Tax Considerations Regarding Loans. Interest on loans from the Plan is not deductible on your federal income tax return. This information is intended only as a general guideline and has been provided for informational purposes only. It is not intended as tax advice. You should consult a tax specialist to confirm the applicable rules.
Loan Administration. The Plan’s rules relating to loans were established by the Plan Administrator and are administered by Empower Retirement Plan Services.
CSXtra Page 30 Summary Plan Description (January 1, 2014) NAI-102596543v7
Whom to Contact if You Need More Information. If you have questions regarding the loan program, please contact an Empower Retirement Customer Service Representative at 888-CSX- 401k (888-279-4015).
EXAMPLES OF APR AND FINANCE CHARGES FOR A $10,000 GENERAL PURPOSE LOAN (Monthly Pay Frequency) 12 months 24 months 36 months 48 months
Stated Annual % Annual % Annual % Annual % Interest Rate Finance Rate Finance Rate Finance Rate Finance Rate (APR) Charge (APR) Charge (APR) Charge (APR) Charge 3% 3.9333% $163.28 3.4888% $315.68 3.3322% $469.52 3.2521% $624.80 4% 4.9358% $218.00 4.4891% $422.00 4.3335% $628.64 4.2529% $837.92 5% 5.9382% $272.96 5.4925% $529.28 5.3346% $789.56 5.2568% $1,054.40 6% 6.9404% $328.04 6.4939% $637.04 6.3369% $951.92 6.2587% $1,273.28
10. Receiving Distributions from Your Account
You are 100% vested in your Plan accounts at all times. In most cases, you have a choice of payment methods when you receive a distribution.
The full current value of all contributions (yours and CSX’s, adjusted for investment earnings and losses) is payable to you when:
Your severance from employment with CSX occurs for any reason, including on account of retirement.
You become permanently disabled. Disabled means a mental or physical impairment for which you receive disability benefits under the Company’s Long Term Disability Plan, or, if no such plan is maintained, you are currently in receipt of disability benefits from Social Security or Railroad Retirement.
Payment of Your Account
Upon severance from employment or your becoming permanently disabled, if the value of your account is more than $5,000 (including any rollover accounts), you have a choice of payment methods:
A single lump-sum payment.
Monthly installments for a period that cannot be longer than the lesser of 240 months (20 years) or the joint life expectancy of you and your beneficiary. You may at any
CSXtra Page 31 Summary Plan Description (January 1, 2014) NAI-102596543v7
subsequent time elect to receive the remaining value of your account in a single lump sum.
Partial distributions (limited to four per year, with a minimum amount per distribution of $250).
If you do not consent to receive an immediate distribution when you retire or become disabled, the distribution of your account balance will automatically be postponed to the earlier of your “required beginning date,” which is April 1st of the calendar year following the year in which you reach age 70½ or your election to take a distribution. If you are over age 70½ when you retire from CSX or become disabled, you will begin receiving the minimum required distributions as soon thereafter as administratively practicable. You may, however, elect to receive any of the above three options, that is, a single lump-sum distribution, monthly installments, or partial distributions, at any time prior to your required beginning date.
Distributions to Members on Active Duty. If you are in the uniformed services and on active duty for a period of more than 30 days, you will be treated as having a termination of employment with CSX during the period of your uniformed service for purposes of eligibility to request a distribution of your pre-tax elective deferral contributions and Roth contributions. Beginning on the date of distribution, you will be prohibited from making any pre-tax contributions or Roth contributions to the Plan for a six-month period.
Payment of Your Account Upon Your Death
If you die while an employee, on leave performing qualified military service, or after you have separated from service but before receiving any payments, and if your beneficiary is your spouse, he or she will have the same payment options you would have had if you had lived.
If your beneficiary is not your spouse, your beneficiary can receive an immediate lump- sum payment or make a timely election to defer receipt of such lump-sum payment until January 1st of the year following your death. The lump-sum payment may not be deferred beyond January 1st.
In addition to a spouse’s rights, a non-spouse beneficiary may establish an individual retirement account (“Inherited IRA”) that can receive a direct rollover of all (except for any required minimum distributions, described below) or a portion of the payment that would be distributed from the Plan to that non-spouse beneficiary upon your death. Only distributions that satisfy the requirements of an “eligible rollover distribution” (described in the section “Withholding for Federal Income Taxes” are permitted to be rolled over to an Inherited IRA.
If you die after monthly payments begin, payment to your beneficiary will be made as follows:
to a beneficiary who is not your surviving spouse, as a lump-sum payment of the balance of your accounts; and
CSXtra Page 32 Summary Plan Description (January 1, 2014) NAI-102596543v7
to a beneficiary who is your surviving spouse, as a continuation of monthly installments. A surviving spouse who is receiving installment payments may, however, elect to receive any remaining amount due as a lump-sum payment at any time.
Payment of Small Benefits
Lump-Sum Cashout. If the value of your account is $1,000 or less (including any rollover accounts) at the time you are eligible for a distribution, and if you do not timely request a distribution to yourself or to an IRA or to another qualified plan, a lump-sum cash payment of your account balance will automatically be mailed to you at your last known address.
Automatic Rollover. If the value of your account is more than $1,000 (including any rollover accounts) but not greater than $5,000 (including any rollover accounts) at the time you are eligible for a distribution and you do not request a distribution to yourself or to an IRA or to another qualified plan within 180 days after the end of the month in which your severance from employment occurs, a direct rollover of your entire account balance will automatically be made to an IRA established on your behalf at Millennium Trust Company (or a similar successor enterprise).
The Millennium Trust Company IRA will be invested in a manner designed to preserve principal and provide a reasonable rate of return, consistent with liquidity. The fees and expenses associated with maintaining the IRA will be comparable to those charged for an IRA established for reasons other than the receipt of a mandatory rollover distribution. You will have the right to enforce the terms of the IRA established on your behalf and also to transfer the distribution to another IRA selected by you. If your Plan benefit is rolled over in this manner because you do not make an affirmative distribution election, you will be notified at your last known address at such time and provided more information about your options. Notwithstanding the above, if you have a designated beneficiary, surviving spouse, or alternate payee, the benefit will be paid to such individual in cash.
Form of Payment
Cash or Stock. Payments are generally made in cash. However, if you request a lump-sum distribution, any amount of your account invested in the CSX Stock Fund can be paid in shares of stock or cash, as you elect. In the absence of a timely election by you or your beneficiary, a lump-sum payment will only be made in cash. (And in all events, the value of any fractional shares of CSX Stock will always be paid in cash.)
Resale of Common Stock Distributed from Plan. Unless you are an “affiliate” under Rule 144 of the Securities Act, shares of CSX common stock received by you pursuant to the Plan should be saleable without restriction. If you are an “affiliate,” which is generally defined to be any person serving as a director or as an executive officer of CSX at the time he or she desires to sell shares of common stock, you are subject to trading restrictions. If you are uncertain of your status as an affiliate, you are urged to consult with the General Counsel of CSX to review the applicability of Rule 144 trading restrictions before selling shares of CSX common stock (including shares of CSX common stock acquired through a distribution from the Plan). See
CSXtra Page 33 Summary Plan Description (January 1, 2014) NAI-102596543v7
also the discussion of the short-swing profit rules discussed earlier under “Managing Your Investments.”
Required Minimum Distribution Rules
If you are no longer employed by the Company, you are required to receive a “Minimum Distribution” from your account annually beginning April 1 of the year after you reach age 70½ and by December 31 of each year thereafter. If you do not want to receive two distributions in one year, you should request the first Minimum Distribution amount through a Partial Distribution by December 31 of the year in which you reach age 70½.
If you are still employed by the Company when you reach age 70½, you may choose to receive a Minimum Distribution from your account each year, but you are not required to do so until April 1st of the year following the year in which you retire from CSX.
In general, the amount of the annual Minimum Distribution is determined by dividing the balance in your account by the applicable life expectancy from the uniform lifetime tables published by the IRS. If you receive money from your account during the year, and that amount is not equal to the Minimum Distribution, you will automatically receive the difference. Of course, you may always elect to receive more than the Minimum Distribution amount.
11. Circumstances That Could Affect Your Benefits
Certain special circumstances could affect the timing or payment of your Plan benefits. They are summarized in this section.
Annual Contribution Limit
Federal law limits the amount of contributions you and the Company can make to your account in any Plan Year. If this limit is exceeded, contributions may be reduced or refunded to you. In the unlikely event that the annual contribution limit affects contributions to your account, you will be notified in writing by the CSX Benefits Department.
Assigning and Pledging Your Account
To protect your interest, the Plan and federal law generally provide that your account balance cannot be assigned or alienated to third parties. Thus, your creditors may not normally attach, garnish, or otherwise interfere with your benefit. Your benefit may not be used as collateral for a personal loan outside of the Plan or be assigned except to the extent required by law, for instance, in the case of an Internal Revenue Service tax levy or a judgment against you for unpaid federal taxes or a crime involving the Plan. Likewise, as discussed in the “Withdrawals from Your Account“ section of this Summary, all or a portion of your benefit may be assigned pursuant to a Qualified Domestic Relations Order. Generally, levies and judgments would not be enforceable except as to amounts which have become distributable under the Plan.
CSXtra Page 34 Summary Plan Description (January 1, 2014) NAI-102596543v7
Other Circumstances that Could Affect Your Benefits
Your account balance may be forfeited or suspended, or you may not qualify or not be eligible for benefits under the following circumstances:
If your benefit under the Plan cannot be paid within a reasonable period of time because you cannot be located, your benefit will be forfeited. If you contact CSX at a later date, your forfeited benefit will be reinstated and paid to you. Until you have received your entire Plan benefit and any related IRS Forms 1099R, it is important that CSX and the Plan Recordkeeper always have your current mailing address on record.
If a contribution is made as a result of a mistake of fact, CSX can recover the contribution. This action would reduce your account balance.
If a tax deduction for a contribution is disallowed, the contribution can be returned to CSX. This action would reduce your account balance.
12. Taxes on Your Account
You are liable for taxes on any contributions or earnings you withdraw from your account, except a portion of any distribution attributable to “traditional” after-tax contributions that you made before January 1, 2011 and except for a distribution of Roth contributions that meets certain requirements (see below).
The following discussion summarizes the federal income tax consequences of membership in the Plan. The summary applies generally to distributions or withdrawals on and after January 1, 2014, and is not intended to be a complete description of all tax rules applicable to the Plan. The tax rules applicable to distributions from the Plan are complex and change frequently. Accordingly, you should consult your personal tax advisors before deciding how to take distributions from the Plan.
The Plan is intended to be qualified under Section 401(a) of the Internal Revenue Code. Plan contributions are tax-deductible by the Company. The Plan has received a favorable determination letter from the Internal Revenue Service (“IRS”). The IRS’s approval signifies that the Plan and its related Trust as written will receive the favorable tax treatment discussed below. IRS approval is valid until the government requires changes to the Plan’s terms. Notwithstanding written compliance, IRS approval can be lost or revoked if a plan is not operated according to its terms.
Pre-Tax Contributions. You are not subject to federal income tax on your pre-tax contributions, any Company contributions made on your behalf, or any rollover contributions at the time such contributions are made to the Trust. Likewise, you are not subject to taxes on any earnings on your account until they are distributed or withdrawn. Your pre-tax contributions are, however, subject to employment taxes, i.e., FICA or Railroad Retirement taxes.
CSXtra Page 35 Summary Plan Description (January 1, 2014) NAI-102596543v7
Roth Contributions. As described above, if you choose to make Roth contributions starting January 1, 2015, those Roth contributions are made on an “after-tax basis” and are included in your taxable wages (and are subject to tax withholding by CSX in the year when the contributions are paid to the Trust). However, if you wait to withdraw or take a distribution of these amounts until you reach the age of 59½ or until you become disabled, and the distribution occurs after the end of the 5-year period beginning with the first taxable year for which you make a Roth 401(k) contribution, then both the contributions and the investment earnings on those contributions are tax-free. If you withdraw these amounts sooner, then the investment earnings on the Roth contributions are taxable in the year of withdrawal.
After-Tax Contributions prior to January 1, 2011. After tax contributions were permitted under the Plan prior to January 1, 2011. If elected, these contribution were deducted from your pay that had already been taxed. Although federal taxes were not postponed on these contributions, taxes on any investment earnings are postponed so long as they remain in the Plan.
Taxes on Distributions or Withdrawals
The tax consequences of a distribution or withdrawal from the Plan depend in part on whether it constitutes a lump-sum distribution, and, if so, on whether any shares of CSX stock in such distribution are taxed under the “normal” or “special” tax rules discussed below. The tax consequences also depend on whether you elect to roll over any portion of your distribution.
Typical Tax Treatment. Normally, your pre-tax contributions, Company contributions, and all of the earnings in your account are taxable in the year they are distributed to you, unless you elect the special tax treatment discussed below for CSX stock, or unless you elect a rollover. Absent such elections, the amount reported as income for the year in which you receive a distribution is the sum of the following:
The amount of any cash you receive, plus
The fair market value of any CSX common stock you receive, valued at the time of distribution.
If a portion of your distribution includes Roth contributions, and if the distribution is made after the end of the 5-taxable year period starting with the first year for which you make a Roth contribution, and at the time of distribution you are age 59½ or older, or disabled, then both the Roth contributions and the earnings on those contributions are not reported as income (i.e., these amounts are not taxable).
With respect to traditional after-tax distributions, your contribution amount is not taxable when returned to you but earnings will be subject to income tax.
Your tax basis in any shares of CSX common stock you receive will ordinarily be equal to the shares’ fair market value at the time of distribution. Your holding period for determining whether any gain or loss on a subsequent sale of such shares will be treated as long- or short- term capital gain generally commences on the day after the day the transfer agent is instructed to issue the shares in your name.
CSXtra Page 36 Summary Plan Description (January 1, 2014) NAI-102596543v7
You will be issued a tax statement showing the taxable amount of your distribution and specific information regarding federal income tax withholding on your distribution. Because stock-in- kind is a non-cash transaction, withholding will not apply to such shares. On the other hand, if you elect to receive the value of your CSX common stock in cash, the shares will be sold and withholding taxes will apply to the distribution.
Special Tax Treatment for Distributions of CSX Stock. Eligibility for this special tax treatment requires you to receive a complete distribution of your account, i.e., a lump-sum distribution of your entire account balance as a result of certain events. Most complete distributions under the Plan should qualify for this treatment. Complete distributions made after your death, disability, attainment of age 59½, or severance from employment generally qualify. Except in the case of death, you must have been a member in the Plan for at least five years before the year in which the distribution is made. Any portion of a year counts as one year. In all cases, you or your beneficiaries must receive all of your distribution in one calendar year for these rules to apply.
Under this special tax treatment, if you receive appreciated shares of CSX common stock in a lump-sum distribution (that is, the market value of the shares now is greater than the purchase price when you invested in the shares), you may (but do not have to) elect to be taxed at the time of distribution based on the original adjusted cost of such shares to the trustee when the shares were purchased and allocated to your account, rather than on the fair market value of the shares at the time of distribution. The value on which you are taxed becomes your “tax basis” in the shares. Any increase in value from the time the trustee purchased the shares through the time of distribution is your “unrealized appreciation.” By electing this special tax treatment, you are electing to defer tax on the unrealized appreciation, and you will be taxed on such amount when you sell the shares, at the then applicable capital gains rate, if any, rather than at ordinary income tax rates. For example, if the trustee originally purchased 50 shares with an adjusted cost basis of $30 each, and those shares are worth $50 each when you receive them, generally you are taxed immediately on only $30 per share, which will be your tax basis per share if you receive a complete distribution and elect this special tax treatment.
The $20 of unrealized appreciation on each share ($50 minus $30) is not taxed until you sell your shares. At the time you sell your shares, assuming the relevant provisions of the Internal Revenue Code are unchanged, you will have $1000 of unrealized appreciation ($50 minus $30 equals $20 times 50 shares), which will be taxable as a capital gain. (This example assumes that the per share price is still $50 at the time you sell the shares. If the share price increases or decreases, so will the amount of your unrealized appreciation. So, for example, if the share price goes up to $55, you will have an additional $250 of capital gain income (the additional $5 increase in the share price times 50 shares).
Ten-Year Averaging. If you were age 50 before January 1, 1986, and the distribution qualifies for lump-sum distribution treatment, it may also be taxed under one of two other methods:
The entire taxable amount is added to your other income and taxed at ordinary income rates.
CSXtra Page 37 Summary Plan Description (January 1, 2014) NAI-102596543v7
The taxable amount of the distribution may be taxed using a ten-year forward averaging method. The tax is calculated using the tax rates in effect in 1986 as if the distribution were received over a ten-year period.
You may elect ten-year forward averaging with respect to only one distribution from all qualified retirement plans in which you participate and only if you do not roll over any part of the distribution. If you receive a subsequent distribution from the Plan, it will be taxed as ordinary income if it is received in a different calendar year. Note, too, that any distribution received after age 59½ may also preclude lump-sum distribution treatment under this rule on any subsequent distributions. You must use IRS Form 4972, “Tax on Lump-Sum Distributions” if you elect ten- year averaging.
A member may choose any of the above methods, including the method that produces the lowest tax.
Periodic Installment Distributions. If you receive a distribution in periodic installments, you must report each installment as ordinary income for the year in which the installment is received. To the extent you have made traditional after-tax contributions, the portion of each distribution attributable to the after-tax contribution amount will not be taxable. To the extent that you have made Roth contributions and the 5-year requirement (and the requirement that you are at least age 59½ or are disabled described above) are met, then the Roth contributions and the earnings on those contributions will not be taxable.
Hardship Withdrawals. In the case of a withdrawal due to hardship that does not qualify as a lump-sum distribution, the reportable amount generally is the amount of cash you receive. However, to the extent that the hardship withdrawal is a withdrawal of Roth contributions other than earnings, the withdrawal is tax-free. To the extent that the withdrawal includes earnings on Roth contributions, those earnings are taxable unless you are at least age 59½ or disabled, and the 5-year requirement is met. You will need to make a withholding election for the taxable portion of any hardship withdrawal you receive. If no withholding election is made, 10% will be automatically withheld.
Rollovers - Deferring Federal Income Taxes on a Distribution. You may exclude from your gross income an “Eligible Rollover Distribution” that you roll over to an “Eligible Retirement Plan.” You can elect a direct rollover, in which the Eligible Rollover Distribution is rolled directly from the Plan to an Eligible Retirement Plan, or an indirect rollover, in which you receive the Eligible Rollover Distribution and then contribute it (roll it over) to an Eligible Retirement Plan within 60 days. An Eligible Rollover Distribution that is directly rolled over from the Plan is not subject to mandatory withholding, whereas an Eligible Rollover Distribution that is paid to you before being rolled over is subject to 20% mandatory withholding.
CSXtra Page 38 Summary Plan Description (January 1, 2014) NAI-102596543v7
“Eligible Rollover Distribution” is any part of a distribution that is:
not a minimum required distribution payable after you reach age 70½;
not part of a series of equal (or almost equal) payments that are made at least annually and are paid out over your life expectancy or a period of at least 10 years; and
not a hardship withdrawal.
“Eligible Retirement Plans” include a traditional IRA, a qualified plan under Section 401(a) of the Internal Revenue Code, a Code Section 403(a) annuity plan, a Code Section 403(b) tax-sheltered annuity plan, an eligible Code Section 457(b) plan maintained by a state or local government employer, and for distributions after December 31, 2007, a Roth IRA. Your payment cannot be rolled over to a SIMPLE IRA or a Coverdell Education Savings Account.
If a distribution or withdrawal qualifies for rollover treatment, you may elect to roll over part or all of it. The amount you roll over will not be taxed until distributed from the IRA or the Eligible Retirement Plan. If you make an IRA rollover, you may not use ten-year forward averaging unless the distribution is later rolled over to a qualified plan and other applicable requirements are satisfied with respect to a subsequent distribution.
If you elect to roll over a distribution from the Plan of less than your account balance, subsequent distributions from the Plan will not be eligible for the special forward averaging rules discussed above.
Rollovers to Roth IRA. An Eligible Rollover Distribution may be directly rolled over to a Roth IRA. The rollover can be made through a direct rollover from the Plan to the Roth IRA or an amount can be distributed from the Plan and contributed (rolled over) to the Roth IRA within 60 days. In either case, the amount rolled over must be an Eligible Rollover Distribution and you must include in gross income any amount that would be includible if the distribution was not rolled over. An Eligible Rollover Distribution paid directly to you or your spouse is subject to 20% mandatory withholding. An Eligible Rollover Distribution that you elect to have paid directly to an Eligible Retirement Plan (including a Roth IRA) is not subject to mandatory withholding, even if the distribution is includible in gross income. However, you are permitted to enter into a voluntary withholding agreement with respect to an Eligible Rollover Distribution that is directly rolled over from the Plan to a Roth IRA.
Distribution Before Age 59½. In addition to the income tax consequences discussed in this section, a 10% additional tax is imposed on most withdrawals and distributions made before you attain age 59½, unless an exception applies. This additional tax (or penalty) would only apply to the part of the distribution that you must include in gross income. However, it is not imposed on distributions that are: (i) made if you become disabled or die; (ii) made to your beneficiary on or after your death; (iii) part of a series of installment payments made for your life or the joint lives of you and your beneficiary; (iv) made to you after your employment with CSX and its affiliates terminates and the employment termination occurs after you reach age 55; (v) dividends paid with respect to CSX stock that are paid to you in cash; (vi) made on account of a tax levy on your account under the Plan; (vii) corrective distributions of pre-tax and after-tax contributions;
CSXtra Page 39 Summary Plan Description (January 1, 2014) NAI-102596543v7
(viii) distributions from your account to an alternate payee under a qualified domestic relations order; or (ix) to the extent that you have tax-deductible medical expenses that exceed 7.5 percent of your adjusted gross income (whether or not you itemize deductions on your federal income tax return).
Also, a “qualified reservist distribution” of pre-tax contributions is not subject to the tax on early distributions. To be eligible to receive a qualified reservist distribution, you must have been called to active duty after September 11, 2001, for a period of more than 179 days or for an indefinite period, and the distribution must be made during the period beginning on the date of the order or call to duty and ending at the close of the active duty period.
You can avoid the 10% additional tax and postpone payment of federal and, in some cases, state income tax on a distribution. To do this, you must redeposit your entire distribution from the Plan into another Eligible Retirement Plan within 60 days after receiving it. Distributions that you receive after you have attained age 59½ are not subject to the 10% additional tax.
Tax Treatment of Outstanding Loans
If you leave the Company for any reason and at that time you have a loan outstanding that is not in default, you may:
Defer receiving your distribution and continue to repay your loan via ACH (See “Termination of Employment” section);
Defer receiving your distribution without repaying the loan. In this case, the amount deferred will be your account balance minus the loan principal. For tax purposes, you will be considered as having received the loan principal amount as a distribution at the time your account is deferred. (This may affect your ability to use 10-year averaging, as explained earlier);
Receive your distribution without repaying the loan. The amount paid to you will be your balance minus the loan principal. However, for tax purposes, you will be considered as having received the entire account balance – including the loan principal – as a total distribution when you receive your distribution; or
Receive your distribution, without repaying the loan, as a direct rollover to another qualified plan that is willing to accept the outstanding loan (not all qualified plans are willing). The amount rolled over will be your balance including the loan principal. You may continue to repay your loan under arrangements with your new employer that sponsors such plan.
State and Local Income Taxes
If you made any traditional after-tax contributions to the Plan prior to January 1, 2011, such contributions came out of base pay that has already been taxed by your state or local government so you pay no further taxes on them when you receive a distribution. However, earnings on these contributions will be subject to tax.
CSXtra Page 40 Summary Plan Description (January 1, 2014) NAI-102596543v7
Generally, state and local tax laws apply to pre-tax contributions in the same manner as federal tax laws. However, some states (such as Pennsylvania) and some cities do not permit exclusion of your pre-tax contributions from income for income tax purposes at the time of the contribution. Such contributions would therefore be treated as after-tax contributions for state tax withholding purposes at the time made and upon distribution.
If you are not liable for state or local taxes on pre-tax contributions at the time they are made, generally you will be subject to state income tax on those amounts when you receive them.
Any investment earnings on pre-tax contributions also generally will be subject to tax when you receive them.
You do not pay state or local taxes on Company contributions and any earnings as long as they remain in the Plan. They generally will be subject to tax upon distribution.
For the state and local income tax treatment of Roth contributions and the related earnings, you should talk to your personal tax advisor (and please see the last paragraph of this Section 12).
The following states require mandatory withholding at the time of payment: California, Delaware, Georgia, Iowa, Kansas, Louisiana, Maine, Massachusetts, North Carolina, Oklahoma, Oregon, Vermont and Virginia. This list changes from time to time.
This summary is not intended as a complete description of the tax consequences of a distribution from the Plan. It has been provided for informational purposes only. CSX Corporation makes no representations as to the tax consequences (federal, state, local, or foreign) of your membership in the Plan. You will receive a more detailed explanation of these rules prior to receiving any distribution from the Plan. You and your beneficiaries should, however, consult your personal tax advisor to determine the tax consequences of receiving a distribution from the Plan to assure you understand the impact of your election and that the form of distribution elected best meets your particular needs.
13. Plan Administration & Your ERISA Rights
Important facts about your rights under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) are described below.
General
The Plan Administrator is the committee appointed by the Fiduciary Oversight Committee to be responsible for plan administration duties. The Plan Administrator has contracted with Empower Retirement Plan Services to handle various administrative aspects of the Plan and the Plan Administrator has delegated other day-to-day administrative responsibilities to employees in CSX’s Benefits Department.
CSX is a global transportation company with principal offices located at 500 Water Street, Jacksonville, Florida 32202. Its telephone number is (904) 359-3100.
CSXtra Page 41 Summary Plan Description (January 1, 2014) NAI-102596543v7
The CSX Corporation 401(k) Plan (referred to in this Summary as CSXtra or the Plan) benefits certain eligible employees of CSX Corporation and its affiliates that have adopted the Plan. The CSX Corporation Benefits Department maintains a list of those companies participating in the Plan. If you would like a copy of the most current list, call or write the CSX Benefits Department at the address and phone number listed in this Summary.
Summary Plan Description
This document constitutes the Summary Plan Description (or, “Summary”) required by ERISA for the Plan. The Summary Plan Description is a non-technical summary of some of the Plan’s features and provides general information relating to the Plan. This Summary has been written to help you understand the technical language contained in the Plan document. However, if this material inadvertently states anything that is inconsistent with the governing Plan document, the language of the Plan document governs the administration of the Plan. Please consult the governing Plan document for more details.
Coordination of Benefits
The description in this Summary relates specifically to the benefits under the Plan. Because there are a variety of plans and programs that may be available to you, it is not possible to describe every combination of benefits under the Plan and benefits under any other plan. Your commencement, termination or receipt of benefits under the Plan may or may not impact your eligibility for or benefit levels under another plan. You must consult the summary plan description or plan documents of any other plan in which you participate in order to determine whether or not your choices under the Plan will affect your eligibility under the other plans sponsored by CSX.
No Contract of Employment/No Informal Variances in Plan Terms
Neither this Summary nor any underlying plan forms an employment contract with any employee. They do not provide any employee with the right to continued employment for any period of time. This Summary and the Plan may not be varied by an officer or employee of CSX either orally or in writing, except as provided below under the Plan amendment and termination procedures.
Plan Name, Type, Number, and Year
The official name of the Plan is the CSX Corporation 401(k) Plan (formerly known as the Tax Savings Thrift Plan for Employees of CSX Corporation and Affiliated Companies). CSX Corporation sponsors the Plan. Relevant documents are filed under the CSX Corporation Employer Identification Number (EIN): 62-1051971. The Plan Number is 003. The Plan is a defined contribution plan with a Plan Year from January 1 through December 31 of each year. Plan records are kept on a Plan Year basis.
The Plan is a profit sharing and stock bonus plan and an employee stock ownership plan, i.e., an “ESOP” (within the meaning of Section 4975(e)(7) of the Internal Revenue Code (“Code”)), intended to meet the requirements of Code Section 401(a). The portion of the Plan intended to constitute an ESOP shall be invested in qualifying employer securities subject to any liquidity
CSXtra Page 42 Summary Plan Description (January 1, 2014) NAI-102596543v7
needs necessary to facilitate the administration of the sale and purchase of such qualifying employer securities at your direction. In addition, the Plan provides for contributions under Code Section 401(k) and matching contributions under Code Section 401(m). Effective January 1, 2011, the Plan includes a qualified automatic contribution arrangement (i.e., safe harbor matching contributions) under Code Section 401(k)(13).
The Plan Administrator has contracted with outside parties to handle various administrative aspects of the Plan.
Plan Sponsor
CSX Corporation 500 Water Street Jacksonville, Florida 32202
Plan Administrator
Plan Administrator C/O Thomas Beyer CSX Corporation 401(k) Plan CSX Corporation 500 Water Street, J905 Jacksonville, FL 32202-4423 Telephone number – (800) 633-4045
All correspondence concerning the Plan not addressed elsewhere in this Summary should be directed to:
Manager of Retirement Plans CSX Benefits Department 500 Water Street, J905 Jacksonville, FL 32202-4423
Trustee
Assets of the Plan are held in trust. The trustee for the Plan is:
The Northern Trust Company 50 South LaSalle Street Chicago, IL 60675
Plan Recordkeeper
Empower Retirement 11500 Outlook Street Overland Park, KS 66211
CSXtra Page 43 Summary Plan Description (January 1, 2014) NAI-102596543v7
Financial Advisor
Empower Retirement – Advised Assets Group, LLC (an Empower Retirement Company) 8515 East Orchard Road Greenwood Village, CO 80111
Appeals Committee
Appeals Committee c/o Thomas Beyer CSX Corporation 401(k) Plan CSX Corporation 500 Water Street, J905 Jacksonville, FL 32202-4423
Agent for Service of Legal Process
The Vice President of Compensation and Benefits of CSX Corporation acts as agent for service of legal process for the Plan. Legal process should be directed to:
Office of Corporate Secretary CSX Corporation 500 Water Street Jacksonville, FL 32202-4423
Service for legal process for the Plan may also be served on the Plan’s trustee:
The Northern Trust Company 50 South LaSalle Street Chicago, IL 60675
No one has been authorized to give any information or to make any representations, other than as contained herein, and if given and made, such information or representations must not be relied upon as having been authorized by CSX.
Amending and Terminating the Plan
Plan Amendment. Although CSX expects to continue the Plan indefinitely, CSX, through action of its Board of Directors, reserves the right to amend or terminate the Plan in whole or in part, prospectively or retroactively, at any time for any reason. Such action may be taken in any manner which does not violate applicable law. An amendment or termination cannot reduce the benefit to which you are already entitled. The Board of Directors has delegated authority to amend the Plan or its Trust to the Board’s Compensation Committee, which has further delegated authority to make certain amendments to the Plan and its Trust to either the Chairman, President and Chief Executive Officer or the Senior Human Resources Officer of CSX Corporation.
CSXtra Page 44 Summary Plan Description (January 1, 2014) NAI-102596543v7
Plan Termination. The Board of Directors, the Compensation Committee, or the Compensation Committee’s delegate may terminate the Plan or completely discontinue contributions under the Plan for any reason at any time in accordance with the Plan’s amendment procedures, by delivering to the Plan Administrator, the Benefit Appeals Committee, the Investment Committee, and the trustee written notice of such termination. If the Plan does terminate, you will receive the full current value of your account. All affected members will remain fully vested in their Plan accounts. However, your benefit may not exceed limitations imposed by the Internal Revenue Code. The total amount in your accounts will be distributed in a single lump sum or remain in the Plan’s trust for your continued benefit, as directed by the Plan Administrator. If the Plan is terminated, you will be notified by CSX that the Plan is terminating and the date of termination.
Plan Interpretation
The Plan Administrator has the absolute and exclusive authority to interpret the Plan in accordance with its terms and intended meaning. The Plan Administrator has the discretion to make any findings of fact necessary to administer the Plan, and the discretion to interpret or construe ambiguous, unclear or implied (but omitted) terms in any manner the Plan Administrator deems appropriate in the Plan Administrator’s sole judgment. The Plan Administrator’s prior exercise of such authority shall not obligate the Plan Administrator to exercise the Plan Administrator’s authority in a like manner thereafter.
If, due to errors in drafting, any provision of the Plan does not accurately reflect its intended meaning, as demonstrated by consistent interpretations or other evidence of intent, the provision will be considered ambiguous and will be interpreted by the Plan Administrator in a manner consistent with its intent. All actions taken and determinations made by the Plan Administrator are final and binding upon all persons claiming any interest in or under the Plan.
Duties of Plan Administrator
The Plan Administrator shall be responsible for the general administration and management of the Plan. The Plan Administrator has all the powers and duties necessary to fulfill the Plan Administrator’s responsibilities including, but not limited to, the following powers and duties:
To construe and interpret the Plan as the Plan Administrator, in his or her sole discretion, deems to be appropriate;
To determine all questions relating to the eligibility of persons to participate or receive benefits as the Plan Administrator, in his or her sole discretion, deems to be appropriate; and
To provide such notices, summaries and periodic financial statements like the summary annual report, as may be required.
The Plan Administrator may delegate his or her duties, either internally or externally to a third party, as the Plan Administrator deems appropriate in his or her sole discretion.
CSXtra Page 45 Summary Plan Description (January 1, 2014) NAI-102596543v7
Benefits Are Not Insured
The Plan is exempt from Title IV of ERISA. Accordingly, the Plan does not participate in federally-sponsored insurance provided through the Pension Benefit Guaranty Corporation. Only certain defined benefit pension plans are covered by such insurance. Therefore, you are entitled to your account balance in the Plan subject to fluctuations caused by investment return experience.
Limitations Period
In the event you wish to file a lawsuit after you have exhausted the claims process, you must do so within three years after the date the claim arose or forever thereafter be precluded from filing a lawsuit because it is time barred.
Claim Denials
Application for benefits shall be made in accordance with forms and procedures provided by the Plan Administrator. In addition, if you have a dispute with respect to your benefits under the Plan or your right to participate in the Plan, you may file a written claim with the Plan Administrator setting forth your claim and the reasons therefor.
If all or part of your claim for benefits is denied, you will receive written notice within 90 days after the claim has been filed. This notice of denial will:
state the specific reasons why your claim has been denied;
refer you to the Plan provisions that deal with the claim and why it is denied;
identify any additional materials or information needed for the claim to be processed and provide an explanation of why that information is necessary; and
describe the Plan’s review procedures and applicable time limits, including your right to bring a civil action under the Employee Retirement Income Security Act of 1974 following an adverse benefit determination on review.
Special conditions may require more than 90 days to process your claim. If this happens, you will be notified about the extension and the date you can expect a decision. Such decision will be made as soon as possible, and not later than 180 days after your written claim was received.
Claim Appeals
If you or your beneficiary disagrees with the decision of the Plan Administrator, you may request a full and fair review of the claim and the adverse benefit determination from the Plan’s Benefit Appeals Committee. The claims procedure provides claimants with at least 60 days to appeal a denied claim. The review procedure provides you the opportunity to:
submit written comments, documents, and records relating to the claim;
CSXtra Page 46 Summary Plan Description (January 1, 2014) NAI-102596543v7
request free of charge reasonable access to and copies of all documents and records relevant to your claim for benefits; and
a review taking into account all information submitted by you relating to the claim, without regard to whether the information was submitted or considered in the initial benefit determination.
If you make an appeal, the Benefit Appeals Committee will make a decision within 60 days after it receives your request for a review, unless special conditions require extra time for processing. If this happens, a decision will be made as soon as possible, but not later than 120 days after the Benefit Appeals Committee receives your appeal. The decision of the Benefit Appeals Committee regarding the review will be written (delivered either in hard copy or electronically), and will include specific reasons for the decision and references to the Plan provisions on which the decision is based. The decision on review is final.
Your Rights Under ERISA
As a member in the Plan you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). ERISA provides that all Plan members shall be entitled to:
Examine, without charge, at the Plan Administrator’s office and at other specified locations, all documents governing the Plan, including insurance contracts and collective bargaining agreements (if applicable), and a copy of the latest annual report (Form 5500 Series) filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration.
Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan, including insurance contracts and collective bargaining agreements (if applicable), and copies of the latest annual report (Form 5500 Series) and updated Summary Plan Descriptions. The Plan Administrator may make a reasonable charge for the copies.
Receive a summary of the Plan’s annual financial report. The Plan Administrator is required by law to furnish each member with a copy of this summary annual report.
Obtain a statement telling you whether you have a right to receive a benefit at normal retirement age. If you do not have a right to a benefit, the statement will tell you how many more years you have to work to get a right to a benefit. This statement must be requested in writing and is not required to be given more than once every 12 months. The Plan must provide the statement free of charge.
In addition to creating rights for Plan members, ERISA imposes duties upon the people who are responsible for the operation of the Plan. The people who operate the Plan, called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and other Plan members and beneficiaries. No one, including your employer, your union, or any other person, may fire you or
CSXtra Page 47 Summary Plan Description (January 1, 2014) NAI-102596543v7
otherwise discriminate against you in any way to prevent you from obtaining benefits or exercising your rights under ERISA.
If your claim for benefits is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules. (See the summaries above concerning “Claim Denials” and “Claim Appeals.”)
Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the Plan, you must receive them within 30 days after the receipt of your request by the Plan Administrator. However, if the materials have not been received after about 20 days, you are requested to contact the Plan Administrator to see if there are any problems with the request. Then, if you do not receive them within 30 days after your request, you may file suit in Federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator.
The Plan terms require that all claims concerning the Plan be exhausted under the Plan’s claims and review procedure. Provided you have fully exhausted the Plan’s claims and review procedures, you may file suit in a federal or state court if you have a claim that is denied or ignored in whole or in part. In addition, if you disagree with the Plan’s decision on a final appeal or lack thereof concerning the qualified status of a domestic relations order, you may file suit in federal court. If a Plan fiduciary misuses Plan money or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor or, after exhaustion of the Plan’s claims and review procedures, file suit in federal court.
In the event of legal action, the court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if the court finds your claim is frivolous.
If you have any questions about the Plan, you should contact the Plan Administrator. If you have any questions about the foregoing summary of your rights or otherwise about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration (toll free at 1-866-444-3272) or at the Internet website www.dol.gov/ebsa.
CSXtra Page 48 Summary Plan Description (January 1, 2014) NAI-102596543v7
14. Prospectus Information and Documents Incorporated by Reference
Certain documents are incorporated in this Summary Plan Description by reference.
The following documents incorporated by reference in this Summary Plan Description together with this Summary Plan Description constitute a prospectus as required by Section 10(a) of the Securities Act of 1933 (“Securities Act”) covering the Plan interests and CSX common stock that have been registered under the Securities Act.
The following documents filed by CSX with the Securities and Exchange Commission are incorporated herein by reference and made a part hereof: (a) CSX’s Annual Report on Form 10-K for the fiscal year ended December 26, 2014; (b) CSX’s Current Reports on Form 8-K filed on February 11, 2015 and February 13, 2015; and (c) the description of CSX common stock contained in its Registration Statement on Form 8-B filed on September 25, 1980. In addition, the Plan’s Annual Report on Form 11-K for the year ended December 31, 2013, as filed with the Securities and Exchange Commission under the Exchange Act is hereby incorporated by reference and made a part hereof.
All documents filed by the Company and the Plan with the Securities and Exchange Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this Summary Plan Description and prior to the termination of the offering of CSX common stock through the Plan shall be deemed to be incorporated by reference in the prospectus and to be a part thereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference herein shall be deemed to be modified or superseded for purposes of the prospectus to the extent that a statement contained herein or in any other subsequently filed document that is incorporated by reference herein modifies or supersedes such earlier statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of the prospectus.
CSX will furnish, without charge, upon written or oral request, to each person to whom a copy of this Summary Plan Description is delivered, a copy of any or all of the documents incorporated by reference, other than exhibits to such documents, unless such exhibits are specifically incorporated by reference herein. Requests should be directed to the CSX Corporation Office of the Corporate Secretary, (904) 366-4242, 500 Water Street, C160, Jacksonville, FL 32202.
In addition, CSX will deliver to all Plan members, upon oral or written request to the above address and telephone number, the latest annual report of the Plan filed pursuant to Section 15(d) of the Exchange Act and all reports, proxy statements and other communications distributed to the CSX’s security holders.
CSXtra Page 49 Summary Plan Description (January 1, 2014) NAI-102596543v7
16. APPENDIX B
EXHIBIT
Fund Information Average Annualized Total Returns.
You may obtain up-to-date information on fund performance and gross expense ratio by using the www.retireonline.com website or speaking with an Empower Retirement Customer Service Representative.
Fund Information
Gross Since Inception Investment Choice As of Date 1 yr 3 yr 5 yr Expense Inception Date Ratio
Stable Value Fund 12/31/2013 3.20 3.39 3.69 4.41 11/1/1999 0.36
Balanced Fund 12/31/2013 19.73 11.87 13.67 8.12 08/31/2001 0.19
Large Cap Value Fund 12/31/2013 39.40 17.67 19.37 7.23 11/1/1999 0.42
S&P 500 Index Fund 12/31/2013 32.34 16.11 17.87 7.33 11/1/1999 0.02
Large Cap Growth Fund 12/31/2013 34.89 14.85 19.62 7.93 09/1/2006 0.50
Small Cap Value Fund 12/31/2013 33.78 16.18 21.11 10.32 09/15/2005 0.76
International Equity Fund 12/31/2013 14.73 8.17 10.23 6.40 11/1/1999 0.65
CSX Stock Fund 12/31/2013 45.28 10.34 22.15 17.31 11/1/1999 N/A
Retirement Income 12/31/2013 9.11 6.75 10.29 4.67 7/1/2007 0.58
Retirement 2005 12/31/2013 9.62 7.32 11.35 4.56 7/1/2007 0.58
Retirement 2010 12/31/2013 11.74 8.04 12.64 6.02 11/1/2006 0.58
CSXtra Page 50 Summary Plan Description (January 1, 2014) NAI-102596543v7
Gross Since Inception Investment Choice As of Date 1 yr 3 yr 5 yr Expense Inception Date Ratio
Retirement 2015 12/31/2013 15.02 9.21 14.19 5.73 11/1/2006 0.58
Retirement 2020 12/31/2013 18.05 10.23 15.52 5.86 11/1/2006 0.58
Retirement 2025 12/31/2013 21.05 11.15 16.58 5.92 11/1/2006 0.58
Retirement 2030 12/31/2013 22.97 11.76 17.38 6.22 11/1/2006 0.58
Retirement 2035 12/31/2013 24.83 12.27 17.95 6.45 11/1/2006 0.58
Retirement 2040 12/31/2013 26.00 12.60 18.20 6.61 11/1/2006 0.58
Retirement 2045 12/31/2013 25.86 12.59 18.18 6.35 11/1/2006 0.58
Retirement 2050 12/31/2013 25.88 12.61 18.17 4.91 7/1/2007 0.58
Retirement 2055 12/31/2013 25.82 12.61 18.17 4.89 7/1/2007 0.58
CSX Fund for Dividend Pass 7/1/2007 0.00 Through
Past performance is not a guarantee of and may not be indicative of future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares or units when redeemed may be worth more or less than original cost or the performance quoted. Current performance may be higher or lower than the performance data shown.
*Expense ratios provided are the Funds’ total annual operating expense ratios, gross of any fee waivers or expense reimbursement.
*Returns for periods less than one year are not annualized.
Source: Empower Retirement Plan Services
CSXtra Page 51 Summary Plan Description (January 1, 2014) NAI-102596543v7