Eligible to Participate in the Halliburton Retirement and Savings Plan
Halliburton Company (the Company) has made saving for retirement under the Halliburton Retirement and Savings Plan (the Plan) easy through its automatic enrollment feature and with the Company matching contributions and Company Basic Contributions that are made on your behalf to the Plan.
Under the Plans current automatic enrollment feature, you will be automatically enrolled and have tax-deferred savings contributions, which are based on a percentage of your eligible pay, deducted from your eligible pay each pay period unless you timely elect to opt out within 30 days as described below.
If you are making tax-deferred savings contributions to the Plan, the Company will make matching contributions to the Plan on your behalf that are based on a percentage of your tax-deferred savings contributions, as described below. The Company also contributes an annual basic retirement contribution on your behalf to the Plan, which is based on a percentage of your eligible pay, if you satisfy certain requirements as described below (the Halliburton Basic Contribution). Halliburton Basic Contributions are made on your behalf to the Plan whether or not you are currently making tax-deferred savings contributions to the Plan.
You can change your tax-deferred savings contribution rate at any time, whether or not you were auto-enrolled, by accessing your account online, by phone or by contacting the Halliburton Benefits Center at any time. Contact information for the Halliburton Benefits Center (both online and via telephone) is provided at the end of this notice.
This notice gives you important information about the Plan rules, the automatic enrollment feature for tax-deferred savings contributions, Company matching contributions and the Company Basic Contribution.
The notice covers these points: Whether the Plans automatic enrollment feature applies to you What amounts will be automatically taken from your pay and contributed to the Plan How eligible pay is defined for Plan purposes What amounts the Company will contribute on your behalf to your Plan account How your Plan account will be invested if you do not actively select an investment option(s) When your Plan account will be vested (the portion of your account that you own and can take with you when you leave the Company), and when you can receive the money from your Plan account How you can change your tax-deferred savings contribution rate and/or elect other investment options for future contributions or your existing account balance How to set up or change your password.
In addition to the information below, you can find out more about the Plan in the legal plan document or the Plans Summary Plan Description (SPD).
1. Does the Plans automatic enrollment feature apply to me? If you are an eligible employee hired on or after J anuary 1, 2009, and you do not make any enrollment elections with respect to the Plan during your first 30 days of employment, you will be automatically enrolled to contribute 4% of your eligible pay per pay period as tax-deferred savings contributions to the Plan. Your automatic tax-deferred savings contributions will begin approximately 30 days after your date of hire and such contributions will continue to be made until you take action to change the contribution rate percentage. Your tax-deferred savings contribution rate will also automatically escalate (or increase) unless you elect otherwise, as described below in Q&A-2.
If you were hired prior to J anuary 1, 2009, and were not auto-enrolled because you made an affirmative election to either make tax-deferred savings contributions or to not make tax-deferred savings contributions to the Plan, your tax-deferred contribution rate will not automatically increase. You can always change your tax-deferred contribution rate by contacting the Halliburton Benefits Center.
- 2 - If you were hired prior to J anuary 1, 2009, and automatically enrolled, your tax-deferred savings contribution rate will automatically increase, as described in Q&A-2.
Automatic enrollment means that money will be automatically deducted from your eligible pay on a tax-deferred basis and contributed to your Plan account. If you do not want to contribute to the Plan or if you want to contribute an amount other than 4% of your eligible pay per pay period, it is very important that you affirmatively take action by contacting the Halliburton Benefits Center. Once payroll deductions have been made into the Plan, they cannot be refunded to you. However, you can change your future tax-deferred savings contribution rate at any time. To change your tax-deferred savings contribution rate or to opt out of contributing to the Plan, you may access your account online or via telephone. Contact information is provided at the end of this notice.
2. If automatic enrollment applies to me and I do nothing, how much will be deducted from my pay and contributed to the Plan? If you are hired on or after J anuary 1, 2009, and if you do not take action to change your contribution rate or opt out of contributing to the Plan within the first 30 days of your employment, 4% of your eligible pay per pay period will be deducted from your eligible pay and contributed as tax-deferred savings contributions to the Plan. These automatic tax- deferred contributions will start approximately 30 days after your hire date and the tax-deferred contribution rate will continue in effect at 4% of your eligible pay per pay period through the end of the year that follows the year in which you were hired. The contribution rate will then increase by 1% each J anuary 1 for the next three years until it reaches 7%. To change your tax-deferred savings contribution rate to opt out of contributing to the Plan, you may access your account online or via telephone. Contact information is provided at the end of this notice.
If you were hired prior to J anuary 1, 2009, and you did not affirmatively make a tax-deferred savings contribution election (or if you were not previously automatically enrolled for some reason), you were automatically enrolled during a special enrollment period in 2009 and 4% of your eligible pay per pay period was automatically deducted from your eligible pay and contributed as tax-deferred savings contributions to the Plan. These automatic tax-deferred savings contributions will continue to be deducted at 4% of your eligible pay per pay period through the end of 2010. Your tax-deferred savings contribution rate will automatically increase by 1% each J anuary 1 for the next three years until it reaches 7% of your eligible pay, unless you affirmatively choose a different tax-deferred savings contribution rate.
3. What are some of the advantages for making tax-deferred savings contributions to the Plan and receiving the Company contributions made on my behalf to the Plan? Your tax-deferred savings contributions to the Plan are deducted from your pay and are not subject to federal, state, or local income tax at that time. The Company contributions made on your behalf to the Plan are also not subject to federal, state or local income tax. Instead, these amounts are contributed to your Plan account and will experience investment gains/losses over time. Your contributions and Company contributions and the earnings, if any, grow tax-free and the money in your Plan account will be subject to federal, state or local income tax only when withdrawn from the Plan. This helpful tax rule is a reason to save for retirement through Plan contributions.
Contributions will be deducted from your eligible pay if you do nothing; however, you are in charge of the amount that you contribute. You may decide to do nothing and become automatically enrolled at 4% of your eligible pay, or you may decide to contribute an amount that better meets your needs. For example, you may want to take advantage of the Companys matching contributions by contributing at least 6% of your eligible pay as tax-deferred savings contributions so that this amount will be matched at the maximum match percentage. To change your tax-deferred savings contribution rate or to opt out of contributing to the Plan, you may access your account online or via telephone. Contact information is provided at the end of this notice.
4. Are there any limits on the amount of contributions that go into the Plan? If you want to contribute more to your Plan account than would be provided automatically, there are limits on the maximum percentage and annual maximum amount. The Plan percentage limit is 50% of your eligible pay per pay period subject to the IRS maximums. For 2014, the tax-deferred savings contribution limit imposed by the IRS is $17,500. In addition, participants attaining age 50 or older during 2014 are permitted to make catch-up contributions of up to $5,500. Therefore, the maximum tax-deferred savings contribution for 2014 is $23,000. For participants making catch-up contributions, the Plan percentage limit is 75% of eligible pay. The annual maximum contribution limit imposed by the IRS for employee and employer contributions is $52,000. These limits are described in the Plan Contributions section of the Plans SPD.
- 3 - 5. What type and amount of pay can be deferred under the Plan? Under the Plan, eligible pay is defined as your base pay, along with any overtime or shift differential earnings received in the course of your employment with the Company, which are required to be reported on your federal income tax withholding statement(s) (Eligible Pay). Eligible pay also includes amounts that would have been paid and includible in your gross income but for an election under sections 125(a), 132(f)(4), 402(e)(3), 402(h)(1)(B), 402(k) or 457(b) of the Internal Revenue Code of 1986, as amended (the Code). In general, these amounts include your contributions under the Plan, the Companys Flexible Benefits Plan or a qualified transportation fringe program. Eligible pay does not include the following types of compensation: (1) bonuses; (2) geographic allowances and foreign service or hardship premiums; (3) reimbursement or other expense allowances; (4) fringe benefits; (5) welfare plan benefits other than paid time-off benefits; (6) moving expenses; (7) Employer contributions to this Plan or any other deferred compensation program; (8) dividends on restricted stock; and (9) certain types of compensation subject to special tax treatment, such as stock options. Eligible Pay for Plan purposes is limited by law to the Code-imposed annual maximum ($260,000 for 2014) and may be contributed only within the percentage and maximum limitations explained in the preceding question.
6. In addition to the contributions deducted from my eligible pay, what amounts will the Company contribute to my Plan account? In addition to the tax-deferred savings contributions deducted from your eligible pay, the Company will make employer contributions to your Plan account. Using an IRS safe harbor contribution formula, the Company will match, on a dollar- for-dollar basis, the first 4% of eligible pay you contribute each pay period as tax-deferred savings contributions. The Company will also match 50 cents for each dollar you contribute between 4% and 6% of your eligible pay each pay period as tax-deferred savings contributions. These safe-harbor matching contributions will be made if you are automatically enrolled or if you choose your own tax-deferred savings contribution rate. For employees hired on or after J anuary 1, 2009, the Companys matching contributions, including investment gains/losses, are subject to a vesting schedule as further described in this notice.
The Companys matching contribution percentage depends on the amount of tax-deferred savings contributions that are deducted from your eligible pay each pay period.
For example: If you earn $2,000 in eligible pay during a pay period and you elect to contribute 6% of your pay, the Company will deduct $120 from your eligible pay for the pay period (that is, 6% x $2,000). The $120 will be put in your Plan account. The Company will also contribute $100 in matching contributions per pay period to your Plan account. In other words, the Company will make a dollar-for-dollar matching contribution on your tax-deferred savings contributions up to 4% of eligible pay (100% of 4% x $2,000, or $80) and a 50 cents per dollar matching contribution on your tax-deferred savings contributions between 4% and 6% of eligible pay (50% of 2% x $2,000, or $20).
If you contribute 3% of your eligible pay per pay period, the Company will deduct $60 from your eligible pay and put it in your Plan account, (3% x $2,000). The Company will also contribute $60 in matching contributions (100% of 3% x $2,000) per pay period to your Plan account.
If you contribute 10% of your eligible pay per pay period, the Company will deduct $200 from your eligible pay and put it in your Plan account (10% x $2,000). The Company will also make $100 in matching contributions (100% of 4% x $2,000, or $80) and a 50 cents per dollar matching contribution on your contributions between 4% and 6% of eligible pay (50% of 2% x $2,000, or $20) per pay period to your Plan account.
If you choose not to contribute to the Plan for a pay period, you will not receive matching contributions for that pay period. Remember, you can always change the amount you contribute to the Plan by changing your tax-deferred savings contribution rate online or via telephone. Contact information is provided at the end of this notice.
In addition to Company matching contributions, the Plan provides for an annual contribution called the Halliburton Basic Contribution. Generally, this Halliburton Basic Contribution will be deposited into your Plan account as soon as possible after J anuary 1 if you are actively employed on December 31 of each year. You will receive the Basic Contribution even if you are not making tax-deferred savings contributions to the Plan. The amount of the Basic Contribution is 4% of your eligible annual pay. If your eligible annual pay is $40,000, the Company will contribute $1,600 to your Plan account (100% of 4% x $40,000). Generally, you must be an active eligible employee on December 31 or on an approved leave of absence to receive the Halliburton Basic Contribution. A Halliburton Basic Contribution will also be made on your behalf to the Plan if you terminate your employment with the Company during the year as a result of death, disability or retirement (as - 4 - defined in the Plan). The Halliburton Basic Contribution, including investment gains/losses, is subject to a vesting schedule as further described in this notice.
7. How will my Plan account be invested? You have the right to direct the investment of your Plan account by selecting from the available investment options offered under the Plan. If you are automatically enrolled and do not choose an investment option(s), or you do not have an investment election on file, your Plan account will automatically be invested in a target date portfolio (Retirement Portfolio) that closely aligns with your date of birth and expected retirement date at age 65 as noted in the table below. If the Halliburton Basic Contribution is made on your behalf to the Plan and you do not have a current investment election on file, these contributions will also automatically be invested in the Retirement Portfolio. The Retirement Portfolios are considered the qualified default investment alternative (QDIA) under the Plan within the meaning of Title 29 of the Code of Federal Regulations, Section 2550.404c-5.
If you were born between Your Target Date Portfolio will be. 1937 or earlier Income Retirement Portfolio 1938 1942 2005 Retirement Portfolio 1943 1947 2010 Retirement Portfolio 1948 1952 2015 Retirement Portfolio 1953 1957 2020 Retirement Portfolio 1958 1962 2025 Retirement Portfolio 1963 1967 2030 Retirement Portfolio 1968 1972 2035 Retirement Portfolio 1973 1977 2040 Retirement Portfolio 1978 1982 2045 Retirement Portfolio 1983 1987 2050 Retirement Portfolio 1988 or later 2055 Retirement Portfolio
The Retirement Date Portfolios characteristics are discussed below. The information set forth below is current as of J une 18, 2013, unless noted otherwise. The latest information for this investment option can be reviewed by accessing your account online or via telephone by calling the Halliburton Benefits Center. Contact information is provided at the end of this notice.
Features of the Retirement Portfolios:
The Retirement Portfolios are target date portfolios. A target date portfolio is designed to simplify your retirement investment decisions by offering a single investment option with an asset allocation appropriate for your age. The year in the target date portfolio name refers to the approximate year (target date) when a participant would retire and leave the workforce (generally age 65). If you prefer to build your own retirement portfolio, you may choose among ten single focus strategies that are separate investment options under the Plan.
Each target date portfolio starts out with a larger allocation to aggressive (growth) investments, such as stocks, when the target retirement date is far away and you have the ability to tolerate short-term ups and downs in order to gain more earnings on your investments over time. Real assets (such as commodities, natural resources and real estate) are used to combat inflation. The target date portfolios asset allocation is automatically adjusted by the professional investment manager over the time horizon of the target date portfolio to become more conservative with (income) investments, such as bonds and stable value, providing more stability in your investments as the target retirement year approaches. This is often referred to as the glidepath of the target date portfolio. See the chart below for an example of the asset allocation, or glidepath, of a target date portfolio.
- 5 - Objective, Investment Strategy and Risk of the Retirement Portfolios:
Objective: The Retirement Portfolios are designed to provide a comprehensive and diversified investment portfolio that targets an appropriate balance between capital growth, investment income and inflation sensitivity.
Strategy: To meet their objective, the underlying assets in the Retirement Portfolios will generally consist of a mixture of global stocks, high yield bonds, real assets, inflation bonds, core bonds and stable value assets. When the target retirement date is far in the future, the Retirement Portfolio emphasizes higher return and risk growth assets to maximize potential returns and asset accumulation during these saving years. As the target retirement date approaches, the Retirement Portfolio shifts its investment strategy over time to focus more on income assets so as to reduce risk and provide capital preservation. The Retirement Portfolios generally reach their most conservative asset allocation ten years after the target date. Generally the same investment managers used within the Single Focus Strategies (the other investment alternatives offered under the Plan) also manage the underlying assets of the Retirement Portfolios. This arrangement generally results in lower expense ratios (fees) for all of the investment options. Risk: The investment risk of each Retirement Portfolio changes over time as its asset allocation changes, becoming more conservative as the target date approaches. The Retirement Portfolios are subject to, among other things, the volatility of the financial markets, including U.S. and non-U.S. equities and bonds, high yield bonds, commodities, and real estate. Investing in a target date portfolio, such as the Retirement Portfolios, does not guarantee that you will be able to retire on or after the target date portfolios target retirement date or that you will have adequate income during retirement. Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market or economic developments. The securities of smaller, less well-known companies can be more volatile than those of large companies. Foreign securities and currencies, especially those in emerging markets, involve greater risk and may offer greater potential returns than U.S. investments. In general the bond market is volatile, and bond securities carry interest rate risk. As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities. The investment options will invest, either through institutionally managed separate accounts or common and collective trusts, in instruments that are defined as commodities under the U.S. Commodity Exchange Act (CEA), which is administered by the Commodity Futures Trading Commission (CFTC). These investments may include certain kinds of financial instruments as well as classic commodities and may be made for the purposes of seeking investment gains, replicating the return of an index or for hedging. As a result of the investment in those instruments, the fiduciaries of the Plan and the Plan sponsor could be deemed commodity pool operators. Therefore, as permitted by a CFTC rule, the fiduciaries and the Plan sponsor have claimed an exemption from the definition of commodity pool operator under the CEA, and you should be aware that they are not subject to registration or regulation as pool operators under the CEA. Real estate investment trusts (REITs) are subject to general stock market risk, real estate market declines and adverse changes to REIT tax laws.
Stable value is generally invested in high quality, diversified bond portfolios that are protected against interest rate volatility by contracts issued by banks and insurance companies. However, while stable value seeks to preserve your - 6 - principal investment, it is possible to lose money. These contracts are backed solely by the financial resources of the bank and insurance companies and by the portfolios of securities. Stable value is not insured or guaranteed by the manager(s), the plan sponsor, plan fiduciaries, the trustee, the FDIC, or any other government agency.
Expenses and Fees: For the operating Expenses (expenses deducted from the portfolios assets) for the Retirement Portfolios, please refer to each portfolios fact sheet, which are available online by accessing www.halliburton.com/totalrewards or by calling the Halliburton Benefits Center at (866) 321-0964. There are no restrictions, expenses or fees related to transfers out of the QDIA into another investment alternative available under the Plan.
Assumptions: The Retirement Portfolios, which are professionally managed, were custom designed for Plan participants based on Halliburton participants demographics, savings, and retirement behavior. The professional manager developed the target date portfolio allocations after analyzing the contribution and withdrawal patterns of Halliburtons employees at different ages and salary levels and employee contribution and company contribution levels. Some of the key assumptions in the analysis were: (1) retirement age 65 years, (2) one employer retirement plan, (3) employee 401(k) contribution rates based on average participating employee in each retirement date range, (4) employer 401(k) match, (5) other employer contributions, as applicable, and (6) pay level and account balance based on average participating employee pay level and average participant account balance in each retirement date range.
How to Make Investment Election Changes:
You can transfer amounts in and out of the Retirement Portfolios at any time, subject to the Plans investment transfer policy.
The Investment Transfer Policy (also known as the Excessive Trading Policy) focuses on what is known as a round-trip transaction for all funds other than the Stable Value Strategy. A round trip is an exchange into and out of the same fund, in excess of $1,000, within 30 days.
Under the Policy, participants are limited to one round-trip transaction in any applicable investment option in the Plan within any rolling 90-day period, subject to an overall limit of four round-trip transactions across all applicable investment options in the Plan over a rolling 12-month period.
If a round-trip transaction is completed:
The first round-trip transaction in an investment option results in a warning letter (mailed from the Halliburton Benefits Center at Fidelity). Participants with two round-trip transactions in the same investment option within a rolling 90-day period will be blocked from making additional exchanges into this investment option for 85 days. Any four round trips across all applicable investment options in the Plan in a 12-month rolling period will result in the participant being limited to one exchange across all applicable investment options (not round trip) per quarter for 12 months. Once the 12-month exchange limitation expires, any additional round trip across all applicable investment options in the Plan in the next 12-month period will result in another 12-month limitation of one exchange across all applicable investment options (not round trip) per quarter.
The trading policy for the Stable Value Strategy works differently. Specifically, if money is transferred or funds are reallocated into the Stable Value Strategy, the number of units that money represented on the day of the transaction is locked in and cannot be transferred out of the Stable Value Strategy for 30 calendar days. For example, if on J uly 1, 2013, you transfer $150 into the Stable Value Strategy and each $15 equals one unit, then you have added 10 units to your portfolio and those 10 units cannot be transferred out for 30 calendar days. However, any unit balance in the Stable Value Strategy prior to the transaction is not subject to the 30-day waiting period and is eligible to be transferred out. Remember that, in order to provide protection against possible market downturns, you can always reallocate or transfer money into the Stable Value Strategy from other investment options.
If you would like amounts automatically contributed to the Plan to be invested in something other than solely the Retirement Portfolios, you can change how your Plan account is invested at any time (subject to the Plans investment transfer policy) or request additional information regarding the investment options offered by accessing your account online or via telephone by calling the Halliburton Benefits Center. Contact information is provided at the end of this notice. - 7 - To learn more about the Retirement Portfolios, the Plans other investment options and procedures for changing how your Plan account is invested, you can review the Investment Choices section of the Plans SPD. Also, you can contact the Halliburton Company Benefits Committee using the contact information at the end of this notice.
8. When will my Plan account be vested and available to me? You will always be fully vested in your contributions to the Plan. Further, if you were hired prior to J anuary 1, 2009, you will also always be fully vested in Company matching contributions made to your account on a per pay period basis.
If you are hired on or after J anuary 1, 2009, you will be fully vested in the Companys matching contributions once you have completed two years of vesting service with the Company or any members of its controlled group.
For all eligible employees, regardless of date of hire, you will be fully vested in the Halliburton Basic Contribution once you have completed three years of vesting service with the Company or any members of its controlled group.
In addition, your Plan account will be fully vested upon normal retirement date (as defined in the Plan), disability (as defined in the Plan) or death. See the Plans SPD for details.
Prior to J anuary 1, 2011, you will be credited with a year of vesting service for each service computation period (the 12-consecutive-month period that begins on your date of hire or on each anniversary of your date of hire) in which you are credited with 1,000 or more hours of service. Effective J anuary 1, 2011, the Plan transitioned to the elapsed time method for determining a year of vesting service. For more information about years of vesting service, you can review the Service with Halliburton section of the Plans SPD.
To be fully vested means that the contributions (together with any investment gain or loss) will always belong to you, and you will not lose them when you leave the Company.
Even if you are vested in your Plan account, there are limits on when you may withdraw your funds. These limits may be important to you in deciding how much, if any, to contribute to the Plan. Generally, you may only withdraw vested money after you leave the Company, reach age 59, or retire from the Company. Also, there is generally an extra 10% tax on distributions received before age 59. Your beneficiary(ies) will be entitled to any amount remaining in your account when you die.
You also can borrow certain amounts from your vested Plan account, and may be able to take out certain vested money if you have a hardship. Hardship distributions are limited to the dollar amount of your tax-deferred savings contributions (including rollover contributions). They may not be taken from earnings, Company matching contributions or the Halliburton Basic Contributions. Hardship distributions must be for a specified reason for qualifying medical expenses, costs of purchasing your principal residence, expenses related to preventing eviction from or foreclosure on your principal residence, expenses for repairing qualifying damages to your principal residence, qualifying post-secondary education expenses, qualifying burial or funeral expenses, or other events that the Plan Administrator, in its sole discretion based on review of your specific facts and circumstances, may deem qualified. Before you can take a hardship distribution, you must have taken other permitted withdrawals and loans from qualifying Company plans.
You can learn more about the Plans hardship withdrawal and loan rules in the Loan, Withdrawals and Distributions section of the Plans SPD. You can also learn more about the extra 10% tax in IRS Publication 575, titled Pension and Annuity Income.
9. Who do I contact to change my contribution level or to opt out of contributing to the Plan, change my investment allocations, or find additional information regarding investment funds offered and general Plan information? You can always change the amount you contribute to the Plan. If you were recently hired and you know now that you do not want to contribute to the Plan (and you havent already elected not to contribute), you will want to opt out of contributing to the Plan by changing your tax-deferred savings contribution rate to 0% within the first 30 days of your employment commencement date. That way, you avoid having any automatic tax-deferred savings contributions deducted from your eligible pay. Remember that, once your payroll deductions have been contributed to the Plan as tax-deferred savings contributions, they cannot be refunded to you. However, you can change your future tax-deferred savings contribution rate at any time as described below.
- 8 - To change your tax-deferred savings contribution rate, opt out of contributing to the Plan, make changes to investment elections, find investment option information, and find Plan descriptions and other documents, you may access your account online or via telephone. In order to access your account, you will need your Social Security number and password. If you are a new hire, you can select a password the first time you contact the Halliburton Benefits Center either online or by phone. If you have forgotten your password, you can request, either online or via telephone, a new password.
Contact Information:
Online by accessing www.halliburton.com/totalrewards. This site is available 24 hours a day, 7 days a week, with a maintenance period when some services may not be available. Via the Halliburton Benefits Center automated phone system, by calling (866) 321-0964 (internationally, use countrys AT&T access code) or (857) 362-5980. This system is available 24 hours a day, 7 days a week, with a maintenance period when some services may not be available. Via a Halliburton Benefits Center representative, by calling (866) 321-0964 (internationally, use countrys AT&T access code) or (857) 362-5980, Monday through Friday, from 7:30 a.m. to 7:30 p.m. Central Time (excluding New York Stock Exchange holidays).
If you have any questions about how the Plan works or your rights and obligations under the Plan, or if you would like a copy of the Plans summary plan description or other Plan documents, please contact the Halliburton Benefits Center (contact information is listed above) which has been designated by the Plan Administrator to provide such information.
The information contained herein has been provided by Halliburton and is solely the responsibility of Halliburton.