Co-op Retirement Plan

We are writing to describe a change in the way Co-op Retirement Plan employer contributions will be charged with respect to a highly paid employee who elects to receive an in-service distribution and experiences a decrease in compensation as additional benefits accrue. Under the Plan�s prior rules, there could have been a dramatic disparity between the value of additional benefit accruals and the reduced contributions that would have been made as those benefits accrued. And as a result, all other employers would have subsidized the marginal accrued benefit costs triggered by such an arrangement. The Plan has been amended to address that concern. At the end of this document, we will also briefly reference a new method for calculating unmarried participants� death benefits.

Further Explanation of Disparity

When an actively employed participant elects to receive an in-service pension benefit, he or she accrues an additional benefit so long as he or she is credited with additional Creditable Service. For the purpose of calculating those additional accruals, the additional Service generally continues to be multiplied by the participant�s �Final Average Wage Base� (the average of the high four of the last 10 annual Wage Bases). Thus, if a participant�s compensation were to stay level or increase after an in-service pension had begun, the employer and employee would continue to make contributions that are roughly in line with the compensation used to calculate additional accruals. If the participant�s compensation were to decrease, however, the contributions might fall woefully short. Why is that? Because additional accruals would be calculated as if compensation had remained at a higher level than the compensation actually used to calculate contributions (which would be calculated as a percentage of current compensation).

New Contribution Calculation Method

To address that concern, the Plan has been amended to apply a different calculation method if the following conditions exist:

(1) A participant�s Final Average Wage Base, multiplied by 12, exceeds the �highly compensated employee� (�HCE�) threshold for the calendar year in which an in-service pension begins. This is a one-time consideration when the in-service pension begins; if this annualized Final Average Wage Base exceeds the HCE threshold then in effect, the new method applies for all years in which the participant receives additional Creditable Service. The HCE threshold is $110,000 in each of 2009 and 2010, and subject to increase by the IRS in future years.

(2) The participant�s compensation for the calendar year, when divided by the number of months of Creditable Service received in the calendar year, is less than the Final Average Wage Base on which the in-service pension is based. This essentially examines whether the participant�s monthly compensation fell below the monthly compensation used to calculate the additional benefit accruals.

We will wait until the end of a calendar year to determine whether the new method will result in an additional contribution for the calendar year just ended. Thus, for all participants, employer and employee contributions will continue to be made as a percentage of current compensation, as usual, throughout the entire calendar year. If, after the conclusion of a calendar year, it is determined that the new method also applies, the employer will make an additional contribution equal to the:

In other words, the additional contribution will be roughly equal to the additional amount that would have been paid during the calendar year if compensation had simply continued at the level used to calculate the in-service pension benefit payments. United Benefits Group will calculate any additional contribution and invoice the employer, which will have a 30-day period to make the contribution in one lump sum. The employee will not be responsible for any portion of the contribution. This process will first occur in early 2011, following the review of 2010 calendar year compensation and Service.

Please consider three important points in closing. First, this new method does not seek to collect contributions to pay for additional accruals on a dollar-for-dollar basis. It simply strives to protect the Plan�s over 400 employers from the marginal disparity arising in a fairly unique situation. Second, it generally applies only in the case of HCEs, who are in the best position to (a) structure a continuing employment relationship that would implicate the Plan funding concern identified above and (b) cost other employers a significant amount of money by doing so. Third, additional benefits may be accrued only by a participant who remains an �employee� of a participating employer. Absent special circumstances, we would typically expect an individual to be considered an �employee� (or not an �employee�) in the same manner for all of an employer�s benefit programs. That is, we would not expect an individual to be an �employee� under the Co-op Plan�s terms but not an �employee� under a 401(k) Plan or health plan�s terms (though those other plans� terms might exclude some �employees� in various situations).

We understand that, for budgeting purposes, you might want to discuss how this new method might apply to specific employees of your organization. If that is the case, or if you have any other questions regarding this notice, please call Keith Vickers at United Benefits Group.

We also want to briefly mention that the Plan has been amended to address some of the inequity previously present with respect to preretirement death benefits. The surviving spouse of a vested participant is generally entitled to a lifetime stream of payments in the event the participant dies prior to retirement. Beneficiaries of unmarried participants, however, had been entitled only to a lump sum distribution of the participant�s contributions and interest thereon. Pursuant to a Plan amendment adopted May 28, 2010, beneficiaries of unmarried vested participants will now be entitled to receive generally the guaranteed monthly payments the participant would have received had he or she elected to receive a Ten-years Guaranteed benefit (a straight life annuity with 120 guaranteed payments). Your employees will be receiving a Summary of Material Modifications that describes this new benefit in much greater detail, but we wanted to let you know that there will no longer be the same disparity between the value of married and unmarried participants� death benefits.