401(k) Plan - My Lowe's Life

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You may contribute between1% and 50% of your eligiblecompensation (up to the annual contribution limit set by theInternal Revenue Service) to the Plan on a pretax basis (inwhole percentages only). Unless you decline to enroll or youelect to contribute a different amount, 1% of your eligiblecompensation will be automatically deducted on a pre-tax basisfrom your paycheck and deposited into your Plan account.Further, after automatic enrollment, unless you elect differentinvestment allocations (see “Investments” below), yourcontributions will be initially invested in the Vanguard TargetRetirement Date Fund geared to your expected retirement atage 65. You can redirect these account assets into any of theother Plan investment options at any time.Your eligible compensation is the total of the salary or wages,overtime premium pay, commissions, and bonuses paid to youduring the payroll period. For 2009 and 2010, the InternalRevenue Service has limited your total annual employeecontribution to $16,500.Company Matching ContributionsImmediately upon your participation in the Plan, Lowe’s willbegin matching your contributions based on the percentage ofyour compensation (up to six percent (6%)) you elect tocontribute.• Lowe’s will match at 100% the first three percent (3%) ofyour compensation you contribute• Lowe’s will match at 50% the next two percent (2%) ofyour compensation you contribute• Lowe’s will match at 25% the next one percent (1%) of yourcompensation you contribute• Lowe’s does not match contributions over six percent ofyour compensation.Catch-up ContributionsFor any Plan Year in which you’ll be age 50 or older, you canalso contribute up to an additional $5,500 (as determined by theInternal Revenue Service) in that year.Lowe’s will match your catch-up contributions up to 6%, asnoted above, when your catch-up contributions are aggregatedwith your other contributions (but Lowe’s will not match afteryour aggregate annual contributions exceed $16,500). .You can change your deferral percentage at any time byaccessing the Plan’s web site, accessible through the employeeportal at www.myloweslife.com (My Wealth > Wealth RelatedQuick Links > 401(k) > 401(k) at ADP) or directly atwww.mykplan.com, or by calling 1-877-236-5693. Yourrequested change will be put into effect on the first day of asubsequent payroll period as soon as administratively feasibleafter your change request is processed.For example:If your eligible compensation equals $20,000 and you elect to contribute 6% of your biweekly pay, your contribution each pay periodwould be $46.15. The biweekly Company Matching Contribution would be calculated each pay period as follows:Your Contribution Company Match 100% Company Match 50%on first 3%on next 2%Company Match 25%of next 1%Total Contribution$46.15 $23.08 $7.69 $1.92 $78.84In this example:• You would contribute $46.15 every payday.• Lowe’s would contribute $32.69 every payday.• After one year of 401(k) participation, you would have contributed $1,199.90 to your 401(k) account.• After one year of 401(k) participation, Lowe’s would have contributed $849.94.• In total, $2,049.84 would have been contributed to your 401(k) account, at a cost to you of only $1,199.90!6
401(k) PlanBenefits of Pretax SavingsAn advantage of participating in the Plan is that yourcontributions to the Plan are made on a pretax basis. Thismeans your contributions to the Plan are not considered taxableincome until you take them out of the Plan. Here’s an examplethat compares the effect of saving on a pretax basis versusafter-tax. This example is based on a single employee with asalary of $20,000, claiming one exemption*:6% After-Tax Savings6% 401(k)SavingsBase Pay $20,000 $20,000Before-Tax Savings 0 $1,200Taxable Income $20,000 $18,800Federal Income Tax $1,719 $1,538After-Tax Contribution $1200 0Net Pay $17,081 $17,262* Based on Tax year 2008 tax tables assuming standard deductions, filing single.This example above reflects a 6% employee contribution rate. Savings may varywith future tax rates.In the above example, the participant who makes pretaxcontributions to the Plan pays $181 less in taxes while savingthe same amount of money as a regular saver. Although theparticipant in the example will eventually have to pay taxes onthe money when he receives it, such as at retirement, he may bein a lower tax bracket and be able to take advantage of certainfavorable tax rules. The tax consequences of participating inthe Plan are discussed more fully below.LimitationsThe Internal Revenue Code contains rules limiting thecontributions to your account in the Plan. Applying these rules,the Internal Revenue Service sets contribution limits each year.In 2009 and 2010, the maximum amount you may contributeeach year to your Plan account is $16,500 (unless you qualifyto make catch-up contributions as explained above). The IRSwill adjust this contribution limit in the future to account forincreases in the cost of living. Lowe’s may reduce ordiscontinue your salary reduction elections or return excesspayroll deduction contributions to you if necessary to complywith the IRS limits.Timing of Contributions∗The contributions you make to the Plan are deducted from yourpaycheck on a pretax basis each pay period. The contributionswithheld from your paycheck and the Company Matchingcontribution will normally be transferred to the Plan’s trusteeon the same day that you receive your payroll check.RolloversThe Plan will accept an eligible rollover distribution made tothe Plan on your behalf from: a qualified plan described inSection 401(a) or 403(a) of the Internal Revenue Code,including after-tax employee contributions; an annuity contractdescribed in Section 403(b) of the Internal Revenue Code,excluding after-tax employee contributions; or an eligible planunder Section 457(b) of the Internal Revenue Code that ismaintained by a state, political subdivision of a state, or anyagency or instrumentality of a state or political subdivision of astate. Finally, the Plan will accept a rollover contribution fromyou of the portion of a distribution from an individualretirement account (IRA) or annuity described inSection 408(a) or 408(b) of the Internal Revenue Code that iseligible to be rolled over and would otherwise be includible inyour gross income. After-tax amounts from an IRA anddistributions from Roth IRAs cannot be rolled over into thePlan. Rollover amounts may be deposited into the Plan at anytime, even before you are eligible to start participating. Suchrollover contributions will be maintained in a separate RolloverAccount under the Plan.To deposit a rollover amount into the Plan, you must completea Lowe’s rollover form. The Lowe’s rollover form is availableon the employee portal at www.myloweslife.com (My Home >Lowe’s Forms > Wealth Related) and on the Plan’s web site,accessible through the employee portal atwww.myloweslife.com (My Wealth > Wealth Related QuickLinks > 401(k) > 401(k) at ADP) or directly atwww.mykplan.com. Mail the completed form and rollovercheck (made payable to the Lowe’s 401(k) Plan FBO:“EMPLOYEE NAME & SOCIAL SECURITY NUMBER”),along with a copy of your final distribution statement or theLetter of Determination from the prior plan, to the addressstated on the rollover form. Special note: If the rollover check∗Specific portions of this document, designated with an asterisk (*), constitutepart of a prospectus covering securities that have been registered under theSecurities Act of 19337
Page 8 and 9: is made out directly to you (instea
Page 10 and 11: Distributions from thePlan∗Approx
Page 12 and 13: Hardship Withdrawal request forms a
Page 14 and 15: Benefit Assignment orTransfer∗You
Page 16 and 17: Claims ProcedureIf your claim for b

401(k) Plan - My Lowe's Life

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