BMW PENSION PLAN Summary Plan Description Describing Plan Provisions as of December 1, 2012
-FIN US_ACTIVE-108708807.14-AWSIZEMO
Table of Contents
Introduction ...... 1
Fast Facts About Your BMW Pension Plan ...... 2
BMW Pension Plan At A Glance...... 3
How the Pension Plan Works ...... 4
Eligible Employees ...... 4 Plan Participation ...... 4 Eligibility Service ...... 4 Pension Service ...... 5 Becoming a Vested Participant ...... 5 Vesting Service ...... 5 How Your Pension Benefit is Calculated ...... 6 What Goes Into Determining Your Pension Benefit? ...... 6 Pension Calculation Example ...... 7 Grandfathering Provision for BMW Manufacturing Participants ...... 8
Life Events that Affect Your Pension Benefit ...... 9
If You Are Married ...... 9 If You Divorce ...... 9 If You Become Disabled ...... 10 If You Leave BMW and Then Return to Active Employment ...... 10 When Breaks in Service Don’t Apply ...... 11 If You Leave Active Employment for Military Service ...... 12 If You Die Prior to Retirement ...... 12 If You Return to Work After You Retire ...... 13
When You May Begin To Receive Pension Benefits ...... 14
Fast Facts ...... 14 Normal Retirement ...... 14 Early Retirement ...... 15 Deferred Vested Benefit if You Leave BMW Before Age 60 With at Least 5 but Less Than 10 Years of Vesting Service ...... 18 Deferred Vested Benefit if You Leave BMW Before Age 55 With at Least 10 Years of Vesting Service...... 18 Pension Commencement After Normal Retirement Age ...... 20 If You Leave BMW and You are Not Vested ...... 20
Forms of Payment under the BMW Pension Plan ...... 21
Fast Facts ...... 21 Payment Options ...... 22 The Joint and Survivor Annuity Options ...... 23 The Single Life Annuity Option ...... 26 The Ten-Year Certain and Life Annuity Option ...... 26 The Social Security Level Income Benefit Option ...... 27 Lump Sum Distributions ...... 27 Applying for Your Pension Benefits ...... 29
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Deciding Which Option to Elect ...... 30 Special Provisions That Apply if the Plan Becomes Underfunded ...... 30
Administrative Information ...... 31
Plan Sponsor and Plan Administrator ...... 31 Plan Identification Numbers ...... 31 Plan Funding ...... 31 Summary of Important Administrative Information ...... 32 Plan Continuation ...... 33 Official Plan Documents Determine Benefits ...... 34 Plan Participation Doesn’t Guarantee Employment ...... 34
Benefit Claims and Appeals Procedure ...... 35
How to File a Claim ...... 35 Denial of Benefits ...... 35 Appeal of Denial ...... 35 Review on Appeal ...... 36
Statements Required by Government Regulations ...... 37
Glossary ...... 40
Retirement Eligibility Chart ...... 42
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Introduction
This Summary Plan Description is prepared for the employees and beneficiaries of all Plan participating employers except BMW Manufacturing Co., LLC.
This document is only a summary of certain portions of the BMW Pension Plan (the “Plan”) in non-legal language. Please do not misunderstand: only the Plan gives any person a legal right to benefits and this is not the Plan. This summary does not describe all of the provisions of the Plan and is not a substitute for the Plan. Please review this whole summary because if you take parts of it out of context, you might read only partial information that could be misleading. Refer to the Administrative Information section of this summary on page 31 for further details about the Plan documents and your legal rights. After you have read this summary, put it in a safe place for future reference by you and your family.
Capitalized words used throughout this summary plan description are defined in the section entitled “Glossary” on page 40.
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Fast Facts About Your BMW Pension Plan
You automatically became a participant in the Plan once you completed one year of service, provided you were at least 18 years old and were hired or rehired before March 1, 2012. BMW pays the entire cost of the Plan – you pay nothing. One of the ways you become fully vested in the Plan is to complete 5 years of Vesting Service. If you leave before you are vested, you may forfeit the benefit you have accrued under the Plan. You also vest when you reach normal retirement age while working. Normal retirement age under the Plan is the later of age 65 or the date on which you complete 5 years of Vesting Service. You may retire early from active service at age 60 without any reduction for early retirement provided you have at least 5 years of Vesting Service. You may retire early from active service with an early retirement pension beginning at age 55 provided you have at least 10 years of Vesting Service. In this case, your benefit will be reduced by 1/12 of 5% for every month you are under age 60 when you start your pension. If you have grandfathered eligibility under the section entitled “Rule of 80,” you may retire from active service as early as age 55 and be eligible to receive an unreduced early retirement benefit, provided your age plus years of Pension Service total at least 80. If you have a Spouse when you retire, you will automatically receive your benefit in the form of a 50% joint and survivor annuity with your Spouse as beneficiary, unless you elect another option with your Spouse’s notarized written consent on a form provided by the Plan. Note that your benefit will be reduced to allow for the survivor benefits that a joint and survivor annuity provides. If you do not have a Spouse when you retire, you will automatically receive your benefit as a single life annuity, unless you elect another option. However, whether or not you have a Spouse, if the lump sum present value of your benefit is $5,000 or less, your benefit will be automatically distributed without your consent. You can choose a payment method that provides survivor benefits for a designated Beneficiary other than your Spouse, subject to Spousal consent requirements. If you are vested, the Plan provides benefits for your Spouse or your designated Beneficiary if you die before you start your pension.
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BMW Pension Plan At A Glance
Participating Employers BMW of North America, LLC (including Husqvarna Motorcycles NA, LLC) BMW Financial Services NA, LLC (including BMW Bank of North America) Designworks/USA Inc. BMW Manufacturing Co., LLC Rolls-Royce Motor Cars NA, LLC BMW US Capital, LLC
Pension Plan Formula Final Average Five-Year Earnings x 1.35% x years of Pension Service earned while an eligible employee, up to 30 years Plus Final Average Five-Year Earnings above 1/2 of the Social Security Wage Base in year of termination x 0.2% x years of Pension Service earned while an eligible employee, up to 30 years
Normal Retirement Age The later of age 65 or the date you complete 5 years of Vesting Service in the Plan
Early Retirement Eligibility There are three early retirement options: 1. You can retire at age 60 if you have at least 5 years of Vesting Service. You can begin receiving unreduced benefits as soon as you retire. 2. You can retire at age 55 if you have at least 10 years of Vesting Service. You can begin benefits before age 60, but the benefit amount is reduced by 1/12 of 5% for every full month (5% a year) that you are under age 60 when benefits begin. You can begin receiving unreduced benefits at age 60. 3. If you are in the grandfathered group described in the section entitled “Rule of 80” and your age and years of service total at least 80, you may retire as early as age 55 and be eligible for an unreduced early retirement benefit.
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How the Pension Plan Works
Eligible Employees
You are eligible to participate in the Plan if you are classified as an “employee” for purposes of BMW’s payroll records, you are not an excluded employee listed below, and you were hired by BMW before March 1, 2012 (the date the Plan was closed to new hires). You are an employee on BMW’s payroll records only if BMW pays the employer’s share of Federal Insurance Contributions Act (FICA) tax.
The following classifications of individuals are not eligible to participate in the Plan: independent contractors; interns and student-interns; contingent, temporary or leased workers; collectively-bargained employees for whom participation in the Plan was not bargained; Expatriates; employees hired or rehired by BMW on or after March 1, 2012; or employees transferred directly from one participating BMW employer to another on or after March 1, 2012, except if: (1) an active Plan participant on the day before the transfer, and (2) originally hired or rehired by BMW before March 1, 2012. Plan Participation
If you were an eligible employee of BMW prior to March 1, 2012, you automatically became or will become a participant in the Plan on the day you satisfied or will satisfy both of the following requirements: Reach age 18, and Complete one year of Eligibility Service.
Enrollment is automatic for eligible employees.
Eligibility Service
One year of “Eligibility Service” is a continuous 12-month period of time during which you perform service for BMW beginning on the date your employment with BMW starts (regardless of whether you are an eligible employee).
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Pension Service
Once you are a participant in the Plan, your years of Pension Service are typically counted from your date of hire as a BMW employee. Partial years of Pension Service are counted in months, and you receive a credit for any month in which you work for BMW as an eligible employee. However, if you were covered by one of the ineligible classifications described above and then you became an eligible employee before March 1, 2012, your service while ineligible to participate in the Plan counts for purposes of vesting and eligibility to participate in the Plan, but does not count toward eligibility for benefits under the Plan or your benefit calculation. If you were not an eligible employee on March 1, 2012, you will not earn any Pension Service for periods of service on or after March 1, 2012.
Becoming a Vested Participant
“Vested” means that you have a non-forfeitable interest in your Plan benefit. You become fully vested in the Plan after you have completed 5 years of Vesting Service or reach normal retirement age while a BMW employee. Once you are vested, if you leave BMW at any time and for any reason, you will be entitled to receive the benefit you have accrued under the Plan. If you leave BMW before you are vested, you may forfeit your benefit unless you are rehired before the forfeiture occurs. See “If You Leave BMW and Then Return to Active Employment” on page 10.
Vesting Service
Vesting Service is defined as all of your years of service with BMW from your date of hire and includes your service as an employee of any BMW company or affiliate. Service as a BMW employee on and after March 1, 2012 will count for Vesting Service for any prior benefit earned even if you are not currently an eligible employee.
Note for Designworks/USA Inc. Employees If your employment originated at Designworks/USA Inc., your Pension Service and Vesting Service start with your date of hire or from January 1, 1995, whichever is later.
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How Your Pension Benefit is Calculated
If you are vested and you leave BMW, your annual Plan benefit will be calculated according to this formula:
Your Final Average Accrual rate of Your years of Pension Service, up to 30 years Five-Year Earnings X 1.35% X
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Your Final Average Five-Year Earnings Accrual rate of Your years of Pension above 1/2 the Social Security Wage Base in X X 0.2% Service, up to 30 years effect at the time you terminate employment
Your years of Pension Service for benefit calculation purposes do not include service as a leased worker or other ineligible classification described above under “Eligible Employees,” including any time that you work for a non-participating BMW affiliate after March 1, 2012.
What Goes Into Determining Your Pension Benefit?
Final Average Five-Year Earnings
Your “Final Average Five-Year Earnings” is defined as the sum of the Earnings during the 60-consecutive month period in which you had your highest total Earnings, divided by five.
Earnings
Earnings include your annual base salary and, for BMW Manufacturing employees, Earnings also include pay for unused vacation time paid within a certain legally-prescribed time after the end of the Plan Year in which you terminate employment with BMW. For most employees, Earnings do not include bonuses, incentives, overtime, commissions, shift differentials, and any other type of extra compensation. If you are a non-exempt hourly employee who works in shifts, your Earnings will include overtime hours required in order for you to reach 160 hours in a four week period. Please contact the Plan Administrator if you are such an employee and you have any questions regarding how your Earnings will be calculated. The Plan does not calculate benefits based on Earnings above a certain amount, due to limits set by the Internal Revenue Code. The limit is $250,000 for 2012 and $255,000 for 2013, and it will be adjusted by the IRS in future years to reflect changes in the cost of living.
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Social Security Wage Base (SSWB)
The SSWB determines the amount of your earnings on which you and BMW pay Social Security tax on each year. In 2012, the SSWB is $110,100, and 1/2 of the SSWB is $55,050. For 2013, the SSWB is $113,700 and 1/2 of the SSWB is $56,850. The SSWB generally increases each year in response to average cost of living increases. The SSWB is a figure that is widely known and published annually by the Social Security Administration.
Examples of Pension Calculations Please note that the data shown in the assumptions throughout this summary are for illustrative purposes only.
Pension Calculation Example
Caroline decides to retire in 2013 at age 60 when she will have 30 years of Pension Service. According to the assumptions and the calculations shown below, Caroline would receive an annual pension of $26,814. This pension amount may be reduced depending on the form of payment Caroline elects, as described on page 23.
Assumptions: Final Average Five-Year Earnings $65,000 Estimated 1/2 of Social Security Wage Base (SSWB) $56,850 Estimated Final Average Five-Year Earnings above 1/2 of SSWB $8,150
Formula: Final Average Five-Year Earnings x 1.35% x Years of Pension Service, up to 30 years Plus Final Average Five-Year Earnings above 1/2 SSWB x 0.2% x Years of Pension Service, up to 30 years
Calculation: $65,000 x 1.35% x 30 = $26,325 $8,150 x 0.2% x 30 = $489 $26,325 + $489 = $26,814 per year payable starting at age 60 as a single life annuity
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Grandfathering Provision for BMW Manufacturing Participants
Employees who were age 50 or older on August 1, 2000, and who were participating in the Plan while employed by BMW Manufacturing Co., LLC on that date, may be eligible for a special grandfathering provision because of a change to the pension formula effective August 1, 2000. To be eligible for this grandfathering provision, you must have been hired by BMW Manufacturing Co., LLC on or before July 31, 1999.
If you meet the eligibility requirements for the grandfathering provision, your pension benefit will be calculated under the Plan formula in effect on July 31, 2000 and the current formula as described above. When you retire or terminate employment, you will receive the higher of the two calculations.
Please keep in mind: Your grandfathered pension, if applicable, will be calculated by using the following formula: your career average earnings x 2.5% x Pension Service. Under the grandfathered pension formula, if you separate from service after age 55 with 10 Years of Service, but before you reach age 65, your benefit is reduced by one-twelfth (1/12) of 5% for every month you are younger than 65 when you start your pension. However, if you separate from service on or after January 1, 2005 and after age 60 with 5 Years of Service, but before you reach age 65, there will be no reduction in your benefits if they begin before age 65. The benefit under the grandfathered formula will not be less than your benefit under the normal formula. If your benefits are being calculated under the grandfathered formula (either because the grandfathering rule applies to you or because you did not have at least one hour of service on or after August 1, 2000), only your earnings after the date on which you became a Participant in the Plan will be counted. If your benefit is being calculated under the current formula, your earnings will be taken into account from your date of hire and only while an eligible employee.
A Note to All BMW Manufacturing Co., LLC Plan Participants: The current formula became effective August 1, 2000 and does not affect the benefits you accrued under the Plan as of July 31, 2000. Your benefit cannot be less than what you had already accrued under the Plan as of July 31, 2000.
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Life Events that Affect Your Pension Benefit
Certain life events, such as marriage, divorce, disability or death may affect your pension, as explained in this section.
If You Are Married
On the Date Your Pension Payments Begin
The normal form of payment under the Plan for participants with a Spouse is the 50% Joint and Survivor Annuity, without the pop-up feature (explained on page 23). If you wish to elect another form of payment, you must obtain your Spouse’s notarized written consent.
If you wish to name someone other than your Spouse as the Beneficiary of your pension benefit, your Spouse must give his or her notarized written consent.
Common Law Spouses and Certain Divorced Spouses Remember, your common law spouse may be treated as your Spouse under the Plan. Also, your former Spouse can be treated as a Spouse for pension purposes if provided in a Qualified Domestic Relations Order.
If you have a same-sex domestic partner, federal law provides that your domestic partner is not treated as your Spouse under the Plan. However, you can name your domestic partner as your Beneficiary if you elect a form of distribution that provides for benefit payments after your death.
After Your Pension Payments Begin
Your pension is not affected if you marry after you begin to receive a pension benefit. Once you begin to receive a pension benefit, you cannot change the form of payment you are receiving.
Depending on the form of payment you elected before your pension started, your Spouse may be eligible to receive a benefit if you die.
If You Divorce
In case of a divorce (or a lawsuit involving a family property settlement or child support issue), you or your Spouse may ask the court for a Qualified Domestic Relations Order (“QDRO”), which may affect your pension benefit. Under the terms of a QDRO, certain payments could be made from your accrued benefit to pay alimony, child support or marital property rights of your Spouse, former Spouse, child or other dependent. If a benefit under the Plan becomes subject to a QDRO, the benefit will be paid in
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accordance with the provisions of the QDRO. You may obtain a copy of the Plan’s Qualified Domestic Relations Order procedures, at no charge to you, from the Plan Administrator upon written request.
If you divorce after your monthly pension begins in the form of a joint and survivor annuity with your Spouse as the Beneficiary, the survivor annuity will continue in effect, and in most situations survivor benefits will be paid to your former Spouse when you die.
If You Become Disabled
If you become totally and permanently disabled while you are an active employee at BMW, you will continue to earn Vesting Service and Pension Service until the earlier of when your disability ends or your employment with BMW ends. You will then receive your pension benefit at normal retirement age unless you qualify for and choose Early Retirement at age 60 with at least 5 years of Vesting Service, at age 55 with at least 10 years of Vesting Service, or Rule of 80 early retirement. Your benefit will be calculated as though the annual Earnings you had when you became disabled continued during your period of disability.
For purposes of the Plan, you will be considered to be totally and permanently disabled if: (1) you are eligible for disability benefits under any long-term disability plan sponsored by BMW and administered by an independent third party; or (2) you are eligible for disability benefits under the Social Security Act in effect on your date of disability.
If You Leave BMW and Then Return to Active Employment
Vesting Service — If you are not vested in your Plan benefit when you separate employment with BMW and its affiliates, and later return to active employment within 12 months of your separation date, the period of your absence will be counted as Vesting Service. If you return to active employment after 12 months, but before 5 years, your periods of service before and after your period of absence will be added together. If you return to active employment after 5 years, you will lose your prior vesting service.
If you were vested in your Plan benefit when you separated from employment, you remain vested for purposes of any future benefit earned after rehire.
Pension Service — If you separate employment with BMW and its affiliates, and later return to active employment within 12 months of your separation date, the period of your absence will be counted as Pension Service.
If you were vested when you separated employment, and return to active employment with BMW or an affiliate after 12 months, your periods of service before and after your period of absence will be added together and counted as Pension Service, provided you did not take a lump sum benefit when you first left.
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Similarly, if you were not vested when you separated employment, and return to employment with BMW or an affiliate after 12 months, but before 5 years of absence, your periods of absence before and after your absence will be added together and counted as Pension Service.
However, no one rehired on or after March 1, 2012 will earn any Pension Service for periods of service after March 1, 2012, as described under the heading “Pension Service” on page 5.
Leaves of Absence — If you are on a leave of absence before you separate from BMW and its affiliates, the 12 month periods described above for both Vesting Service and Pension Service are counted from when the leave begins, not from your severance date.
Example 1
John had four years of service when he left BMW. Three years later and before March 1, 2012, John returned to BMW. John’s service would be bridged, meaning he would begin accruing pension benefits and continue vesting as of his first day of work when he returned to BMW. His previous service would count toward his accrued benefit.
Example 2
Sara left BMW after three years of service. Six years later, she returned to BMW. Sara would lose the benefit she had accrued in the first three years she was at BMW, and her prior service would not be counted for any purpose after her return.
When Breaks in Service Don’t Apply
Caring for a Child — The Break in Service rule will not apply to the first year after you leave active employment if the reason you leave is because you were pregnant, your child was born, you adopted a child, or you spent time caring for your newly born or adopted child.
Family and Medical Leave Act — Any absences covered by the Family and Medical Leave Act of 1993, as amended, will not be considered a break in service.
What is a “Break in Service?” A break in service occurs when you are not employed by BMW or its affiliates for 12 continuous months.
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If You Leave Active Employment for Military Service
If you leave active employment due to qualified military service, you will retain reemployment rights under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). If you receive differential wage payments while you are performing qualified military service, those payments are considered Earnings to the extent required by law. However, in order to receive credit under the Plan for your military service, you must return to active employment at BMW after your release from active duty within a specific time period applicable to your military leave. If you die while performing qualified military leave, your benefit (other than benefit accruals) will be calculated as if you returned to work and then died the next day. If you have questions about the impact of military service on your pension, contact the Plan Administrator.
If You Die Prior to Retirement
If you have a Spouse, are a vested participant, and die before you begin to receive your BMW retirement benefit, the Plan provides your surviving Spouse with a death benefit equal to 50% of the reduced benefit you would have been eligible to receive had you left BMW, survived until earliest retirement age, and selected the 50% joint and survivor form of payment. The reduced benefit is determined by applying the joint and survivor annuity factors and, if applicable, the early retirement reduction factors to your unreduced benefit.
In general, payments to your surviving Spouse begin on the first business day of the month following the earliest date you would have been eligible for a retirement benefit following your death. However, your surviving Spouse may elect to defer payments until the date you would have been eligible for Normal Retirement, and the amount of the death benefit will be adjusted accordingly. This benefit will continue for the life of your surviving Spouse.
In some circumstances, if you elect to retire, select a joint and survivor form of payment that provides more than a 50% survivorship percentage, select your Spouse as your Beneficiary, and die before the retirement payments begin, the benefit payable to your surviving Spouse will be based on the joint and survivor form of payment you selected.
If you do not have a Spouse, but do have a designated Beneficiary, and die before you begin to receive your retirement benefits, the death benefit will be calculated as if your designated Beneficiary were your Spouse, unless limitations apply because your designated Beneficiary is substantially younger than you are. If you have a domestic partner, you can name your domestic partner as your designated Beneficiary.
If you do not have a Spouse or a designated Beneficiary (primary or contingent), or if your designated Beneficiary dies before you do, your death benefit will be forfeited. If you are not vested when you die, your surviving Spouse or designated Beneficiary will not receive any benefits.
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If You Return to Work After You Retire
If you are retired from active service with BMW or an affiliated entity and you return to work as an active employee within the BMW Group working 40 or more hours in a calendar month, your pension payments will be temporarily suspended. When you retire again, your pension will be recalculated. If you were rehired before March 1, 2012, your benefit will take into account your highest Final Average Five-Year Earnings and years of Pension Service at the time of your retirement. If you are rehired on or after March 1, 2012, your benefits will be temporarily suspended, but your benefit will not take into account service and compensation increases on and after your rehire. If you received a distribution of your benefits when you initially retired, your benefit will be reduced to take into account that distribution.
The Plan’s formula is based on your years of Pension Service, up to 30 years. Therefore, if you earn more than 30 years of Pension Service, those extra years above 30 will not be included in your Pension Service, and will not increase the amount of your benefit. However, even if you have reached the 30 year service maximum, compensation increases during those years still may increase your Final Average Five-Year Earnings.
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When You May Begin To Receive Pension Benefits
Fast Facts Employees who retire from active service on or after age 60 with at least 5 years of Vesting Service will be eligible to receive an unreduced Early Retirement benefit at any time after termination. Employees who retire from active service on or after age 55 with at least 10 years of Vesting Service will be eligible for a reduced Early Retirement benefit at age 55 or an unreduced Early Retirement benefit at age 60. Employees with at least 10 years of Vesting Service who leave BMW before reaching age 55 will have the option to receive a reduced benefit at any time after termination, or an unreduced benefit at age 65. Refer to pages 18-19 for more information. Employees with at least 5 but less than 10 years of Vesting Service who leave BMW before reaching age 60 will have the option to receive a reduced benefit at any time after termination, or an unreduced benefit at age 65. Refer to pages 18-19 for more information.
For more information, please see the Retirement Eligibility Chart beginning on page 42.
Pension Reductions Your individual pension may be further reduced by the form of payment you elect. For example, if you elect to receive your benefit as a joint and survivor annuity, your benefit amount will be reduced in order to provide survivor benefits. Refer to page 23 for more information.
Normal Retirement
You may receive an unreduced pension benefit if you retire from active service after you attain age 65 and complete five years of Vesting Service (normal retirement age).
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Early Retirement
The Plan has three different early retirement options, a 60/5 early retirement option, a 55/10 early retirement option, and a grandfathered Rule of 80 option, as follows:
60/5 Early Retirement
If you retire from active service with BMW after reaching age 60 and after completing at least 5 years of Vesting Service, you will be eligible to receive an unreduced benefit as soon as you retire.
55/10 Early Retirement
If you retire from active service with BMW after reaching age 55 and after completing at least 10 years of Vesting Service, you will be eligible to receive an unreduced benefit if you delay receiving benefits until you reach age 60. If you begin to receive payments before age 60, your benefit will be reduced by 1/12 of 5% for every month (which equals 5% for each year) that you are under age 60 when payments begin.
Percentage of Benefit Payable for Early Retirement
Age Benefit Begins Percentage of Benefit Payable 60 100% 59 95% 58 90% 57 85% 56 80% 55 75%
Early Retirement Example
Ed is age 55 and decides to retire in 2012 with 20 years of Pension Service. If Ed begins to receive his benefit as soon as he retires, his benefit would be reduced by 25% for benefit commencement at age 55 and he would receive 75% of the unreduced age 60 benefit. If Ed waited to retire at age 60, or if he left BMW at age 55 and delayed the start of his pension payments to age 60, he would be eligible for an unreduced benefit at age 60. According to the assumptions and the calculations shown below, Ed would receive an annual pension at age 55 of $13,461.
Assumptions: Final Average Five-Year Earnings $65,000 Estimated 1/2 of Social Security Wage Base (“SSWB”) $55,050 Estimated Final Average Five-Year Earnings above 1/2 of SSWB $9,950
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Formula: Final Average Five-Year Earnings x 1.35% x Years of Pension Service, up to 30 years
Plus
Final Average Five-Year Earnings above 1/2 SSWB x 0.2% x Years of Pension Service, up to 30 years
Calculation:
$65,000 x 1.35% x 20 = $17,550
$9,950 x 0.2% x 20 = $398
$17,550 + $398 = $17,948 per year payable at age 60
Early Retirement Reduction: $17,948 x 0.75 = $13,461 per year payable starting at age 55 as a single life annuity.
Early Retirement Basics In order to be eligible for an unreduced early retirement benefit, you must: have at least 5 years of service, and be at least age 60 when you retire from active service at BMW. OR have at least 10 years of service, and be at least age 55 when you retire from active service at BMW, and wait until you are age 60 to begin payments. OR be at least age 55 when you retire from active service at BMW, and qualify for the Grandfathered Rule of 80 Pension.
Grandfathered Rule of 80 Pension You may be eligible to retire as early as age 55 with an unreduced pension benefit if you qualify for the grandfathered Rule of 80 pension. In order to qualify, you must: have been hired by BMW on or before June 30, 1999; have been considered a participant in the Plan and employed by BMW of North America, LLC, BMW Financial Services NA, LLC or Designworks/USA Inc. on June 30, 2000; be at least age 55 when you retire from active employment with BMW; and have the sum of your age and years of Pension Service earned while an Eligible Employee equal to at least 80 when you retire from active employment.
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Partial years of age and of Pension Service are calculated in whole months. You need not work the entire month to receive credit for that month of Pension Service.
Note: If you are eligible for the Rule of 80 pension and you transfer from BMW of North America, LLC, BMW Financial Services NA, LLC, or Designworks/USA Inc. to BMW Manufacturing Co., LLC or Rolls-Royce Motor Cars NA, LLC, you will remain eligible for the Rule of 80 pension with respect to your total accrued benefit.
Grandfathered Rule of 80 Pension Example
Mary decides to retire in 2012 at age 55 with 30 years of Pension Service. Mary was hired by BMW before June 30, 1999, employed by BMW Financial Services NA, LLC and considered a Plan participant on June 30, 2000, so she is eligible for the grandfathered Rule of 80 Pension. Because her combined age and service equal 85, she can receive an unreduced benefit beginning at age 55.
Assumptions:
Final Average Five-Year Earnings $65,000
Estimated 1/2 of SSWB $55,050
Estimated Final Average Five-Year Earnings above 1/2 of SSWB $9,950
Formula:
Final Average Five-Year Earnings x 1.35% x Years of Pension Service, up to 30 years
Plus
Final Average Five-Year Earnings above 1/2 SSWB x 0.2% x Years of Pension Service, up to 30 years
Calculation:
$65,000 x 1.35% x 30 = $26,325
$9,950 x 0.2% x 30 = $597
$26,325 + $597 = $26,922 per year payable starting at age 55 as a single life annuity.
Note: If you were not yet participating in the Plan as of June 30, 2000 because you did not yet meet the eligibility requirements, the Rule of 80 Pension will not apply to you. Ineligible employees include those who were hired on or after July 1, 1999 by BMW of North America, LLC, BMW Financial Services NA, LLC, or Designworks/USA Inc. In addition, if your employment originated at Land Rover NA, Inc., BMW Manufacturing Co., LLC, or BMW US Capital, LLC, you are not eligible for the Rule of 80 Pension. The early retirement benefit under the Rule of 80 Pension will not be less than the benefit you would receive under the regular early retirement provisions of the Plan.
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Deferred Vested Benefit if You Leave BMW Before Age 60 With at Least 5 but Less Than 10 Years of Vesting Service
If you leave BMW before age 60, but you have at least 5 years of Vesting Service (but less than 10 years of Vesting Service) at the time of your termination, you are entitled to a “deferred vested pension benefit”. You have three choices for when to receive your deferred vested benefit:
Unreduced Benefit — If you wish to receive an unreduced deferred vested pension benefit, you must wait until the first of the month on or after age 65 to begin to receive payments. If you wait until after age 65 to begin to receive your benefit, the amount of your benefit will be adjusted to the actuarial equivalent of the amount that you would have received at age 65 to reflect your late commencement.
Reduced benefit on or after age 60 — You may begin to receive your deferred vested pension benefit as of the first day of any month on or after your 60th birthday. However, it will be reduced for every year you are under age 65 when payments begin based on a special set of actuarial assumptions. For more details, contact BMW Human Resources (“HR”). See the Retirement Eligibility Chart at the end of this summary for more information regarding timing and forms of payment.
Reduced benefit before age 60 — If you wish to begin your deferred vested pension benefit before age 60, your benefit will be reduced from 65 based on a special set of actuarial assumptions. For more details, contact HR. See the Retirement Eligibility Chart at the end of this summary for more information regarding timing and forms of payment. Deferred Vested Benefit if You Leave BMW Before Age 55 With at Least 10 Years of Vesting Service
If you leave BMW before age 55, but you have at least 10 years of Vesting Service at your termination, you are entitled to a “deferred vested pension benefit.” You have three choices for when to receive your deferred vested pension benefit:
Unreduced benefit — If you wish to receive an unreduced deferred vested pension benefit, you must wait until the first of the month on or after age 65 to begin to receive payments. If you wait until after age 65 to begin to receive your benefit, the amount of your benefit will be adjusted to the actuarial equivalent of the amount that you would have received at age 65 to reflect your late commencement.
Reduced benefit on or after age 55 — You may begin to receive your deferred vested pension benefit as of the first day of any month on or after your 55th birthday. However, it will be reduced for every year you are under age 65 when payments begin, according to the schedule below.
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Percentage of Benefit Payable if You Leave BMW Before Age 55 with 10 Years of Pension Service
Age Benefit Begins Percentage of Benefit Payable* 65 100% 64 93% 63 86% 62 79% 61 72% 60 65% 59 61% 58 57% 57 53% 56 49% 55 45% * Percentages are prorated on a monthly basis.
Reduced benefit before age 55 — If you wish to begin your deferred vested pension benefit before age 55, your benefit will be reduced based on a special set of actuarial assumptions. For more details, contact HR. See the Retirement Eligibility Chart at the end of this summary for more information regarding timing and forms of payment.
Example
Amy leaves BMW in 2012 with 11 years of vesting service at age 45. Her annual deferred vested pension benefit payable as of the first of the month after age 65 is $4,025. Amy decides to receive her benefit at age 56. She would receive 49% of her normal retirement age benefit, as shown in the chart above.
$4,025 x 49% = $1,972.25 per year payable at age 56 as a single life annuity.
Note: The benefit reduction is prorated on a monthly basis, so if Amy were 56 years and 3 months old when payments begin, she would actually receive 50% of her normal retirement age pension benefit. This calculation assumes Amy is single and receives a single life annuity.
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Pension Commencement After Normal Retirement Age
If you continue to work for BMW after age 65, then your benefits may be actuarially adjusted to reflect late commencement unless your benefit would be greater if it were based on your Credited Service through your date of termination, in which case it will be calculated to provide the greater benefit. If you terminate employment prior to age 65 but do not elect to commence your pension benefits at normal retirement age, your benefits will be actuarially adjusted to reflect late commencement. You will automatically begin to receive pension benefit payments if continually adjusting the benefit amount would cause you to exceed legal limits.
If You Leave BMW and You are Not Vested
If you are not vested when you leave BMW because you have less than 5 years of service and do not meet any of the other vesting rules, you will forfeit any pension benefit you have accrued unless you subsequently return and qualify for vesting under the Break in Service rules. Refer to page 10 (“If You Leave BMW and Then Return to Active Employment”) for more information about when you become vested.
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Forms of Payment under the BMW Pension Plan
Fast Facts The normal method of payment depends upon your marital status when payments begin. Your benefit will be paid in the form of:
— A 50% Joint and Survivor Annuity (without the pop–up feature) with your Spouse as the Beneficiary if you have a Spouse as of your benefit commencement date; or
— A Single Life Annuity if you are single as of your benefit commencement date.
If you have a Spouse, and you wish to elect an optional form of payment, you and your Spouse must jointly waive the 50% Joint and Survivor Annuity. This would also apply if you are not married but your former Spouse is treated as your Spouse for this purpose under a Qualified Domestic Relations Order (a “QDRO”).
Under IRS rules and the Plan, benefits must begin by April 1 of the calendar year after the later of the year in which you reach age 70 1/2 or the year of your termination.
If the lump sum present value of your benefit is $5,000 or less (but greater than $1,000), your benefit will automatically be paid in a lump sum to an individual retirement account (IRA) established on your behalf unless you elect either a lump sum payment in cash or specify another rollover account within an election period of at least 30 days.
If the lump sum present value of your benefit is $1,000 or less, it will be paid to you in cash (less 20% mandatory tax withholding) unless you elect otherwise within the election period.
You may also choose a lump sum payment in cash or a direct rollover if the lump sum present value of your benefit is greater than $5,000 and less than $25,000.
In addition, if you terminate employment between November 30, 2012 and December 31, 2017 and the lump sum present value of your benefit is $25,000 or more, you are entitled to a one-time election within six (6) months of your termination to receive your benefit in a lump sum in cash or a direct rollover.
You must have your Spouse’s written notarized consent if you wish to elect to receive a lump sum distribution. Refer to page 27 for further information.
You are considered to have a Spouse if you are married or you are legally separated or divorced and a former Spouse is designated as your Spouse for these purposes under a QDRO.
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Payment Options
The Plan offers several payment options, which are listed below and are described in more detail on the following pages. With the exception of mandatory lump sum distributions, you may choose how you wish to receive your pension benefit. Options previously provided under the Plan but no longer available are not listed. The 50% Joint and Survivor Annuity.* This payment option is available with or without the pop-up feature. The 75% Joint and Survivor Annuity.* This payment option is available with or without the pop-up feature. The 100% Joint and Survivor Annuity.* This payment option is available with or without the pop-up feature. The Single Life Annuity. The Ten-Year Certain and Life Annuity.* This payment option is not available if (i) you first become a participant in the Plan on or after March 1, 2007, or (ii) you were a participant in the Plan before March 1, 2007, and you did not have an accrued benefit under the Plan as of March 1, 2007. The Social Security Level Income Benefit.* A Voluntary Lump Sum Distribution. This payment option is available only if the present value of your benefit is less than $25,000.
A Limited-Time Lump Sum Distribution. This payment option is available only if: (i) the present value of your benefit is $25,000 or more; (ii) you terminate employment with BMW between November 30, 2012 and December 31, 2017; and (iii) you elect (with appropriate Spousal consent and election forms) to receive your benefit in a lump sum within six (6) months of after your termination of employment.
Taxes on Benefits Monthly benefits from the Plan and lump sum distributions are taxable for federal income tax purposes. Most states also tax these benefits. For the law that applies in your state, contact your tax advisor.
These options are not available for terminated vested participants with a benefit present value of greater than $5,000 but less than $25,000, who terminate employment and commence benefits before age 55 with 10 or more years of service, or before age 60 with less than 10 years of service. Their limited options are: (1) the lump sum payment option, or (2) a single life annuity for unmarried participants or the 50% or 75% joint and survivor annuity without pop-up (with the Spouse or alternate payee treated as a Spouse as the beneficiary) for married participants.
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The Joint and Survivor Annuity Options
Under this payment method, you will receive a reduced monthly benefit for the rest of your life. If you die before your Beneficiary, your Beneficiary will receive 50%, 75% or 100% of your reduced monthly benefit (depending on your election) for the rest of his or her life.
Your monthly benefit will be reduced based on: the early retirement reduction factor, if applicable, the option you select, either 50%, 75% or 100% Joint and Survivor Annuity, whether you select the pop-up feature, your age when benefits begin, and your Beneficiary’s age when benefits begin.
The reduction reflects the cost to provide a benefit for your lifetime and the lifetime of your Beneficiary.
If your Beneficiary dies before your benefits have started, the joint and survivor payment method will be cancelled automatically. You must then select another payment method.
Pop-Up Feature
If your Beneficiary dies before you but after benefits have started and you have not elected the pop-up feature, you will continue to receive the same reduced benefit for life without any survivor benefits paid after you die. This means that if your Beneficiary is your Spouse and you remarry after his or her death, benefits will not be paid to your new Spouse after you die.
If you have elected the pop-up feature, and your Beneficiary dies before you do, the joint and survivor annuity benefit will be cancelled and your monthly benefit will be restored to the single life annuity amount.
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Who is Your Beneficiary? If you have a Spouse, your Spouse is automatically your Beneficiary, unless you elect another Beneficiary in writing with your Spouse’s written and notarized consent. If you cannot locate your Spouse to obtain his or her written consent (if, for example, you are separated from and don’t know the whereabouts of your Spouse), you may be able to sign an affidavit attesting to this fact in order to receive a single life annuity or designate another Beneficiary. If you do not have a Spouse, you may elect a Joint and Survivor Annuity option, naming any one living Beneficiary you choose. Your domestic partner is not your Spouse, but you can elect your domestic partner as your Beneficiary. In addition, you may name one contingent Beneficiary to receive benefits if your primary Beneficiary dies before you. Special rules may apply if your Beneficiary is substantially younger than you. It is important to keep your Beneficiary Form up to date.
Reduction Factors for Joint and Survivor Annuity Forms of Payment If you elect or receive a form of payment other than a single life annuity, the amount of your benefit will be actuarially adjusted to reflect the cost of providing the alternate form of payment. The chart on page 25 helps you determine the adjustment for an election of a Joint and Survivor Annuity (50%, 75%, or 100%), as compared to the benefit as a single life annuity. To use the chart, first, select your joint and survivor annuity percentage and whether a pop–up feature is desired. Next, select the appropriate rows for (1) whether you are age 65 or older or younger than 65, and (2) whether your beneficiary is older or younger than you. Follow all rows all the way across, taking into account all applicable increases and decreases. Finally, add up your total reduction. An example of these provisions is provided in the text below the chart.
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Adjustment Factors for Optional Forms of Payment
Reductions to Single Life Annuity Increases to Single Life Annuity Amount Amount
J/S Option 50% 75% 100% 50% 75% 100% Without Survivor Survivor Survivor Survivor Survivor Survivor Pop-Up Annuity Annuity Annuity Annuity Annuity Annuity
You are 9% 12.5% 16% .3% for .4% for .5% for Under Age every year every year every year 65 you are you are you are under age under age under age 65 65 65
OR You are 9% + .3% for 12.5% + 16% + .5% Age 65 or every year .4% for for every Over you are over every year year you age 65 you are are over over age age 65 65
AND You are .3% for each .4% for .5% for Older than year you are each year each year your older than you are you are Beneficiary your older than older than Beneficiary your your Beneficiary Beneficiary
OR You are .3% for .4% for .5% for Younger each year each year each year than your you are you are you are Beneficiary younger younger younger than your than your than your Beneficiary Beneficiary Beneficiary
AND With Pop- 1% 1.5% 2% Up (Optional)
Total
The example below helps to clarify how these joint and survivor annuity reduction factors work.
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Example
Carl retires and his accrued annual pension benefit is $18,000 (paid in monthly installments as a single life annuity). Since Carl has a Spouse, his normal form of payment is the 50% joint and survivor annuity option without the pop-up feature. Let’s assume Carl is age 65 and his Spouse is age 60 on his annuity starting date. After applying the joint and survivor reduction factors, his annual pension benefit would be $16,110 with a 50% joint and survivor annuity and $14,670 with a 100% joint and survivor annuity:
50% J&S 100% J&S J&S reduction factor 9.0% 16% Further reduction due to Spousal 1.5% (0.3% for each year 2.5% (0.5% for each age difference a Spouse is younger) year a Spouse is younger) Carl’s total annual pension 10.5% or $1,890* 18.5% or $3,330** reduction
*($18,000 x 10.5% = $1,890; $18,000 - $1,890 = $16,110, or $1,342.50 per month)
** ($18,000 X 18.5% = $3,330; $18,000 - $3,330 = $14,670 or $1,222.50 per month)
If Carl elects the 50% joint and survivor annuity, and he dies before his Spouse, she will receive an annual pension of $8,055 ($16,110 x 50%). If Carl’s Spouse dies before he does, Carl will continue to receive the reduced annual benefit of $16,110 for the rest of his life. If Carl remarries, his new Spouse will not be eligible for survivor benefits if Carl dies before she does.
If Carl elects the 100% joint and survivor annuity, he will receive an annual benefit of $14,670, which would be paid in monthly installments of $1,222.50 to Carl until his death and then to his Spouse until her death.
The Single Life Annuity Option
This option provides a monthly benefit as long as you live. Payments stop when you die. This option does not pay any survivor benefits. As a result, it is not reduced by any form of payment factors. If you have a Spouse, you and your Spouse must jointly waive the 50% joint and survivor annuity in order to elect this option.
The Ten-Year Certain and Life Annuity Option
This option pays you a reduced monthly benefit for life. If you die within 10 years from your benefit starting date, the Beneficiary you select continues to receive the same monthly benefit for the balance of the 10-year period. If your Beneficiary dies before you have received payments for the 10-year period, you may appoint another
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Beneficiary to receive the remaining payments. If your Beneficiary dies after you die and before the end of the 10 years, benefits will continue to be paid to your designated contingent Beneficiary or your estate. If you live longer than 10 years, your benefits will continue to be paid to you only as long as you live; no payments will be made to a Beneficiary or your estate after your death.
If you elect this option, your single life annuity benefit would be reduced by 7%. Your benefit would be further reduced by 0.6% for each year you are older than age 65 on your annuity starting date. Alternatively, your benefit would be increased 0.6% for each year you are younger than 65 on your annuity starting date, subject to a maximum reduction of 10% and a minimum reduction of 1%.
Note: You may not elect this option if you first become a participant in the Plan on or after March 1, 2007 or, if you were a participant in the Plan before March 1, 2007, you did not have an accrued benefit under the Plan as of March 1, 2007. If you have a Spouse, you and your Spouse must jointly waive the 50% joint and survivor annuity in order to elect this option.
The Social Security Level Income Benefit Option
The purpose of this option is to provide you with a level income from the combination of your BMW pension and Social Security throughout your retirement. If you have a Spouse, you and your Spouse must jointly waive the 50% joint and survivor annuity in order to elect this option. There are no survivor benefits under this payment option. When you retire before age 62, your monthly retirement benefit payments from this Plan will be increased by a percentage of your estimated Social Security benefit. The amount of this percentage will depend on your age at retirement. Once you are eligible to receive Social Security benefits at age 62, the monthly pension benefit you receive will be reduced by the amount of your estimated Social Security benefit. This creates a level income throughout your retirement.
Lump Sum Distributions
Mandatory Lump Sum Distribution
Your benefit will automatically be distributed in a lump sum if the lump sum present value of your benefit is $5,000 or less when you terminate employment, or on any annual valuation date chosen by the Committee after your termination. If you do not make any election regarding direct rollovers within the 30-day election period, including an election to receive your benefit (minus mandatory 20% federal tax withholding) in cash, and the lump sum present value of your benefit is more than $1,000, then your entire distribution will be directly rolled over to a traditional IRA established in your name by the Pension Committee. That IRA will initially be invested in an investment that is designed to preserve principal, while providing a reasonable rate of return and the ability to access the funds in the IRA. Any fees imposed by the investment company
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upon the IRA will be payable from the funds in the IRA. Neither the Plan nor BMW will be responsible for paying any IRA fees. If you have questions regarding the required direct rollover of automatic cashouts, please contact the Plan Administrator. If the lump sum present value of your benefit is $1,000 or less, it will be automatically paid to you in cash (minus mandatory 20% federal tax withholding), unless you elect a direct rollover within the 30-day election period. Please consult your tax advisor to determine what impact, if any, any such distribution may have on your tax situation.
Voluntary Lump Sum Distribution (under $25,000)
You may also choose a lump sum payment if the present value of your benefit is greater than $5,000 and less than $25,000; however, you must have your Spouse’s notarized consent if you have a Spouse and wish to elect to receive this lump sum. Alternate payees and death beneficiaries entitled to a benefit present value of greater than $5,000 and less than $25,000 also may elect to receive this lump sum. Please consult your tax advisor to determine what impact, if any, any such distribution may have on your tax situation.
Limited-Time Voluntary Lump Sum Distribution ($25,000 or more)
For a limited time, certain participants may also choose a lump sum payment even if the present value of their benefit is $25,000 or more. This option is available only to participants who terminate employment with BMW between November 30, 2012 and December 31, 2017 with a benefit present value of $25,000 or more, and who elect to receive a lump sum distribution within six (6) months after termination of employment. You must have your Spouse’s timely, notarized consent if you have a Spouse and wish to elect to receive this lump sum. Please consult your tax advisor to determine what impact, if any, any such distribution may have on your tax situation. Certain alternate payees and death beneficiaries with a benefit present value of $25,000 or more also may elect this lump sum, but only if the associated participant terminates employment (or dies) between November 30, 2012 and December 31, 2017 and the lump sum is elected within six (6) months of the participant’s termination or death, as applicable. Please contact HR if you have questions regarding eligibility for, or calculation of, this limited-time lump sum distribution option.
Voluntary and Limited-Time Lump Sum Payments
NOTE: If you elect to receive a voluntary or limited-time lump sum payment, you (or your surviving Spouse or your former Spouse who is the alternate payee under a QDRO, if eligible for such a lump sum distribution) may choose to have all or part of that distribution directly rolled over to an “eligible retirement plan”, which includes an individual retirement account or annuity, a Roth IRA, or to the eligible retirement plan or annuity contract of another employer in which you participate, if that plan accepts rollovers. Your nonspouse designated Beneficiary may elect to have all or part of a lump sum distribution directly rolled over to an inherited IRA but not to another employer’s plan. An inherited IRA is an IRA that is set up to indicate that the funds in it belong to the Beneficiary of an individual who has died. Contact HR for more details about direct rollovers.
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Applying for Your Pension Benefits
You should notify HR at least 90 days before the date on which you plan to retire, to allow time for choosing your method of payment and submitting your pension application, as shown in the pension timetable below. The Plan does not allow for retroactive annuity starting dates. You may change or revoke any application or election at any time before the date your pension begins. Keep in mind, though, that changing your election close to your retirement date could delay your first pension payment. Generally, the law requires that there be at least 30 days between the date on which you receive information about your benefit options and the date on which your pension payments begin. However, you may waive the standard 30-day waiting period with your Spouse’s consent, if applicable, and receive your pension 8 days after you receive information about your options, or whenever administratively feasible. If you have not made your election within 180 days of receiving information about your benefit options, you will be required to obtain new information about your benefit options and start the application process over again. For more details, contact HR.
Pension Application Timetable
What You Must Do: Your Timeframe: Send a written request to HR with an approximate date Between 3 and 6 of your retirement in order to receive a pension months before application. your anticipated retirement date. Request sample benefit calculations from HR for the Within 30 days of forms of payment you are considering. receiving your pension application. Submit pension application to HR At least 30 days If you have a Spouse, you will need to include: before your anticipated retirement date. Your original* marriage certificate, and Your and your Spouse’s original* birth certificates, or A notarized consent signed by you and your Spouse if you decide to waive the joint and survivor annuity option, or elect a Beneficiary other than your Spouse QDRO, if applicable If you do not have a Spouse, you will need to include: Your original* birth certificate, and Your Beneficiary’s original* birth certificate, if you elect an option that provides survivor benefits. QDRO, if applicable *Original certificates will be returned to you.
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Deciding Which Option to Elect
You may wish to consult a financial advisor for input on which form of payment to select. If you do not elect an optional form of payment before your required beginning date (April 1 of the calendar year following the calendar year in which you turn age 70 1/2 or terminate employment), your benefit will automatically be paid as: A 50% Joint and Survivor Annuity with your Spouse as your Beneficiary if you have a Spouse on the date your payments begin. A Single Life Annuity, if you do not have a Spouse on the date your payments begin.
Select Your Payment Option Carefully! Once your pension payments start, you cannot change the way you receive benefits, even upon a later marriage or divorce. It is a good idea to seek advice from a trusted financial advisor on which option to elect.
Special Provisions That Apply if the Plan Becomes Underfunded
Each year you will receive a notice that shows the funding level of the Plan as a percentage determined by comparing the total Plan assets to the total Plan benefits earned by participants. If the funding percentage falls below 80%, restrictions on Plan benefits may apply. Restrictions that may apply are: (i) restrictions on forms of benefit payment (e.g., the voluntary or limited-time lump sum), (ii) restrictions on benefits associated with certain events (such as a plant closure), (iii) delaying benefit improvements, and (iv) a freeze on benefit accruals until permitted by law to resume.
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Administrative Information
Plan Sponsor and Plan Administrator
BMW of North America, LLC is the Plan Sponsor for this Plan. The Plan Sponsor has delegated authority and responsibility for Plan administration to the Pension Committee. To contact this committee at its mailing address, write to: BMW Pension Plan Committee BMW of North America, LLC P.O. Box 1227 Westwood, NJ 07675
The Pension Committee is the “Plan Administrator” (as that term is defined by ERISA) of the Plan and has authority to amend the Plan. This committee oversees and delegates responsibility for the preparation of Plan documents, Summary Plan Descriptions, Summary Annual Reports, and the filing of annual reports of the Plan.
Plan assets are held and administered by the Plan Trustee, J.P. Morgan Chase.
Plan Identification Numbers
The Internal Revenue Service (IRS) identifies each employee benefit plan by two numbers: (1) Plan number, which BMW has assigned as 001 to the Plan; and (2) Plan Sponsor’s Employer Identification Number (EIN), which is assigned by the IRS. BMW of North America, LLC’s EIN is 22-2139469.
The Plan Administrator's EIN is 20-0257368.
Plan Funding
The Plan is funded by BMW from its general assets. The contributions to the Plan are actuarially determined and are held in a trust that is managed and administered by the Plan Trustee, J.P. Morgan Chase. Contributions to the Plan are conditioned upon their tax deductibility. The chart starting on the following page provides a fast reference for administrative information about the Plan.
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Summary of Important Administrative Information
Legal Name of the Plan BMW Pension Plan Plan Number 001 Employer Identification Number 22-2139469 Plan Type Defined Benefit Pension Plan Plan Year January 1 to December 31 Plan Sponsor BMW of North America, LLC 300 Chestnut Ridge Road Woodcliff Lake, NJ 07677 201-307-4000 Mailing Address: P.O. Box 1227 Westwood, NJ 07675 Plan Administrator BMW Pension Plan Committee BMW of North America, LLC 300 Chestnut Ridge Road Woodcliff Lake, NJ 07677 201-307-4000 Mailing Address: P.O. Box 1227 Westwood, NJ 07675 Agent for Service of Plan Administrator or Plan Trustee Legal Process Plan Trustee and J.P. Morgan Chase NA Investment Manager 1 Chase Manhattan Plaza Floor 19 New York, NY 10005-1401 Participating Employers BMW of North America, LLC (including Husqvarna Motorcycles NA, LLC)* 300 Chestnut Ridge Road Woodcliff Lake, NJ 07677 BMW Financial Services NA, LLC (including BMW Bank of North America) 5550 Britton Parkway Hilliard, OH 43026 Designworks/USA Inc. 2201 Corporate Center Drive Newbury Park, CA 93120-1421
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BMW Manufacturing Co., LLC 1400 Highway 101 South Greer, SC 29651
Rolls-Royce Motor Cars NA, LLC* 300 Chestnut Ridge Road Woodcliff Lake, NJ 07677 BMW US Capital, LLC* 300 Chestnut Ridge Road Woodcliff Lake, NJ 07677 *The mailing address is: P.O. Box 1227 Westwood, NJ 07675 A complete list of the employers and employee organizations sponsoring the Plan may be obtained by participants and/or beneficiaries upon written request to the Plan Administrator and is available for examination by participants and/or beneficiaries. Collective Bargaining Agreements The Plan is maintained pursuant to one or more collective bargaining agreements. A copy of any such agreement may be obtained, at no charge, by participants and/or beneficiaries upon written request to the Plan Administrator, and is available for examination by participants and/or beneficiaries.
Plan Continuation
BMW intends to continue maintaining the benefit plan described in this booklet. However, the Boards of Directors of BMW of North America, LLC, BMW Manufacturing Co., LLC, and BMW Financial Services NA, LLC reserve the right to terminate or change the Plan at any time without advance notice. Each participating subsidiary also reserves the right to end its participation in the Plan at any time without advance notice.
Any Plan change or termination will affect your future benefits only. In other words, if the Plan is changed or terminated, you will not lose benefits that you had accrued before the date of the change or termination. However, any Plan benefits for which you might be eligible in the future may be increased, decreased, or terminated.
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Official Plan Documents Determine Benefits
This summary is based on the official Plan documents. All benefits under the Plan will be determined in accordance with the official Plan documents and any administrative procedures under the Plan. If there is any difference between this summary and the official Plan documents, the official Plan documents and the administrative procedures will be followed. No one can orally change the terms of the Plan.
Plan Participation Doesn’t Guarantee Employment
Nothing in this booklet says or implies that participation in the Plan is a guarantee of continued employment with BMW or its affiliated companies.
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Benefit Claims and Appeals Procedure
How to File a Claim
You or your representative (the “Claimant”) must file a claim for benefits under the Plan with the Pension Committee on forms supplied by the Pension Committee. The Pension Committee will, within 90 days after the receipt of the claim, send written notification to the Claimant as to its decision, unless special circumstances require an extension of time for processing the claim. If such an extension is required, written notice of the extension will be furnished to the Claimant prior to the termination of the initial 90-day period. The extension notice will include the reason for the delay and the date by which the Pension Committee expects to make a decision, which may not exceed 180 days from the Pension Committee’s receipt of the claim.
Denial of Benefits
In the event that the claim is wholly or partially denied, the written notice will include the specific reason(s) for the denial, references to the relevant Plan provisions on which the denial is based, a description of any additional material needed to complete the claim and an explanation as to why that information is needed, if applicable, an explanation of the Plan’s claims review procedure and time limits for appealing the denial, and a statement explaining the Claimant’s right to bring a court action under Section 502 of ERISA in the event that the claim is denied upon appeal.
Appeal of Denial
If the Claimant’s application is denied, he or she has the right to appeal by making a request for a review or hearing by the Pension Committee of the decision denying the claim. This appeal must be in writing to the Pension Committee (at the address listed in this summary plan description) and must be received by the Pension Committee within 60 days after the Pension Committee’s denial notice was received. If the appeal is not requested within this 60-day period, no further review by the Plan or a court is available.
In connection with the appeal, the Claimant:
has the right to submit written comments, documents, records, and other information relating to the claim for benefits; and
will be provided, upon request and free of charge, reasonable access to and copies of all documents, records, and other information that is relevant to the claim for benefits.
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Review on Appeal
The Pension Committee’s review will take into account all comments, documents, records, and other information submitted by the Claimant, without regard to whether that information was submitted or considered in connection with the initial claims determination by the Pension Committee. The Pension Committee will review the appeal and will submit its decision within 60 days after it receives the Claimant’s written request for appeal. If special circumstances require an extension of time, for example, if the Pension Committee decides to hold a written or oral hearing, the Pension Committee will make a decision within 120 days after receiving the written appeal. If an extension is required, the Claimant will be sent a notice of extension within 60 days after the Pension Committee receives the written appeal.
Written notice of the Pension Committee’s decision will be provided and will contain specific reasons for the decision and specific references to the relevant Plan provisions on which the decision is based. In addition, if the denial of benefits is affirmed on appeal, the notice will contain:
a statement that the Claimant is entitled to receive, upon request, and free of charge, reasonable access to, and copies of all, documents, records, and other information that is relevant to the claim for benefits, and
a statement of the Claimant’s right to bring an action in court under Section 502 of ERISA to challenge the Pension Committee’s decision.
For purposes of these benefit claims and appeals procedures, information is considered to be “relevant” to a Claimant’s claim if such document, record, or other information:
was relied upon in making the benefit determination;
was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record, or other information was relied upon in making the determination; or
demonstrates compliance with the Plan’s review procedures and that, if appropriate, the Plan provisions have been applied consistently with respect to similarly-situated Claimants.
Any court action regarding a claim denial must be brought within one year of receipt of the Pension Committee’s denial of an appeal of an initial claim denial.
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Statements Required by Government Regulations
Regulations of the U.S. government require that this summary plan description include the two statements which appear below. Both statements were drafted by the U.S. government and both are reproduced here with quotation marks, except that certain portions not applicable to the Plan have been deleted. Neither BMW nor the Plan Administrator can take any responsibility whatsoever for the accuracy or completeness of any assertion in either statement. These statements are made to you by the federal government, not by the Plan Administrator or BMW.
I.
Certain benefits under the Plan are insured under Title IV of the Employee Retirement Income Security Act of 1974 (“ERISA”). The statement below concerns the rights under Title IV:
“Your pension benefits under this plan are insured by the Pension Benefit Guaranty Corporation (PBGC), a federal insurance agency. If the plan terminates (ends) without enough money to pay all benefits, the PBGC will step in to pay pension benefits. Most people receive all of the pension benefits they would have received under their plan, but some people may lose certain benefits.
The PBGC guarantee generally covers: (1) normal and early retirement benefits; (2) disability benefits if you become disabled before the plan terminates; and (3) certain benefits for your survivors.
The PBGC guarantee generally does not cover: (1) benefits greater than the maximum guaranteed amount set by law for the year in which the plan terminates; (2) some or all of benefit increases and new benefits based on plan provisions that have been in place for fewer than 5 years at the time the plan terminates; (3) benefits that are not vested because you have not worked long enough for the company; (4) benefits for which you have not met all of the requirements at the time the plan terminates; (5) certain early retirement payments (such as supplemental benefits that stop when you become eligible for Social Security) that result in an early retirement monthly benefit greater than your monthly benefit at the plan’s normal retirement age; and (6) non-pension benefits, such as health insurance, life insurance, certain death benefits, vacation pay, and severance pay.
Even if certain of your benefits are not guaranteed, you still may receive some of those benefits from the PBGC depending on how much money your plan has and on how much the PBGC collects from employers.
For more information about the PBGC and the benefits it guarantees, ask your plan administrator or contact the PBGC’s Technical Assistance Division, 1200 K Street N.W., Suite 930, Washington, D.C. 20005-4026 or call 202-326-4000 (not a toll-free number). TTY/TDD users may call the federal relay service toll-free at 1-800-877-8339 and ask to
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be connected to 202-326-4000. Additional information about the PBGC’s pension insurance program is available through the PBGC’s website on the Internet at http://www.pbgc.gov.”
II.
The following statement concerns additional rights under ERISA not involving the PBGC:
“As a participant in the BMW Pension 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 participants shall be entitled to:
Receive Information About Your Plan and Benefits
Examine, without charge, at the plan administrator’s office and at other specified locations, such as worksites and union halls, all documents governing the plan, including insurance contracts and collective bargaining agreements, 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, and copies of the latest annual report (Form 5500 Series) and updated summary plan description. The 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 participant with a copy of this summary annual report.
Obtain a statement telling you whether you have a right to receive a pension at normal retirement age (age 65) and if so, what your benefits would be at normal retirement age if you stop working under the plan now. If you do not have a right to a pension, the statement will tell you how many more years you have to work to get a right to a pension. This statement must be requested in writing and is not required to be given more than once every twelve (12) months. The plan must provide this statement free of charge.
Prudent Actions By Plan Fiduciaries
In addition to creating rights for plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your plan, called “fiduciaries” of the plan, have a duty to act prudently and in the interest of you and other Plan participants and beneficiaries. No one, including your employer, your union, or any other person, may fire you or otherwise discriminate
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against you in any way to prevent you from obtaining a pension benefit or exercising your rights under ERISA.
Enforce Your Rights
If your claim for a pension benefit 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.
Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of plan documents or the latest annual report from the plan and do not receive them within 30 days, you may file suit in a 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 administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court.
In addition, if you disagree with the plan’s decision or lack thereof concerning the qualified status of a domestic relations order, you may file suit in Federal court.
If it should happen that plan fiduciaries misuse the plan’s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court. 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 it finds your claim is frivolous.
Assistance with Your Questions
If you have any questions about your plan, you should contact the plan administrator. If you have any questions about this statement or 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.”
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Glossary
Unless otherwise indicated, capitalized words in this summary plan description have the following meanings:
Beneficiary means your Spouse, if you are legally married (unless you elect another beneficiary in writing with your Spouse’s notarized consent). If you are single, you may elect any beneficiary you choose. You may also elect one contingent beneficiary in the event that your primary beneficiary dies before you.
BMW means BMW of North America, LLC and any affiliated BMW companies that participate in the Plan, as indicated on page 3.
Break in Service occurs when you are not employed by BMW or any other affiliates under the Plan for 12 continuous months.
Earnings means your annual base salary for services performed while an eligible employee. For most employees, Earnings do not include bonuses, overtime, commissions, shift differentials, and any other type of extra compensation. If you are a non-exempt hourly employee who works in shifts, your Earnings will include overtime hours required in order for you to reach 160 hours in a four week period. Please contact the Plan Administrator if you are such an employee and you have any questions regarding how your Earnings will be calculated.
Expatriate means an employee of a foreign business entity that is related to BMW who is performing work on behalf of BMW under a Limited Duration Contract that provides for a return to work on behalf of the foreign business entity (or another foreign business entity) after a definite term of employment on behalf of BMW.
Final Average Five-Year Earnings means the sum of your Earnings during the 60-consecutive month period during which you had your highest total Earnings, divided by five.
Pension Service means the time during which you accrue benefits under the Plan. Once you are a participant in the Plan, your years of Pension Service accrue from your date of hire. For each complete year you work for BMW as an eligible employee, you gain a year of Pension Service. Partial years of Pension Service are credited for full calendar months totaling less than twelve. The Plan takes into account up to 30 years of Pension Service when determining your pension benefit, as shown under the heading “How Your Pension Plan Benefit is Calculated.” If you were not an eligible employee on March 1, 2012, you will not earn any Pension Service for periods of service on or after March 1, 2012.
Pension Committee means the BMW Pension Plan Committee.
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Plan means the BMW Pension Plan, as amended and restated January 1, 2009, and as subsequently amended.
Plan Administrator means the Pension Committee.
QDRO means a qualified domestic relations order, as defined in Section 414(p) of the Internal Revenue Code of 1986, as amended, and 206(d) of the Employee Retirement Income Security Act of 1974, as amended.
Social Security Wage Base or SSWB means the amount of your Earnings on which you and BMW pay Social Security tax each year. The SSWB is a figure that is widely known and published annually by the Social Security Administration.
Spouse means your legal spouse as determined under state law and consistent with the federal Defense of Marriage Act, which defines a spouse as “a person of the opposite sex who is a husband or wife”. In addition, the term Spouse includes a former Spouse to the extent recognized under a Qualified Domestic Relations Order.
Vesting Service means all of your years of service with BMW from your date of hire and includes your service as an employee of any BMW company or affiliate, whether or not as an eligible employee. Service as a BMW employee on and after March 1, 2012, will count for Vesting Service for any prior benefit earned even if you are not currently an eligible employee.
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Retirement Eligibility Chart (can only qualify for one pension; also use for death benefit eligibility)
Type of Age at Years of Pension Timing and Forms of Retirement Termination Vesting Eligibility Payment (all retirements are of Service at (does not (does not consider limited-time effective as of the Employment Termination of consider form of lump sum distribution option – see first of month on (or Death for Employment payment page 28)*** or after meeting Death Benefits reductions and eligibility Payable to immediate cash requirements) Beneficiary) out for $5,000 or less lump sum)** Normal 65 Any Unreduced Full range of payment options available first of any month on or after normal retirement date. Early (60/5) 60 or older but 5 or more Unreduced Full range of payment options not 65 available first of any month on or after early retirement date. Early (55/10) 55 or older but 10 or more Unreduced if Full range of payment options not 60 defer to 60; available first of any month on reduced from or after early retirement date. age 60 for earlier commencement Early 55 or older but Enough so that Unreduced Full range of payment options (Grandfathered not 60 and in age at available first of any month on Rule of 80) grandfathered termination plus or after early retirement date. group service equal at least 80 (age and service both expressed in whole years and any fractional years in whole months)****
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Type of Age at Years of Pension Timing and Forms of Retirement Termination Vesting Eligibility Payment (all retirements are of Service at (does not (does not consider limited-time effective as of the Employment Termination of consider form of lump sum distribution option – see first of month on (or Death for Employment payment page 28)*** or after meeting Death Benefits reductions and eligibility Payable to immediate cash requirements) Beneficiary) out for $5,000 or less lump sum)** Terminated Any age before 10 or more Unreduced if Full range of payment options Vested 55 defer to 65 available.
Reduced from Limited payment options (lump age 65 for sum, and 50% and 75% J&S earlier with spouse only and no pop-up commencement if married, life annuity if not at any age even married) if commence prior to if before 55 age 55 and benefit present value is greater than $5,000 but less than $25,000. Full range of payment options are available if (i) commence payments the first of any month on or after age 55 or (ii) benefit present value is greater than or equal to $25,000 (except that voluntary lump sum option is not available). Terminated Any age before 5 or more but Unreduced if Full range of payment options Vested 60 less than 10 defer to 65 available. Reduced from Limited payment options (lump age 65 for sum, and 50% and 75% J&S earlier with spouse only and no pop-up commencement if married, life annuity if not at any age even married) if commence prior to if before 60 age 60 and benefit present value is greater than $5,000 but less than $25,000. Full range of payment options are available if (i) commence payments the first of any month on or after age 60 or (ii) commence payment first of any month prior to age 60 and benefit present value is greater than or equal to $25,000 (except that voluntary lump sum option is not available). Not Vested Any age before Less than 5 Forfeit benefit N/A 65 As of December 1, 2012
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Spousal beneficiaries can elect to defer payment of death benefits until the Member would have reached normal retirement age. Non-spouse beneficiaries cannot defer payment of benefits and must commence benefits as of the earliest retirement age of the Member. Required minimum distribution rules require that non-spouse beneficiaries begin payment of benefits no later than December 31 of the year following the year of the Member’s death.
** Lump sum only if benefit present value is $5,000 or less. If benefit present value is greater than $1,000 but less than $5,000, lump sum is transferred to a Pension Committee-selected IRA if Member does not elect lump sum distribution in cash. If benefit present value is less than $1,000, lump sum is paid in cash unless the Member elects otherwise.
*** Members who terminate from employment with BMW on or after November 30, 2012 and before December 31, 2017 are eligible to elect a limited-time lump sum distribution if: (i) the lump sum present value of the benefit is at least $25,000; and (ii) the Member elects to receive the lump sum within six (6) months after termination of employment. Members who are eligible for the limited-time lump sum distribution remain eligible for all other form of payment options (except the voluntary lump sum for distributions under $25,000).
**** Members who earn at least one Hour of Service as an Employee in a month earn Pension Service credit for the entire month. A Member’s age is calculated in years and whole months beginning with the first day of the month coinciding with or next following the Member’s birthday.
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