Fannie Mae 2013 Annual Report Download - page 202

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“Nonqualified Deferred Compensation,” effective July 1, 2013, Mr. Benson began receiving benefits under our Supplemental
Retirement Savings Plan.
Retirement Savings Plan
The Retirement Savings Plan is a tax-qualified defined contribution plan that includes a 401(k) before-tax feature, a regular
after-tax feature and a Roth after-tax feature. Under the plan, eligible employees may allocate investment balances to a
variety of investment options. Subject to IRS limits for 401(k) plans, we match in cash employee contributions up to 6% of
base salary and eligible incentive compensation, which includes the deferred salary element of our executive compensation
program. Prior to July 1, 2013, for employees who were grandfathered participants in our Retirement Plan we only matched
up to 3% of base salary, and no other compensation. Employees are 100% vested in our matching contributions. Prior to
July 1, 2013, Mr. Benson, as the only named executive who was also a grandfathered employee, received benefits under the
3% matching program, while our other named executives received benefits under the 6% matching program (and did not
participate in the Retirement Plan). Since July 1, 2013, all of our named executives are eligible to receive benefits under the
6% matching program. In addition, as discussed above under “Pension Benefits—Freeze of Benefits under and Termination
of Defined Benefit Pension Plans,” because he satisfies the rule of 65, the company is making additional fully vested
contributions to the Retirement Savings Plan for Mr. Benson equal to 4% of his eligible earnings during the period from
July 1, 2013 through June 2018.
Regardless of employee contributions to this plan, our named executives, as well as other regular employees, receive an
additional 2% contribution from the company based on salary and eligible incentive compensation. For periods prior to
July 1, 2013, this additional 2% contribution was based on base salary only for grandfathered employees. Participants are
fully vested in this 2% contribution after three years of service.
Defined Benefit Pension Plans
Retirement Plan. The Retirement Plan is a tax-qualified defined benefit pension plan. Prior to the freeze on June 30, 2013 of
benefit accruals under, and termination effective December 31, 2013 of, the Retirement Plan, participation in the Retirement
Plan was frozen. After December 31, 2007, newly hired employees were not eligible for the plan and employees who had not
satisfied the rule of 45 did not earn additional benefits under the Retirement Plan after June 30, 2008. Prior to 2007,
participation in the Retirement Plan was generally available to employees. Participants became fully vested in the Retirement
Plan when they completed five years of service. Mr. Benson is the only named executive who participated in the Retirement
Plan.
Under the Retirement Plan, normal retirement benefits are computed on a single life basis using a formula based on final
average annual earnings (which consists of base salary) and years of credited service. For years of service after 1988, the
pension formula is:
• 1 1/2% multiplied by final average annual earnings, plus
• 1/2% multiplied by final average annual earnings over Social Security-covered compensation multiplied by years of
credited service.
A different formula applies for years of service after 35 years. Final average annual earnings are average annual earnings in
the participant’s highest paid 36 consecutive calendar months during the participant’s last 120 calendar months of
employment. Earnings are base salary. Provisions of the Internal Revenue Code of 1986, as amended, limit the amount of
annual compensation that may be used for calculating pension benefits and the annual benefit that may be paid. For 2013, the
statutory compensation cap was $255,000 and the benefit cap was $205,000. As a result of the freeze of benefits under the
Retirement Plan, earnings and service after June 30, 2013 are not taken into account in determining plan benefits. The normal
form of benefit under the Retirement Plan is an annuity providing monthly payments for the life of the participant and a
survivor annuity for the participant’s spouse, if applicable. The normal retirement age under the Retirement Plan is age 65;
however, early retirement under the plan is generally available at age 55. For an employee who retires before age 65, benefit
payments are reduced by stated percentages for each year that the employee’s age is less than 65.
Supplemental Pension Plan and 2003 Supplemental Pension Plan. Prior to the freeze of benefit accruals on June 30, 2013
and termination of the Supplemental Plans effective December 31, 2013, the purpose of the Supplemental Pension Plan was
to provide supplemental retirement benefits using the Retirement Plan formula to employees whose base salary exceeded the
statutory compensation cap applicable to the Retirement Plan or whose benefit under the Retirement Plan was limited by the
statutory benefit cap applicable to the Retirement Plan. The purpose of the Supplemental Pension Plan of 2003 was to
provide additional benefits based on eligible incentive compensation not taken into account under the Retirement Plan or the
Supplemental Pension Plan. Eligible incentive compensation for executive officers includes deferred salary under our current
executive compensation program and other types of incentive compensation paid in prior years under our prior executive