Retirement Program

ARA has a goal of contributing 15% of compensation to your retirement program each year and has met that goal for 19 of the past 21 years - and it averaged 13% in those two years.¹

The ARA Retirement Program consists of three separate pension plans - an Employee Stock Ownership Plan (ESOP), a Money-purchase Pension Plan (MPP), and a 401(k) Profit Sharing Pension Plan (401(k)). In a typical year, ARA contributes 9% of compensation to the ESOP, 5% to the MPP, and 1% to the 401(k). Employees direct the investments for all funds in their name in both the MPP and 401(k) choosing from 24 no-load Vanguard mutual funds. All employees who are at least 18 years old by the close of the fiscal year (September 30) and have worked 1,000 hours are eligible to participate in the ARA Retirement Program for that year.

All three pension plans are IRS tax qualified so taxes are deferred on all contributions and earnings until you take a distribution of the money. The money must remain in the plans as long as you are an ARA employee. When you leave ARA you may roll it over into another qualified plan with no tax consequences or you may leave it until you reach the IRS mandatory distribution age of 70 and one-half. When you do take a distribution, you may take it either in a lump sum or in annual installments. ² You may start the distribution from each plan at different times.

¹The actual amount contributed in any one year depends on the financial performance of the company as determined by the Board of Directors.
²The ESOP installment option is limited to 5 years.

Vesting

In addition to the large annual company contribution to the pension program, ARA has a very generous vesting schedule for employer-contributed funds (employee deferrals into the 401(k) are fully vested upon deferral) Employees become fully vested after just 3 years of service. A year of service for the retirement plan is one in which the employee works at least 1,000 hours and is on the payroll on the last day of the plan year, September 30. The vesting schedule is as follows.

Employee Stock Ownership Plan (ESOP)

The ESOP was established to transfer significant ownership of the company from the founders and principal owners to the employees. ARA makes a contribution into the ESOP each year and the ESOP Trustee uses this money to buy ARA stock in the name of each employee. The contribution has equaled 9% of employee compensation every year since the ESOP was founded in 1993. It now owns more than 40% of ARA, and is the largest shareholder in the company. The ESOP allows you to own a piece of the company and to share in the company's success.

The ARA stock price is determined by an independent appraiser after the close of each fiscal year.

Money-Purchase Pension Plan (MPP)

The Money-purchase Pension Plan is a defined contribution plan with a fixed company contribution that is not dependent upon the company's profitability for the year. The MPP is not a profit-sharing pension plan. The company contribution to the MPP has historically been 5% of compensation. It can only be changed by the Board of Directors for future fiscal years (not the current one).

401(k) Profit Sharing Pension Plan

The ARA 401(k) Profit Sharing Pension Plan permits employees to defer a percentage of their salary on a pre-tax basis with ARA matching a portion of the deferral. ARA matches the first one percent of your deferral on a dollar-for-dollar basis. The maximum allowable deferral is 10% for non-highly compensated employees (compensation less than $85,000 in the prior plan year) and 8% for highly-compensated employees. New employees may defer 10% during their first plan year.

Summary

If you take advantage of the maximum deferral into the 401(k) and the company contributes up to the maximum amount to all plans, you can have up to 25 percent of compensation going into your retirement accounts on a pre-tax basis in a typical year (9% company contribution into the ESOP, 5% company contribution into the MPP, 10% deferral into the 401(k), and a 1% company match).

ARA is an Equal Opportunity Employer

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