MEMORANDUM TO: FROM: RE...2020/12/10 · December 4, 2020 MEMORANDUM TO: VRS Board of Trustees...

December 4, 2020

MEMORANDUM

TO: VRS Board of Trustees

FROM: Patricia S. BishopDirector

RE: Agenda Materials for December 10th Board Meeting

Enclosed are the agenda materials for the December 10th Board meeting that begins at 1:00 p.m.

Pursuant to Item 4-0.01 of Chapter 56 of the 2020 Special Session I Acts of Assembly, the Virginia Retirement System Board of Trustees will convene electronically on December 10th at 1:00 p.m. Registration is required to observe this meeting electronically by telephone or webinar. Meeting materials will be available in Directors Desk and the GoToWebinar meeting space at the time of the meeting.

Board members have been registered by staff. Please save your invitation email that you received upon registration or save the contents to your calendar so that you have easy access to the meeting link. In the email you can click on “add to calendar.” The email is sent from “VRS Board Meeting.” You will receive a reminder prior to the meeting. If you need the invitation resent, please contact Jillian Sherman at [email protected] at least one hour prior to the meeting.

Members of the public and staff who have not been pre-registered should please follow the directions in the link below to register for the electronic meeting https://attendee.gotowebinar.com/register/4939139684073280781. Instructions for signing up to provide public comment, as required under Item 4-0.01 of Chapter 1289, are included in the meeting registration.

Listed below is a recap of the meetings scheduled for next week:

Meeting Date LocationAudit and Compliance Committee

Thursday, December 10th,1:00 p.m.

To be held via GoToWebinarWebinar ID: 798-576-931

Board of Trustees Thursday, December 10th,1:00 p.m.

To be held via GoToWebinarWebinar ID: 711-508-643

Thanks, and I look forward to speaking with you soon.

Attachments

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mailto:[email protected]

https://attendee.gotowebinar.com/register/4939139684073280781

2

cc: The Honorable Aubrey Layne, Secretary of Finance Joe Flores, Office of the Secretary of Finance June Jennings, Office of the Secretary of Finance Craig Burns, Department of Taxation Michael Jay, House Appropriations Committee Sarah Herzog, Senate Finance Committee Adam Rosatelli, Senate Finance Committee Zack Borgerding, Auditor of Public of Accounts Jon Howe, Department of Planning and Budget Dean Lynch, VA Association of Counties Katie Boyle, VA Association of Counties Kathy Burcher, VA Education Association Bea Snidow, VA Education Association Jamie Bitz, Joint Legislative Audit & Review Commission Kimberly Sarte, Joint Legislative Audit & Review Commission Hal Greer, Joint Legislative Audit & Review Commission Elizabeth Bushnell Myers, Office of the Attorney General Jessica Ackerman, VA Municipal League Lawrence Kochard, VRS Investment Advisory Committee Bonnie Atwood, VA Retired Teachers Association

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Board of Trustees Meeting GotoWebinar

Thursday, 12/10/2020 1:00 - 4:00 PM ET

I. Public CommentII. Approve Minutes

November 17, 2020Board Minutes 11.17.20 - Page 5

III. Report of the Chief Investment OfficerAsset Allocation Report 10.31.20 - Page 11 Daily Asset Allocation Report 12.7.20 - Page 12 Plan Tracking Error 9.30.20 - Page 13 Performance Summary 10.31.20 - Page 14 New Investments and Terminations - Page 15 RBA – Approve Revised Diverse Investment Management Engagement PolicyRBA - Approve Diverse Investment Management Engagement Policy - Page 16 Diverse Investment Manager Engagement Policy - Page 17 WaM Engagement Policy - Redline - Page 19

IV. CEM Cost Effective Analysis of VRS Investment ProgramCEM - Investment Benchmarking Presentation - Page 23 Bio for Kam Mangat - 9

V. V. Report of the Defined Contribution Plans Advisory CommitteeReport of the DCPAC - Page 40 RBA – Approve Amended and Restated Deferred Compensation and Defined Contribution Plan Documents and New Hybrid 457 and Hybrid Cash Match Plan Documents

RBA - Approve DC Plan Documents - Page 44 i. 457 Plan

Restated 457 Plan_Version 4 - Page 46 ii. Hybrid 457 Plan

Hybrid 457 Plan_Version 4 - Page 84 iii. Cash Match Plan

Cash Match Plan Restatement_Version 4 - Page 115iv. Hybrid Cash Match Plan

Hybrid Cash Match Plan_Version 4 - Page 145v. ORPHE

Restated ORPHE_Version 4 - Page 174vi. ORPPA

Restated ORPPA_Version 4 - Page 208vii. ORPSS

Restated ORPSS_Version 4 - Page 236 RBA – Approve Amendments to the Master Trust Documents for the Deferred Compensation and Defined Contribution Plans

RBA - Approve Master Trust Amendments - Page 265i. ORPHE Master Trust

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First Amendment ORPHE MasterTrust - Page 266ii. COV and Hybrid 457 Master Trust

First Amendment 457 Master Trust - Page 268iii. 401(a) Plans Master Trust

First Amendment 401(a) Plans Master Trust - Page 270VI. Report of the Audit and Compliance Committee

Report of the A&CC - Page 273VII. Report of the Director

VRS New Coverage Elections for December - Page 275FY 2021 Agency Roadmap Update - November - Page 276

VIII. Litigation Update (Closed session)

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Board of Trustees Meeting Minutes

November 17, 2020Page 1 of 6

MinutesAn electronic meeting of the Virginia Retirement System Board of Trustees was held on November 17, 2020 in accordance with § 2.2-3708.2(A)(3) of the Code of Virginia and in accordance with guidance provided in Item 4-0.01 of Chapter 1289 of the 2020 Acts of Assembly, with the following members participating:

Board members participating: O’Kelly E. McWilliams, III, ChairJoseph W. Montgomery, Vice ChairHon. J. Brandon Bell, II Michael P. DisharoonWilliam A. GarrettSusan T. Gooden, Ph.D.Wallace G. Harris, Ph.D.W. Brett HayesTroilen G. Seward, Ed.S.

Investment Advisory Committee:Lawrence E. Kochard, Ph.D., Chair

VRS Staff: Patricia Bishop, Ron Schmitz, Jennifer Schreck, John Alouf, Advait Apte, Rory Badura, Parham Behrooz, Jeanne Chenault, Michael Cooper, Perry Corsello, Harriet Covey, Juanita Cribbs, Sara Denson, Valerie Disanto, Barry Faison, Josh Fox, Brian Goodman, JT Grier, Dane Honrado, KC Howell, Robert Irving, Wendy Jenkins, Ross Kasarda, LaShaunda King, Kristina Koutrakos, Matthew Kubisiak, Matt Lacy, Chung Ma, Curt Mattson, Steve McClelland, Mark McNair, Walker Noland, Greg Oliff, Angela Payne, Steve Peterson, Paula Reid, Jummai Sarki-Hurd, Dan Schlussler, Kristy Scott, Jillian Sherman, Grace Wheaton, Dan Whitlock, Cindy Wilkinson and Nick Zizzo.

Guests participating were:Larry Langer, Alisa Bennett and Brad Wild, Cavanaugh Macdonald Consulting, LLC; Adam Rosatelli, Senate Finance and Appropriations Committee; Steff Chavez, Mandate Wire; Mark McNair, Kaplan Fox & Kilsheimer; Bill Porter, DDJ Capital Management; Elizabeth Myers, Assistant Attorney General, Office of the Attorney General; Mary Rozycki, Virginia Education Association; Jamie Bitz, Joint Legislative Audit and Review Commission; Latosha Johnson, Department of Planning and Budget; Justin Ferrell, Auditor of Public Accounts; Jeremy Bennett, Virginia Association of Counties; Carlton Byrd, Triple i Partners; Dyice Ellis-Beckham, Invesco; and Zack Cziryak, Financial Investment News.

The meeting convened at 1:01 p.m.

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Opening Remarks

Mr. McWilliams called the meeting to order and welcomed everyone to the November 17, 2020 meeting of the Virginia Retirement System Board of Trustees.

Mr. McWilliams noted that given the current circumstances related to COVID-19, the Board is unable to meet in person and, therefore, is using electronic means to hold the meeting. The meeting is being held in accordance with § 2.2-3708(A)(3) of the Code of Virginia and Chapter 1289 of the 2020 Acts of the Assembly as they relate to conducting business during the pandemic.

Next, Mr. McWilliams took attendance with the following roll call of each of the trustees:

Mr. Bell: HereMr. Disharoon: HereMr. Garrett: HereDr. Gooden: HereMr. Harris: HereMr. Hayes: HereMr. Montgomery: HereMs. Seward: HereMr. McWilliams: Here

Public Comment

In accordance with Item 4-0.01 of Chapter 1289 of the 2020 Acts of Assembly, the Board of Trustees opened the floor for public comment. Mr. McWilliams noted that no members of the public registered to comment at the electronic meeting.

Approve Minutes

Upon Ms. Seward’s motion, with a second by Mr. Montgomery, the VRS Board of Trustees approved the minutes of the October 15, 2020 meeting upon the following roll call vote:

Mr. Bell: AyeMr. Disharoon: AyeMr. Garrett: AyeDr. Gooden: AyeMr. Harris: AyeMr. Hayes: AyeMr. Montgomery: AyeMs. Seward: AyeMr. McWilliams: Aye

Report of the Investment Advisory Committee

Mr. Kochard presented the report of the Investment Advisory Committee (IAC) to the Board. He advised the IAC met electronically on November 10, 2020 and noted the meeting began with Mr. Schmitz presenting his CIO report as of September 30, 2020. The Committee discussed the annual reviews for

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the various asset programs, including market impacts, investment results and portfolio exposures. The Committee also reviewed scenarios and potential impacts on fund-level returns, funded status, contribution rates and liquidity.

Mr. McWilliams thanked Mr. Kochard for his report.

Report of the Chief Investment Officer

Mr. Schmitz began his report with a market overview and discussed asset allocation, total fund portfolio performance and tracking error, concluding that risk measures are all within Board-approved levels. Next, Mr. Schmitz reviewed the New Investment and Terminations report.

Mr. McWilliams thanked Mr. Schmitz for his report.

Report of the Benefits and Actuarial Committee

The Board received the report of the Benefits and Actuarial Committee and placed it on file.

Approval of Minutes

Mr. Harris began his report by noting that the Committee approved the minutes of its October 14, 2020 meeting.

2020 Actuarial Valuation Results for Political Subdivision Retirement Plans, the Virginia Local Disability Program (VLDP), Local Health Insurance Credit (HIC) Plans and the Line of Duty Act (LODA) Fund

Larry Langer and Alisa Bennett from the VRS plan actuary, Cavanaugh Macdonald Consulting, LLC, presented the June 30, 2020 actuarial valuations for the Political Subdivision Retirement Plans, the Virginia Local Disability Program (VLDP), Local Health Insurance Credit (HIC) Plans and the Line of Duty Act (LODA) Fund. The VRS actuary conducts annual valuations as of the close of the fiscal year (June 30). In odd-numbered years the valuations are used to establish employer contribution rates. The results in even-numbered years are shared with the Board of Trustees to inform the Board of any emerging trends or indications of the magnitude and direction of any changes to contribution rates.

Key points from the presentation include:

Pension Results

The market value return for the total fund of 1.40% fell short of the long-term assumed rate of return of 6.75%.

The corresponding actuarial value asset return for local pension plans was 5.86% due to smoothing of investment gains/losses observed over the previous five years.

The pension funded status on an actuarial value of asset basis for political subdivisions in aggregate increased slightly from the 2019 valuations. Half of the individual plans saw a decrease in funded status while half saw an increase in funded status. On a market value basis, nearly all plans saw a decrease in funded status as compared to 2019.

Employer contribution rates trended higher for just over half of the political subdivision pension plans compared to the 2019 rate setting valuation.

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OPEB Results

Funded status increased and contribution rates decreased slightly for Constitutional Officers and Registrars HIC programs as compared to the prior year.

Funded status decreased and contribution rates increased slightly for HIC programs for Political Subdivisions in aggregate and Social Services Employees as compared to the prior year.

Funded status increased for both the Teacher and Political Subdivision VLDP Plans. Contribution rates for both plans trended slightly lower as compared to the 2019 valuation.

Alisa Bennett of Cavanaugh Macdonald Consulting, LLC, provided the results for the Line of Duty Act (LODA) fund.

The LODA premium rate certified by the Board following the 2019 valuation of $695.18 increased to $717.31 to cover new legislation enacted effective July 1, 2020.

LODA health care premiums for pre-Medicare members increased 2.8% and the premiums for Medicare-eligible members increased roughly 8.0% from the 2019 valuation. These premiums are assumed to increase every year with the health care cost trend.

The full-time equivalent (FTE) active headcount for the LODA fund increased slightly from 19,243 in 2019 to 19,989 for the 2020 valuation.

The number of health care beneficiaries decreased slightly from 1,173 in the 2019 valuation to 1,168 for the 2020 valuation.

The LODA premium developed for the informational valuation trended upwards to $758.03 due to increased health care and administrative costs.

No explicit changes or assumptions related to COVID-19 were incorporated in the valuation due to the level of uncertainty regarding the impact on both plan costs and contribution levels going forward.

Mr. Harris advised that Larry Langer and Alisa Bennett of Cavanaugh Macdonald Consulting, LLC, will also deliver an abbreviated version of their presentation to the full Board of Trustees.

Ms. Bishop then followed up on questions presented during the Committee meeting regarding legislation that would provide immunity to private entities and government agencies for claims related to contracting COVID-19. She advised that legislation that would have considered contracting COVID-19 as a presumption for workers’ compensation had been introduced during the General Assembly’s special session; however, these bills failed to pass. Staff anticipates additional legislation to be introduced during the 2021 regular session and will provide updates to the Board as they are available.

Request for Board Action: The Board accepts the June 30, 2020 Actuarial Valuations conducted by the VRS plan actuary, Cavanaugh Macdonald Consulting, LLC, for the Political Subdivision Retirement Plans, the Virginia Local Disability Program (VLDP), Health Insurance Credit (HIC) Plans for Political Subdivisions and the Line of Duty Act (LODA) Fund.

Upon a motion by Mr. Harris, with a second by Mr. Montgomery, the VRS Board of Trustees approved the action upon the following roll call vote:

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Information Items

Lastly, Mr. Harris noted the Committee’s 2021 meeting schedule:

February 11, 2021 at 1:00 p.m. April 19, 2021 at 1:00 p.m. June 9, 2021 at 1:00 p.m. October 13, 2021 at 10:00 a.m. November 15, 2021 at 1:00 p.m.

Mr. McWilliams thanked Mr. Harris for his report.

Proxy Voting Discussion

Mr. Whitlock reviewed the FY 2020 Corporate Governance Report and provided an overview of the Proxy Voting and Securities Litigation Policy with the Board. He advised that Institutional Shareholder Services, Inc. (ISS) continues to provide proxy research and implementation services for VRS. During FY 2020, VRS staff reviewed and evaluated these services and determined that ISS continues to meet the needs of VRS.

Mr. McWilliams thanked Mr. Whitlock for his presentation.

ERM Risk Assessment Update

Mr. Cooper presented the Enterprise Risk Management (ERM) Educational Workshop to the Board. He began with an overview of ERM and the project’s initiatives, followed by the Board’s fiduciary responsibility and its relation to ERM, as well as the roles and responsibilities of the Director’s Executive Committee and the various business units throughout VRS.

VRS is currently in Phase 2 of its ERM Implementation, which focuses on conducting a risk assessment to validate and prioritize risks, and then develop and implement a risk response plan based on the outcomes of the assessment. The ERM Committee facilitated smaller workshops throughout the agency in order to conduct the assessment with members of staff. ERM is expected to be fully implemented in FY 2022.

The Board was asked to participate in the risk assessment survey following the conclusion of the meeting, which will be distributed via email.

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Mr. McWilliams thanked Mr. Cooper for his presentation.

Report of the Director

Ms. Bishop began her report with an update on the VRS Agency Roadmap for FY 2021. She advised that all projects have progressed as planned with the exception of (1) the Access Management System project which is expected to be fully implemented at the end of the calendar year; and (2) the Cloud Transition, which due to its complexity required additional research and analysis but is expected to return to green status by the end of November.

Ms. Bishop advised that the Annual Code of Ethics Training and Affirmation will be provided to the Board in December and the Conflict of Interest training is expected to follow shortly after.

Ms. Bishop announced that the annual agency meeting will be held virtually on December 16, 2020. Next, she reported that VRS received an excellence award from the Public Pension Coordinating Council for Funding Administration which recognized VRS’ funding adequacy, comprehensive benefit program, actuarial valuation, audit, investments and communication. VRS, along with fellow independent agencies, also received special recognition from the Commonwealth of Virginia Campaign (CVC) for having the second highest number of charitable donations in 2019.

Mr. McWilliams thanked Ms. Bishop for her report.

Other Business

Lastly, Mr. McWilliams noted that the DCPAC will meet at 1pm on November 19th and the next Board meeting is scheduled for December 10, 2020 at 1 pm.

Adjournment

Upon a motion by Mr. McWilliams, with a second by Ms. Seward, the Board agreed to adjourn the meeting upon the following roll call vote:


There being no further business, the meeting concluded at 2:48 p.m.

________________________ ________________________

Chair Secretary

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Current$Bil

Current Weight

Policy Weight

Variance Allowable Range

Internal%

Total Fund 83.9 30.4%

Public Equity 30.0 35.7% 37.0% -1.3% -5% +5% 37.5%

Fixed Income 13.8 16.5% 16.0% 0.5% -3% +5% 93.5%

Credit Strategies 11.9 14.2% 14.0% 0.2% -5% +5%

RS Credit 5.2 6.2% 5.6% 0.6%

NRS Credit 6.7 8.0% 8.4% -0.4%

Real Assets 11.4 13.6% 14.0% -0.4% -5% +5% 10.1%

Public RE 1.2 1.4% 99.9%

Private RE 6.7 8.0%

Other RA 3.5 4.2%

Private Equity 11.6 13.8% 13.0% 0.8% -5% +5%

MAPS 2.5 3.0% 3.0% 0.0% -1% +1%

DSTRAT 1.2 1.4%

RBI 1.3 1.6% 10.2%

PIP 1.5 1.8% 2.0% -0.2% -1% +2%

Cash 1.3 1.5% 1.0% 0.5% -1% +4%

Current$Bil

Current Weight

Policy Limit

Hedge Funds 8.1 9.7% 15.0%

3 Year Tracking Error

Total Fund: 1.94%

Total Public: 0.69%

*Total Fund includes the following amt held by the Treasurer of VA:

• The values shown for each asset class on this report may differ from the VRS Monthly Performance Report due to adjustments related to derivative positions in the Rebalance Account, pending transactions, and certain accruals. The values on this report are a more descriptive representation of the Virginia Retirement System's true economic exposure to each asset class.( 6 adjustments applied )*Total Fund and Total Public tracking error are calculated using monthly returns, then annualized

$ 51 million

* Differences in totals are due to rounding.

Asset Allocation ReportOctober 31, 2020

For Internal Investment Purposes Only

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Current$Bil

Current Weight

Policy Weight

Variance Allowable Range

Internal%

Total Fund 89.1 29.9%

Public Equity 34.3 38.5% 37.0% 1.5% -5% +5% 37.2%

Fixed Income 13.4 15.0% 16.0% -1.0% -3% +5% 92.9%

Credit Strategies 12.1 13.6% 14.0% -0.4% -5% +5%

RS Credit 5.3 5.9% 5.6% 0.3%

NRS Credit 6.8 7.7% 8.4% -0.7%

Real Assets 11.6 13.0% 14.0% -1.0% -5% +5% 11.4%

Public RE 1.3 1.5% 99.9%

Private RE 6.7 7.6%

Other RA 3.6 4.0%

Private Equity 11.8 13.2% 13.0% 0.2% -5% +5%

MAPS 2.7 3.1% 3.0% 0.1% -1% +1%

DSTRAT 1.4 1.6%

RBI 1.3 1.5% 10.0%

PIP 1.5 1.7% 2.0% -0.3% -1% +2%

Cash 1.6 1.8% 1.0% 0.8% -1% +4%

Current$Bil

Current Weight

Policy Limit

Hedge Funds 9.0 10.1% 15.0%

3 Year Tracking Error

Total Fund: 1.94%

Total Public: 0.69%

*Total Fund includes the following amt held by the Treasurer of VA:

• The values shown for each asset class on this report may reflect adjustments related to derivative positions in the Rebalance Account, pendingtransactions and certain accruals, in order to provide a more descriptive representation of the true economic exposure to each asset class ( 8adjustments applied )*Total Fund and Total Public tracking error are calculated using monthly returns, then annualized

$ 78 million

* Differences in totals are due to rounding.

Daily Asset Allocation ReportDecember 07, 2020

For Internal Investment Purposes Only

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Vir

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Total Fund Tracking Error

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Date

0

0.5

1

1.5

2

2.5

3

3.5

Tra

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rror

(Quart

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1.0%

3.0%

1.1%

Figure 1: Policy Tracking Error Rolling Three Year - Plan (as of 9/30/2020)

Lower expectation

Upper expectation

Plan

1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Date

0

0.5

1

1.5

2

2.5

3

3.5

Tra

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g E

rror

(Quart

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1.0%

3.0%

0.9%

Figure 2: Policy Tracking Error Rolling Five Year - Plan (as of 9/30/2020)

Lower expectation

Upper expectation

Plan

The VRS Defined Benefit Plan Investment Policy Statement established the total fund tracking error range as the allowable observed

tracking error calculated quarterly using 5 years of history.

Plan Performance Analysis

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VRS Investment Department Recap of New Investments/Terminations Time Period: 11/17/2020 – 12/10/2020

December 10, 2020 BOT Meeting

Program Action Effective Date

Commitment/ Current Value

Funding/ Defunding Period Description

Credit Strategies Hired 11/25/2020 $300 Million 4 Years Ares Private Credit Solutions II – An upper middle market junior

capital lending strategy.

Real Assets Hired 11/17/2020 $100 Million 4 Years Digital Colony Partners II – An infrastructure fund that targets digital infrastructure on a global basis.

Private Equity Hired 11/20/2020 $100 Million 6 Years Charlesbank X – A buyout fund that looks for relative value opportunities: companies that are misunderstood by the market or simply mispriced in the market.

Dynamic Strategies Opened 12/01/2020 $100 Million Immediate Shenandoah – An internally directed global asset allocation strategy.

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Request for Board ActionRBA 2020-12-____

Approve revised Diverse Investment Management Engagement Policy.

Page 1 of 1December 10, 2020

Requested Action

The VRS Board of Trustees approves the revised Diverse Investment Management Engagement Policy.

Description/Background

The VRS Board of Trustees approved the current Women and Minority Owned (WaM) Investment Management Engagement Policy on April 26, 2017.

Since that time, the Code of Virginia § 2.2-4310 expanded the scope of its program to include service-disabled veteran-owned businesses.

Rationale for Requested Action

The proposed revisions reflect the expansion of the definition of the Code of Virginia to include service-disabled veteran-owned businesses, including a change to the title of the policy to reflect the expansion. Additional proposed revisions reflect current reporting responsibilities of the Chief Investment Officer.

The revised Diverse Investment Management Engagement Policy, as well as a redlined version, is attached.

Authority for Requested Action

Code of Virginia §§ 51.1-124.22 and -124.30 authorize the Board to approve these revisions.

The above action is approved on December 10, 2020.

_________________________________________________ ________________________________O’Kelly E. McWilliams, III, Chair DateVRS Board of Trustees

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Virginia Retirement System Diverse Investment Management

Engagement Policy

Diverse Investment Management Engagement Policy Page 1 of 2

DIVERSE INVESTMENT MANAGEMENT ENGAGEMENT POLICY

Approved by the Board of Trustees: April 26, 2017Updated December 10, 2020

________________________________________________GUIDING PRINCIPLE

The guiding principle for the Virginia Retirement System’s (“VRS”) Diverse Investment Management Engagement (“DIME”) Policy is to help ensure under-represented segments of the investment management industry get careful consideration for VRS mandates in a very crowded and competitive landscape.

BACKGROUND

VRS has a long history of engagement and investment with diverse investment managers. We believe the inclusion of these managers has the potential to enhance the overall returns generated by VRS’s portfolio. A cornerstone of our DIME initiative is taking a comprehensive approach in all aspects of our engagement activities. This includes conference participation, manager outreach, strategy evaluation and maintaining an informed perspective on the performance, and potential value of working with various managers.

Staff believes that execution of our fiduciary duties requires us to broadly cover the market and to determine which managers and investment strategies have the greatest likelihood of producing superior returns for VRS’s beneficiaries.

VRS uses the Code of Virginia § 2.2-4310 definition of women-owned, minority-owned and service-disabled veteran-owned businesses. In this section of the Code of Virginia, these businesses are defined as being at least 51 percent owned by one or more women, minority individuals, or service-disabled veterans and are U.S. citizens or legal resident aliens.

ENGAGEMENT

VRS staff follows an approach of engagement and awareness with the diverse investment management community. The DIME initiative encourages staff to pay particular attention to investment opportunities available with women, minority, or service-disabled veteran-owned firms and implements this initiative in three primary ways:

1. The team uses its broad network to identify the leading diverse-owned firms. Methods used to source managers include attending conferences, talking to other institutional investors, contacting existing managers, consulting with industry trade groups and maintaining an ongoing dialogue with our DIME consultants.

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Virginia Retirement System Diverse Investment Management

Engagement Policy

Diverse Investment Management Engagement Policy Page 2 of 2

This sourcing method helps VRS develop a relationship and familiarity with many of the leading diverse-owned firms.

2. Along with proactively sourcing opportunities, staff welcomes the opportunity to learn more about new diverse managers and get updates from existing diverse managers. All managers are subject to the same underwriting standards regardless of gender, ethnicity, or service status, which ensures that our fiduciary responsibility is maintained.

3. For all of its prospective and current managers, VRS staff will inquire about and encourage its managers to practice diverse hiring practices, recognizing that diversity of thought and experience can be beneficial to the investment process. Annual supplemental questionnaires to existing managers will include requests for staff diversity information and for policies related to diversity and inclusion.

ENGAGEMENT ACTION PLAN

VRS staff will continue to follow the current approach of engagement and awareness with the diverse-owned investment management community.

REPORTING

The CIO is responsible for reporting on at least an annual basis the DIME-related activity to the Board. Such reports may include summaries of engagement activities, additions or terminations of investment managers, and a summary of overall relationships.

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Virginia Retirement System DiverseWomen- and Minority-Owned

(WaM) Investment Management Engagement Policy

DiverseWomen- and Minority-Owned Investment Management Engagement Policy Page 1 of 4

DIVERSE INVESTMENT MANAGEMENT ENGAGEMENT POLICY

Approved by the Board of Trustees: April 26, 2017 Updated December 10, 2020

BOARD OF TRUSTEES’ WOMEN- AND MINORITY-OWNED (WaM) INVESTMENT

MANAGEMENT ENGAGEMENT POLICY ________________________________________________

GUIDING PRINCIPLE The guiding principle for the Virginia Retirement System’s (“VRS”) DiverseWaM Investment Management Engagement (“DIME”) Policy is to help ensure an under-represented segments of the investment management industry gets careful consideration for VRS mandates in a very crowded and competitive landscape. BACKGROUND VRS has a long history of engagement and investment with diverse investment managers., or under state procurement nomenclature Women- and Minority-owned (WaM) investment managers. We believe the that inclusion of these managers has the potential to enhance the overall returns generated by VRS’s portfolio. A cornerstone of our DIMEWaM initiative is taking a comprehensive approach in all aspects of our engagement activities. This includes conference participation, manager outreach, strategy evaluation and maintaining an informed perspective on the performance, and potential value of working with various managers. Staff believes that execution of our fiduciary duties requires us to broadly cover the market and to determine which managers and investment strategies have the greatest likelihood of producing superior returns for VRS’s beneficiaries. In order to effectively execute this duty VRS may need to continue its efforts by developing strategies and techniques to understand elements of the investment landscape and managers that do not receive the same exposure and coverage as more mainstream managers. VRS currently uses the Code of Virginia § 2.2-4310Commonwealth of Virginia’s definition of women-owned, minority-owned and service-disabled veteran-owned businesses. In this section of the Code of Virginia, these businesses are defined as being (at least 51percent% owned by one or more women, or minority individuals, or service-disabled veterans and who are U.S. citizens or legal resident aliens). While VRS follows the Commonwealth’s definition, our investment manager roster includes a number of relationships where women and minorities play critical and leading roles in the management of those investments, but do not fit the strict criteria of the Commonwealth. Additionally, VRS staff encourages all of its managers to practice diverse hiring

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practices, recognizing that diversity of thought and background is beneficial to the investment process.

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ENGAGEMENT VRS staff follows an approach of engagement and awareness with the diverse WaM-owned investment management community. The DIMEWaM initiative encourages staff to pay particular attention to investment opportunities available with women, minority, or service-disabled veteran-ownedWomen- and Minority-owned firms and implements this initiative in three primary ways:

1. The team uses its broad network to identify the leading diverseWaM-owned firms. Methods used to source the premier managers includes attending conferences, talking to other institutional investors, contacting existing managers, consulting with industry trade groups and maintaining an ongoing dialogue with our DIMEWaM consultants. This sourcing method helps VRS develop a relationship and familiarity with many of the leading diverseWaM-owned firms.

2. Along with proactively sourcing opportunities, staff welcomes the opportunity to

learn more about new diverseWaM managers and get updates from existing diverseWaM managers. (see Appendix A for the latest VRS Quarterly WaM Update Report). All managers are subject to the same underwriting standards regardless of gender, or ethnicity, or service status, which ensures that our fiduciary responsibility is maintained.

3. For all of its prospective and current managers, VRS staff will inquire about and

encourage its managers to practice diverse hiring practices, recognizing that diversity of thought and experience can be beneficial to the investment process. Annual supplemental questionnaires to existing managers will include requests for staff diversity information (EEO-1 Report or similar information) and for policies related to diversity and inclusion. (examples might include staff recruitment and retention policies, maternity/paternity policies, staff education activities, community engagement activities, etc.).

ENGAGEMENT ACTION PLAN: VRS staff will continue to follow the current approach of engagement and awareness with the diverseWaM-owned investment management community.

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REPORTING: The CIO is responsible for reporting on at least an annual basis the DIME-related activity to the Board. Such reports may include summaries of engagement activities, additions or terminations of investment managers, and a summary of overall relationships.will review the following diversity engagement reports, and will review them with the Board as part of the normal process. a. The latest quarterly WaM activity report summarizing all interaction with existing and prospective WaM managers (see Appendix A). b. The latest annual WaM Investment report which summarizes relationships and commitments by VRS asset class, based on the Commonwealth’s WaM definition (see Appendix B). c. The latest annual WaM Investment report which summarizes the performance of commitments by VRS asset class, based on the Commonwealth’s WaM definition (see Appendix C).

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Virginia Retirement System Investment Benchmarking Results

For the 5 year period ending December 2019

December 10, 2020

Kam Mangat, MBA, CFA Vice President 416‐369‐[email protected]

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5-Year net value added versus excess cost(Your 5‐year: net value added 18 bps, cost savings 4 bps¹)

2019 2018 2017 2016 2015 5‐yearNet value added (12.0)bp (19.0)bp 49.0bp (16.5)bp 88.0bp 18.2bpExcess Cost (5.7)bp (5.0)bp (5.6)bp (4.2)bp (1.0)bp (4.3)bp

Your 5-year performance placed you in the positive value added, low cost quadrant of the cost effectiveness chart.

Excess Cost

1. Your 5‐year cost savings of 4 basis points is the average of your cost savings for the past 5 years.

Your 0.2% 5‐year value added translates into approximately$0.8 billion of cumulative value added over 5 years.

Your 4.3 bps in 5‐year cost savings translate into approximately $168 million of cumulative cost savings over 5 years.

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This benchmarking report compares your cost and return performance to the 298 funds in CEM's extensive pension database.

•151 U.S. pension funds participate. The median U.S. fund had assets of $11.4 billion and the average U.S. fund had assets of $25.9 billion. Total participating U.S. assets were $3.9 trillion.

• 67 Canadian funds participate with assets totaling$1.6 trillion.

•70 European funds participate with aggregate assets of $3.7 trillion. Included are funds from the Netherlands, Norway, Sweden, Finland, Ireland, Denmark and the U.K.

•6 Asia‐Pacific funds participate with aggregate assetsof $1.1 trillion. Included are funds from Australia, NewZealand, China and South Korea.

The most meaningful comparisons for your returns and value added are to the U.S. Public universe.

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The most valuable comparisons for cost performance are to your custom peer group because size impacts costs.

Peer group for Virginia Retirement System

• 18 U.S. Public sponsors from $31.9 billion to $162.6 billion• Median size of $79.0 billion versus your $82.7 billion

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Total returns, by themselves, provide little insight into the reasons behind relative performance. Therefore, we separate total return into its more meaningful components: policy return and value added.

Your 5‐yearNet total fund return 7.4%

‐ Policy return 7.2% 15%= Net value added 0.2%

10%

This approach enables you to understand the contribution from both policy mix decisions (which tend to be the board's responsibility) and implementation decisions (which tend to be management's responsibility).

Your 5-year net total return of 7.4% was equal to the U.S. Public median of 7.4% and below the peer median of 7.5%.

U.S. Public net total returns - quartile rankings

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• Long term capital market expectations• Liabilities• Appetite for risk

Each of these three factors is different across funds. Therefore, it is not surprising that policy returns often vary widely between funds.

Your 5-year policy return of 7.2% was above both the U.S. Public median of 6.9% and the peer median of 7.0%.

U.S. Public policy returns - quartile rankingsYour policy return is the return you could have earned passively by indexing your investments according to your policy mix.

Having a higher or lower relative policy return is not necessarily good or bad. Your policy return reflects your investment policy, which should reflect your:

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5-year average policy mix¹return

YourFund

U.S. Public

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LessYourFund

U.S. Public

Avg.U.S. Stock 0% 21% ‐21% 11.2% 11.0%Global Stock 42% 11% 31% 9.4% 8.5%Other Stock² 0% 17% ‐17% n/a³ n/a³Total Stock 42% 48% ‐6% 9.3% 8.8%

U.S. Bonds 17% 17% 0% 3.1% 3.1%Fixed Income ‐ infl. Indexed 0% 3% ‐3% n/a³ 2.8%High Yield Bonds 4% 2% 2% 6.4% 5.8%Emerging Market Debt 3% 1% 2% 5.4% 4.7%Cash 0% ‐1% 1% n/a³ 1.1%Other Fixed Income² 6% 4% 2% n/a³ n/a³Total Fixed Income 30% 25% 5% 4.6% 3.7%

Multi‐Strategy Funds 1% 4% ‐3% n/a³ 3.4%Risk Parity 0% 1% ‐1% n/a³ 6.1%Natural Resources 1% 1% 0% 5.5% 3.9%Infrastructure 1% 1% 0% 5.5% 6.7%Real Estate ex‐REITs 10% 8% 3% 8.3% 8.4%Other Real Assets² 2% 2% 0% n/a³ n/a³Private Equity⁴ 10% 9% 2% 11.0% 7.7%Private Debt 3% 2% 2% 3.6% 5.3%Total 100% 100% 0%

5-year bmk.

Your 5-year policy return of 7.2% was slightly above the U.S. Public median of 6.9% primarily because of policy mix differences.

1.5‐year weights are based only on plans with 5 years of continuous data.2.Other stock includes EAFE, emerging and ACWIxUS stock. Other fixed income includes U.S. and Global bonds. Other real assets includes commodities and REITs.3.A value of 'n/a' is shown if asset class return are not available for the full 5 years or if they are broad and incomparable.4.You have 2% policy allocation to Private Investment Partnerships (PIP), which is included in your Private Equity policy weighting.

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Asset class


2015 2019

Peer U.S. Public

avg. avg.2019 2019

U.S. Stock 0% 0% 14% 19%Global Stock 43% 40% 17% 10%Other Stock¹ 0% 0% 11% 17%Total Stock 43% 40% 41% 46%

U.S. Bonds 18% 16% 18% 17%Fixed Income ‐ infl. Indexed 0% 0% 3% 3%High Yield Bonds 6% 3% 1% 2%Emerging Market Debt 4% 3% 1% 1%Cash 1% 0% ‐1% ‐1%Other Fixed Income¹ 9% 3% 6% 4%Total Fixed Income 37% 24% 28% 26%

Multi‐Strategy Funds 0% 3% 4% 4%Risk Parity 0% 0% 2% 1%Natural Resources 1% 0% 1% 1%Infrastructure 1% 0% 1% 1%Real Estate ex‐REITs 9% 12% 9% 8%Other Real Assets¹ 1% 2% 2% 2%Private Equity 8% 13% 11% 9%Private Debt 0% 6% 1% 2%Total 100% 100% 100% 100%

Your fund1.Other stock includes EAFE, emerging and ACWIxUS stock. Other fixed income includes U.S. and Global bonds. Other real assets includes commodities and REITs.

Differences in policy return are caused by differences in policy mix and benchmarks. At the end of 2019 your policy mix compared to your peers and theU.S. Public universe as follows:

Policy asset mix

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Net value added is the component of total return from active management. Your 5-year net value added was 0.2%.

Net value added equals total net return minus policy return.

U.S. Public net value added - quartile rankings

Your 5‐year net value added of 0.2% compares to a median of 0.5% for your peers and 0.4% for the U.S. Public universe.

Your 0.2% 5‐year value added translates into approximately $0.8 billion of cumulative value added over 5 years.

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Value added for Virginia Retirement System

YearNet

ReturnPolicy

ReturnNet Value

Added2019 15.3% 15.4% ‐0.1%2018 ‐1.3% ‐1.1% ‐0.2%2017 14.4% 13.9% 0.5%2016 7.6% 7.8% ‐0.2%2015 2.0% 1.1% 0.9%

5‐Year 7.4% 7.2% 0.2%

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Asset management costs by asset class and style ($000s) Internal ManagementPassive Active Overseeing

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External MgmtActive Perform.

base fees fees ⁴ TotalStock ‐ U.S. Large Cap 2,920 49 1,359 4,328Stock ‐ U.S. Small Cap 326 93 5,318 5,738Stock ‐ EAFE 4,768 105 4,909 9,782Stock ‐ Emerging 21 476 258 5,890 6,644Stock ‐ Global 1,124 32,595 33,719Fixed Income ‐ U.S. 5,768 5,768Fixed Income ‐ Emerging 282 215 6,975 7,472Fixed Income ‐ High Yield 222 110 3,400 3,733Fixed Income ‐ Convertibles 262 9,976 10,238Fixed Income ‐ Other 5 60 65Cash 1,139 1,139REITs 270 97 2,875 3,241Global TAA 476 4,086 4,562Hedge Funds ‐ External Active 2,860 92,273 95,133Real Estate ex‐REITs ⁴ 1,313 35,445 2,369 36,757Real Estate ex‐REITs ‐ LP ² ⁴ 462 18,253 18,715Real Estate ex‐REITs ‐ Co‐Invest. ⁴ 53 1,074 1,126Infrastructure ⁴ 176 3,450 930 3,626Infrastructure ‐ LP ² ⁴ 410 17,156 17,566Infrastructure ‐ Co‐Invest. ⁴ 76 76Infrastructure ‐ FoFs ⁴ 60 2,171 2,231Natural Resources ⁴ 176 6,043 6,219Natural Resources ‐ LP ² ⁴ 274 13,097 13,371Natural Resources ‐ Co‐Invest. ⁴ 39 39Diversified Private Equity ‐ LP ² ⁴ 2 2,127 171,829 173,958Diversified Private Equity ‐ Co‐Invest. ⁴ 547 724 1,271Diversified Private Equity ‐ FoFs ³ ⁴ 130 17,742 17,872LBO ‐ LP ¹ ⁴ 501 18,530 19,032Private Credit ‐ LP ² ⁴ 473 26,439 26,912Private Credit ‐ External ⁴ 645 16,738 17,383Private Credit ‐ Co‐Invest. ⁴ 15 22 37Mortgages ⁴ 82 2,086 2,168Derivatives/Overlays 134 22 2,700 2,856


Total excluding private asset performance feesOversight, custodial and other costs ⁵Oversight & consulting

552,776

2,833

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Trustee & custodial 4,875Other 590Total oversight, custodial & other costs 8,298 1.0bp

Total investment costs (excl. transaction costs & private asset performance fees) 561,074 67.9bp

Your investment costs were $561.1 million or 67.9 basis points in 2019.Footnotes1. CEM used default costs.2.Cost derived from the partnership level detail.3.Default underlying costs were added: Diversified Private Equity ‐FoFs 157 bps.Refer to Appendix A for full details regarding defaults.4. Total cost excludescarry/performance fees for hedge funds, real estate, infrastructure, natural resources and private equity. Performance fees are included for non‐partnership mandates.5.Excludes non‐investment costs, such as benefit insurance premiums and preparing cheques for retirees.

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Comparison of costs before adjusting for asset mix:

Before adjusting for differences in asset mix, your cost of67.9 bps was above the peer median of 50.1 bps.

Comparison of costs after adjusting for asset mix:

Your benchmark cost is an estimate of what your cost would be given your actual asset mix and the median costs that your peers pay for similar services. It represents the cost your peers would incur if they had your actual asset mix.

$000s basis points

Your benchmark cost 607,915 73.5 Your excess cost (46,841) (5.7)

Your total investment cost 561,074 67.9

Benchmark cost analysis suggests that your fund was low cost by 5.7 basis points in 2019.

Your cost versus benchmark

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Excess Cost/ (Savings)

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1. Lower cost implementation style• More active management (vs. lower cost passive) 29,460 3.6• More in‐house management (vs. external management) (8,235) (1.0)• Less partnerships as a percentage of external (19,425) (2.3)• Less fund of funds (3,535) (0.4)• More co‐investment as a percentage of LP/Co (7,206) (0.9)• More overlays 1,477 0.2

(7,464) (0.9)

2. Paying less than peers for similar services• External investment management costs (39,942) (4.8)• Internal investment management costs 1,938 0.2• Oversight, custodial & other costs

Total savings

(1,372) (0.2)(39,377) (4.8)

(46,841) (5.7)

Your fund was low cost because you paid less than peers for similar services and you had a lower cost implementation style.

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Total savings due to in‐house management Total in basis points

(45,437)(5.5)

Style

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Cost in bps Cost/(savings)

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Assets managed in-house (A) (B) (A X B)

Stock ‐ U.S. Large Cap active 7,109 4.1 26.1 (22.0) (15,607)Stock ‐ U.S. Small Cap active 635 5.1 56.6 (51.4) (3,266)Stock ‐ EAFE active 4,643 10.3 36.3 (26.0) (12,068)Stock ‐ Emerging passive 82 2.6 5.8 (3.2) (26)Stock ‐ Emerging active 618 7.7 54.0 (46.3) (2,862)Fixed Income ‐ U.S. active 11,738 4.9 12.2 (7.3) (8,582)Fixed Income ‐ Emerging active 229 12.3 35.4 (23.1) (530)Fixed Income ‐ High Yield active 181 12.3 30.7 (18.4) (333)REITs active 656 4.1 37.1 (32.9) (2,162)

If the assets you manage in-house were managed externally and you paid peer median costs, your cost would have been higher by approximately $45.4 million or5.5 bps.

Cost savings achieved by managing assets in-house

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5-Year net value added versus excess cost(Your 5‐year: net value added 18 bps, cost savings 4 bps¹)

2019 2018 2017 2016 2015 5‐yearNet value added (12.0)bp (19.0)bp 49.0bp (16.5)bp 88.0bp 18.2bpExcess Cost (5.7)bp (5.0)bp (5.6)bp (4.2)bp (1.0)bp (4.3)bp

Your 5-year performance placed you in the positive value added, low cost quadrant of the cost effectiveness chart.

Excess Cost

1. Your 5‐year cost savings of 4 basis points is the average of your cost savings for the past 5 years.

Your 0.2% 5‐year value added translates into approximately$0.8 billion of cumulative value added over 5 years.

Your 4.3 bps in 5‐year cost savings translate into approximately $168 million of cumulative cost savings over 5 years.

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Summary of key takeaways

Returns• Your 5‐year policy return was 7.2%. This was above the U.S. Public median of 6.9% and above the peer median of

7.0%.

Value added• Your 5‐year net value added was 0.2%. This was slightly below the U.S. Public median of 0.4% and below the

peer median of 0.5%.

Cost and cost effectiveness• Your investment cost of 67.9 bps was below your benchmark cost of 73.5 bps. This suggests that your fund was

low cost compared to your peers.• Your fund was low cost because you paid less than peers for similar services and you had a lower cost

implementation style.• Your 5‐year performance placed you in the positive value added, low cost quadrant of the cost effectiveness

chart.

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Kam Mangat, Vice President [email protected]

CEM Benchmarking Inc 372 Bay Street, Suite 1000

Toronto, ON M5H 2W9

www.cembenchmarking.com

Copyright © 2020 by CEM Benchmarking Inc. ('CEM').

Although the information in this document has been based upon and obtained from sources we believe to be reliable, CEM does not guarantee its accuracy or completeness. The information contained herein is proprietary and confidential and may not be disclosed to third parties without the express written mutual consent of CEM.

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http://www.cembenchmarking.com/

Kam Mangat is a Client Relationship Manager at CEM responsible for research, consulting, client service, and business development. She has over 15 years of experience in various roles spanning technology, pension consulting and capital markets. Prior to joining CEM, Kam worked in capital markets as a sell-side analyst covering the Industrials and Special Situations space. Kam received a Bachelor of Commerce from the University of Toronto, has earned the right to use the Chartered Financial Analyst designation, and is a graduate of the University of Western Ontario, The Richard Ivey School of Business MBA program.

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Defined Contribution Plans Advisory Committee

Committee Report to the Board of TrusteesDecember 10, 2020

Page 1 of 4

Report

Pursuant to § 2.2-3700 et. seq. of the Code of Virginia and Chapter 1289 of the 2020 Acts of Assembly, the Defined Contribution Plans Advisory Committee (DCPAC) convened electronically on November 19, 2020 at 1:00 p.m., and took up the following matters:

WELCOME AND INTRODUCTION

Senator Bell welcomed and introduced Dr. Susan Gooden, the newly appointed vice chair to the Committee. Dr. Gooden, who was unable to attend the meeting, is Dean of the L. Douglas Wilder School of Government and Public Affairs at Virginia Commonwealth University.

ADMINISTRATION

Annual Administrative Expense Reports

Staff provided an overview of the administrative expense report and annual cost update for FY 2020, as required by the DCPAC Charter. The report provided both direct and indirect costs associated with administering VRS’ Defined Contribution Plans. Total administrative costs related to participants and expenditures for FY 2020 were provided, along with a cost trend analysis over the five-year period from FY 2016 to FY 2020. Staff informed the Committee of cost increases to the Hybrid Plan due to increased staff time allocated to the program. Staff also noted cost decreases to the Optional Retirement Plan for Higher Education (ORPHE) due to the reduction in the number of recordkeepers.

Administrative Reports and Communication Update

Staff provided an update on administrative reports for the third quarter of 2020. Updates included an overview of assets and accounts across the various defined contribution plans, as well as participant trends and the impact of various plan initiatives. Staff shared with the Committee an analysis and overview of initiatives related to the third quarter goal to increase contributions and enrollments among plan participants.

ORPHE Update

Staff provided an overview of ORPHE reports for the third quarter of 2020, including plan assets and accounts, and provider election data. Staff also provided an update on outreach activities and education initiatives, including the annual employer update and ORPHE open enrollment period.

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Page 2 of 4

ORPHE Employer Update Report

Mr. Larson provided an update on the ORPHE Annual Employer Update hosted by VRS on September 24, 2020. He noted that 86% of participating institutions were represented.

INVESTMENTS

Performance Reports

Staff provided an overview of the September 30, 2020 performance reports to the DCPAC, including the unbundled DC plans investment options and the bundled TIAA investment menu in the Retirement Choice (RC) contract for ORPHE. CEM Defined Contribution Plans Survey

Staff reviewed the CEM DC Plans 2019 survey results, which was comprised of 92 corporate and 20 public plans representing $1.2 trillion in assets. Staff informed the Committee that the survey results included the unbundled DC Plans supplemental 457 Deferred Compensation Plan, in addition to the bundled TIAA and Fidelity programs for ORPHE. Staff noted that the TIAA and Fidelity information was based solely on the “selected” plan investment options. Staff also highlighted that the TIAA information was based on the investment lineup prior to the new investment menu options implemented January 1, 2020.

For the year ending December 31, 2019, CEM reported the following:

The 457 Deferred Compensation Plan was a high value added, low cost plan. Total 457 Plan costs of 0.20% were below CEM’s calculated VRS 457 Plan benchmark cost of 0.35%. (Note: The investment lineup is predominately passively managed.)

The TIAA ORPHE program was a low value added, high cost plan. Total TIAA plan costs of 0.41% were higher than CEM’s calculated TIAA ORPHE benchmark cost of 0.34%.

The Fidelity ORPHE program was a low value added, high cost plan. Fidelity Total plan costs of 0.53% were higher than CEM’s calculated Fidelity ORPHE benchmark cost of 0.31%.

Staff included the CEM DC Survey Reports in the meeting materials Appendix for the Committee to review.

Presidential Executive Order

Staff informed the Committee of the Executive Order issued on November 12, 2020, barring U.S. persons from transacting in certain securities that the Department of Defense identifies as supporting

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Page 3 of 4

the Chinese military. The effective date of the order is January 11, 2021, and investors have until November 2021 to divest holdings.

Staff shared they are in the process of gathering information and determining its potential impact to VRS’ DC Plans investments and will inform the Committee of its findings.

PLAN DOCUMENTS AND MASTER TRUSTS

Staff provided an overview of outside benefit counsel’s amended and restated DC plan documents, which included adding two additional separate plan documents for the Hybrid 457 and Hybrid Cash Match Plan as a result of separating the Hybrid provisions from the pre-existing plan documents. In connection with the amendment and restatement of the DC plan documents, staff also consulted with outside benefits counsel to determine what changes would be needed to the master trusts relating to the plans.

Staff informed the Committee that the primary goals of the review project were to employ current best practices in plan document structure, streamline current plan documents for readability, ensure compliance with recent federal statutory and regulatory provisions, simplify plan documents, and deploy more standardized plan document templates. In addition, outside counsel’s recommendations relating to the master trusts are intended to provide additional assurance that VRS does and will continue to comply with state and federal law.

The Committee recommends approval of the following action to the full Board:

Request for Board Action: The Board approves the amended and restated Commonwealth of Virginia 457 Deferred Compensation Plan, the amended and restated Optional Retirement Plan of the Commonwealth of Virginia for Employees of Institutions of Higher Education, the amended and restated Optional Retirement Plan of the Commonwealth of Virginia for Political Appointees, the amended and restated Optional Retirement Plan of the Commonwealth of Virginia for Public School Superintendents, the amended and restated Virginia Cash Match Plan, the new Virginia Hybrid 457 Deferred Compensation Plan and the new Virginia Hybrid Cash Match Plan, all effective January 1, 2021.

Request for Board Action: The Virginia Retirement System Board of Trustees approves the First Amendment to the Master Trust for the Deferred Compensation Plan of the Commonwealth of Virginia, the First Amendment to the Master Trust for the Defined Contribution Plans of the Commonwealth of Virginia and the First Amendment to the Optional Retirement Plan of the Commonwealth of Virginia for Employees of Institutions of Higher Education, all effective January 1, 2021.

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Page 4 of 4

OTHER BUSINESS

Code of Ethics

Staff informed the Committee that an email notification would be forthcoming that includes instructions and a hyperlink to a learning module on the Board of Trustees’ Code of Ethics and Standards of Conduct, an annual requirement of VRS advisory committee members. Staff shared that Committee members will be able to send certification electronically for acknowledgement of the policy upon review of the recorded webinar.

Discussion of New Ideas

Staff informed the Committee of efforts to develop a communications campaign to target members who are not taking full advantage of the employer match in the plans, specifically those who may earn a lower salary and /or those members who are younger and struggle with student debt or other financial challenges. Staff shared that research is being conducted and more information about ideas and initiatives will be shared in 2021.

2021 MEETINGS

Based on prior polling, the Committee is scheduled to meet on the following dates for 2021:

Thursday, April 15, 2021 at 1:00 p.m. Thursday, June 24, 2021 at 1:00 p.m. Thursday, September 2, 2021 at 1:00 p.m. Thursday, December 2, 2021 at 1:00 p.m.

Additionally, the ORPHE Annual Employer Update will be scheduled and appear on the agenda as an upcoming event. This is not a DCPAC Committee meeting, however, members may attend if interested.

There was no other business to come before the Committee.

That concludes my report to the Board.

Submitted to the Board of Trustees on December 10, 2020.

_________________________________________J. Brandon Bell, ChairDefined Contribution Plans Advisory Committee

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Approve amended and restated deferred compensation and defined contribution plan documents and new Hybrid 457 and Hybrid Cash Match plan documents, effective January 1, 2021.


Requested Action

The Virginia Retirement System Board of Trustees approves the amended and restated Commonwealth of Virginia 457 Deferred Compensation Plan, the amended and restated Optional Retirement Plan of the Commonwealth of Virginia for Employees of Institutions of Higher Education, the amended and restated Optional Retirement Plan of the Commonwealth of Virginia for Political Appointees, the amended and restated Optional Retirement Plan of the Commonwealth of Virginia for Public School Superintendents, the amended and restated Virginia Cash Match Plan, the new Virginia Hybrid 457 Deferred Compensation Plan and the new Virginia Hybrid Cash Match Plan, all effective January 1, 2021.


In Summer 2019 VRS staff undertook an exhaustive review of the existing DC plan documents for the purpose of amending and restating the existing plan documents and adding two additional separate plan documents (Hybrid 457 and Hybrid Cash Match). In connection with this project, staff engaged Ice Miller (outside benefits counsel) to create drafts of the plans. The overriding goals of the review project were: employ current best practices in plan document structure; streamline current plan documents for readability; ensure compliance with recent federal statutory and regulatory provisions; simplify plan documents by separating the previously combined plan documents for the Commonwealth 457 and Cash Match Plans and the Hybrid Plan DC plans; and deploy more standardized plan document templates, thereby limiting extensive customization. The Defined Contribution Plans Advisory Committee has reviewed the amendments and recommends the approval of this RBA.

The document changes can be summarized as follows:

Hybrid provisions were added to the two existing plan documents (457 and Cash Match) in 2014. This has proven to be unwieldy in administration, so there are now four plan documents: 457; Hybrid 457; Cash Match; and Hybrid Cash Match.

To reflect the mandatory provisions of the recently enacted SECURE Act, such as the age change for required minimum distributions, and the recently enacted CARES Act addressing issues related to the coronavirus pandemic.

New mandatory cash-out and stale distribution check procedures to align with current industry best practices.

The Defined Contribution Plans Advisory Committee has reviewed the amended and restated plan documents and recommends the approval of this RBA.


Code of Virginia § 51.1-124.22(8) authorizes the Board to make determinations necessary to carry out the provisions of Title 51.1 of the. Code of Virginia, and § 51.1-124.22(10) requires the Board to adopt

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RBA 2020-12-____


rules and policies that bring the Retirement System into compliance with any applicable law or regulation of the Commonwealth of Virginia or the United States.

The above action is approved.

_________________________________________________ ________________________________O’Kelly E. McWilliams, III, Chairman DateVRS Board of Trustees

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Amended and Restated Effective January 1, 2021I\15595571.3

COMMONWEALTH OF VIRGINIA 457 DEFERRED COMPENSATION PLAN

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TABLE OF CONTENTS

Page

ARTICLE I. ESTABLISHMENT AND RESTATEMENT OF PLAN ....................................1Section 1.01. Plan Establishment and History ..........................................................1Section 1.02. Plan Restatement...................................................................................1

ARTICLE II. CONSTRUCTION AND DEFINITIONS ...........................................................2Section 2.01. Construction and Governing Law .......................................................2Section 2.02. Definitions ..............................................................................................2

ARTICLE III. ELIGIBILITY AND PARTICIPATION.........................................................10Section 3.01. Participation ........................................................................................10Section 3.02. Cessation of Contributions .................................................................10Section 3.03. Reemployment .....................................................................................10

ARTICLE IV. CONTRIBUTIONS............................................................................................10Section 4.01. Elective Deferrals ................................................................................10Section 4.02. Automatic Elective Deferrals .............................................................12Section 4.03. Discretionary Employer Contributions.............................................13Section 4.04. Sick, Vacation and Back Pay..............................................................13Section 4.05. Rollover Contributions to the Plan....................................................14Section 4.06. Transfers to the Plan...........................................................................15Section 4.07. Leave of Absence .................................................................................15Section 4.08. Disability ..............................................................................................15Section 4.09. Expenses of Plan..................................................................................15

ARTICLE V. LIMITATIONS ON CONTRIBUTIONS..........................................................16Section 5.01. Elective Deferral Limits......................................................................16Section 5.02. Participating Employer Contribution Limits ...................................16Section 5.03. Coordination of Limits .......................................................................17Section 5.04. Correction of Excess Deferrals...........................................................18

ARTICLE VI. ACCOUNTING ..................................................................................................18Section 6.01. Participant Accounts...........................................................................18Section 6.02. Participant Statements........................................................................18Section 6.03. Value of Account .................................................................................18

ARTICLE VII. INVESTMENT OF CONTRIBUTIONS........................................................19Section 7.01. Investment Funds ................................................................................19Section 7.02. Default Investments.............................................................................19

ARTICLE VIII. TRUST .............................................................................................................19Section 8.01. Trust Fund ...........................................................................................19Section 8.02. Trust Status..........................................................................................19

ARTICLE IX. DISTRIBUTIONS ..............................................................................................20

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Section 9.01. Distribution Restrictions.....................................................................20Section 9.02. Forms of Payment ...............................................................................20Section 9.03. Reemployment .....................................................................................20Section 9.04. Mandatory Cash-Out..........................................................................20Section 9.05. Coronavirus-Related Distributions. ..................................................21Section 9.06. Death Benefit .......................................................................................21Section 9.07. Required Minimum Distribution Rules ............................................21Section 9.08. Unforeseeable Financial Emergency Distributions..........................22Section 9.09. Transfer to Defined Benefit Governmental Plan .............................23Section 9.10. Transfers from the Plan......................................................................23

ARTICLE X. LOANS..................................................................................................................24

ARTICLE XI. VESTING............................................................................................................24Section 11.01. Vesting ..................................................................................................24Section 11.02. Felony Convictions ..............................................................................24

ARTICLE XII. ROLLOVERS FROM THIS PLAN ...............................................................24Section 12.01. Definitions for this Article ..................................................................24Section 12.02. Direct Transfer of Eligible Rollover Distribution ............................26Section 12.03. Mandatory Withholding of Eligible Rollover Distributions ...........26Section 12.04. Explanation of Plan Distribution and Withholding Requirements26

ARTICLE XIII. PARTICIPATING EMPLOYERS................................................................27Section 13.01. Adoption of Plan by Participating Employer ...................................27Section 13.02. Plan Terms...........................................................................................27Section 13.03. Withdrawal from Plan by Participating Employer .........................27Section 13.04. Termination of Participation for Failure to Make Timely

Contributions.......................................................................................27

ARTICLE XIV. ADMINISTRATION OF THE PLAN...........................................................27Section 14.01. Authority of the Administrator..........................................................27Section 14.02. Responsibility of the Participating Employer...................................28Section 14.03. Powers of the Administrator ..............................................................28Section 14.04. Delegation by Administrator..............................................................28Section 14.05. Employment of Consultants ...............................................................28

ARTICLE XV. REQUESTS FOR INFORMATION AND OTHER CLAIMS PROCEDURES ...............................................................................................28

Section 15.01. Requests for Information Concerning Eligibility, Participation and Contributions.......................................................................................28

Section 15.02. Requests for Information Concerning Investment Funds...............28Section 15.03. Processing of Claims ...........................................................................29

ARTICLE XVI. AMENDMENT AND TERMINATION........................................................29Section 16.01. Amendment and Termination............................................................29Section 16.02. Adverse Effects ....................................................................................29

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Section 16.03. Distribution Upon Termination of the Plan......................................29

ARTICLE XVII. MISCELLANEOUS ......................................................................................29Section 17.01. Non-Alienation.....................................................................................29Section 17.02. Military Service ...................................................................................30Section 17.03. Limitation of Rights and Obligations ................................................31Section 17.04. Federal and State Taxes......................................................................31Section 17.05. Erroneous Payments ...........................................................................32Section 17.06. Payments to Minors or Incompetents................................................32Section 17.07. Missing or Lost Participants ..............................................................32Section 17.08. Stale Distribution Checks ...................................................................32Section 17.09. No Reversion........................................................................................33Section 17.10. Claims of Other Persons .....................................................................33Section 17.11. Counterparts........................................................................................33

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COMMONWEALTH OF VIRGINIA 457 DEFERRED COMPENSATION PLAN

ARTICLE I.

ESTABLISHMENT AND RESTATEMENT OF PLAN

Section 1.01. Plan Establishment and History.

(a) Pursuant to the Government Employees Deferred Compensation Plan Act of 1979, Section 51.1-600 et seq. of the Code of Virginia ("Va. Code"), the Board of Trustees of the Virginia Retirement System ("Board") established the Commonwealth of Virginia 457 Deferred Compensation Plan ("Plan"), effective July 1, 1980, in order to provide eligible employees the opportunity to make voluntary deferrals.

(b) The Plan is, and is intended to remain, an eligible deferred compensation plan under Section 457(b) of the Internal Revenue Code ("Code"), and is a governmental plan within the meaning of Code Section 414(d) and Section 3(32) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). As a governmental plan, ERISA does not apply.

(c) The Plan was most recently amended and restated effective January 1, 2014, to add the hybrid deferred compensation provisions established under Va. Code Section 51.1-169, and has been amended once thereafter, generally effective July 1, 2015.

Section 1.02. Plan Restatement.

(a) The Plan is now being amended and restated effective January 1, 2021, except as otherwise specifically provided herein, to reflect the separation of the hybrid deferred compensation portion of the Plan to the Virginia Hybrid 457 Deferred Compensation Plan ("Hybrid 457 Plan").

(b) To effectuate the separation of the hybrid deferred compensation portion of this Plan to the Hybrid 457 Plan, the Board shall direct a transfer of the Plan assets held for eligible employees to the Hybrid 457 Plan trust as soon as administratively practicable following the establishment of the Hybrid 457 Plan.

(c) Except as otherwise specifically provided herein, the Plan as hereinafter set forth establishes the rights and obligations with respect to individuals who are Employees on and after January 1, 2021, and to transactions under the Plan on and after January 1, 2021. The rights and benefits, if any, of individuals who are not Employees on or after January 1, 2021, shall be determined in accordance with the terms and provisions of the Plan that were in effect on the date of their Severance from Employment, except as otherwise specifically provided herein or in a subsequent amendment.

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ARTICLE II.

CONSTRUCTION AND DEFINITIONS

Section 2.01. Construction and Governing Law.

(a) This Plan shall be interpreted, enforced and administered in accordance with the Code and, when not inconsistent with the Code, or expressly provided otherwise herein, the Va. Code without regard to conflict of law principles.

(b) Words used herein in the masculine gender shall be construed to include the feminine gender where appropriate, and vice versa, and words used herein in the singular or plural shall be construed as being in the plural or singular where appropriate, and vice versa.

(c) The headings and subheadings in the Plan are inserted for convenience of reference only and are not to be considered in the construction of any provision of the Plan.

(d) If any provision of the Plan shall be held to violate the Code or be illegal or invalid for any other reason, that provision shall be deemed to be null and void, but the invalidation of that provision shall not otherwise impair or affect the Plan.

(e) In resolving any conflict between provisions of the Plan and in resolving any other uncertainty as to the meaning or intention of any provision of the Plan, the interpretation that causes the Plan to (i) constitute an eligible deferred compensation plan under the provisions of Code Section 457(b), (ii) be a governmental plan as defined in ERISA Section 3(32) and Code Section 414(d), and (iii) comply with all applicable requirements of the Code, shall prevail over any different interpretation.

Section 2.02. Definitions. When the initial letter of a word or phrase is capitalized herein the meaning of such word or phrase shall be as follows:

(a) "Account" means the aggregate of the following separate accounts maintained for each Participant reflecting his or her interest under the Plan as follows:

(1) "Pre-Tax Contribution Account" means the account maintained to reflect the Participant's interest under the Plan attributable to his or her Pre-Tax Contributions pursuant to Section 4.01.

(2) "Roth Contribution Account" means the account maintained to reflect the Participant's interest under the Plan attributable to his or her Roth Contributions pursuant to Section 4.01.

(3) "Rollover Contribution Account" means the account maintained to reflect the Participant's interest under the Plan attributable to his or her Rollover Contributions pursuant to Section 4.05. There shall be the following separate subaccounts under the Rollover Contribution Account:

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(i) A subaccount to reflect the Participant's interest under the Plan attributable to his or her Rollover Contributions from a Code Section 457(b) plan within the meaning of Section 4.05(a);

(ii) A subaccount to reflect the Participant's interest under the Plan attributable to his or her Rollover Contributions from a Code Section 457(b) plan within the meaning of Section 4.05(a) that consists of Roth elective deferrals within the meaning of Section 4.05(b);

(iii) A subaccount to reflect the Participant's interest under the Plan attributable to his or her Rollover Contributions from an eligible retirement plan within the meaning of Section 4.05(a) other than a Code Section 457(b) plan; and

(iv) A subaccount to reflect the Participant's interest under the Plan attributable to his or her Rollover Contributions from an eligible retirement plan within the meaning of Section 4.05(a) other than a Code Section 457(b) plan that consists of Roth elective deferrals within the meaning of Section 4.05(b).

(4) "Transfer Contribution Account" means the account maintained to reflect the Participant's interest under the Plan attributable to his or her Transfer Contributions pursuant to Section 4.06. There shall be the following separate subaccounts under the Transfer Contribution Account:

(i) A subaccount to reflect the Participant's interest under the Plan attributable to his or her Transfer Contributions from an eligible retirement plan within the meaning of Section 4.06(a) that consists of after-tax employee contributions; and

(ii) A subaccount to reflect the Participant's interest under the Plan attributable to his or her Transfer Contributions from an eligible retirement plan within the meaning of Section 4.06(a) that consists of employer and/or employee contributions other than after-tax employee contributions.

(b) "Administrator" means VRS; provided, however, that to the extent that VRS has delegated any of its responsibilities as Administrator to any other person or persons, the term Administrator shall be deemed to refer to that person or persons. The VRS Director shall serve as the chief administrative officer of the Plan.

(c) "Agent" means a service provider selected by the Administrator, in its sole and absolute discretion, to provide services under the Plan.

(d) "Applicable Form" means the appropriate form as designated and furnished by the Administrator or the Agent to make any election or provide any notice required by the Plan. In those circumstances where a written election or consent is not required by the Plan or the Code, the Administrator and/or the Agent may prescribe an electronic or telephonic form in lieu of or in addition to a written form.

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(e) "Auto-Enrolled Employee" means a Participant who is subject to an Automatic Contribution Arrangement pursuant to either Va. Code Section 51.1-601.1 or 51.1-603.1(B), which shall include:

(1) An Employee of the Commonwealth employed or reemployed on or after January 1, 2008, in a position covered by VRS, who (i) has not elected to participate in a Code Section 403(b) plan or (ii) does not participate in the Hybrid 457 Plan.

(2) If provided in the Participating Employer's agreement with VRS, an Employee of a Political Subdivision employed or reemployed on or after a specified date agreed upon by VRS and the Political Subdivision who (i) has not elected to participate in a Code Section 403(b) plan or (ii) does not participate in the Hybrid 457 Plan.

(f) "Automatic Contribution Arrangement" is an arrangement under which, in the absence of an affirmative election by an Auto-Enrolled Employee, the Auto-Enrolled Employee shall be automatically enrolled in the Plan and deemed to have elected to have his or her Compensation reduced by a specified amount and paid to the Plan as a Pre-Tax Contribution, as described in Section 4.02.

(g) "Beneficiary" means any person, company, trustee or estate designated by the Participant on the Applicable Form to receive any benefits payable under the Plan in the event of the Participant's death. If the designated primary or contingent Beneficiary does not survive the Participant or there is no Beneficiary designated, the Participant's Beneficiary shall be determined in accordance with Va. Code Section 51.1-162, as follows: (i) the Participant's surviving Spouse, or if none; (ii) the Participant's children and descendants of deceased children, per stirpes, or if none; (iii) the Participant's parents equally if both living, or if none; (iv) the duly appointed executor or administrator of the Participant's estate, or if none; (v) the next of kin entitled to inherit under the laws of the Participant's domicile at the time of death. If a Beneficiary survives the Participant but dies before the entire Account has been distributed, then the unpaid balance of the Account shall be distributed to the Beneficiary's estate. Beneficiary also means an alternate payee within the meaning of Code Section 414(p)(8).

(h) "Board" means the Board of Trustees of the Virginia Retirement System.

(i) "Break in Service" means a period of at least one full calendar month from the end of the month in which the Participant has a Severance from Employment.

(j) "CARES Act" means the Coronavirus Aid, Relief, and Economic Security Act of 2020.

(k) "Code" means the Internal Revenue Code of 1986, as amended from time to time.

(l) "Commonwealth" means the Commonwealth of Virginia and an agency or instrumentality thereof.

(m) "Compensation" means a Participant's wages, salary, and other amounts received for personal services rendered to the Participating Employer as an Employee during the Employee's taxable year. Compensation includes: (i) any amounts excludable from taxable

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income because of an election under Code Sections 401(k), 403(b), 457(b), 125, and 132(f); (ii) bonuses; (iii) overtime; (iv) taxable reimbursements for office expenses of members of the General Assembly; (v) sick leave payments; (vi) family and personal leave payments; (vii) leave share payments; (viii) short-term disability payments under the Virginia Sickness and Disability Program or the Virginia Local Disability Program; and (ix) back pay. Compensation does not include: (a) any compensation received in the form of non-taxable fringe benefits; (b) long term disability benefits paid under the Virginia Sickness and Disability Program or the Virginia Local Disability Program; or (c) disability retirement payments under VRS. Compensation includes payments described in paragraphs (1) or (2) paid after the Employee's Severance from Employment, provided it is paid by the later of two and one-half months after the Employee's Severance from Employment or the end of the calendar year in which the Employee has a Severance from Employment:

(1) any payment that would have been paid to the Employee prior to a Severance from Employment if the Employee continued in employment with the Employer and that is regular compensation for services during the Employee's regular working hours, compensation for services outside the Employee's regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments; and

(2) a payment for unused vacation, sick pay (including the payout of disability credits under the Virginia Sickness and Disability Program), or accumulated compensatory time, but only if the Employee would have been able to use the leave if employment had continued and the payment would be Compensation if paid prior to the Employee's Severance from Employment.

Any payment that is not described in the preceding sentence is not considered Compensation if paid after Severance from Employment.

(n) "Contributions" mean Pre-Tax Contributions, Roth Contributions, Discretionary Employer Contributions, Rollover Contributions, and Transfer Contributions.

(o) "Coronavirus-Related Distribution" means a distribution made on or after April 9, 2020, but before December 31, 2020, or such later date as provided in legislation modifying or extending the CARES Act or regulatory guidance under the CARES Act, to a Qualified Individual in accordance with Section 9.05.

(p) "Cost-of-Living Adjustment" means the cost-of-living adjustment prescribed by the Secretary of the Treasury under Code Section 401(a)(17), 414(v), or 457(e)(15) for any applicable year.

(q) "Discretionary Employer Contributions" mean contributions made to the Plan by the Participating Employer on behalf of a Participant in accordance with Section 4.03.

(r) "Effective Date" of the Plan means July 1, 1980, and of this amendment and restatement means January 1, 2021.

(s) "Elective Deferral" means Pre-Tax Contributions and Roth Contributions.

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(t) "Employee" means any common law employee employed by a Participating Employer, including appointed or elected officials, who is designated as an Employee by the Participating Employer. An Employee includes an independent contractor only when expressly authorized by the Va. Code.

(u) "HEART" means the Heroes Earnings Assistance and Relief Tax Act of 2008, as amended from time to time.

(v) "Hybrid 457 Plan" means the Virginia Hybrid 457 Deferred Compensation Plan, as amended from time to time.

(w) "Includible Compensation" means all compensation received by an Employee from the Participating Employer that is includible in his or her gross income for federal income tax purposes (computed without regard to Code Section 911) for that taxable year. Includible Compensation also includes any amounts excludable from taxable income because of an election under Code Sections 401(k), 403(b), 457(b), 125, and 132(f). Includible Compensation includes any compensation described in paragraphs (1), (2), or (3), provided the compensation is paid by the later of two and one-half months after the Employee's Severance from Employment or the end of the calendar year in which the Employee has a Severance from Employment:

(1) a payment that would have been paid to the Employee prior to a Severance from Employment if the Employee had continued in employment with the Participating Employer and that is regular compensation for services during the Employee's regular working hours, compensation for services outside the Employee's regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments;

(2) a payment for unused accrued bona fide sick leave, vacation or other leave, but only if the Employee would have been able to use the leave if employment had continued and the payment would have been included in the definition of Includible Compensation if paid prior to the Employee's Severance from Employment; and

(3) a payment received by an Employee pursuant to a nonqualified unfunded deferred compensation plan, but only if the payment would have been paid to the Employee at the same time if the Employee had continued in employment with the Participating Employer and only to the extent that the payment is includible in the Employee's gross income.

Includible Compensation is determined without regard to any community property laws. Includible Compensation shall not exceed the limits under Code Section 401(a)(17), to the extent applicable, increased by the Cost-of-Living Adjustment.

(x) "Investment Funds" means the mutual funds, collective investment trust funds, insurance company separate accounts, annuity contracts, or other investment vehicles made available to Participants for the investment of their Accounts. The Administrator, in its sole and absolute discretion, shall select the Investment Funds and may add or delete Investment Funds.

(y) "Normal Retirement Age" means the age elected by the Participant on the Applicable Form that is (i) on or after the earlier of age 65 or the age at which the Participant can

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retire and receive an unreduced benefit from the Participating Employer's pension plan and (ii) not later than age 70½.

(z) "Participant" means any Employee who is or may become eligible to receive a benefit of any type under the Plan. A Participant shall also mean, when appropriate to the context, a former Employee who is eligible to receive a benefit of any type under the Plan.

(aa) "Participating Employer" means (i) the Commonwealth or (ii) a Political Subdivision that is an eligible employer within the meaning of Code Section 457(e)(1)(A) that has elected to offer the Plan to its Employees pursuant to Va. Code Section 51.1-603.1; provided, however, that a Political Subdivision that becomes a Participating Employer on or after January 1, 2021, must also be an employer as defined under Va. Code Section 51.1-124.3.

(bb) "Plan" means the Commonwealth of Virginia 457 Deferred Compensation Plan, as amended from time to time.

(cc) "Plan Year" means the calendar year.

(dd) "Political Subdivision" means a county, municipality, authority, school division, or other political subdivision of the Commonwealth or an agency thereof.

(ee) "Pre-Tax Contributions" mean the contributions made to the Plan by the Participating Employer at the election of a Participant pursuant to a Salary Reduction Agreement in accordance with Section 4.01.

(ff) "Qualified Distribution" means a distribution from a Roth Contribution Account after the Participant has satisfied a five year tax holding period and has attained age 59½, died, or become disabled, in accordance with Code Section 402A(d). The five year tax holding period is the period of five consecutive taxable years that begins with the first day of the first taxable year in which the Participant makes a designated Roth Contribution under the Plan or to another retirement plan which amount was directly rolled over to the Plan, and ends when five consecutive taxable years have been completed.

(gg) "Qualified Individual" means a Participant:

(1) who is diagnosed with the virus SARS-CoV-2 or with coronavirus disease 2019 (COVID-19) by a test approved by the Centers for Disease Control and Prevention;

(2) whose Spouse or dependent (as defined in Code Section 152) is diagnosed with such virus or disease by such a test; or

(3) who experiences adverse financial consequences as a result of:

(i) the Participant, the Participant's Spouse, or a member of the Participant's household (a) being quarantined, (b) being furloughed or laid off or having work hours reduced due to such virus or disease, (c) being unable to work due to lack of child care due to such virus or disease, (d) having a reduction in pay

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(or self-employment income) due to such virus or disease, or (e) having a job offer rescinded or start date for a job delayed due to such virus or disease;

(ii) closing or reducing hours of a business owned or operated by the Participant, the Participant's Spouse, or a member of the Participant's household due to such virus or disease; or

(iii) other factors as determined by the Secretary of the Treasury (or the Secretary's delegate); or

(4) any other Participant who satisfies the definition of a Qualified Individual as provided in legislation modifying or extending the CARES Act or regulatory guidance under the CARES Act.

For purposes of this paragraph (gg), a member of the Participant's household means someone who shares the Participant's principal residence.

(hh) "Related Employer" means the Participating Employer and any other entity which is under common control with the Participating Employer under Code Section 414(b), (c) or (m). For this purpose, the Board shall determine which entities are Related Employers based on a reasonable, good faith standard and taking into account the special rules applicable under Notice 89-23, 1989-1 C.B. 654.

(ii) "Rollover Contributions" mean the contributions made to the Plan pursuant to Section 4.05.

(jj) "Roth Contributions" mean contributions made to the Plan by the Participating Employer at the election of a Participant under a Salary Reduction Agreement that have been (i) designated irrevocably by the Participant as a Roth Contribution being made in lieu of all or a portion of the Pre-Tax Contributions the Participant is otherwise eligible to make under the Plan, and (ii) treated by the Participating Employer as includible in the Participant's gross income at the time the Participant would have received that amount in cash if the Participant had not made such an election.

(kk) "Salary Reduction Agreement" means an agreement entered into between an Employee and the Participating Employer pursuant to Section 4.01. Such agreement shall not be effective with respect to Compensation made available prior to the effective date of such agreement and shall be binding on the parties and irrevocable with respect to Compensation earned while it is in effect.

(ll) "Section" means, when not preceded by the word Code, a section of the Plan.

(mm) "Severance from Employment" means the complete termination of the employment relationship between the Employee and the Participating Employer.

(nn) "Spouse" means the person to whom the Participant is legally married under federal law.

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(oo) "Transfer Contributions" mean the contributions made to the Plan pursuant to Section 4.06.

(pp) "Trust" means the Master Trust for the Deferred Compensation Plan of the Commonwealth of Virginia, which may incorporate one or more qualified trusts under Code Section 457(g), custodial accounts treated as qualified trusts under Code Section 401(f), and/or annuity contracts treated as qualified trusts under Code Section 401(f), established under the Plan to hold Plan assets.

(qq) "Trust Fund" means the assets of the Plan held pursuant to the terms of the Plan and the Trust.

(rr) "Trustee" means the trustee or any successor trustee designated and appointed by VRS and includes a custodian of a custodial account or an insurer of an annuity contract under Code Section 457(g)(3).

(ss) "Unforeseeable Financial Emergency" means a severe financial hardship of the Participant resulting from:

(1) an illness or accident of the Participant, the Participant's Spouse, the Participant's dependent (as defined in Code Section 152, without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)), or a Beneficiary of the Participant;

(2) loss of the Participant's property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by homeowner's insurance, e.g., as a result of a natural disaster);

(3) the need to pay funeral expenses of the Participant's Spouse, the Participant's Dependent (as defined in Code Section 152, without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)), or a Beneficiary of the Participant; or

(4) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

(tt) "USERRA" means the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended from time to time.

(uu) "Va. Code" means the Code of Virginia, as amended from time to time.

(vv) "Vested" means the interest of the Participant or Beneficiary in his or her Accounts which is unconditional, legally enforceable, and nonforfeitable at all times.

(ww) "VRS" means the Virginia Retirement System.

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ARTICLE III.

ELIGIBILITY AND PARTICIPATION

Section 3.01. Participation.

(a) An Employee who is a Participant on the day before the Effective Date of this amended and restated Plan shall continue to be a Participant on the Effective Date.

(b) An Employee may become a Participant in the Plan immediately after commencement of employment or reemployment with a Participating Employer as an Employee.

(c) The Participating Employer shall notify the Employee of his or her eligibility to participate in the Plan. To become a Participant under the Plan, an Employee must complete the Applicable Forms, which may include a Salary Reduction Agreement and enrollment, beneficiary designation, and investment election forms, and return them to the Administrator or Agent, as applicable. Subject to Section 4.02, an Employee who fails to complete the Applicable Forms shall be deemed to have waived all of his or her rights under the Plan, provided that such Employee may become a Participant in the Plan at any time thereafter by completing the Applicable Forms and returning them to the Administrator or Agent, as applicable.

Section 3.02. Cessation of Contributions. A Participant shall cease to be eligible for Contributions under the Plan when (i) he or she is no longer an Employee, (ii) his or her Participating Employer ceases to be a Participating Employer, or (iii) the Plan is terminated.

Section 3.03. Reemployment. If an Employee has a Severance from Employment from his or her Participating Employer and is then reemployed by that Participating Employer or is employed by another Participating Employer, the Participant must complete the Applicable Forms pursuant to Section 3.01(c) to be eligible again for Contributions under the Plan.

ARTICLE IV.

CONTRIBUTIONS

Section 4.01. Elective Deferrals.

(a) Subject to the limitations under Article V, an Employee who has satisfied the participation requirements under Section 3.01 may enter into a written Salary Reduction Agreement agreeing to contribute each pay period Pre-Tax Contributions and/or Roth Contributions to the Plan equal to a specified dollar amount of his or her Compensation, as permitted by the Administrator. The Administrator may establish a minimum Elective Deferral amount from time to time.

(b) Elective Deferrals shall begin as soon as administratively practicable following the date specified in the Salary Reduction Agreement, or, if later or if no date is specified, as soon as administratively practicable after the Salary Reduction Agreement is filed with the

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Administrator. Notwithstanding the preceding, the Salary Reduction Agreement shall become effective no earlier than the first pay date of the month following the month in which the Salary Reduction Agreement is executed and submitted to the Administrator; provided, however, that a new Employee may defer Compensation payable in the calendar month during which he or she first becomes an Employee if he or she enters into a Salary Reduction Agreement before the first day on which he or she performs services for the Participating Employer.

(c) Elective Deferrals shall reduce the Compensation otherwise payable to a Participant and shall be paid in cash to the Trustee by the Participating Employer, on a basis consistent with its payroll practices, as soon as administratively feasible after being withheld from the Compensation of a Participant, but no later than 15 business days following the end of the month in which such amount is withheld from the Compensation of the Participant.

(d) If the Participant fails to designate whether Elective Deferrals are Pre-Tax Contributions or Roth Contributions, the Participant will be deemed to have designated his or her Elective Deferrals as Pre-Tax Contributions. Pre-Tax Contributions shall be allocated to the Pre-Tax Contribution Account of the Participant as of the date of contribution. Roth Contributions shall be allocated to the Roth Contribution Account of the Participant as of the date of contribution.

(e) A Participant may change his or her election to make Pre-Tax Contributions and/or Roth Contributions at any time by entering into a new Salary Reduction Agreement. Any such changes shall be effective as soon as administratively practicable following the date specified in the new Salary Reduction Agreement, or, if later, as soon as administratively practicable after the Salary Reduction Agreement is filed with the Administrator; provided that the Salary Reduction Agreement shall become effective no earlier than the first pay date of the month following the month in which the Salary Reduction Agreement is executed and submitted to the Administrator.

(f) A Participant may terminate his or her election to make Elective Deferrals at any time by filing the Applicable Form with the Administrator, which shall be effective as soon as administratively practicable after the Applicable Form is filed with the Administrator.

(g) If a Participant's Elective Deferrals to the Plan cease during a Plan Year because they exceed the limits set forth in Article V, the Participant must either ensure that his or her Employer begins Elective Deferrals pursuant to the existing Salary Reduction Agreement the following Plan Year or enter into a new Salary Reduction Agreement for the following Plan Year in order to continue making Elective Deferrals under the Plan.

(h) An election to make Elective Deferrals shall not be valid with respect to any period during which the Participant is not an Employee. No election to make, change, or discontinue Elective Deferrals shall be given retroactive effect.

(i) The Administrator may establish additional nondiscriminatory rules and procedures governing the manner and timing of elections by Participants to make, change, or discontinue Elective Deferrals.

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Section 4.02. Automatic Elective Deferrals.

(a) Notwithstanding Section 4.01 or any other provision of the Plan, an Employee who is an Auto-Enrolled Employee shall be automatically enrolled in the Plan pursuant to this Section 4.02.

(b) An Auto-Enrolled Employee shall be deemed to have elected to contribute Pre-Tax Contributions to the Plan, for the Plan Year and each subsequent Plan Year, in an amount equal to $20.00 each semi-monthly pay period. The preceding sentence shall not apply if, within a reasonable period of time (pursuant to policy established by the Administrator which shall be uniformly applied on a nondiscriminatory basis) after receipt of the notice described in paragraph (d) below, the Auto-Enrolled Employee affirmatively elects not to make Elective Deferrals to the Plan or affirmatively elects to make Pre-Tax Contributions and/or Roth Contributions under the Plan in a greater or lesser amount pursuant to Section 4.01.

(c) Automatic Pre-Tax Contributions shall become effective the first pay date of the next calendar month following the Employee's 90th day of employment or as soon as administratively practicable thereafter.

(d) Prior to making automatic Pre-Tax Contributions to the Plan on behalf of any Auto-Enrolled Employee, and at least 30 days but not more than 90 days before the beginning of each Plan Year thereafter, the Administrator or the Agent shall provide notice to the Auto-Enrolled Employee that explains:

(1) the amount and timing of automatic Pre-Tax Contributions;

(2) how Pre-Tax Contributions will be invested in the absence of an investment election by the Participant;

(3) the Auto-Enrolled Employee's right to modify or terminate automatic Pre-Tax Contributions, including to have contributions designated as Roth Contributions;

(4) the procedures for exercising the Auto-Enrolled Employee's right to make an affirmative election under the Plan;

(5) the timing for implementation of any such election; and

(6) the Auto-Enrolled Employee's right to make a withdrawal of automatic Pre-Tax Contributions in accordance with paragraph (f).

(e) Except as provided in paragraph (f), automatic Pre-Tax Contributions under this Section 4.02 shall remain in effect until the Participant affirmatively elects to modify or terminate automatic Pre-Tax Contributions by filing the Applicable Form under Section 4.01.

(f) An Employee may request a withdrawal of any automatic Pre-Tax Contributions made under this Section 4.02, provided that such request must be made no later than 90 days after the date automatic Pre-Tax Contributions are first withheld from Compensation. The effective date of the withdrawal shall be as soon as administratively practicable, but in no event

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later than the earlier of (i) the pay date for the second payroll period that begins after the Employee's withdrawal request and (ii) the first pay date that occurs after 30 days after the Employee's withdrawal request. The withdrawal shall include earnings through the date of distribution. Distributions made pursuant to this paragraph (f) are not counted against the limitations under Article V. Unless the Employee affirmatively elects otherwise, any withdrawal request shall be treated as an affirmative election to terminate Pre-Tax Contributions made on the Employee's behalf.

(g) Automatic Pre-Tax Contributions shall reduce the Compensation otherwise payable to a Participant and shall be paid in cash to the Trust Fund by the Participating Employer, on a basis consistent with its payroll practices, as soon as administratively feasible after being withheld from the Compensation of a Participant, but no later than 15 business days following the end of the month in which such amount is withheld from the Compensation of the Participant.

(h) Automatic Pre-Tax Contributions shall be allocated to the Pre-Tax Contribution Account of the Participant as of the date of contribution.

(i) Automatic Pre-Tax Contributions shall be invested in a default Investment Option described in Section 7.02 until such time that the Participant makes an affirmative investment election with the Administrator on the Applicable Form.

(j) The Administrator may establish additional nondiscriminatory rules and procedures governing the administration of automatic Pre-Tax Contributions.

Section 4.03. Discretionary Employer Contributions.

(a) A Participating Employer may make Discretionary Employer Contributions by completing and returning any Applicable Form to the Administrator.

(b) Notwithstanding Section 3.01(c), if an Employee fails to complete the Applicable Forms at such time that the Employee is eligible for Discretionary Employer Contributions, Discretionary Employer Contributions shall be made by the Participating Employer to the Participant's Pre-Tax Contribution Account under the Plan and invested in the default Investment Option described in Section 7.02 until such time that the Employee completes the Applicable Form.

(c) VRS shall establish reasonable policies to govern Discretionary Employer Contributions under the Plan, which may be amended from time to time. All Discretionary Employer Contributions shall comply with such policies and shall be administered in accordance with such policies.

(d) Discretionary Employer Contributions shall be allocated to each Participant's Pre-Tax Contribution Account as of the date made to the Plan, but no later than the last day of the Plan Year.

Section 4.04. Sick, Vacation and Back Pay. A Participant who has not had a Severance from Employment may elect to defer accumulated sick pay, accumulated vacation

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pay, and back pay under the Plan if the requirements of Code Section 457(b) are satisfied. These amounts may be deferred for any calendar month only if a Salary Reduction Agreement providing for the deferral is entered into before the beginning of the month in which the amounts would otherwise be paid or made available and the Participant is an Employee on the date the amounts would otherwise be paid or made available. Compensation that would otherwise be paid for a payroll period that begins before Severance from Employment is treated as an amount that is paid or made available before an Employee has a Severance from Employment.

Section 4.05. Rollover Contributions to the Plan.

(a) An Employee or former Employee may transfer to the Plan as a Rollover Contribution a distribution from:

(1) a Code Section 401(a) or 403(a) qualified plan, excluding after-tax employee contributions;

(2) a Code Section 403(b) plan, excluding after-tax employee contributions;

(3) a Code Section 457(b) eligible deferred compensation plan which is maintained by an eligible employer described in Code Section 457(e)(1)(A); or

(4) a Code Section 408 individual retirement account or annuity, with respect to the portion of the distribution that is eligible to be rolled over and would otherwise be includible in gross income.

(b) A Rollover Contribution under this paragraph shall be made directly from such prior plan, or if such amount was distributed to the Employee or former Employee, shall be made within 60 days after the Employee or former Employer receives the rollover amount, unless the 60 day deadline is waived under Code Section 402(c)(3)(B) or a later deadline is established under Internal Revenue Service guidance.

(c) An Employee or former Employee may also transfer to the Plan as a Rollover Contribution a distribution from a Roth elective deferral account under a Code Section 401(a) plan, a Code Section 403(b) plan, or a Code Section 457(b) eligible deferred compensation plan which is maintained by an eligible employer described in Code Section 457(e)(1)(A), but only to the extent that the Rollover Contribution is made directly from such prior plan and only to the extent the rollover is permitted under the rules of Code Section 402(c).

(d) A Rollover Contribution shall be subject to the Trustee's determination, in its discretion, that the Rollover Contribution satisfies all applicable requirements of the Code.

(e) A Rollover Contribution shall be allocated to a Rollover Contribution Account as of the date of the contribution; provided, however, that separate subaccounts shall be maintained to reflect Rollover Contributions from Code Section 457(b) plans and plans other than Code Section 457(b) plans, and separate subaccounts shall be maintained to reflect Rollover Contributions from elective deferral accounts and Roth elective deferral accounts, as provided in Section 2.02(a).

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(f) Before a Rollover Contribution is made, the Employee or former Employee shall designate on the Applicable Form the Investment Funds in which to invest his or her Rollover Contribution.

Section 4.06. Transfers to the Plan.

(a) Subject to the conditions set forth in this Section, the Plan shall accept as a Transfer Contribution a transfer on behalf of a: (i) Participant from the Hybrid 457 Plan if the transfer is to correct an eligibility error; or (ii) group of Participants from another 457(b) plan established and maintained by the Participating Employer if the other 457(b) plan is being merged into the Plan.

(b) The Plan shall only accept a transfer that satisfies the following conditions:

(1) The transferor plan permits the transfer;

(2) The Participant whose amounts are being transferred will have a deferred amount immediately after the transfer at least equal to the deferred amount with respect to that Participant immediately before the transfer; and

(3) The transfer shall satisfy such rules and policies established by the Administrator.

(c) A Transfer Contribution shall be allocated to the Transfer Contribution Account of the Participant as of the date of the transfer.

Section 4.07. Leave of Absence. During a paid leave of absence, Contributions shall continue to be made for a Participant on the basis of Compensation paid by the Participating Employer during the leave. No Contributions shall be made on behalf of a Participant who is on an unpaid leave of absence.

Section 4.08. Disability. A Participant who has not had a Severance from Employment may make Elective Deferrals during any period of time that he or she is disabled to the extent that the Participant has Compensation. Compensation does not include imputed compensation, long term disability benefits paid under the Virginia Sickness and Disability Program or the Virginia Local Disability Program, or disability retirement payments under VRS.

Section 4.09. Expenses of Plan. All reasonable expenses of administering the Plan shall be charged against and paid from the Participants' Accounts, subject to the terms of the applicable Investment Funds, unless paid by the Participating Employer. The Administrator shall have the right to allocate expenses associated with maintaining the Accounts of terminated Employees to such Accounts, even if no expenses are allocated to the Accounts of active Employees, in accordance with rules promulgated by the Internal Revenue Service.

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ARTICLE V.

LIMITATIONS ON CONTRIBUTIONS

Section 5.01. Elective Deferral Limits.

(a) The maximum amount of Elective Deferrals to the Plan for any calendar year shall be limited to the lesser of (i) the applicable dollar amount as provided in Code Section 457(e)(15) or (ii) the Participant's Includible Compensation as provided in Code Section 457(b)(2). The applicable dollar amount is $19,500 for 2021, increased thereafter by the Cost-of-Living Adjustment.

(b) A Participant who attains age 50 or more by the end of the calendar year, and who is contributing up to the applicable dollar amount under paragraph (a), may make additional Elective Deferrals under Code Section 414(v) of up to $6,500 for 2021, increased thereafter by the Cost-of-Living Adjustment.

(c) If the applicable year is one of a Participant's last three calendar years ending before the year in which the Participant attains Normal Retirement Age and the amount determined under this paragraph (c) exceeds the amount computed under paragraphs (a) and (b), then the Elective Deferrals limit under this Article V shall be the lesser of:

(1) An amount equal to two times the applicable dollar amount set forth in paragraph (a) for such year; or

(2) The sum of:

(i) An amount equal to (i) the aggregate paragraph (a) limit for the current year plus each prior calendar year beginning after December 31, 2001, during which the Participant was an Employee under the Plan, minus (ii) the aggregate amount of Compensation that the Participant deferred under the Plan during such years, plus

(ii) An amount equal to (i) the aggregate limit referred to in Code Section 457(b)(2) for each prior calendar year beginning after December 31, 1978, and before January 1, 2002, during which the Participant was an Employee (determined without regard to paragraph (b) or (c)), minus (ii) the aggregate contributions to Pre-2002 Coordination Plans (as defined by Treasury regulations and as provided in Section 5.03(c)) for such years.

However, in no event can the Elective Deferrals be more than the Participant's Compensation for the year.

Section 5.02. Participating Employer Contribution Limits. If the Participating Employer elects to make Discretionary Employer Contributions to the Plan on behalf of a Participant pursuant to Section 4.03, the Discretionary Employer Contributions shall be deemed Elective Deferrals for purposes of this Article, and shall apply toward the

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maximum Elective Deferral limits set forth in this Article in the taxable year that they are Vested.

Section 5.03. Coordination of Limits.

(a) If the Participant is or has been a participant in one or more other eligible plans within the meaning of Code Section 457(b), including the Hybrid 457 Plan, then this Plan and all such other plans shall be considered as one plan for purposes of applying the foregoing limitations of this Article V. For this purpose, the Administrator shall take into account any other such eligible plan maintained by the Participating Employer for which the Administrator receives from the Participating Employer sufficient information concerning such plan, and shall also take into account any other such eligible plan for which the Administrator receives from the Participant sufficient information concerning his or her participation in such other plan.

(b) In applying Section 5.03, a year shall be taken into account only if:

(1) the Participant was eligible to participate in the Plan during all or a portion of the year; and

(2) Compensation deferred, if any, under the Plan during the year was subject to the applicable dollar amount described in Section 5.01(a) or any other plan ceiling required by Code Section 457(b).

(c) For purposes of Section 5.01(c)(2)(ii) "contributions to Pre-2002 Coordination Plans" means any employer contribution, salary reduction or elective contribution under any other eligible Code Section 457(b) plan, or a salary reduction or elective contribution under any Code Section 401(k) qualified cash or deferred arrangement, Code Section 402(h)(1)(B) simplified employee pension (SARSEP), Code Section 403(b) annuity contract, and Code Section 408(p) simple retirement account, or under any plan for which a deduction is allowed because of a contribution to an organization described in Code Section 501(c)(18), including plans, arrangements or accounts maintained by the Participating Employer or any employer for whom the Participant performed services. However, the contributions for any calendar year are only taken into account for purposes of Section 5.01(c)(2)(ii) to the extent that the total of such contributions does not exceed the aggregate limit referred to in Code Section 457(b)(2) for that year.

(d) For 2002 and thereafter, any amounts contributed by the Participant to a tax-sheltered annuity pursuant to Code Section 403(b) or to a 401(k) plan pursuant to Code Section 402(e)(3) shall not reduce the maximum Elective Deferrals under Section 5.01.

(1) An individual is treated as not having deferred compensation under a plan for a prior taxable year to the extent excess deferrals under the plan are distributed, as described in Section 5.04. To the extent that the combined deferrals for pre-2002 years exceeded the maximum deferral limitations, the amount is treated as an excess deferral for those prior years.

(2) The Participant is responsible for ensuring coordination of these limits.

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Section 5.04. Correction of Excess Deferrals.

(a) If the Elective Deferrals on behalf of a Participant for any calendar year exceeds the limitations described above, or the Elective Deferrals on behalf of a Participant for any calendar year exceeds the limitations described above when combined with other amounts deferred by the Participant under another eligible deferred compensation plan under Code Section 457(b) for which the Participant provides information that is accepted by the Administrator, then the Elective Deferrals, to the extent in excess of the applicable limitation and adjusted for earnings, shall be distributed to the Participant no later than the April 15 following the calendar year in which the excess Elective Deferral was made.

(b) Excess Elective Deferrals shall be distributed from the following plans in the following order:

(1) the other eligible deferred compensation plan or plans (not including the Hybrid 457 Plan);

(2) a Participant's unmatched Roth Contributions to this Plan;

(3) a Participant's unmatched Pre-Tax Contributions to this Plan;

(4) a Participant's matched Roth Contributions to this Plan;

(5) a Participant's matched Pre-Tax Contributions; and

(6) a Participant's Discretionary Employer Contributions.

ARTICLE VI.

ACCOUNTING

Section 6.01. Participant Accounts. The Agent shall establish and maintain adequate records to reflect the Accounts of each Participant and Beneficiary. Credits and charges shall be made to such Accounts to reflect additions, distributions, and withdrawals, and to reflect gains or losses pursuant to the terms of each Investment Fund. The maintenance of individual Accounts is for accounting purposes only, and a segregation of Plan assets to each Account shall not be required.

Section 6.02. Participant Statements. The Agent shall provide to each Participant a quarterly statement reflecting the value of the Participant's Account as of the end of each quarter and shall provide similar information to the Administrator upon its request.

Section 6.03. Value of Account. The value of the Account of a Participant as of any valuation date is the value of the Account balance as determined by the Agent. The valuation date shall be the last day of the Plan Year and each other date designated by the Administrator or Agent in a uniform and nondiscriminatory manner. All transactions and Account records shall be based on fair market value.

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ARTICLE VII.

INVESTMENT OF CONTRIBUTIONS

Section 7.01. Investment Funds.

(a) All Contributions under the Plan shall be transferred to the Trust to be held, managed, invested, and distributed in accordance with the provisions of the Plan and the Investment Funds as applicable.

(b) Participants' Accounts shall be invested in one or more of the Investment Funds available to Participants under this Plan, as selected by the Administrator and communicated to Participants. The Administrator's current selection of Investment Funds is not intended to limit future additions or deletions of Investment Funds.

(c) A Participant shall have the right to direct the investment of his or her Account among the Investment Funds by filing the Applicable Form with the Administrator. A Participant may change his or her investment election as often as determined by the Administrator. A Participant may elect to transfer all or any portion of his or her Accounts invested in any one Investment Fund to another Investment Fund, subject to the limitations of the Investment Fund, by filing a request on the Applicable Form with the Administrator.

Section 7.02. Default Investments. If a Participant does not have a valid and complete investment direction on file with the Administrator on the Applicable Form, Contributions may be invested in a default fund selected by the Administrator in its sole discretion, until the Participant makes an affirmative election regarding the investment of his or her Account.

ARTICLE VIII.

TRUST

Section 8.01. Trust Fund. All Contributions under the Plan shall be transferred to the Trustee to be held in Trust as part of the Trust Fund in accordance with the provisions of the Plan and the Investment Funds, as applicable. All assets held in connection with the Plan, including all Contributions, all property and rights acquired or purchased with such amounts, and all income attributable to such amounts, property or rights, shall be held in, managed, invested and distributed in Trust as part of the Trust Fund, in accordance with the provisions of the Plan. All benefits under the Plan shall be distributed solely from the Trust Fund, and VRS and/or Participating Employer shall have no liability for any such benefits other than the obligation to make Contributions as provided in the Plan.

Section 8.02. Trust Status. The Trust Fund shall be held in Trust for the exclusive benefit of Participants and Beneficiaries under the Plan in accordance with Code Section 457(g). No part of the Trust Fund shall be used for, or diverted to, purposes other than for the exclusive benefit of Participants and their Beneficiaries, and for defraying the reasonable expenses of the Plan and Trust. The Trust is exempt from tax pursuant to Code Sections 457(g)(2) and 501(a).

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ARTICLE IX.

DISTRIBUTIONS

Section 9.01. Distribution Restrictions.

(a) Except as otherwise provided in this Section 9.01, a Participant or Beneficiary is not entitled to a distribution of his or her Vested Accounts under the Plan until the Participant has had a Break in Service following a Severance from Employment.

(b) Notwithstanding paragraph (a), a Participant who is an Employee may request a distribution of his or her Account on or after the January 1 of the calendar year in which the Participant attains age 70½, even if the Participant has not had a Severance from Employment.

(c) Notwithstanding paragraph (a), a Participant may request a distribution from his or her Rollover Contribution Account at any time.

(d) Notwithstanding paragraph (a), a Participant who is an Employee may request a distribution of his or her Account at any time if (i) his or her Account balance does not exceed the de minimis amounts under Code Section 457(e)(9)(A), (ii) no contributions have been made to the Participant's Account in the 24 month period preceding the date the distribution request, (iii) the Participant has not previously taken a withdrawal under this paragraph (d), and the distribution equals the Participant's entire Account balance.

(e) A Participant or Beneficiary may submit a request for a distribution to the Administrator on the Applicable Form. The Participating Employer shall certify that the Participant has had a Severance from Employment, if applicable.

Section 9.02. Forms of Payment.

(a) Subject to Section 9.06, the terms of the Investment Funds, and any restrictions established by VRS, a Participant may elect to receive his or her Vested Account under any form of payment approved by the Administrator which may include a lump sum payment, annuity payment, periodic payment, or partial lump sum with remainder paid as a periodic payment or annuity payment.

(b) Notwithstanding paragraph (a), a distribution under Section 9.01(c) or 9.01(d) made prior to Severance from Employment shall only be made as a lump sum payment.

Section 9.03. Reemployment. If a Participant who is a former Eligible Employee subsequently becomes an Eligible Employee again after distribution of his or her Accounts has begun under a payment option other than annuity payments, such distributions shall immediately cease, and the Eligible Employee shall not receive any benefits under the Plan until the Employee is entitled to a distribution under Section 9.01.

Section 9.04. Mandatory Cash-Out. A lump sum payment of the Participant's Account may be made at the Participant's Severance from Employment without his or her consent, provided that the Account balance (not including the Rollover Contribution Account)

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does not exceed $1,000, unless the Participant elects to have such distribution paid directly to an eligible retirement plan specified by the Participant in a direct rollover. Any lump sum payments made under this Section 9.04 shall be made in a uniform and nondiscriminatory manner.

Section 9.05. Coronavirus-Related Distributions.

(a) Notwithstanding Section 9.01 and subject to the limitation under paragraph (b) and the terms of the Investment Funds, a Participant who is a Qualified Individual may request one or more Coronavirus-Related Distributions from his or her Vested Accounts.

(b) Coronavirus-Related Distributions to a Participant from this Plan and all other plans maintained by the Participating Employer or a Related Employer may not exceed $100,000.

(c) A Participant shall certify to the Administrator that he or she is a Qualified Individual prior to receiving a Coronavirus-Related Distribution.

(d) Notwithstanding any other provision of the Plan, Coronavirus-Related Distributions shall be made in accordance with the CARES Act, any subsequent legislation addressing Coronavirus-Related Distributions, and any regulatory guidance issued thereunder.

Section 9.06. Death Benefit. If a Participant dies before distribution of his or her entire Account, his or her Account shall be payable to his or her Beneficiary under the distribution options available under the Investment Funds, subject to Code Section 401(a)(9).

Section 9.07. Required Minimum Distribution Rules.

(a) The provisions of this Section 9.07 take precedence over any inconsistent provisions of the Plan. All distributions under this Plan shall be made in accordance with Code Section 401(a)(9) and the regulations promulgated thereunder, including the incidental death benefit rules under Code Section 401(a)(9)(G), and the changes under the Setting Every Community Up for Retirement Enhancement Act of 2019, and any regulatory guidance issued thereunder, and shall comply with rules under this Section 9.07.

(b) Distributions may only be made over one of the following periods (or a combination thereof):

(1) The life of the Participant;

(2) The life of the Participant and a designated individual Beneficiary;

(3) A period certain not extending beyond the life expectancy of the Participant; or

(4) A period certain not extending beyond the joint and last survivor life expectancy of the Participant and designated individual Beneficiary.

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(c) A Participant's Accounts shall be distributed to the Participant beginning no later than his or her “required beginning date” as defined in this paragraph or, if applicable, as defined in subsequent legislation or regulations that amend the definition of required beginning date for purposes of Code Section 401(a)(9). Subject to the preceding sentence, required beginning date shall mean April 1 of the calendar year following the calendar year in which the Participant attains age 70½ (age 72 for distributions required to be made after December 31, 2019, with respect to a Participant who would have attained age 70½ after December 31, 2019) or, if later, April 1 of the calendar year following the calendar year that the Participant has a Severance from Employment.

(d) The Administrator or its Agent shall calculate the amounts required to be distributed to a Participant under this Section and notify such Participant of such distributions prior to the date distributions must begin.

(e) Notwithstanding anything in this Section 9.07 to the contrary, for 2020 or such longer period as provided in legislation modifying or extending the CARES Act, the minimum distribution requirements will be satisfied as provided in this paragraph (e).

(1) Effective March 27, 2020, or as soon as administratively practicable thereafter, a Participant or Beneficiary who would have been required to receive a required minimum distribution in 2020 (or paid in 2021 for the 2020 calendar year for a Participant with a required beginning date of April 1, 2021) but for the enactment of Code Section 401(a)(9)(I) ("2020 RMDs") and who would have satisfied that requirement by receiving distributions that are equal to the 2020 RMDs, will not receive these distributions unless the Participant or Beneficiary chooses to receive the distributions. Participants and Beneficiaries described in the preceding sentence will be given the opportunity to elect to receive the distributions described in the preceding sentence.

(2) Effective March 27, 2020, or as soon as administratively practicable thereafter, a Participant who would have been required to receive 2020 RMDs and who would have satisfied that requirement by receiving distributions that are one or more payments (that include the 2020 RMDs) in a series of substantially equal periodic payments made at least annually and expected to last for the life (or life expectancy) of the Participant, the joint lives (or joint life expectancies) of the Participant and the Beneficiary, or for a period of at least 10 years ("Extended 2020 RMDs"), will receive these distributions unless the Participant or Beneficiary chooses not to receive the distributions. Participants and Beneficiaries described in the preceding sentence will be given the opportunity to elect to stop receiving the distributions described in the preceding sentence.

(3) In addition, solely for purposes of applying the direct rollover provisions of Article VII, 2020 RMDs and Extended 2020 RMDs will be treated as eligible rollover distributions in 2020.

Section 9.08. Unforeseeable Financial Emergency Distributions.

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(a) A Participant who has not had a Severance from Employment may receive a distribution for an Unforeseeable Financial Emergency from his or her Account.

(b) Any distribution made because of the Participant's Unforeseeable Financial Emergency shall not exceed the amount reasonably necessary to relieve the Participant's need, including any anticipated taxes or penalties associated with such distribution.

(c) The Participant's distribution request shall specify the reason for the Unforeseeable Financial Emergency and specify the amount the Participant wishes to withdraw to meet the need caused by the Unforeseeable Financial Emergency.

(d) A distribution on account of Unforeseeable Financial Emergency shall not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant's assets to the extent the liquidation of such assets would not itself cause severe financial hardship, or by cessation of Elective Deferrals under the Plan.

(e) The Administrator or its Agent shall determine based on uniform and nondiscriminatory standards whether an Unforeseeable Financial Emergency exists based on the facts and circumstances and in accordance with the claims procedures of the Plan.

(f) The Administrator may charge a reasonable fee for processing Unforeseeable Financial Emergency distributions.

Section 9.09. Transfer to Defined Benefit Governmental Plan.

(a) If a Participant is also a participant in a tax-qualified defined benefit governmental plan (as defined in Code Section 414(d)) that provides for the acceptance of plan-to-plan transfers with respect to the Participant, then the Participant may elect to have any portion of the Participant's Vested Account transferred to the defined benefit governmental plan, subject to the terms of the Investment Fund. A transfer under this Section may be made before the Participant has had a Severance from Employment.

(b) A transfer may be made under this Section only if the transfer is either for the purchase of permissive service credit (as defined in Code Section 415(n)(3)(A)) under the receiving defined benefit governmental plan or a repayment to which Code Section 415 does not apply by reason of Code Section 415(k)(3).

(c) Notwithstanding paragraph (a), no portion of the Participant's Account attributable to Roth Contributions or Roth Rollover Contributions may be transferred under this Section 9.08.

Section 9.10. Transfers from the Plan. The Plan shall transfer a Participant's Account to the Hybrid 457 Plan to correct an eligibility error under the following conditions: (i) the Participant whose amounts are being transferred will have a deferred amount immediately after the transfer at least equal to the deferred amount with respect to that Participant immediately before the transfer; and (ii) the transfer satisfies such other rules and policies established by the Administrator.

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ARTICLE X.

LOANS

Loans are not permitted under the Plan.

ARTICLE XI.

VESTING

Section 11.01. Vesting. A Participant shall be 100% Vested in his or her Accounts at all times.

Section 11.02. Felony Convictions.

(a) Notwithstanding Section 11.01, if a Participant (i) is convicted of a felony and (ii) his or her Participating Employer determines that the felony arose from misconduct occurring on or after July 1, 2011, in any position in which the Participant was covered for retirement purposes under any retirement system administered by the Board, the Participant shall forfeit his or her Discretionary Employer Contributions, if any. Such forfeiture shall occur following the Participating Employer's notification to VRS that a felony conviction arising from such misconduct has been obtained and the administrative process as set forth in Va. Code Section 51.1-124.13 has concluded. If the Participant is or becomes a Participant in service after such forfeiture, he or she shall be entitled to the benefits based solely on his or her service after the forfeiture.

(b) Forfeitures arising under paragraph (a) shall be allocated to a forfeiture account under the Plan and shall be used to reduce Plan expenses.

ARTICLE XII.

ROLLOVERS FROM THIS PLAN

Section 12.01. Definitions for this Article. For purposes of this Article, the following definitions shall apply.

(a) "Direct Rollover" means an Eligible Rollover Distribution that is paid directly to an Eligible Retirement Plan for the benefit of the Distributee.

(b) "Distributee" means a Participant, the Spouse of the Participant, or the Participant's former Spouse who is the alternate payee under a qualified domestic relations order as defined in Code Section 414(p), and a Participant's non-Spouse Beneficiary, any of whom is eligible to receive a distribution from the Plan.

(c) "Eligible Retirement Plan," as defined under Code Section 402(c)(8)(B), means:

(1) an individual retirement account described in Code Section 408(a);

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(2) an individual retirement annuity (other than an endowment contract) described in Code Section 408(b);

(3) any annuity plan described in Code Section 403(a);

(4) a plan described in Code Section 403(b);

(5) a qualified plan described in Code Section 401(a);

(6) a Code Section 457(b) eligible deferred compensation plan which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state;

(7) a Roth individual retirement account described in Code Section 408A(e) provided the Distributee's adjusted gross income does not exceed any limit applicable under federal law for the tax year in which the distribution occurs; and

(8) a SIMPLE IRA described in Code Section 408(p)(1), provided that the rollover contribution is made after the two year period described in Code Section 72(t)(6).

In the case of a distribution to a non-Spouse Beneficiary, an Eligible Retirement Plan means the plans described in subparagraphs (1) and (2) only, to the extent consistent with the provisions of Code Section 402(c)(11) and any successor provisions thereto or additional guidance issued thereunder.

(d) "Eligible Rollover Distribution," as defined in Code Section 402(f)(2)(A), means any distribution of all or any portion of the balance to the credit of the Distributee under the Plan, excluding the following:

(1) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Distributee or the joint lives (or joint life expectancies) of the Distributee and the Distributee's designated Beneficiary, or for a specified period of 10 years or more;

(2) any distribution to the extent such distribution is required under Code Section 401(a)(9);

(3) the portion of any distribution that is not includible in gross income; however, a portion of a distribution will not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions that are not includible in gross income, although such portion may be transferred only to an individual retirement account or annuity described in Code Section 408(a) or (b) or to a qualified retirement plan described in Code Section 401(a) that agrees to separately account for amounts so transferred (and earnings thereon), including separately accounting for the portion of the distribution that is includible in gross income and the portion of the distribution that is not so includible;

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(4) any distribution which is made upon the financial hardship of the Participant; and

(5) other items designated by regulations, or by the Commissioner in revenue rulings, notices, or other guidance, as items that do not constitute an eligible rollover distribution.

Section 12.02. Direct Transfer of Eligible Rollover Distribution. A Distributee may elect on an Applicable Form to have an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan as specified by the Distributee in a Direct Rollover, at the time and in the manner prescribed by the Administrator. An Eligible Rollover Distribution that is paid to an Eligible Retirement Plan in a Direct Rollover is excludable from the Distributee's gross income under Code Section 402; provided, however, if any portion of such Eligible Rollover Distribution is subsequently distributed from the Eligible Retirement Plan, that portion shall be included in gross income to the extent required under Code Section 402, 403, or 408.

Section 12.03. Mandatory Withholding of Eligible Rollover Distributions.

(a) If the Distributee of an Eligible Rollover Distribution does not elect to have the Eligible Rollover Distribution paid directly from the Plan to an Eligible Retirement Plan in a Direct Rollover pursuant to Code Section 401(a)(31), the Eligible Rollover Distribution shall be subject to a mandatory 20% federal income tax withholding under Code Section 3405(c). Only that portion of the Eligible Rollover Distribution that is not paid directly from the Plan to an Eligible Retirement Plan in a Direct Rollover shall be subject to the mandatory withholding requirement under Code Section 3405(e), and only to the extent such amount would otherwise be includible in the Distributee's taxable gross income.

(b) If a Distributee elects to have an Eligible Rollover Distribution paid to the Distributee, the distribution may be excluded from the gross income of the Distributee provided that said distribution is contributed to an Eligible Retirement Plan no later than the 60th day following the day on which the Distributee received the distribution.

(c) If the Plan distribution is not an Eligible Rollover Distribution, said distribution shall be subject to the elective withholding provisions of Code Section 3405(a) and (b).

Section 12.04. Explanation of Plan Distribution and Withholding Requirements.

(a) Not fewer than 30 days nor more than 180 days before an Eligible Rollover Distribution, the Administrator shall provide each Distributee a written explanation as required under Code Section 402(f), which explains the rules:

(1) under which a Distributee may elect to have an Eligible Rollover Distribution paid in a Direct Rollover to an Eligible Retirement Plan;

(2) that require the withholding of tax on an Eligible Rollover Distribution if it is not paid in a Direct Rollover to an Eligible Retirement Plan;

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(3) that provide that a distribution shall not be subject to tax if the distribution is rolled over to an Eligible Retirement Plan within 60 days after the date the Distributee receives the distribution; and

(4) if applicable, certain special rules regarding taxation of the distribution as described in Code Sections 402(d) and (e).

(b) Notwithstanding paragraph (a), a distribution may begin fewer than 30 days after the notice discussed in the preceding sentence is given, provided that the Administrator clearly informs the Participant that he or she has a right to a period of at least 30 days after receiving the notice to consider the decision of whether or not to elect a distribution and the Participant, after receiving a notice, affirmatively elects a distribution.

ARTICLE XIII.

PARTICIPATING EMPLOYERS

Section 13.01. Adoption of Plan by Participating Employer. A Political Subdivision must enter into an agreement with VRS before its Employees may become Participants in the Plan.

Section 13.02. Plan Terms. Each Participating Employer shall adopt the Plan on the same terms without modification. Any amendment of the Plan by VRS shall be effective and binding on each Participating Employer.

Section 13.03. Withdrawal from Plan by Participating Employer. A Participating Employer that is a Political Subdivision may cease making contributions to the Plan and request a trustee to trustee transfer of its Employees' Accounts to a separate Code Section 457(b) plan established by the Participating Employer, pursuant to such procedures adopted by the Board from time to time.

Section 13.04. Termination of Participation for Failure to Make Timely Contributions. The Board may terminate the participation of a Participating Employer that is a Political Subdivision for recurring failures by the Participating Employer to remit Contributions to the Trustee in a timely manner. Upon such termination, VRS shall transfer the Participating Employer's Employee Accounts to a separate Code Section 457(b) plan established by the Participating Employer, pursuant to such procedures adopted by the Board. If no such separate Code Section 457(b) plan is established, the Plan shall be deemed terminated with respect to that Participating Employer and Employee Accounts shall be distributed to Employees.

ARTICLE XIV.

ADMINISTRATION OF THE PLAN

Section 14.01. Authority of the Administrator. The Administrator is responsible for performing the duties required for operation of the Plan. The Administrator shall have all power necessary or convenient to enable it to exercise its authority under the

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Plan. In connection therewith, the Administrator may provide rules and regulations, not inconsistent with the provisions hereof, for the operation and management of the Plan, and may from time to time amend or rescind such rules or regulations. The Administrator is authorized to accept service of legal process for the Plan.

Section 14.02. Responsibility of the Participating Employer. The Participating Employer is responsible for notifying Participants that they are eligible to participate in the Plan, providing the Administrator complete and accurate information as needed to administer the Plan, and such other responsibilities as may be delegated to Participating Employer by the Administrator from time to time. A Participating Employer that is either a state agency that has decentralized its payroll function or a Political Subdivision is responsible for timely remitting Contributions for its Employees to the Trust. The Department of Accounts of the Commonwealth is responsible for timely remitting Contributions to the Trust on behalf of Employees of any other Participating Employer.

Section 14.03. Powers of the Administrator. The Administrator shall have the power and discretion to construe and interpret the Plan, including any ambiguities, to determine all questions of fact or law arising under the Plan, and to resolve any disputes arising under and all questions concerning administration of the Plan. The Administrator may correct any defect, supply any omission or reconcile any inconsistency in the Plan in such manner and to such extent as the Administrator may deem expedient and, subject to the Plan's claims procedures, the Administrator should be the sole and final judge of such expediency. Benefits under the Plan shall be paid only if the Administrator decides in its discretion that the Participant or Beneficiary is entitled to them.

Section 14.04. Delegation by Administrator. The Administrator may delegate to an individual, committee, or organization to carry out its fiduciary duties or other responsibilities under the Plan. Any such individual, committee or organization delegated fiduciary duties shall be a fiduciary until the Administrator revokes such delegation. A delegation of the Administrator duties or responsibilities may be revoked without cause or advance notice. Such individual, committee, or organization shall have the same power and authority with respect to such delegated fiduciary or other responsibilities as the Administrator has under the Plan.

Section 14.05. Employment of Consultants. The Administrator may employ one or more persons to render advice with regard to its responsibilities under the Plan.

ARTICLE XV.

REQUESTS FOR INFORMATION AND OTHER CLAIMS PROCEDURES

Section 15.01. Requests for Information Concerning Eligibility, Participation and Contributions. Requests for information concerning eligibility, participation, contributions, or any other aspects of the operation of the Plan, and service of legal process, should be in writing and directed to the Administrator of the Plan.

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Section 15.02. Requests for Information Concerning Investment Funds. Requests for information concerning the Investment Funds and their terms, conditions, and interpretations thereof, claims thereunder, and any requests for review of such claims, should be in writing and directed to the Administrator of the Plan.

Section 15.03. Processing of Claims. Claims under the Plan shall be processed in a manner consistent with the Virginia Administrative Process Act, Va. Code Section 2.2-4000 et seq.

ARTICLE XVI.

AMENDMENT AND TERMINATION

Section 16.01. Amendment and Termination. While it is expected that the Plan shall continue indefinitely, the Commonwealth reserves the right to amend, freeze, or terminate the Plan, or to discontinue any further Contributions to the Plan at any time. The Board may, consistent with Va. Code Section 51.1-600 et seq., make any amendment to the Plan, provided that no such amendment shall reduce, suspend or terminate the accrued benefits otherwise payable to a Participant or Beneficiary hereunder as of the date of such amendment. To the extent required by the exclusive benefit rule, any amendment shall not be effective to the extent that the amendment has the effect of causing any Plan assets to be diverted to or inure to the benefit of the Participating Employer, or to be used for any purpose other than providing benefits to Participants and Beneficiaries and defraying reasonable expenses of administering the Plan.

Notwithstanding the foregoing, the Board hereby delegates to the VRS Director the right to modify, alter, or amend the Plan in whole or in part to make any technical modification, alteration or amendment which (i) in the opinion of VRS' counsel is necessary to comply with federal law or (ii) does not substantially increase costs, contributions, or benefits or materially affect the eligibility, vesting or benefit accrual or allocation provisions of the Plan.

Section 16.02. Adverse Effects. Any amendment or termination of the Plan cannot adversely affect the benefits accrued by Participants prior to the date of amendment or termination. The Plan may not be amended in a manner that violates any provision of the Code.

Section 16.03. Distribution Upon Termination of the Plan. The Commonwealth has the right to completely terminate this Plan at any time and in its sole discretion. In such a case, VRS shall arrange for suitable distribution of Plan assets, including the possibility of transfer to another 457 plan or plans. The Trustee shall not be required to pay out any asset of the Trust Fund to Participants and Beneficiaries or a successor plan upon termination of the Trust until the Trustee has received written confirmation from VRS (i) that all provisions of the law with respect to such termination have been complied with, and, (ii) after the Trustee has made a determination of the fair market value of the assets of the Plan, that the assets of the Plan are sufficient to discharge when due all obligations of the Plan required by law. The Trustee shall rely conclusively upon such written certification and shall be under no obligation to investigate or otherwise determine its propriety.

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ARTICLE XVII.

MISCELLANEOUS

Section 17.01. Non-Alienation.

(a) A Participant's Account under the Plan shall not be liable for any debt, liability, contract, engagement, or tort of the Participant or his or her Beneficiary, nor subject to anticipation, sale, assignment, transfer, encumbrance, pledge, charge, attachment, garnishment, execution, alienation, or any other voluntary or involuntary alienation or other legal or equitable process, nor transferable by operation of law.

(b) Notwithstanding paragraph (a), the Plan shall comply with any judgment, decree or order ("domestic relations order") which establishes the right of an alternate payee within the meaning of Code Section 414(p)(8) to all or a portion of a Participant's benefit under the Plan to the extent that it is a "qualified domestic relations order" ("QDRO") under Code Section 414(p). The Administrator shall establish reasonable written procedures to determine whether a domestic relations order is a QDRO and to administer the distribution of benefits with respect to such orders, which procedures may be amended from time to time, and which shall be provided to Participants upon request. Notwithstanding any other provisions in the Plan, the Plan may make an immediate distribution to the alternate payee pursuant to a QDRO.

(c) Notwithstanding paragraph (a), the Plan shall offset from the benefit otherwise payable to a Participant or his or her Spouse such amounts as are permitted to be offset under a court order, civil judgment, or settlement agreement in accordance with Code Section 401(a)(13)(C).

(d) Notwithstanding paragraph (a), the Administrator may pay from Participant's or Beneficiary's Account under the Plan the amount that the Administrator finds is lawfully demanded under a levy issued by the Internal Revenue Service with respect to that Participant or Beneficiary or is sought to be collected by the United States Government under a judgment resulting from an unpaid tax assessment against the Participant or Beneficiary. Except in the case of an alternate payee within the meaning of Code Section 414(p)(8), under no circumstances may a payment under this paragraph (d) take place before a Participant has a Severance from Employment or reaches age 72, whichever is earlier.

(e) Notwithstanding paragraph (a), pursuant to Va. Code Section 51.1-124.4(A), the Administrator shall honor any process for a debt to the Participating Employer who has employed such person, and except for administrative actions pursuant to Chapter 19 (Section 63.2-1900 et seq.) of Title 63.2 of the Va. Code or any court process to enforce a child or child and spousal support obligation. Under no circumstances may a payment under this paragraph (e) take place before a Participant has a Severance from Employment or reaches age 72, whichever is earlier.

Section 17.02. Military Service.

(a) Notwithstanding any provisions of this Plan to the contrary, contributions, benefits, and service credit with respect to qualified military service shall be provided in

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accordance with USERRA, HEART, Code Section 414(u), and Code Section 401(a)(37). For purposes of this Section, "qualified military service" means any service in the uniformed services as defined in USERRA by any individual if such individual is entitled to reemployment rights under USERRA with respect to such service.

(b) A Participant whose employment is interrupted by qualified military service or who is on a leave of absence for qualified military service may elect to make Elective Deferrals upon resumption of employment with the Participating Employer up to the maximum Elective Deferrals that the Participant could have elected during that period if the Participant's employment with the Participating Employer had continued (at the same level of Compensation) without the interruption or leave, reduced by the Elective Deferrals, if any, actually made for the Participant during the period of the interruption or leave. Except to the extent provided under Code Section 414(u), this right applies for the lesser of (i) five years following the resumption of employment or (ii) a period equal to three times the period of the interruption or leave. Such Elective Deferrals by the Participant may only be made during such period and while the Participant is reemployed by the Participating Employer.

(c) If a Participant timely resumes employment with the Participating Employer in accordance with USERRA, the Participating Employer shall make the Discretionary Employer Contributions, if any, that would have been made if the Participant had remained employed during the Participant's qualified military service. Discretionary Employer Contributions must be made no later than 90 days after the date of reemployment or when Discretionary Employer Contributions are normally due for the year in which the qualified military service was performed, if later.

(d) To the extent provided under Code Section 401(a)(37), in the case of a Participant whose employment is interrupted by qualified military service and who dies while performing qualified military service, the survivor of such Participant shall be entitled to any additional benefit (other than benefit accruals) provided under the Plan as if the Participant timely resumed employment in accordance with USERRA and then, on the next day, terminated employment on account of death.

(e) A Participant whose employment is interrupted by qualified military service or who is on a leave of absence for qualified military service and who receives a differential wage payment within the meaning of Code Section 414(u)(12)(D) from the Participating Employer shall be treated as an Employee of the Participating Employer who is a Participant eligible to make Elective Deferrals during such service and the differential wage payment shall be treated as Compensation and Includible Compensation. This provision shall be applied to all similarly situated individuals in a reasonably equivalent manner.

Section 17.03. Limitation of Rights and Obligations. Neither the establishment nor maintenance of the Plan, nor any amendment thereof, nor the purchase of any insurance contract, nor any act or omission under the Plan or resulting from the operation of the Plan shall be construed:

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(a) as conferring upon any Participant, Beneficiary or any other person any right or claim against VRS, Participating Employer, Administrator, or Trust, except to the extent that such right or claim shall be specifically expressed and provided in the Plan;

(b) as a contract or agreement between VRS and/or the Participating Employer and any Participant or other person; or

(c) as an agreement, consideration, or inducement of employment or as affecting in any manner or to any extent whatsoever the rights or obligations of VRS, the Participating Employer, or any Employee to continue or terminate the employment relationship at any time.

Section 17.04. Federal and State Taxes. It is intended that Discretionary Employer Contributions and Pre-Tax Contributions, plus any earnings thereunder, are excludable from gross income for federal and state income tax purposes until paid to Participants or Beneficiaries, and that Roth Contributions and earnings thereunder are excludable from gross income for federal and state income tax purposes when paid to Participants or Beneficiaries to the extent that they are Qualified Distributions. However, the Administrator does not guarantee that any particular federal or state income, payroll, or other tax consequence will occur as a result of participation in this Plan.

Section 17.05. Erroneous Payments. If the Administrator or its Agent makes any payment that according to the terms of the Plan and the benefits provided hereunder should not have been made, the Administrator or Agent may recover that incorrect payment, by whatever means necessary, whether or not it was made due to the error of the Administrator or Agent, from the person to whom it was made or from any other appropriate party. For example, if any such incorrect payment is made directly to a Participant, the Administrator or Agent may deduct it when making any future payments directly to that Participant.

Section 17.06. Payments to Minors or Incompetents. If a Participant or Beneficiary entitled to receive any benefits hereunder is a minor or is determined to be legally incapable of giving valid receipt and discharge for such benefits by a court or by the Administrator, benefits shall be paid to such person as the Administrator may designate for the benefit of such Participant or Beneficiary. Such payments shall be considered a payment to the Participant or Beneficiary and shall, to the extent made, be deemed a complete discharge of any liability for such payments under the Plan.

Section 17.07. Missing or Lost Participants. In the event that the Administrator does not have current contact information for or is unable to identify a Participant or Beneficiary under the Plan, the Administrator shall make reasonable attempts to determine the address and identity of the Participant or Beneficiary entitled to benefits under the Plan. A reasonable attempt to locate a missing or lost Participant or Beneficiary shall include (i) providing notice to the Participant at the Participant's last known address via certified mail; (ii) determining whether the Participating Employer's records or the records of another plan maintained by the Participating Employer has a more current address for the Participant; (iii) attempting to contact any named Beneficiary of the Participant; and (iv) searching for the missing Participant via free electronic search tools, such as Internet search engines, public record databases, obituaries, and social media. If such search methods are unsuccessful, based

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on the facts and circumstances, the Administrator may use other search methods, including using Internet search tools, commercial locator services, credit reporting agencies, information brokers, investigation databases, and analogous services that may involve charges. The Administrator may charge missing Participants and Beneficiaries reasonable expenses for efforts to find them. In the event that the Administrator is unable to locate a Participant or Beneficiary entitled to benefits under the Plan, the Trustee shall continue to hold the benefits due to such person under the Plan.

Section 17.08. Stale Distribution Checks. A distribution check for an amount less than $10.00 shall be forfeited if it remains uncashed 180 days following its issuance. A distribution check for an amount less than $250.00 shall be forfeited if it remains uncashed five years following its issuance. If a Participant is subsequently located, his or her benefit will be restored and a replacement check will be issued, but no earnings will be paid for the time that the check was outstanding. All forfeitures under this Section 17.08 shall be held in a separate account under the Plan and shall be used to reduce Plan expenses or to restore benefits to Participants who have been located under this Section.

Section 17.09. No Reversion. Under no circumstances or conditions will any Contributions revert to, be paid to, or inure to the benefit of, directly or indirectly, VRS or the Participating Employer, but shall be held for the exclusive purpose of providing benefits to Participants and their Beneficiaries and defraying the reasonable expenses of administering the Plan. However, if Contributions are made by VRS or the Participating Employer by mistake of fact, these amounts and, if applicable, any interest earned therein, may be returned to VRS or Participating Employer, as applicable, within one year of the date that they were made.

Section 17.10. Claims of Other Persons. The provisions of the Plan will not be construed as giving any Participant or any other person, firm, or corporation, any legal or equitable right against VRS or Participating Employer, its officers, employees, or directors, except the rights as specifically provided for in this Plan or created in accordance with the terms and provisions of this Plan.

Section 17.11. Counterparts. The Plan may be executed in any number of counterparts, each of which shall be deemed to be an original. All counterparts shall constitute but one and the same instrument and shall be evidenced by any one counterpart.

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IN WITNESS WHEREOF, the Board has caused this amended and restated Plan to be adopted as of the Effective Date.

BOARD OF TRUSTEES OF THE VIRGINIA RETIREMENT SYSTEM

By:

Printed Name:

Title:

Date:

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VIRGINIAHYBRID 457 DEFERRED COMPENSATION PLAN

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TABLE OF CONTENTS

Page

ARTICLE I. ESTABLISHMENT OF PLAN..............................................................................1Section 1.01. Plan History ...........................................................................................1Section 1.02. Plan Establishment................................................................................1


ARTICLE III. ELIGIBILITY AND PARTICIPATION...........................................................8Section 3.01. Participation ..........................................................................................8Section 3.02. Cessation of Contributions ...................................................................9Section 3.03. Reemployment .......................................................................................9

ARTICLE IV. CONTRIBUTIONS..............................................................................................9Section 4.01. Elective Deferrals ..................................................................................9Section 4.02. Automatic Escalation of Elective Deferrals ......................................10Section 4.03. Rollover Contributions to the Plan....................................................11Section 4.04. Transfers to the Plan...........................................................................12Section 4.05. Leave of Absence .................................................................................12Section 4.06. Disability ..............................................................................................12Section 4.07. Expenses of Plan..................................................................................12

ARTICLE V. LIMITATIONS ON CONTRIBUTIONS..........................................................13Section 5.01. Elective Deferral Limits......................................................................13Section 5.02. Coordination of Limits .......................................................................13Section 5.03. Correction of Excess Deferrals...........................................................13




ARTICLE IX. DISTRIBUTIONS ..............................................................................................15Section 9.01. Distribution Restrictions.....................................................................15Section 9.02. Forms of Payment ...............................................................................15Section 9.03. Reemployment .....................................................................................15

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Section 9.04. Mandatory Cash-Out..........................................................................16Section 9.05. Coronavirus-Related Distributions. ..................................................16Section 9.06. Death Benefit .......................................................................................16Section 9.07. Required Minimum Distribution Rules. ...........................................16Section 9.08. Transfer to Defined Benefit Governmental Plan .............................17Section 9.09. Transfers from the Plan......................................................................18

ARTICLE X. LOANS..................................................................................................................18

ARTICLE XI. VESTING............................................................................................................18


ARTICLE XIII. PARTICIPATING EMPLOYERS................................................................21

ARTICLE XIV. ADMINISTRATION OF THE PLAN...........................................................21Section 14.01. Authority of the Administrator..........................................................21Section 14.02. Responsibility of the Employer ..........................................................21Section 14.03. Powers of the Administrator ..............................................................21Section 14.04. Delegation by Administrator..............................................................22Section 14.05. Employment of Consultants ...............................................................22




ARTICLE XVI. AMENDMENT AND TERMINATION........................................................22Section 16.01. Amendment and Termination............................................................22Section 16.02. Adverse Effects ....................................................................................23Section 16.03. Distribution Upon Termination of the Plan......................................23

ARTICLE XVII. MISCELLANEOUS ......................................................................................23Section 17.01. Non-Alienation.....................................................................................23Section 17.02. Military Service ...................................................................................24Section 17.03. Limitation of Rights and Obligations ................................................25Section 17.04. Federal and State Taxes......................................................................25Section 17.05. Erroneous Payments ...........................................................................25Section 17.06. Payments to Minors or Incompetents................................................25Section 17.07. Missing or Lost Participants ..............................................................25Section 17.08. Stale Distribution Checks ...................................................................26Section 17.09. No Reversion........................................................................................26

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Section 17.10. Claims of Other Persons .....................................................................26Section 17.11. Counterparts........................................................................................26

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VIRGINIA HYBRID 457 DEFERRED COMPENSATION PLAN

ARTICLE I.

ESTABLISHMENT OF PLAN

Section 1.01. Plan History.

(a) Pursuant to Sections 51.1-600 et seq. of the Code of Virginia ("Va. Code"), the Board of Trustees of the Virginia Retirement System ("Board") established the Commonwealth of Virginia 457 Deferred Compensation Plan ("Deferred Compensation Plan"), effective July 1, 1980, in order to provide eligible employees the opportunity to make voluntary deferrals.

(b) The Deferred Compensation Plan is, and is intended to remain, an eligible deferred compensation plan under Section 457(b) of the Internal Revenue Code ("Code"), and is a governmental plan within the meaning of Code Section 414(d) and Section 3(32) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). As a governmental plan, ERISA does not apply.

(c) The Deferred Compensation Plan was most recently amended and restated effective January 1, 2014, to add the hybrid deferred compensation provisions established under Va. Code Section 51.1-169, and has been amended once thereafter, generally effective July 1, 2015.

(d) The Deferred Compensation Plan is being amended and restated effective January 1, 2021, to reflect the separation of the hybrid deferred compensation portion of the Deferred Compensation Plan from the Deferred Compensation Plan to a separate eligible deferred compensation plan under Code Section 457(b), effective January 1, 2021.

Section 1.02. Plan Establishment.

(a) The Board hereby establishes the Virginia Hybrid 457 Deferred Compensation Plan ("Plan"), effective January 1, 2021, for the benefit of eligible employees, pursuant to the provisions of Va. Code Section 51.1-169.

(b) The Plan is, and is intended to remain, an eligible deferred compensation plan under Code Section 457(b), and is a governmental plan within the meaning of Code Section 414(d) and ERISA Section 3(32). As a governmental plan, ERISA does not apply.

(c) To effectuate the separation of the hybrid deferred compensation portion of the Deferred Compensation Plan to this Plan, the Board shall direct a transfer of the Deferred Compensation Plan assets held for eligible employees under the provisions of Va. Code Section 51.1-169 to a subtrust of the Trust, as soon as administratively practicable following the establishment of the Plan.

(d) Except as otherwise specifically provided herein, the Plan as hereinafter set forth establishes the rights and obligations with respect to individuals who are Employees on and

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after January 1, 2021, and to transactions under the Plan on and after January 1, 2021. The rights and benefits, if any, of individuals who are not Employees on or after January 1, 2021, shall be determined in accordance with the terms and provisions of the Deferred Compensation Plan that were in effect on the date of their Severance from Employment, except as otherwise specifically provided herein or in a subsequent amendment.

ARTICLE II.



(a) This Plan shall be interpreted, enforced and administered in accordance with the Code and, when not inconsistent with the Code, or expressly provided otherwise herein, the Va. Code without regard to conflict of law principles.

(b) Words used herein in the masculine gender shall be construed to include the feminine gender where appropriate, and vice versa, and words used herein in the singular or plural shall be construed as being in the plural or singular where appropriate, and vice versa.



(e) In resolving any conflict between provisions of the Plan and in resolving any other uncertainty as to the meaning or intention of any provision of the Plan, the interpretation that causes the Plan to (i) constitute an eligible deferred compensation plan under the provisions of Code Section 457(b), (ii) be a governmental plan as defined in ERISA Section 3(32) and Code Section 414(d), and (iii) comply with all applicable requirements of the Code, shall prevail over any different interpretation.

Section 2.02. Definitions. When the initial letter of a word or phrase is capitalized herein the meaning of such word or phrase shall be as follows:


(1) "Pre-Tax Contribution Account" means the account maintained to reflect the Participant's interest under the Plan attributable to his or her Pre-Tax Contributions pursuant to Section 4.01.


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(i) A subaccount to reflect the Participant's interest under the Plan attributable to his or her Rollover Contributions from a Code Section 457(b) plan within the meaning of Section 4.03(a); and

(ii) A subaccount to reflect the Participant's interest under the Plan attributable to his or her Rollover Contributions from an eligible retirement plan within the meaning of Section 4.03(a) other than a Code Section 457(b) plan.






(d) "Applicable Form" means the appropriate form as designated and furnished by the Administrator or the Agent to make any election or provide any notice required by the Plan. In those circumstances where a written election or consent is not required by the Plan or the Code, the Administrator and/or the Agent may prescribe an electronic or telephonic form in lieu of or in addition to a written form.

(e) "Automatic Escalation Arrangement" is an arrangement under which, in the absence of an affirmative election by a Covered Employee, the Participant's Elective Deferrals shall be increased by one-half of one percent every three years until the Participant's Elective Deferrals equal four percent of his or her Creditable Compensation, as described in Section 4.02.

(f) "Beneficiary" means any person, company, trustee or estate designated by the Participant on the Applicable Form to receive any benefits payable under the Plan in the event of the Participant's death. If the designated primary or contingent Beneficiary does not survive the Participant or there is no Beneficiary designated, the Participant's Beneficiary shall be determined in accordance with Va. Code Section 51.1-162, as follows: (i) the Participant's

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surviving Spouse, or if none; (ii) the Participant's children and descendants of deceased children, per stirpes, or if none; (iii) the Participant's parents equally if both living, or if none; (iv) the duly appointed executor or administrator of the Participant's estate, or if none; (v) the next of kin entitled to inherit under the laws of the Participant's domicile at the time of death. If a Beneficiary survives the Participant but dies before the entire Account has been distributed, then the unpaid balance of the Account shall be distributed to the Beneficiary's estate. Beneficiary also means an alternate payee within the meaning of Code Section 414(p)(8).

(g) "Board" means the Board of Trustees of the Virginia Retirement System.

(h) "Break in Service" means a period of at least one full calendar month from the end of the month in which the Participant has a Severance from Employment.

(i) "CARES Act" means the Coronavirus Aid, Relief, and Economic Security Act of 2020.

(j) "Code" means the Internal Revenue Code of 1986, as amended from time to time.

(k) "Commonwealth" means the Commonwealth of Virginia and an agency or instrumentality thereof.

(l) "Contributions" mean Pre-Tax Contributions, Rollover Contributions, and Transfer Contributions.

(m) "Coronavirus-Related Distribution" means a distribution made on or after April 9, 2020, but before December 31, 2020, or such later date as provided in legislation modifying or extending the CARES Act or regulatory guidance under the CARES Act, to a Qualified Individual in accordance with Section 9.05.

(n) "Cost-of-Living Adjustment" means the cost-of-living adjustment prescribed by the Secretary of the Treasury under Code Section 401(a)(17), 414(v), or 457(e)(15) for any applicable year.

(o) "Covered Employee" means an Employee who has elected to contribute to the Plan Elective Deferrals equal to less than 4% of his or her Creditable Compensation, and who is subject to an Automatic Escalation Arrangement pursuant Va. Code Section 51.1-169(C)(3).

(p) "Creditable Compensation" has the meaning set forth in Va. Code Section 51.1-124.3, as interpreted by VRS. Creditable Compensation generally means the Employee's annual salary, not including overtime pay, payment of a temporary nature, or payments for extra duties. Creditable Compensation shall not include any amounts paid after Severance from Employment except for regular pay that would have been paid to the Employee prior to a Severance from Employment if the Employee continued in employment with the Employer and that is otherwise Creditable Compensation.

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(q) "Deferred Compensation Plan" means the Commonwealth of Virginia 457 Deferred Compensation Plan, as amended from time to time.

(r) "Effective Date" of the Plan means January 1, 2021.

(s) "Elective Deferral" means Pre-Tax Contributions.

(t) "Employee" means any common law employee employed by an Employer who:

(1) is first hired or rehired in a position covered for retirement purposes under Chapter 1 of Title 51.1 of the Va. Code (Section 51.1-124.1 et seq.) on or after January 1, 2014; or

(2) made an irrevocable election to participate in the Plan pursuant to Va. Code Section 51.1-169(A).

An Employee who was first hired in a position covered for retirement purposes under Chapter 1 of Title 51.1 of the Va. Code (Section 51.1-124.1 et seq.) prior to January 1, 2014, but who took a refund of his or her member contributions and interest or withdrew his or her full account under an optional retirement plan maintained under the same Chapter, will be treated as an Employee under paragraph (1) if otherwise applicable. An Employee does not include: (i) any person who meets the definition of "emergency medical services personnel in Va. Code Section 32.1-111.1 or is employed as a firefighter, emergency medical technician, or law-enforcement officer as those terms are defined in Va. Code Section 15.2-1512.2, and whose Employer has adopted the resolutions described in Va. Code Section 51.1-153(B)(4) or Va. Code Section 51.1-155(A)(3); (ii) any employee who is a participant in or eligible to participate in, the retirement plans under Chapter 2 of Title 51.1 of the Va. Code (Section 51.1-200 et seq.), Chapter 2.1 of Title 51.1 of the Va. Code (Section 51.1-211 et seq.), and the optional retirement plans established under Va. Code Sections 51.1-126.1, 51.1-126.3, 51.1-126.4, and 51.1-126.7, or a person eligible to earn benefits under Va. Code Section 51.1-138; or (iii) any member of the retirement plan under Chapter 3 of Title 51.1 of the Va. Code (Section 51.1-300 et seq.) except members appointed to an original term on or after January 1, 2014. An Employee also does not include any person employed by a Political Subdivision who has elected to direct his or her voluntary hybrid contributions to a 403(b) plan established by his or her Employer; provided, however, that such a person may change his or her election on or before November 30 of each year, and become an Employee under the Plan effective January 1 of the following year as described in Va. Code Section 51.1-169(G)(3).

(u) "Employer" means an employer as defined under Va. Code Section 51.1-124.3 that is an eligible employer within the meaning of Code Section 457(e)(1)(A). The Commonwealth is considered a single Employer for purposes of the Plan.

(v) "HEART" means the Heroes Earnings Assistance and Relief Tax Act of 2008, as amended from time to time.

(w) "Includible Compensation" means all compensation received by an Employee from the Employer that is includible in his or her gross income for federal income tax purposes (computed without regard to Code Section 911) for that taxable year. Includible

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Compensation also includes any amounts excludable from taxable income because of an election under Code Sections 401(k), 403(b), 457(b), 125, and 132(f). Includible Compensation includes any compensation described in paragraphs (1), (2), or (3), provided the compensation is paid by the later of two and one-half months after the Employee's Severance from Employment or the end of the calendar year in which the Employee has a Severance from Employment:

(1) a payment that would have been paid to the Employee prior to a Severance from Employment if the Employee had continued in employment with the Employer and that is regular compensation for services during the Employee's regular working hours, compensation for services outside the Employee's regular working hours (such as overtime or shift differential), commissions, bonuses, or other similar payments;

(2) a payment for unused accrued bona fide sick leave, vacation or other leave, but only if the Employee would have been able to use the leave if employment had continued and the payment would have been included in the definition of Includible Compensation if paid prior to the Employee's Severance from Employment; and

(3) a payment received by an Employee pursuant to a nonqualified unfunded deferred compensation plan, but only if the payment would have been paid to the Employee at the same time if the Employee had continued in employment with the Employer and only to the extent that the payment is includible in the Employee's gross income.

Includible Compensation is determined without regard to any community property laws. Includible Compensation shall not exceed the limits under Code Section 401(a)(17), to the extent applicable, increased by the Cost-of-Living Adjustment.

(x) "Investment Funds" means the mutual funds, collective investment trust funds, insurance company separate accounts, annuity contracts, or other investment vehicles made available to Participants for the investment of their Accounts. The Administrator, in its sole and absolute discretion, shall select the Investment Funds and may add or delete Investment Funds.

(y) "Normal Retirement Age" means the age elected by the Participant on the Applicable Form that is (i) on or after the earlier of age 65 or the age at which the Participant can retire and receive an unreduced benefit from the Employer's pension plan and (ii) not later than age 70½.

(z) "Participant" means any Employee who is or may become eligible to receive a benefit of any type under the Plan. A Participant shall also mean, when appropriate to the context, a former Employee who is eligible to receive a benefit of any type under the Plan.

(aa) "Plan" means the Virginia Hybrid 457 Deferred Compensation Plan, as amended from time to time.

(bb) "Plan Year" means the calendar year.

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(cc) "Political Subdivision" means a county, municipality, authority, school division or other political subdivision of the Commonwealth or an agency thereof.

(dd) "Pre-Tax Contributions" mean the contributions made to the Plan by the Employer at the election of a Participant pursuant to a Salary Reduction Agreement in accordance with Section 4.01.

(ee) "Qualified Individual" means a Participant:




(i) the Participant, the Participant's Spouse, or a member of the Participant's household (a) being quarantined, (b) being furloughed or laid off or having work hours reduced due to such virus or disease, (c) being unable to work due to lack of child care due to such virus or disease, (v) having a reduction in pay (or self-employment income) due to such virus or disease, or (e) having a job offer rescinded or start date for a job delayed due to such virus or disease;




For purposes of this paragraph (ee), a member of the Participant's household means someone who shares the Participant's principal residence.

(ff) "Related Employer" means the Employer and any other entity which is under common control with the Employer under Code Section 414(b), (c) or (m). For this purpose, the Board shall determine which entities are Related Employers based on a reasonable, good faith standard and taking into account the special rules applicable under Notice 89-23, 1989-1 C.B. 654.

(gg) "Rollover Contributions" mean the contributions made to the Plan pursuant to Section 4.03.

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(hh) "Salary Reduction Agreement" means an agreement entered into between an Employee and the Employer pursuant to Section 4.01. Such agreement shall not be effective with respect to Creditable Compensation made available prior to the effective date of such agreement and shall be binding on the parties and irrevocable with respect to Creditable Compensation earned while it is in effect.

(ii) "Section" means, when not preceded by the word Code, a section of the Plan.

(jj) "Severance from Employment" means the complete termination of the employment relationship between the Employee and the Employer.

(kk) "Spouse" means the person to whom the Participant is legally married under federal law.

(ll) "Transfer Contributions" mean the contributions made to the Plan pursuant to Section 4.04.

(mm) "Trust" means the Master Trust for the Deferred Compensation Plan of the Commonwealth of Virginia, which may incorporate one or more qualified trusts under Code Section 457(g), custodial accounts treated as qualified trusts under Code Section 401(f), and/or annuity contracts treated as qualified trusts under Code Section 401(f), established under the Plan to hold Plan assets.

(nn) "Trust Fund" means the assets of the Plan held pursuant to the terms of the Plan and the Trust.

(oo) "Trustee" means the trustee or any successor trustee designated and appointed by VRS and includes a custodian of a custodial account or an insurer of an annuity contract under Code Section 457(g)(3).

(pp) "USERRA" means the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended from time to time.

(qq) "Va. Code" means the Code of Virginia, as amended from time to time.

(rr) "Vested" means the interest of the Participant or Beneficiary in his or her Accounts which is unconditional, legally enforceable, and nonforfeitable at all times.

(ss) "VRS" means the Virginia Retirement System.

ARTICLE III.



(a) An Employee who is a Participant in the hybrid-eligible deferred compensation portion of the Deferred Compensation Plan on the day before the Effective Date of this Plan

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shall be a Participant on the Effective Date.

(b) An Employee may become a Participant in the Plan immediately after commencement of employment or reemployment with an Employer as an Employee.

(c) The Employer shall notify the Employee when he or she is eligible to participate in the Plan. To become a Participant under the Plan, an Employee must complete the Applicable Forms, which may include a Salary Reduction Agreement and enrollment, beneficiary designation, and investment election forms, and return them to the Administrator or Agent, as applicable. An Employee who fails to complete the Applicable Forms shall be deemed to have waived all of his or her rights under the Plan, provided that such Employee may become a Participant in the Plan at any time thereafter by completing the Applicable Forms and returning them to the Administrator or Agent, as applicable.

Section 3.02. Cessation of Contributions. A Participant shall cease to be eligible for Contributions under the Plan when (i) he or she is no longer an Employee or (ii) the Plan is terminated.

Section 3.03. Reemployment. If an Employee has a Severance from Employment from his or her Employer and is then reemployed by that Employer or is employed by another Employer, the Participant must complete the Applicable Forms pursuant to Section 3.01(c) to be eligible again for Contributions under the Plan.

ARTICLE IV.

CONTRIBUTIONS

Section 4.01. Elective Deferrals.

(a) Subject to the limitations under Article V, an Employee who has satisfied the participation requirements under Section 3.01 may enter into a written Salary Reduction Agreement agreeing to contribute each pay period Pre-Tax Contributions to the Plan equal to a specified half or whole percentage of his or her Creditable Compensation up to a maximum of four percent.

(b) Elective Deferrals shall begin as soon as administratively practicable following the date specified in the Salary Reduction Agreement, or, if later or if no date is specified, as soon as administratively practicable after the Salary Reduction Agreement is filed with the Administrator. Notwithstanding the preceding, the Salary Reduction Agreement shall become effective no earlier than the first day of the calendar quarter following the month in which the Salary Reduction Agreement is executed and submitted to the Administrator.

(c) Elective Deferrals shall reduce the Creditable Compensation otherwise payable to a Participant and shall be paid in cash to the Trustee by the Employer each payroll period, on a basis consistent with its payroll practices, as soon as administratively feasible after being withheld from the Creditable Compensation of a Participant, but no later than 15 business days following the end of the month in which such amount is withheld from the Creditable Compensation of the Participant.

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(d) A Participant may change his or her election to make Pre-Tax Contributions at any time by entering into new Salary Reduction Agreement. If the Salary Reduction Agreement is filed by the 15th day of the month prior to the end of the calendar quarter, it shall become effective on the first day of the calendar quarter following the month in which the Salary Reduction Agreement is executed and submitted to the Administrator. If the Salary Reduction Agreement is filed thereafter, it shall become effective on the first day of the subsequent calendar quarter.

(e) A Participant may terminate his or her election to make Elective Deferrals at any time by filing the Applicable Form with the Administrator, which shall be effective as soon as administratively practicable after the Applicable Form is filed with the Administrator.

(f) If a Participant's Elective Deferrals to the Plan cease during a Plan Year because they exceed the limits set forth in Article V, the Participant must either ensure that his or her Employer begins Elective Deferrals pursuant to the existing Salary Reduction Agreement the following Plan Year or enter into a new Salary Reduction Agreement for the following Plan Year in order to continue making Elective Deferrals under the Plan.

(g) An election to make Elective Deferrals shall not be valid with respect to any period during which the Participant is not an Employee. No election to make, change, or discontinue Elective Deferrals shall be given retroactive effect.

(h) The Administrator may establish additional nondiscriminatory rules and procedures governing the manner and timing of elections by Participants to make, change, or discontinue Elective Deferrals.

Section 4.02. Automatic Escalation of Elective Deferrals.

(a) Participants who are Covered Employees shall participate in an Automatic Escalation Arrangement pursuant to Va. Code Section 51.1-169(C)(3).

(b) If a Covered Employee's Pre-Tax Contributions under Section 4.01 equal less than four percent of his or her Creditable Compensation, beginning on January 1, 2017, and every three years thereafter, the Covered Employee's Pre-Tax Contributions shall increase by one-half of one percent effective with the first pay period that begins in such calendar year until the Covered Employee's Pre-Tax Contributions equal four percent of his or her Creditable Compensation; provided, however that the preceding sentence shall not apply if, within a reasonable period of time (pursuant to policy established by the Administrator which shall be uniformly applied on a nondiscriminatory basis) after receipt of the notice described in paragraph (c) below, the Covered Employee affirmatively elects not to increase his or her Pre-Tax Contributions under the Plan pursuant to Section 4.01.

(c) Prior to increasing Pre-Tax Contributions to the Plan on behalf of any Covered Employee, the Administrator or the Agent shall provide notice to the Covered Employee that explains:

(1) the amount and timing of automatic increases in Pre-Tax Contributions;

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(2) the Covered Employee's right to modify or terminate an automatic increase in Pre-Tax Contributions;

(3) the procedures for exercising the Covered Employee's right to make an affirmative election under the Plan; and

(4) the timing for implementation of any such election.

(d) An automatic increase in Pre-Tax Contributions under this Section 4.02 shall remain in effect until the Participant affirmatively elects to modify or terminate automatic Pre-Tax Contributions by filing the Applicable Form under Section 4.01.

(e) The Administrator may establish additional nondiscriminatory rules and procedures governing the administration of automatic increase in Pre-Tax Contributions.


(a) An Employee or former Employee may transfer to the Plan as a Rollover Contribution a distribution from:

(1) a Code Section 401(a) or 403(a) qualified plan, excluding after-tax employee contributions;




A Rollover Contribution under this paragraph shall be made directly from such prior plan, or if such amount was distributed to the Employee or former Employee, shall be made within 60 days after the Employee or former Employee receives the rollover amount, unless the 60 day deadline is waived under Code Section 402(c)(3)(B) or a later deadline is established under Internal Revenue Service guidance.

(b) Any Rollover Contribution shall be subject to the Trustee's determination, in its discretion, that the Rollover Contribution satisfies all applicable requirements of the Code.

(c) A Rollover Contribution shall be allocated to a Rollover Contribution Account as of the date of the contribution; provided, however, that separate subaccounts shall be maintained to reflect Rollover Contributions from Code Section 457(b) plans and plans other than Code Section 457(b) plans, as provided in Section 2.02(a).

(d) In no event shall the Plan accept as a Rollover Contribution a distribution from a Roth elective deferral account.

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(e) Before a Rollover Contribution is made, the Employee or former Employee shall designate on the Applicable Form the Investment Funds in which to invest his or her Rollover Contribution.


(a) The Plan shall accept as a Transfer Contribution a transfer on behalf of a Participant from the Deferred Compensation Plan or from another 457(b) plan established by the Employer, under the following conditions:

(1) The transfer is to correct an eligibility error;

(2) The transferor plan permits the transfer;

(3) The Participant whose amounts are being transferred will have a deferred amount immediately after the transfer at least equal to the deferred amount with respect to that Participant immediately before the transfer; and

(4) The transfer shall satisfy such rules and policies established by the Administrator.

(b) A Transfer Contribution shall be allocated to the Transfer Contribution Account of the Participant as of the date of the transfer.

Section 4.05. Leave of Absence. During a paid leave of absence, Contributions shall continue to be made for a Participant on the basis of Creditable Compensation paid by the Employer during the leave. No Contributions shall be made on behalf of a Participant who is on an unpaid leave of absence.

Section 4.06. Disability. A Participant who has not had a Severance from Employment may make Elective Deferrals during any period of time that he or she is disabled to the extent that the Participant has Creditable Compensation. Creditable Compensation does not include imputed compensation, long term disability benefits paid under the Virginia Sickness and Disability Program or the Virginia Local Disability Program, or disability retirement payments under VRS.

Section 4.07. Expenses of Plan. All reasonable expenses of administering the Plan shall be charged against and paid from the Participant's Accounts, subject to the terms of the applicable Investment Funds, unless paid by the Employer. The Administrator shall have the right to allocate expenses associated with maintaining the Accounts of terminated Employees to such Accounts, even if no expenses are allocated to the Accounts of active Employees, in accordance with rules promulgated by the Internal Revenue Service.

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ARTICLE V.


Section 5.01. Elective Deferral Limits. The maximum amount of Elective Deferrals to the Plan for any calendar year shall be limited to the lesser of (i) the applicable dollar amount as provided in Code Section 457(e)(15) or (ii) the Participant's Includible Compensation as provided in Code Section 457(b)(2). The applicable dollar amount is $19,500 for 2021, increased thereafter by the Cost-of-Living Adjustment. However, in no event can the Elective Deferrals be more than the Participant's Creditable Compensation for the year.

Section 5.02. Coordination of Limits. If the Participant is or has been a participant in one or more other eligible plans within the meaning of Code Section 457(b), including the Deferred Compensation Plan, then this Plan and all such other plans shall be considered as one plan for purposes of applying the foregoing limitations of this Article V. For this purpose, the Administrator shall take into account any other such eligible plan maintained by the Employer for which the Administrator receives from the Employer sufficient information concerning such plan, and shall also take into account any other such eligible plan for which the Administrator receives from the Participant sufficient information concerning his or her participation in such other plan.

Section 5.03. Correction of Excess Deferrals.

(a) If the Elective Deferrals on behalf of a Participant for any calendar year exceeds the limitations described above, or the Elective Deferrals on behalf of a Participant for any calendar year exceeds the limitations described above when combined with other amounts deferred by the Participant under another eligible deferred compensation plan under Code Section 457(b) for which the Participant provides information that is accepted by the Administrator, then the Elective Deferrals, to the extent in excess of the applicable limitation and adjusted for earnings, shall be distributed to the Participant no later than the April 15 following the calendar year in which the excess Elective Deferral was made.

(b) Excess Elective Deferrals shall be distributed from the following plans in the following order:

(1) the other eligible deferred compensation plan or plans (not including the Deferred Compensation Plan);

(2) the Deferred Compensation Plan pursuant to its correction procedures; and

(3) this Plan.

ARTICLE VI.

ACCOUNTING

Section 6.01. Participant Accounts. The Agent shall establish and maintain adequate records to reflect the Accounts of each Participant and Beneficiary. Credits and charges shall be

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made to such Accounts to reflect additions, distributions, and withdrawals, and to reflect gains or losses pursuant to the terms of each Investment Fund. The maintenance of individual Accounts is for accounting purposes only, and a segregation of Plan assets to each Account shall not be required.

Section 6.02. Participant Statements. The Agent shall provide to each Participant a quarterly statement reflecting the value of the Participant's Account as of the end of each quarter, and shall provide similar information to the Administrator upon its request.


ARTICLE VII.





(c) A Participant shall have the right to direct the investment of his or her Account among the Investment Funds by filing the Applicable Form with the Administrator. A Participant may change his or her investment election as often as determined by the Administrator. A Participant may elect to transfer all or any portion of his or her Accounts invested in any one Investment Fund to another Investment Fund, subject to the limitations of the Investment Funds, by filing a request on the Applicable Form with the Administrator.


ARTICLE VIII.

TRUST

Section 8.01. Trust Fund. All Contributions under the Plan shall be transferred to the

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Trustee to be held in Trust as part of the Trust Fund in accordance with the provisions of the Plan and the Investment Funds, as applicable. All assets held in connection with the Plan, including all Contributions, all property and rights acquired or purchased with such amounts, and all income attributable to such amounts, property or rights, shall be held in, managed, invested and distributed in Trust as part of the Trust Fund, in accordance with the provisions of the Plan. All benefits under the Plan shall be distributed solely from the Trust Fund, and VRS and/or Employer shall have no liability for any such benefits other than the obligation to make Contributions as provided in the Plan.

Section 8.02. Trust Status. The Trust Fund shall be held in Trust for the exclusive benefit of Participants and Beneficiaries under the Plan in accordance with Code Section 457(g). No part of the Trust Fund shall be used for, or diverted to, purposes other than for the exclusive benefit of Participants and their Beneficiaries, and for defraying the reasonable expenses of the Plan and Trust. The Trust is exempt from tax pursuant to Code Sections 457(g)(2) and 501(a).

ARTICLE IX.

DISTRIBUTIONS



(b) Notwithstanding paragraph (a), a Participant may request a distribution from his or her Rollover Contribution Account at any time.

(c) A Participant or Beneficiary may submit a request for a distribution to the Administrator on the Applicable Form. The Employer shall certify that the Participant has had a Severance from Employment, if applicable.



(b) Notwithstanding paragraph (a), a distribution under Section 9.01(b) made prior to Severance from Employment shall only be made as a lump sum payment.

Section 9.03. Reemployment. If a Participant who is a former Employee subsequently becomes an Employee again after distribution of his or her Accounts has begun under a payment option other than annuity payments, such distributions shall immediately cease, and the Employee shall not receive any benefits under the Plan until the Employee is entitled to a distribution under Section 9.01.

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Section 9.04. Mandatory Cash-Out. A lump sum payment of the Participant's Account may be made at the Participant's Severance from Employment without his or her consent, provided that the Account balance (not including the Rollover Contribution Account) does not exceed $1,000, unless the Participant elects to have such distribution paid directly to an eligible retirement plan specified by the Participant in a direct rollover. Any lump sum payments made under this Section 9.04 shall be made in a uniform and nondiscriminatory manner.













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(1) A Participant or Beneficiary who would have been required to receive a required minimum distribution in 2020 (or paid in 2021 for the 2020 calendar year for a Participant with a required beginning date of April 1, 2021) but for the enactment of Code Section 401(a)(9)(I) ("2020 RMDs") and who would have satisfied that requirement by receiving distributions that are equal to the 2020 RMDs, will not receive these distributions unless the Participant or Beneficiary chooses to receive the distributions. Participants and Beneficiaries described in the preceding sentence will be given the opportunity to elect to receive the distributions described in the preceding sentence.

(2) A Participant who would have been required to receive 2020 RMDs and who would have satisfied that requirement by receiving distributions that are one or more payments (that include the 2020 RMDs) in a series of substantially equal periodic payments made at least annually and expected to last for the life (or life expectancy) of the Participant, the joint lives (or joint life expectancies) of the Participant and the Beneficiary, or for a period of at least 10 years ("Extended 2020 RMDs"), will receive these distributions unless the Participant or Beneficiary chooses not to receive the distributions. Participants and Beneficiaries described in the preceding sentence will be given the opportunity to elect to stop receiving the distributions described in the preceding sentence.


Section 9.08. Transfer to Defined Benefit Governmental Plan.

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(a) If a Participant is also a participant in a tax-qualified defined benefit governmental plan (as defined in Code Section 414(d)) that provides for the acceptance of plan-to-plan transfers with respect to the Participant, then the Participant may elect to have any portion of the Participant's Rollover Account transferred to the defined benefit governmental plan, subject to the terms of the Investment Fund. A Participant may not elect to have any portion of the Participant's Pre-Tax Contribution Account or Transfer Contribution Account transferred under this Section. A transfer under this Section may be made before the Participant has had a Severance from Employment.

(b) A transfer may be made under this Section only if the transfer is either for the purchase of permissive service credit (as defined in Code Section 415(n)(3)(A)) under the receiving defined benefit governmental plan or a repayment to which Code Section 415 does not apply by reason of Code Section 415(k)(3).

Section 9.09. Transfers from the Plan. The Plan shall transfer a Participant's Account to the Deferred Compensation Plan to correct an eligibility error under the following conditions: (i) the Participant whose amounts are being transferred will have a deferred amount immediately after the transfer at least equal to the deferred amount with respect to that Participant immediately before the transfer; and (ii) the transfer satisfies such other rules and policies established by the Administrator.

ARTICLE X.

LOANS


ARTICLE XI.

VESTING

A Participant shall be 100% Vested in his or her Accounts at all times.

ARTICLE XII.





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(3) the portion of any distribution that is not includible in gross income; however, a portion of a distribution will not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions that are not includible in gross income, although such portion may be transferred only to an individual retirement account or annuity described in Code Section 408(a) or (b) or to a qualified retirement plan described in Code Section 401(a) that agrees to separately

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account for amounts so transferred (and earnings thereon), including separately accounting for the portion of the distribution that is includible in gross income and the portion of the distribution that is not so includible;











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ARTICLE XIII.


Each Employer shall participate in the Plan on the same terms without modification. Any amendment of the Plan by VRS shall be effective and binding on each Employer.

ARTICLE XIV.


Section 14.01. Authority of the Administrator. The Administrator is responsible for performing the duties required for operation of the Plan. The Administrator shall have all power necessary or convenient to enable it to exercise its authority under the Plan. In connection therewith, the Administrator may provide rules and regulations, not inconsistent with the provisions hereof, for the operation and management of the Plan, and may from time to time amend or rescind such rules or regulations. The Administrator is authorized to accept service of legal process for the Plan.

Section 14.02. Responsibility of the Employer. The Employer is responsible for notifying Participants that they are eligible to participate in the Plan, providing the Administrator complete and accurate information as needed to administer the Plan, and such other responsibilities as may be delegated to Employer by the Administrator from time to time. An Employer that is either a state agency who has decentralized its payroll function or a Political Subdivision is responsible for timely remitting Contributions for its Employees to the Trust. The Department of Accounts of the Commonwealth is responsible for timely remitting Contributions to the Trust on behalf of Employees of any other Employer.

Section 14.03. Powers of the Administrator. The Administrator shall have the power and discretion to construe and interpret the Plan, including any ambiguities, to determine all questions of fact or law arising under the Plan, and to resolve any disputes arising under and all questions concerning administration of the Plan. The Administrator may correct any defect,

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supply any omission or reconcile any inconsistency in the Plan in such manner and to such extent as the Administrator may deem expedient and, subject to the Plan's claims procedures, the Administrator should be the sole and final judge of such expediency. Benefits under the Plan shall be paid only if the Administrator decides in its discretion that the Participant or Beneficiary is entitled to them.

Section 14.04. Delegation by Administrator. The Administrator may delegate to an individual, committee, or organization to carry out its fiduciary duties or other responsibilities under the Plan. Any such individual, committee or organization delegated fiduciary duties shall be a fiduciary until the Administrator revokes such delegation. A delegation of the Administrator duties or responsibilities may be revoked without cause or advance notice. Such individual, committee, or organization shall have the same power and authority with respect to such delegated fiduciary or other responsibilities as the Administrator has under the Plan.


ARTICLE XV.





ARTICLE XVI.


Section 16.01. Amendment and Termination. While it is expected that the Plan shall continue indefinitely, the Commonwealth reserves the right to amend, freeze, or terminate the Plan, or to discontinue any further Contributions to the Plan at any time. The Board may, consistent with Va. Code Section 51.1-600 et seq., make any amendment to the Plan, provided that no such amendment shall reduce, suspend or terminate the accrued benefits otherwise payable to a Participant or Beneficiary hereunder as of the date of such amendment. To the extent required by the exclusive benefit rule, any amendment shall not be effective to the extent that the amendment has the effect of causing any Plan assets to be diverted to or inure to the

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benefit of the Employer, or to be used for any purpose other than providing benefits to Participants and Beneficiaries and defraying reasonable expenses of administering the Plan.



Section 16.03. Distribution Upon Termination of the Plan. The Commonwealth has the right to completely terminate this Plan at any time and in its sole discretion. In such a case, VRS shall arrange for suitable distribution of Plan assets, including the possibility of transfer to another 457 plan or plans. The Trustee shall not be required to pay out any asset of the Trust Fund to Participants and Beneficiaries or a successor plan upon termination of the Trust until the Trustee has received written confirmation from VRS (i) that all provisions of the law with respect to such termination have been complied with, and, (ii) after the Trustee has made a determination of the fair market value of the assets of the Plan, that the assets of the Plan are sufficient to discharge when due all obligations of the Plan required by law. The Trustee shall rely conclusively upon such written certification and shall be under no obligation to investigate or otherwise determine its propriety.

ARTICLE XVII.

MISCELLANEOUS




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(d) Notwithstanding paragraph (a), the Administrator may pay from Participant's or Beneficiary's Account under the Plan the amount that the Administrator finds is lawfully demanded under a levy issued by the Internal Revenue Service with respect to that Participant or Beneficiary or is sought to be collected by the United States Government under a judgment resulting from an unpaid tax assessment against the Participant or Beneficiary. Except in the case of an alternate payee within the meaning of Code Section 414(p)(8), under no circumstances may a payment under this paragraph (d) take place before a Participant has a Severance from Employment.

(e) Notwithstanding paragraph (a), pursuant to Va. Code Section 51.1-124.4(A), the Administrator shall honor any process for a debt to the Employer who has employed such person, and except for administrative actions pursuant to Chapter 19 (Section 63.2-1900 et seq.) of Title 63.2 of the Va. Code or any court process to enforce a child or child and spousal support obligation. Under no circumstances may a payment under this paragraph (e) take place before a Participant has a Severance from Employment.


(a) Notwithstanding any provisions of this Plan to the contrary, contributions, benefits, and service credit with respect to qualified military service shall be provided in accordance with USERRA, HEART, Code Section 414(u), and Code Section 401(a)(37). For purposes of this Section, "qualified military service" means any service in the uniformed services as defined in USERRA by any individual if such individual is entitled to reemployment rights under USERRA with respect to such service.

(b) A Participant whose employment is interrupted by qualified military service or who is on a leave of absence for qualified military service may elect to make Elective Deferrals upon resumption of employment with the Employer up to the maximum Elective Deferrals that the Participant could have elected during that period if the Participant's employment with the Employer had continued (at the same level of Creditable Compensation) without the interruption or leave, reduced by the Elective Deferrals, if any, actually made for the Participant during the period of the interruption or leave. Except to the extent provided under Code Section 414(u), this right applies for the lesser of (i) five years following the resumption of employment or (ii) a period equal to three times the period of the interruption or leave. Such Elective Deferrals by the Participant may only be made during such period and while the Participant is reemployed by the Employer.

(c) To the extent provided under Code Section 401(a)(37), in the case of a Participant whose employment is interrupted by qualified military service and who dies while performing qualified military service, the survivor of such Participant shall be entitled to any additional benefit (other than benefit accruals) provided under the Plan as if the Participant timely

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resumed employment in accordance with USERRA and then, on the next day, terminated employment on account of death.

(d) A Participant whose employment is interrupted by qualified military service or who is on a leave of absence for qualified military service and who receives a differential wage payment within the meaning of Code Section 414(u)(12)(D) from the Employer shall be treated as an Employee of the Employer who is a Participant eligible to make Elective Deferrals during such service and the differential wage payment shall be treated as Creditable Compensation and Includible Compensation. This provision shall be applied to all similarly situated individuals in a reasonably equivalent manner.


(a) as conferring upon any Participant, Beneficiary or any other person any right or claim against VRS, Employer, Administrator, or Trust, except to the extent that such right or claim shall be specifically expressed and provided in the Plan;

(b) as a contract or agreement between VRS and/or the Employer and any Participant or other person; or

(c) as an agreement, consideration, or inducement of employment or as affecting in any manner or to any extent whatsoever the rights or obligations of VRS, the Employer, or any Employee to continue or terminate the employment relationship at any time.

Section 17.04. Federal and State Taxes. It is intended that Contributions, plus any earnings thereunder, are excludable from gross income for federal and state income tax purposes until paid to Participants or Beneficiaries. However, the Administrator does not guarantee that any particular federal or state income, payroll, or other tax consequence will occur as a result of participation in this Plan.



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Section 17.07. Missing or Lost Participants. In the event that the Administrator does not have current contact information for or is unable to identify a Participant or Beneficiary under the Plan, the Administrator shall make reasonable attempts to determine the address and identity of the Participant or Beneficiary entitled to benefits under the Plan. A reasonable attempt to locate a missing or lost Participant or Beneficiary shall include (i) providing notice to the Participant at the Participant's last known address via certified mail; (ii) determining whether the Employer's records or the records of another plan maintained by the Employer has a more current address for the Participant; (iii) attempting to contact any named Beneficiary of the Participant; and (iv) searching for the missing Participant via free electronic search tools, such as Internet search engines, public record databases, obituaries, and social media. If such search methods are unsuccessful, based on the facts and circumstances, the Administrator may use other search methods, including using Internet search tools, commercial locator services, credit reporting agencies, information brokers, investigation databases, and analogous services that may involve charges. The Administrator may charge missing Participants and Beneficiaries reasonable expenses for efforts to find them. In the event that the Administrator is unable to locate a Participant or Beneficiary entitled to benefits under the Plan, the Trustee shall continue to hold the benefits due to such person under the Plan.

Section 17.08. Stale Distribution Checks. A distribution check for an amount less than $10.00 shall be forfeited if it remains uncashed 180 days following its issuance. A distribution check for an amount less than $250.00 shall be forfeited if it remains uncashed five years following its issuance. If a Participant is subsequently located, his or her benefit will be restored and a replacement check will be issued, but no earnings will be paid for the time that the check was outstanding. All forfeitures under this Section 17.08 shall be held in a separate account under the Plan, and shall be used to reduce Plan expenses or to restore benefits to Participants who have been located under this Section.

Section 17.09. No Reversion. Under no circumstances or conditions will any Contributions revert to, be paid to, or inure to the benefit of, directly or indirectly, VRS or the Employer, but shall be held for the exclusive purpose of providing benefits to Participants and their Beneficiaries and defraying the reasonable expenses of administering the Plan. However, if Contributions are made by VRS or the Employer by mistake of fact, these amounts and, if applicable, any interest earned therein, may be returned to VRS or Employer, as applicable, within one year of the date that they were made.

Section 17.10. Claims of Other Persons. The provisions of the Plan will not be construed as giving any Participant or any other person, firm, or corporation, any legal or equitable right against VRS or Employer, its officers, employees, or directors, except the rights as specifically provided for in this Plan or created in accordance with the terms and provisions of this Plan.


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BOARD OF TRUSTEES OF THEVIRGINIA RETIREMENT SYSTEM

By: ______________________________________

Printed Name: _____________________________

Title: ____________________________________

Date: ____________________________________

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VIRGINIA CASH MATCH PLAN

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TABLE OF CONTENTSPage




ARTICLE IV. CONTRIBUTIONS..............................................................................................9Section 4.01. Matching Contributions .......................................................................9Section 4.02. Rollover Contributions to the Plan......................................................9Section 4.03. Transfers to the Plan...........................................................................10Section 4.04. Expenses of Plan..................................................................................10

ARTICLE V. LIMITATIONS ON CONTRIBUTIONS..........................................................10Section 5.01. Code Section 415(c) Limits .................................................................10Section 5.02. Excess Annual Additions ....................................................................11




ARTICLE IX. DISTRIBUTIONS ..............................................................................................13Section 9.01. Distribution Restrictions.....................................................................13Section 9.02. Forms of Payment ...............................................................................13Section 9.03. Reemployment .....................................................................................13Section 9.04. Mandatory Cash-Out..........................................................................13Section 9.05. Coronavirus-Related Distributions. ..................................................14Section 9.06. Death Benefit .......................................................................................14Section 9.07. Required Minimum Distribution Rules. ...........................................14Section 9.08. Additional Tax on Early Withdrawals ..............................................15

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Section 9.09. Transfer upon Privatization or Cessation of Employer ..................16

ARTICLE X. LOANS..................................................................................................................16

ARTICLE XI. VESTING............................................................................................................16Section 11.01. Vesting ..................................................................................................16Section 11.02. Participant Withdrawal of Voluntary Deferrals ..............................16Section 11.03. Felony Convictions ..............................................................................16


ARTICLE XIII. PARTICIPATING EMPLOYERS................................................................19Section 13.01. Adoption of Plan by Participating Employer ...................................19Section 13.02. Plan Terms...........................................................................................19Section 13.03. Withdrawal from Plan by Participating Employer .........................19Section 13.04. Termination of Participation for Failure to Make Timely

Contributions.......................................................................................20






ARTICLE XVII. MISCELLANEOUS ......................................................................................22Section 17.01. Non-Alienation.....................................................................................22Section 17.02. Military Service ...................................................................................23Section 17.03. Limitation of Rights and Obligations ................................................23Section 17.04. Federal and State Taxes......................................................................24Section 17.05. Erroneous Payments ...........................................................................24Section 17.06. Payments to Minors or Incompetents................................................24

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Section 17.07. Missing or Lost Participants ..............................................................24Section 17.08. Stale Distribution Checks ...................................................................25Section 17.09. No Reversion........................................................................................25Section 17.10. Claims of Other Persons .....................................................................25Section 17.11. Counterparts........................................................................................25

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VIRGINIA CASH MATCH PLAN

ARTICLE I.



(a) Pursuant to Sections 51.1-607 et seq. of the Code of Virginia ("Va. Code"), the Board of Trustees of the Virginia Retirement System ("Board") established the Virginia Cash Match Plan ("Plan"), effective March 25, 2000, in order to provide retirement benefits for eligible employees who contribute to an eligible deferred compensation plan under Internal Revenue Code ("Code") Section 457(b) or a tax-deferred annuity under Code Section 403(b).

(b) The Plan is, and is intended to remain, a defined contribution plan qualified under Code Section 401(a) and a profit-sharing plan within the meaning of Code Section 401(a)(27), with contributions made without regard to profits, and is a governmental plan within the meaning of Code Section 414(d) and Section 3(32) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). As a governmental plan, ERISA does not apply.

(c) The Plan was most recently amended and restated effective January 1, 2014, to add the hybrid retirement program provisions established under Va. Code Section 51.1-169, and has been amended once thereafter, generally effective July 1, 2015.


(a) The Plan is now being amended and restated effective January 1, 2021, except as otherwise specifically provided herein, to reflect the separation of the hybrid retirement program portion of the Plan from the Virginia Hybrid Cash Match Plan ("Hybrid Cash Match Plan").

(b) To effectuate the separation of the hybrid retirement program portion of this Plan from the Hybrid Cash Match Plan, the Board shall direct a transfer of the Plan assets held for eligible employees to the Hybrid Cash Match Plan trust as soon as administratively practicable following the establishment of the Hybrid Cash Match Plan.

(c) Except as otherwise specifically provided herein, the Plan as hereinafter set forth establishes the rights and obligations with respect to individuals who are Employees on and after January 1, 2021, and to transactions under the Plan on and after January 1, 2021. The rights and benefits, if any, of individuals who are not Employees on or after January 1, 2021, shall be determined in accordance with the terms and provisions of the Plan that were in effect on the date of their Severance from Employment, except as otherwise specifically provided herein or in a subsequent amendment.

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ARTICLE II.



(a) This Plan shall be interpreted, enforced, and administered in accordance with the Code and, when not inconsistent with the Code, or expressly provided otherwise herein, the Va. Code without regard to conflict of law principles.

(b) Words used herein in the masculine gender shall be construed to include the feminine gender where appropriate, and vice versa, and words used herein in the singular or plural shall be construed as being in the plural or singular, where appropriate, and vice versa.



(e) In resolving any conflict between provisions of the Plan and in resolving any other uncertainty as to the meaning or intention of any provision of the Plan, the interpretation that causes the Plan to (i) constitute a qualified plan under the provisions of Code Section 401 with the earnings of the Trust exempt from income tax under Code Section 501, (ii) be a governmental plan as defined in ERISA Section 3(32) and Code Section 414(d), and (iii) comply with all applicable requirements of the Code, shall prevail over any different interpretation.

Section 2.02. Definitions. When the initial letter of a word or phrase is capitalized herein, the meaning of such word or phrase shall be as follows:


(1) "Matching Contribution Account" means the account maintained to reflect the Participant's interest under the Plan attributable to his or her Matching Contributions pursuant to Section 4.01.


(i) A subaccount to reflect the Participant's interest under the Plan attributable to his or her Rollover Contributions from an eligible retirement plan within the meaning of Section 4.02(a) that consists of after-tax employee contributions; and

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(ii) A subaccount to reflect the Participant's interest under the Plan attributable to his or her Rollover Contributions from an eligible retirement plan within the meaning of Section 4.02(a) that consists of employer and/or employee contributions other than after-tax employee contributions.






(d) "Annual Addition" means the annual addition as defined in Code Section 415(c) and as modified in Code Sections 415(l)(1) and 419A(d)(2). In general, Code Section 415(c) defines annual addition as the sum of the following amounts credited to a Participant's accounts for the Limitation Year under this Plan and any other defined contribution plan maintained by the Participating Employer:

(1) Employee contributions;

(2) Participating Employer contributions, including Matching Contributions under Section 4.01;

(3) forfeitures;

(4) amounts allocated to an individual medical account, as defined in Code Section 415(l)(2), which is part of a pension or annuity plan maintained by the Participating Employer or a Related Employer, or both, as applicable; and

(5) mandatory employee contributions to a defined benefit plan maintained by the Participating Employer, unless the contributions are picked up by the Participating Employer pursuant to Code Section 414(h)(2).

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Annual Additions shall not include Transfer Contributions or Rollover Contributions.

(e) "Applicable Form" means the appropriate form as designated and furnished by the Administrator or the Agent to make any election or provide any notice required by the Plan. In those circumstances where a written election or consent is not required by the Plan or the Code, the Administrator and/or the Agent may prescribe an electronic or telephonic form in lieu of or in addition to a written form.

(f) "Beneficiary" means any person, company, trustee or estate designated by the Participant on the Applicable Form to receive any benefits payable under the Plan in the event of the Participant's death. If the designated primary or contingent Beneficiary does not survive the Participant or there is no Beneficiary designated, the Participant's Beneficiary shall be determined in accordance with Va. Code Section 51.1-162, as follows: (i) the Participant's surviving Spouse, or if none; (ii) the Participant's children and descendants of deceased children, per stirpes, or if none; (iii) the Participant's parents equally if both living, or if none; (iv) the duly appointed executor or administrator of the Participant's estate, or if none; (v) the next of kin entitled to inherit under the laws of the Participant's domicile at the time of death. If a Beneficiary survives the Participant but dies before the entire Account has been distributed, then the unpaid balance of the Account shall be distributed to the Beneficiary's estate. Beneficiary also means an alternate payee within the meaning of Code Section 414(p)(8).



(i) "CARES Act" means the Coronavirus Aid, Relief, and Economic Security Act of 2020.



(l) "Contributions" means Matching Contributions, Rollover Contributions, and Transfer Contributions.

(m) "Coronavirus-Related Distribution" means a distribution made on or after April 9, 2020, but before December 31, 2020, or such later date as provided in legislation modifying or extending the CARES Act or regulatory guidance under the CARES Act, to a Qualified Individual in accordance with Section 9.05.

(n) "Cost-of-Living Adjustment" means the cost-of-living adjustment prescribed by the Secretary of the Treasury under Code Section 401(a)(17) or 415(d) for any applicable year.

(o) "COV 457(b) Plan" means the Deferred Compensation Plan of the Commonwealth of Virginia, as amended from time to time.

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(p) "Effective Date" of the Plan means March 25, 2000, and of this amendment and restatement means January 1, 2021.

(q) "Eligible Employee" means a salaried Employee who participates in the COV 457(b) Plan or a retirement plan established by the Employee's Participating Employer under Code Section 403(b); provided, however, that an Eligible Employee shall not include:

(1) An Employee who participates in the Hybrid Retirement Program unless the Employee makes the voluntary contributions provided under Va. Code Section 51.1-169(C)(2) required to receive the maximum employer matching contributions provided under Va. Code Section 51.1-169(B)(2).

(2) An Employee who participates in a separate cash match plan established by his or her Participating Employer under Va. Code Section 51.1-608(D).

(r) "Employee" means any common law employee employed by the Participating Employer, including appointed or elected officials. An Employee does not include an independent contractor.

(s) "Excess Annual Additions" mean that portion of a Participant's Matching Contributions to the Plan and contributions to another 401(a) defined contribution plan maintained by the Participating Employer or a Related Employer for a Limitation Year which exceeds the limits of Code Section 415.

(t) "HEART" means the Heroes Earnings Assistance and Relief Tax Act of 2008, as amended from time to time.

(u) "Hybrid Retirement Program" means the hybrid retirement program established under Va. Code Section 51.1-169.

(v) "Investment Funds" means the mutual funds, collective investment trust funds, insurance company separate accounts, annuity contracts, or other investment vehicles made available to Participants for the investment of their Accounts. The Administrator, in its sole and absolute discretion, shall select the Investment Funds and may add or delete Investment Funds.

(w) "Limitation Year" means the 12 month period beginning January 1.

(x) "Matching Contributions" mean contributions made to the Plan by the Participating Employer on behalf of a Participant pursuant to Section 4.01.

(y) "Participant" means any Eligible Employee who is or may become eligible to receive a benefit of any type under the Plan. A Participant shall also mean, when appropriate to the context, a former Eligible Employee who is eligible to receive a benefit of any type under the Plan.

(z) "Participating Employer" means (i) the Commonwealth or (ii) a Political Subdivision that has elected to offer the Plan to its Employees pursuant to Va. Code Section 51.1-611.

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(aa) "Plan" means the Virginia Cash Match Plan, as amended from time to time.

(bb) "Plan Compensation" means all compensation as defined in Code Section 415(c)(3). In general, Code Section 415(c)(3) defines compensation as all of an Employee's wages as defined in Code Section 3401(a) for the purposes of income tax withholding at the source but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)); provided, however, Plan Compensation shall also include the amount of any elective deferrals, as defined in Code Section 402(g)(3), and any amount contributed or deferred by the Participating Employer at the election of the Employee and which is not includible in the gross income of the Employee by reason of Code Section 125, 403(b), 132(f)(4), 401(k), or 457(b). Plan Compensation for a Plan Year includes compensation paid by the later of (i) two and one-half months after an Employee's Severance from Employment, or (ii) the end of the Plan Year that includes the date of the Employee's Severance from Employment, if:

(1) the payment is regular compensation for services during the Employee's regular working hours, or compensation for services outside the Employee's regular working hours (e.g., overtime or shift differential), commissions, bonuses, or other similar payments and the payment would have been paid to the Employee prior to a Severance from Employment if the Employee had continued in employment with the Participating Employer; or

(2) the payment is for unused accrued bona fide sick, vacation, or other leave, but only if the Employee would have been able to use the leave if the Employee had continued in employment.

Plan Compensation does not include any amounts "picked up" by the Participating Employer within the meaning of Code Section 414(h). Plan Compensation shall not exceed the limits under Code Section 401(a)(17) increased by the Cost-of-Living Adjustment.

(cc) "Plan Year" means the 12 month period beginning July 1.

(dd) "Political Subdivision" means a county, municipality, authority, school division, or other political subdivision of the Commonwealth or an agency thereof.

(ee) "Qualified Individual" means a Participant:




(i) the Participant, the Participant's Spouse, or a member of the Participant's household (a) being quarantined, (b) being furloughed or laid off or

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having work hours reduced due to such virus or disease, (c) being unable to work due to lack of child care due to such virus or disease, (d) having a reduction in pay (or self-employment income) due to such virus or disease, or (e) having a job offer rescinded or start date for a job delayed due to such virus or disease;




For purposes of this paragraph (ee), a member of the Participant's household means someone who shares the Participant's principal residence.

(ff) "Qualified Participant" means a Participant making continuous voluntary deferrals of at least $10.00 each pay period to a Supplemental Retirement Program.

(gg) "Related Employer" means the Participating Employer and any other entity which is under common control with the Participating Employer under Code Section 414(b), (c) or (m). For this purpose, the Board shall determine which entities are Related Employers based on a reasonable, good faith standard and taking into account the special rules applicable under Notice 89-23, 1989-1 C.B. 654.

(hh) "Rollover Contributions" mean the contributions made to the Plan pursuant to Section 4.02.

(ii) "Section" means, when not preceded by the word Code, a section of the Plan.

(jj) "Severance from Employment" means the complete termination of the employment relationship between the Employee and the Participating Employer.

(kk) "Spouse" means the person to whom the Participant is legally married under federal law.

(ll) "Supplemental Retirement Program" means

(1) the COV 457(b) Plan; or

(2) a retirement plan established by a Participating Employer under Code Section 403(b).

(mm) "Transfer Contributions" mean the contributions made to the Plan pursuant to Section 4.03.

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(nn) "Trust" means the Master Trust for the Defined Contribution Plans of the Commonwealth of Virginia, which may incorporate one or more qualified trusts under Code Section 401(a), custodial accounts treated as qualified trusts under Code Section 401(f), and/or annuity contracts treated as qualified trusts under Code Section 401(f), established under the Plan to hold Plan assets.

(oo) "Trust Fund" means the assets of the Plan held pursuant to the terms of the Plan and the Trust.

(pp) "Trustee" means the trustee or any successor trustee designated and appointed by VRS, and includes a custodian of a custodial account or an insurer of an annuity contract under Code Section 401(f).

(qq) "USERRA" means the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended from time to time.

(rr) "Va. Code" means the Code of Virginia, as amended from time to time.

(ss) "Vested" means the interest of the Participant or Beneficiary in his or her Accounts which is unconditional, legally enforceable, and nonforfeitable at all times.

(tt) "VRS" means the Virginia Retirement System.

ARTICLE III.



(a) An Eligible Employee who is a Participant on the day before the Effective Date of this amended and restated Plan shall continue to be a Participant on the Effective Date.

(b) An Eligible Employee shall become a Participant in the Plan on the first pay date of the month following the month in which the Eligible Employee elects to make voluntary deferrals to a Supplemental Retirement Program.

(c) The Participating Employer shall notify the Eligible Employee of his or her eligibility to participate in the Plan. To become a Participant under the Plan, an Eligible Employee must complete the Applicable Forms, which may include enrollment, beneficiary designation, and investment election forms, and return them to the Administrator or Agent, as applicable. An Eligible Employee who fails to complete the Applicable Forms shall be deemed to have waived all of his or her rights under the Plan, provided that such Eligible Employee may become a Participant in the Plan at any time thereafter by completing the Applicable Forms and returning them to the Administrator or Agent, as applicable.

(d) Notwithstanding paragraph (b), if an Eligible Employee is automatically enrolled in a Supplemental Retirement Program, he or she shall also be automatically enrolled in the Plan.

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Section 3.02. Cessation of Contributions. A Participant shall cease to be eligible for Contributions under the Plan when (i) he or she is no longer an Eligible Employee, (ii) his or her Participating Employer ceases to be a Participating Employer, or (iii) the Plan is terminated.

Section 3.03. Reemployment. If an Employee has a Severance from Employment from his or her Employer and is then reemployed by the Participating Employer or is employed by another Participating Employer, the Participant must complete the Applicable Forms pursuant to Section 3.01(c) to be eligible again for Contributions under the Plan.

ARTICLE IV.

CONTRIBUTIONS

Section 4.01. Matching Contributions.

(a) If the Participating Employer is the Commonwealth, the Participating Employer shall make a Matching Contribution to the Plan each payroll period on behalf of each Qualified Participant it employs equal to 50% of the Qualified Participant's voluntary deferrals to the Supplemental Retirement Program; provided, however, that such Matching Contribution shall not exceed the maximum established by the Commonwealth in accordance with Va. Code Section 51.1-609.

(b) If the Participating Employer is a Political Subdivision, the Participating Employer shall make a Matching Contribution to the Plan each payroll period on behalf of each Qualified Participant it employs equal to a dollar amount or percentage of the Qualified Participant's voluntary deferrals to the Supplemental Retirement Program, as determined by the governing body of the Participating Employer, in its sole and absolute discretion, prior to the beginning of the Plan Year.

(c) Matching Contributions shall be paid to the Plan by the Participating Employer each payroll period. Matching Contributions shall be allocated to each Participant's Matching Contribution Account as of the date made to the Plan, but no later than the last day of the Plan Year.


(a) An Eligible Employee or former Eligible Employee may transfer to the Plan as a Rollover Contribution a distribution from:

(1) a Code Section 401(a) or 403(a) qualified plan, including after-tax employee contributions in a direct rollover;



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A Rollover Contribution under this paragraph shall be made directly from such prior plan, or if such amount was distributed to the Eligible Employee or former Eligible Employee, shall be made within 60 days after the Eligible Employee or former Eligible Employee receives the rollover amount, unless the 60 day deadline is waived under Code Section 402(c)(3)(B) or a later deadline is established under Internal Revenue Service guidance.

(b) A Rollover Contribution shall be subject to the Trustee's determination, in its discretion, that the Rollover Contribution satisfies all applicable requirements of the Code.

(c) A Rollover Contribution shall be allocated to a Rollover Contribution Account as of the date of the contribution; provided, however, that separate subaccounts shall be maintained to reflect Rollover Contributions from after-tax employee contributions and contributions other than after-tax employee contributions, as provided in Section 2.02(a).

(d) Before a Rollover Contribution is made, the Eligible Employee or former Eligible Employee shall designate on the Applicable Form the Investment Funds in which to invest his or her Rollover Contribution.


(a) The Plan shall accept as a Transfer Contribution a transfer of accrued benefits from the Defined Contribution Incentive Plan for VRS Personnel on behalf of a Participant. The Plan shall not accept a transfer from any other plan.

(b) The transfer shall satisfy such rules and policies established by the Administrator.


Section 4.04. Expenses of Plan. All reasonable expenses of administering the Plan shall be charged against and paid from the Participant's Accounts, subject to the terms of the applicable Investment Funds, unless paid by the Participating Employer. The Administrator shall have the right to allocate expenses associated with maintaining the Accounts of terminated Employees to such Accounts, even if no expenses are allocated to the Accounts of active Employees, in accordance with rules promulgated by the Internal Revenue Service.

ARTICLE V.


Section 5.01. Code Section 415(c) Limits.

(a) Notwithstanding any provision of the Plan to the contrary, Annual Additions to the Plan and any other Code Section 401(a) plan maintained by the Participating Employer or a

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Related Employer for a Participant in a Limitation Year shall not exceed the limitations set forth in Code Section 415(c).

(b) The Code Section 415(c) limit for any Limitation Year is the lesser of:

(1) $58,000 for 2021, increased by the Cost-of-Living Adjustment thereafter; or

(2) 100% of the Participant's Plan Compensation for the Limitation Year.

Section 5.02. Excess Annual Additions.

(a) If as of the end of the Plan Year, the Annual Additions allocated to any Participant's Account exceed the limitations of this Article V, the Excess Annual Additions will be corrected as permitted under the Employee Plans Compliance Resolution System (or similar Internal Revenue Service correction program).

(b) If a Participant has Excess Annual Additions for a Plan Year, an adjustment to comply with this Article shall be made as soon as administratively possible, but no later than the time permitted under Internal Revenue Service guidance: (i) first, to any other plan sponsored and maintained by the Participating Employer that is required to be aggregated with this Plan; and (ii) second, to this Plan.

ARTICLE VI.

ACCOUNTING




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ARTICLE VII.







ARTICLE VIII.

TRUST


Section 8.02. Trust Status. The Trust Fund shall be held in Trust for the exclusive benefit of Participants and Beneficiaries under the Plan in accordance with Code Section 501(a). No part of the Trust Fund shall be used for, or diverted to, purposes other than for the exclusive benefit of Participants and their Beneficiaries, and for defraying the reasonable expenses of the Plan and Trust. The Trust is exempt from tax pursuant to Code Sections 401(a) and 501(a).

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ARTICLE IX.

DISTRIBUTIONS



(b) Notwithstanding paragraph (a), a Participant who is an Employee may request a distribution of his or her Account on or after the January 1 of the calendar year in which the Participant attains age 70½, even if the Participant has not had a Severance from Employment.

(c) Notwithstanding paragraph (a), a Participant may request a distribution from his or her Rollover Contribution Account at any time.

(d) A Participant or Beneficiary may submit a request for a distribution to the Administrator on the Applicable Form. The Participating Employer shall certify that the Participant has had a Severance from Employment, if applicable.



(b) Notwithstanding paragraph (a), a distribution under Section 9.01(c) made prior to Severance from Employment shall only be made as a lump sum payment.

Section 9.03. Reemployment. If a Participant who is a former Eligible Employee subsequently becomes an Eligible Employee again after distribution of his or her Accounts has begun under a payment option other than annuity payments, such distributions shall immediately cease, and the Eligible Employee shall not receive any benefits under the Plan until the Employee is entitled to a distribution under Section 9.01.


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(c) A Participant's Accounts shall be distributed to the Participant beginning no later than his or her “required beginning date” as defined in this paragraph or, if applicable, as defined in subsequent legislation or regulations that amend the definition of required beginning date for purposes of Code Section 401(a)(9). Subject to the preceding sentence, required beginning date shall mean April 1 of the calendar year following the calendar year in which the Participant

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attains age 70½ (age 72 for distributions required to be made after December 31, 2019, with respect to a Participant who would have attained age 70½ after December 31, 2019) or, if later, April 1 of the calendar year following the calendar year that the Participant has a Severance from Employment.




(2) Effective March 27, 2020, or as soon a administratively practicable thereafter, a Participant who would have been required to receive 2020 RMDs and who would have satisfied that requirement by receiving distributions that are one or more payments (that include the 2020 RMDs) in a series of substantially equal periodic payments made at least annually and expected to last for the life (or life expectancy) of the Participant, the joint lives (or joint life expectancies) of the Participant and the Beneficiary, or for a period of at least 10 years ("Extended 2020 RMDs"), will receive these distributions unless the Participant or Beneficiary chooses not to receive the distributions. Participants and Beneficiaries described in the preceding sentence will be given the opportunity to elect to stop receiving the distributions described in the preceding sentence.

(3) In addition, solely for purposes of applying the direct rollover provisions of Article XII, 2020 RMDs and Extended 2020 RMDs will be treated as eligible rollover distributions in 2020.

Section 9.08. Additional Tax on Early Withdrawals.

(a) Generally, and except as described in paragraph (b), if a Participant receives any amount under the Plan, his or her tax for the taxable year in which such amount is received is increased by an amount equal to 10% of the portion of such amount which is includible in gross income. Such amount shall be included in gross income to the extent allocable to income on the

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Investment Fund and shall not be included in gross income to the extent allocable to the investment in the Investment Fund as provided in Code Section 72(e)(2)(b).

(b) The penalty described in paragraph (a) generally does not apply to any distribution (i) made on or after the date on which the Participant attains age 59½, (ii) made on or after the death of the Participant, (iii) attributable to the Participant becoming disabled within the meaning of Code Section 72(m)(7), (iv) which is part of a series of substantially equal periodic payments made (not less frequently than annually) for the life or life expectancy of the Participant or the joint lives (or joint life expectancies) of such Participant and his or her designated Beneficiary, (v) made to a Participant after Severance from Employment following the attainment of age 55, (vi) which is a qualified reservist distribution within the meaning of Code Section 72(t)(2)(G)(iii), or (vii) any other circumstance permitted by the Code or the Internal Revenue Service.

Section 9.09. Transfer upon Privatization or Cessation of Employer. If a Participating Employer ceases to be eligible to participate in a governmental plan under Code Section 414(d), or ceases to exist as an ongoing concern, the assets attributable to the Participants employed by such Participating Employer may be transferred to a qualified plan under Code Section 401(a) maintained by that employer or another Participating Employer.

ARTICLE X.

LOANS


ARTICLE XI.

VESTING


Section 11.02. Participant Withdrawal of Voluntary Deferrals.

(a) Notwithstanding Section 11.01, if a Participant timely opts-out of automatic enrollment under a Supplemental Retirement Program, he or she shall forfeit any Matching Contributions made on his or her behalf under this Plan.

(b) Forfeitures arising under paragraph (a) shall be held in a separate account under the Plan, and shall be used to reduce Plan expenses.


(a) Notwithstanding Section 11.01, if a Participant (i) is convicted of a felony and (ii) his or her Participating Employer determines that the felony arose from misconduct occurring on or after July 1, 2011, in any position in which the Participant was covered for retirement purposes under any retirement system administered by the Board, the Participant shall forfeit his

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or her Employer Contributions, if any. Such forfeiture shall occur following the Participating Employer's notification to VRS that a felony conviction arising from such misconduct has been obtained and the administrative process as set forth in Va. Code Section 51.1-124.13 has concluded. If the Participant is or becomes a Participant in service after such forfeiture, he or she shall be entitled to the benefits based solely on his or her service after the forfeiture.

(b) Forfeitures arising under paragraph (a) shall be allocated to a forfeiture account under the Plan, and shall be used to reduce Plan expenses.

ARTICLE XII.














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(a) If the Distributee of an Eligible Rollover Distribution does not elect to have the Eligible Rollover Distribution paid directly from the Plan to an Eligible Retirement Plan in a Direct Rollover pursuant to Code Section 401(a)(31), the Eligible Rollover Distribution shall be

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subject to a mandatory 20% federal income tax withholding under Code Section 3405(c). Only that portion of the Eligible Rollover Distribution that is not paid directly from the Plan to an Eligible Retirement Plan in a Direct Rollover shall be subject to the mandatory withholding requirement under Code Section 3405(e), and only to the extent such amount would otherwise be includible in the Distributee's taxable gross income.







(3) that provide that a distribution shall not be subject to tax if the distribution is rolled over to an Eligible Retirement Plan within 60 days after the date the Distribute receives the distribution; and



ARTICLE XIII.


Section 13.01. Adoption of Plan by Participating Employer. A Political Subdivision must enter into an agreement with VRS before its Employees may become Participants in the Plan.

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Section 13.03. Withdrawal from Plan by Participating Employer. A Participating Employer that is a Political Subdivision may cease making contributions to the Plan and request a trustee to trustee transfer of its Employees' Accounts to a separate Code Section 401(a) plan established by the Participating Employer, pursuant to such procedures adopted by the Board from time to time.

Section 13.04. Termination of Participation for Failure to Make Timely Contributions. The Board may terminate the participation of a Participating Employer that is a Political Subdivision for recurring failures by the Participating Employer to remit Contributions to the Trustee in a timely manner. Upon such termination, VRS shall transfer the Participating Employer's Employee Accounts to a separate Code Section 401(a) plan established by the Participating Employer, pursuant to such procedures adopted by the Board. If no such separate Code Section 401(a) plan is established, the Plan shall be deemed terminated with respect to that Participating Employer and Employee Accounts shall be distributed to Employees.

ARTICLE XIV.



Section 14.02. Responsibility of the Participating Employer. The Participating Employer is responsible for notifying Participants that they are eligible to participate in the Plan, providing the Administrator complete and accurate information as needed to administer the Plan, and such other responsibilities as may be delegated to Participating Employer by the Administrator from time to time. A Participating Employer that is either a state agency who has decentralized its payroll function or a Political Subdivision is responsible for timely remitting Contributions for its Employees to the Trust. The Department of Accounts of the Commonwealth is responsible for timely remitting Contributions to the Trust on behalf of Employees of any other Participating Employer.

Section 14.03. Powers of the Administrator. The Administrator shall have the power and discretion to construe and interpret the Plan, including any ambiguities, to determine all questions of fact or law arising under the Plan, and to resolve any disputes arising under and all questions concerning administration of the Plan. The Administrator may correct any defect, supply any omission or reconcile any inconsistency in the Plan in such manner and to such extent as the Administrator may deem expedient and, subject to the Plan's claims procedures, the

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Administrator should be the sole and final judge of such expediency. Benefits under the Plan shall be paid only if the Administrator decides in its discretion that the Participant or Beneficiary is entitled to them.

Section 14.04. Delegation by Administrator. The Administrator may delegate to an individual, committee, or organization to carry out its fiduciary duties or other responsibilities under the Plan. Any such individual, committee, or organization delegated fiduciary duties shall be a fiduciary until the Administrator revokes such delegation. A delegation of the Administrator duties or responsibilities may be revoked without cause or advance notice. Such individual, committee, or organization shall have the same power and authority with respect to such delegated fiduciary or other responsibilities as the Administrator has under the Plan.


ARTICLE XV.





ARTICLE XVI.


Section 16.01. Amendment and Termination. While it is expected that the Plan shall continue indefinitely, the Commonwealth reserves the right to amend, freeze, or terminate the Plan, or to discontinue any further Contributions to the Plan at any time. The Board may, consistent with Va. Code Section 51.1-607 et seq., make any amendment to the Plan, provided that no such amendment shall reduce, suspend or terminate the accrued benefits otherwise payable to a Participant of Beneficiary hereunder as of the date of such amendment. To the extent required by the exclusive benefit rule, any amendment shall not be effective to the extent that the amendment has the effect of causing any Plan assets to be diverted to or inure to the benefit of the Participating Employer, or to be used for any purpose other than providing benefits to Participants and Beneficiaries and defraying reasonable expenses of administering the Plan.

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Section 16.03. Distribution Upon Termination of the Plan. The Commonwealth has the right to completely terminate this Plan at any time and in its sole discretion. In such a case, VRS shall arrange for suitable distribution of Plan assets, including the possibility of transfer to another 401(a) plan or plans. The Trustee shall not be required to pay out any asset of the Trust Fund to Participants and Beneficiaries or a successor plan upon termination of the Trust until the Trustee has received written confirmation from VRS (i) that all provisions of the law with respect to such termination have been complied with, and, (ii) after the Trustee has made a determination of the fair market value of the assets of the Plan, that the assets of the Plan are sufficient to discharge when due all obligations of the Plan required by law. The Trustee shall rely conclusively upon such written certification and shall be under no obligation to investigate or otherwise determine its propriety.

ARTICLE XVII.

MISCELLANEOUS


(a) A Participant's Account under the Plan shall not be liable for any debt, liability, contract, engagement, or tort of the Participant or his or her Beneficiary, nor subject to anticipation, sale, assignment, transfer, encumbrance, pledge, charge, attachment, garnishment, execution, alienation, or any other voluntarily or involuntarily alienation or other legal or equitable process, nor transferable by operation of law.


(c) Notwithstanding paragraph (a), the Plan shall offset from the benefit otherwise payable to a Participant or his or her Spouse such amounts as are permitted to be offset under a

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court order, civil judgment, or settlement agreement in accordance with Code Section 401(a)(13)(C).


(e) Notwithstanding paragraph (a), pursuant to Va. Code Section 51.1-124.4(A), the Administrator shall honor any process for a debt to the Participating Employer who has employed such person, and except for administrative actions pursuant to Chapter 19 (Section 63.2-1900 et seq.) of Title 63.2 of the Va. Code or any court process to enforce a child or child and spousal support obligation. Under no circumstances may a payment under this paragraph (e) take place before a Participant has a Severance from Employment.



(b) If a Participant whose employment is interrupted by qualified military service or who is on a leave of absence for qualified military service under Code Section 414(u), timely resumes employment as an Eligible Employee with the Participating Employer in accordance with USERRA, the Participating Employer shall make the Matching Contributions, if any, that would have been made if the Participant had remained employed during the Participant's qualified military service. Matching Contributions must be made no later than 90 days after the date of reemployment or when Matching Contributions are normally due for the year in which the qualified military service was performed, if later.

(c) To the extent provided under Code Section 401(a)(37), in the case of a Participant whose employment is interrupted by qualified military service and who dies while performing qualified military service, the survivor of such Participant shall be entitled to any additional benefit (other than benefit accruals) provided under the Plan as if the Participant timely resumed employment in accordance with USERRA and then, on the next day, terminated employment on account of death.

(d) Differential wage payments within the meaning of Code Section 414(u)(12)(D) shall be treated as Plan Compensation under the Plan.

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Section 17.04. Federal and State Taxes. It is intended that Matching Contributions, plus any earnings thereunder, are excludable from gross income for federal and state income tax purposes until paid to Participants or Beneficiaries. However, the Administrator does not guarantee that any particular federal or state income, payroll or other tax consequence will occur as a result of participation in this Plan.



Section 17.07. Missing or Lost Participants. In the event that the Administrator does not have current contact information for or is unable to identify a Participant or Beneficiary under the Plan, the Administrator shall make reasonable attempts to determine the address and identity of the Participant or Beneficiary entitled to benefits under the Plan. A reasonable attempt to locate a missing or lost Participant or Beneficiary shall include (i) providing notice to the Participant at the Participant's last known address via certified mail; (ii) determining whether the Participating Employer's records or the records of another plan maintained by the Participating Employer has a more current address for the Participant; (iii) attempting to contact any named Beneficiary of the Participant; and (iv) searching for the missing Participant via free

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electronic search tools, such as Internet search engines, public record databases, obituaries, and social media. If such search methods are unsuccessful, based on the facts and circumstances, the Administrator may use other search methods, including using Internet search tools, commercial locator services, credit reporting agencies, information brokers, investigation databases, and analogous services that may involve charges. The Administrator may charge missing Participants and Beneficiaries reasonable expenses for efforts to find them. In the event that the Administrator is unable to locate a Participant or Beneficiary entitled to benefits under the Plan, the Trustee shall continue to hold the benefits due to such person under the Plan.

Section 17.08. Stale Distribution Checks. A distribution check for an amount less than $10.00 shall be forfeited if it remains uncashed 180 days following its issuance. A distribution check for an amount less than $250.00 shall be forfeited if it remains uncashed five years following its issuance. If a Participant is subsequently located, his or her benefit will be restored and a replacement check will be issued, but no earnings will be paid for the time that the check was outstanding. All forfeitures under this Section 17.08 shall be held in a separate account under the Plan, and shall be used to reduce Plan expenses or to restore benefits to Participants who have been located under this Section.




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By:

Printed Name:

Title:

Date:

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Effective January 1, 2021

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VIRGINIA HYBRID 401(a) CASH MATCH PLAN

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ARTICLE I. ESTABLISHMENT OF PLAN..............................................................................1Section 1.01. Plan History ...........................................................................................1Section 1.02. Plan Establishment................................................................................1



ARTICLE IV. CONTRIBUTIONS..............................................................................................8Section 4.01. Mandatory Employee Contributions...................................................8Section 4.02. Matching Contributions .......................................................................9Section 4.03. Mandatory Employer Contribution ....................................................9Section 4.04. Rollover Contributions to the Plan......................................................9Section 4.05. Transfers to the Plan.............................................................................9Section 4.06. Leave of Absence .................................................................................10Section 4.07. Disability ..............................................................................................10Section 4.08. Expenses of Plan..................................................................................10





ARTICLE IX. DISTRIBUTIONS ..............................................................................................12Section 9.01. Distribution Restrictions.....................................................................12Section 9.02. Forms of Payment ...............................................................................12Section 9.03. Reemployment .....................................................................................13Section 9.04. Mandatory Cash-Out..........................................................................13

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Section 9.05. Death Benefit .......................................................................................13Section 9.06. Required Minimum Distribution Rules ............................................13Section 9.07. Additional Tax on Early Withdrawals ..............................................14Section 9.08. Transfers from the Plan......................................................................15Section 9.09. Transfer upon Privatization or Cessation of Employer ..................15

ARTICLE X. LOANS..................................................................................................................15

ARTICLE XI. VESTING............................................................................................................15Section 11.01. Vesting ..................................................................................................15Section 11.02. Felony Convictions ..............................................................................16Section 11.03. Forfeitures............................................................................................16


ARTICLE XIII. EMPLOYERS .................................................................................................19

ARTICLE XIV. ADMINISTRATION OF THE PLAN...........................................................19Section 14.01. Authority of the Administrator..........................................................19Section 14.02. Responsibility of the Employer ..........................................................19Section 14.03. Powers of the Administrator ..............................................................20Section 14.04. Delegation by Administrator..............................................................20Section 14.05. Employment of Consultants ...............................................................20





ARTICLE XVII. MISCELLANEOUS ......................................................................................21Section 17.01. Non-Alienation.....................................................................................21Section 17.02. Military Service ...................................................................................22Section 17.03. Limitation of Rights and Obligations ................................................23Section 17.04. Federal and State Taxes......................................................................23Section 17.05. Erroneous Payments ...........................................................................23Section 17.06. Payments to Minors or Incompetents................................................24Section 17.07. Missing or Lost Participants ..............................................................24

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Section 17.08. Stale Distribution Checks ...................................................................24Section 17.09. No Reversion........................................................................................24Section 17.10. Claims of Other Persons .....................................................................24Section 17.11. Counterparts........................................................................................25

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VIRGINIA HYBRID 401(a) CASH MATCH PLAN

ARTICLE I.

ESTABLISHMENT OF PLAN

Section 1.01. Plan History.

(a) Pursuant to Sections 51.1-607 et seq. of the Code of Virginia ("Va. Code"), the Board of Trustees of the Virginia Retirement System ("Board") established the Virginia Cash Match Plan ("Cash Match Plan"), effective March 25, 2000, in order to provide retirement benefits for eligible employees who contribute to an eligible deferred compensation plan under Internal Revenue Code ("Code") Section 457(b) or a tax-deferred annuity under Code Section 403(b).

(b) The Cash Match Plan is, and is intended to remain, a defined contribution plan qualified under Code Section 401(a) and a profit-sharing plan within the meaning of Code Section 401(a)(27), with contributions made without regard to profits, and is a governmental plan within the meaning of Code Section 414(d) and Section 3(32) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). As a governmental plan, ERISA does not apply.

(c) The Cash Match Plan was most recently amended and restated effective January 1, 2014, to add the hybrid retirement program provisions established under Va. Code Section 51.1-169, and has been amended once thereafter, generally effective July 1, 2015.

(d) The Cash Match Plan is being amended and restated effective January 1, 2021, to reflect the separation of the hybrid retirement program portion of the Cash Match Plan from a new defined contribution plan qualified under Code Section 401(a), effective January 1, 2021.

Section 1.02. Plan Establishment.

(a) The Board hereby establishes the Virginia Hybrid 401(a) Cash Match Plan ("Plan"), effective January 1, 2021, for the benefit of eligible employees, pursuant to Va. Code Section 51.1-169.

(b) The Plan is, and is intended to remain, a defined contribution plan qualified under Code Section 401(a) and a profit-sharing plan within the meaning of Code Section 401(a)(27), with contributions made without regard to profits, and is a governmental plan within the meaning of Code Section 414(d) and ERISA Section 3(32). As a governmental plan, ERISA does not apply.

(c) To effectuate the separation of the hybrid cash match portion of the Cash Match Plan to this Plan, the Board shall direct a transfer of the Cash Match Plan assets held for eligible employees to the Trust as soon as administratively practicable following the establishment of the Plan.

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(d) Except as otherwise specifically provided herein, the Plan as hereinafter set forth establishes the rights and obligations with respect to individuals who are Employees on and after January 1, 2021, and to transactions under the Plan on and after January 1, 2021. The rights and benefits, if any, of individuals who are not Employees on or after January 1, 2021, shall be determined in accordance with the terms and provisions of the Cash Match Plan that were in effect on the date of their Severance from Employment, except as otherwise specifically provided herein or in a subsequent amendment.

ARTICLE II.







(e) In resolving any conflict between provisions of the Plan and in resolving any other uncertainty as to the meaning or intention of any provision of the Plan, the interpretation that causes the Plan to (i) constitute a qualified plan under the provisions of Code Section 401 with the earnings of the Trust exempt from income tax under Code Section 501, (ii) be a governmental plan as defined in ERISA Section 3(32) and Code Section 414(d), and (iii) comply with all applicable requirements of the Code, shall prevail over any different interpretation.


(a) "Account" means the aggregate of the following separate accounts maintained for each Participant, reflecting his or her interest under the Plan as follows:

(1) "Mandatory Employee Contribution Account" means the account maintained to reflect the Participant's interest under the Plan attributable to his or her Mandatory Employee Contributions pursuant to Section 4.01.

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(2) "Matching Contribution Account" means the account maintained to reflect the Participant's interest under the Plan attributable to his or her Matching Contributions pursuant to Section 4.02.

(3) "Mandatory Employer Contribution Account" means the account maintained to reflect the Participant's interest under the Plan attributable to his or her Mandatory Employer Contributions pursuant to Section 4.03.






(d) "Annual Addition" means the annual addition as defined in Code Section 415(c) and as modified in Code Sections 415(l)(1) and 419A(d)(2). In general, Code Section 415(c) defines annual addition as the sum of the following amounts credited to a Participant's accounts for the Limitation Year under this Plan and any other defined contribution plan maintained by the Employer:

(1) Employee contributions, including Mandatory Employee Contributions under Section 4.01;

(2) Employer contributions, including Matching Contributions under Section 4.02 and Mandatory Employer Contributions under Section 4.03;

(3) forfeitures;

(4) amounts allocated to an individual medical account, as defined in Code Section 415(l)(2), which is part of a pension or annuity plan maintained by the Employer or a Related Employer, or both, as applicable; and

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(5) mandatory employee contributions to a defined benefit plan maintained by the Employer, unless the contributions are picked up by the Employer pursuant to Code Section 414(h)(2).

Annual Additions shall not include Transfer Contributions.




(h) "Break in Service" means a period of at least one full calendar month from the end of the month in which the Participant has a Severance from Employment, but does not include any period during which Mandatory Employer Contributions are being made under Section 4.07 on behalf of a Participant who is permanently and totally disabled within the meaning of Code Section 22(e)(3) and Va. Code Section 51.1-1172.

(i) "Cash Match Plan" means the Virginia Cash Match Plan, as amended from time to time.



(l) "Contributions" means Mandatory Employee Contributions, Matching Contributions, Mandatory Employer Contributions, and Transfer Contributions.

(m) "Cost-of-Living Adjustment" means the cost-of-living adjustment prescribed by the Secretary of the Treasury under Code Section 401(a)(17) or 415(d) for any applicable year.

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(n) "Creditable Compensation" has the meaning set forth in Va. Code Section 51.1-124.3, as interpreted by VRS. Creditable Compensation generally means the Employee's annual salary, not including overtime pay, payment of a temporary nature, or payments for extra duties. Creditable Compensation shall not include any amounts paid after Severance from Employment except for regular pay that would have been paid to the Employee prior to a Severance from Employment if the Employee continued in employment with the Employer and that is otherwise Creditable Compensation. Creditable Compensation shall not exceed the limits under Code Section 401(a)(17), increased by the Cost-of-Living Adjustment.

(o) "Effective Date" of the Plan means January 1, 2021.

(p) "Employee" means any common law employee employed by the Employer who:

(1) is first hired in a position covered for retirement purposes under Chapter 1 of Title 51.1 of the Va. Code on or after January 1, 2014; or

(2) made an irrevocable election to participate in the Plan pursuant to Va. Code Section 51.1-169(A).

An Employee who was first hired in a position covered for retirement purposes under Chapter 1 of Title 51.1 of the Va. Code prior to January 1, 2014, but who took a refund of his or her member contributions and interest or withdrew his or her full account under an optional retirement plan maintained under Chapter 1 of Title 51.1 of the Va. Code, will be treated as an Employee under paragraph (1) if otherwise applicable. An Employee does not include: (i) any person who meets the definition of "emergency medical services personnel" in Va. Code Section 32.1-111.1 or is employed as a firefighter, emergency medical technician, or law-enforcement officer as those terms are defined in Va. Code Section 15.2-1512.2, and whose Employer has adopted the resolution described in Va. Code Sections 51.1-153(B)(4) and Va. Code Section 51.1-155(A)(3); (ii) any person who is an active member of any optional retirement plan maintained under Chapter 1 of Title 51.1 of the Va. Code; (iii) any employee who is a participant in or eligible to participate in, the retirement plans under Va. Code Section 51.1-200 et seq., Va. Code Section 51.1-211 et seq., and the optional retirement plans established under Va. Code Sections 51.1.-126.1, 51.1-126.3, 51.1-126.4, and 51.1-126.7, or a person eligible to earn benefits under Va. Code Section 51.1-138; or (iv) any member of the retirement plan under Va. Code Section 51.1-300 et seq. except members appointed to an original term on or after January 1, 2014.

(q) "Employer" means an employer as defined under Va. Code Section 51.1-124.3.

(r) "Excess Annual Additions" mean that portion of a Participant's Mandatory Employee Contributions, Matching Contributions, and Mandatory Employer Contributions to the Plan and contributions to another 401(a) defined contribution plan maintained by the Employer or a Related Employer for a Limitation Year which exceeds the limits of Code Section 415.

(s) "HEART" means the Heroes Earnings Assistance and Relief Tax Act of 2008, as amended from time to time.

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(t) "Hybrid Deferred Compensation Plan" means the Virginia Hybrid 457(b) Deferred Compensation Plan, as amended from time to time.

(u) "Investment Funds" means the mutual funds, collective investment trust funds, insurance company separate accounts, annuity contracts, or other investment vehicles made available to Participants for the investment of their Accounts. The Administrator, in its sole and absolute discretion, shall select the Investment Funds and may add or delete Investment Funds.

(v) "Limitation Year" means the 12 month period beginning January 1.

(w) "Mandatory Employee Contributions" mean contributions required to be made by a Participant to the Plan pursuant to Section 4.01.

(x) "Mandatory Employer Contributions" mean contributions made to the Plan by the Employer on behalf of a Participant pursuant to Section 4.03.

(y) "Matching Contributions" mean contributions made to the Plan by the Employer on behalf of a Participant pursuant to Section 4.02.

(z) "Normal Retirement Date" means the later of (i) the normal retirement date defined in Va. Code Section 51.1-124.3 or (ii) the fifth anniversary of the first day the Employee becomes a Participant in the Plan.

(aa) "Participant" means any Employee who is or may become eligible to receive a benefit of any type under the Plan. A Participant shall also mean, when appropriate to the context, a former Employee who is eligible to receive a benefit of any type under the Plan.

(bb) "Plan" means the Virginia Hybrid 401(a) Cash Match Plan, as amended from time to time.

(cc) "Plan Compensation" means all compensation as defined in Code Section 415(c)(3). In general, Code Section 415(c)(3) defines compensation as all of an Employee's wages as defined in Code Section 3401(a) for the purposes of income tax withholding at the source but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)); provided, however, Plan Compensation shall also include the amount of any elective deferrals, as defined in Code Section 402(g)(3), and any amount contributed or deferred by the Employer at the election of the Employee and which is not includible in the gross income of the Employee by reason of Code Section 125, 403(b), 132(f)(4), 401(k), or 457(b). Plan Compensation for a Plan Year includes compensation paid by the later of (i) two and one-half months after an Employee's Severance from Employment, or (ii) the end of the Plan Year that includes the date of the Employee's Severance from Employment, if:

(1) the payment is regular compensation for services during the Employee's regular working hours, or compensation for services outside the Employee's regular working hours (e.g., overtime or shift differential), commissions, bonuses, or other similar payments and the payment would have been paid to the Employee prior to a

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Severance from Employment if the Employee had continued in employment with the Employer; or


Plan Compensation does not include any amounts "picked up" by the Employer within the meaning of Code Section 414(h). Plan Compensation shall not exceed the limits under Code Section 401(a)(17), increased by the Cost-of-Living Adjustment.

(dd) "Plan Year" means the 12 month period beginning July 1.

(ee) "Political Subdivision" means a county, municipality, authority, school division, or other political subdivision of the Commonwealth or an agency thereof.

(ff) "Related Employer" means the Employer and any other entity which is under common control with the Employer under Code Section 414(b), (c) or (m). For this purpose, the Board shall determine which entities are Related Employers based on a reasonable, good faith standard and taking into account the special rules applicable under Notice 89-23, 1989-1 C.B. 654.

(gg) "Section" means, when not preceded by the word Code, a section of the Plan.

(hh) "Severance from Employment" means the complete termination of the employment relationship between the Employee and the Employer.

(ii) "Spouse" means the person to whom the Participant is legally married under federal law.

(jj) "Transfer Contributions" mean the contributions made to the Plan pursuant to Section 4.05.

(kk) "Trust" means the Master Trust for the Defined Contribution Plans of the Commonwealth of Virginia, which may incorporate one or more qualified trusts under Code Section 401(a), custodial accounts treated as qualified trusts under Code Section 401(f), and/or annuity contracts treated as qualified trusts under Code Section 401(f), established under the Plan to hold Plan assets.

(ll) "Trust Fund" means the assets of the Plan held pursuant to the terms of the Plan and the Trust.

(mm) "Trustee" means the trustee or any successor trustee designated and appointed by VRS, and includes a custodian of a custodial account or an insurer of an annuity contract under Code Section 401(f).

(nn) "USERRA" means the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended from time to time.

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(oo) "Va. Code" means the Code of Virginia, as amended from time to time.

(pp) "Vested" means the interest of the Participant or Beneficiary in his or her Accounts which is unconditional, legally enforceable, and nonforfeitable at all times.

(qq) "VRS" means the Virginia Retirement System.

(rr) "Year of Vesting Service" means a completed year of creditable service. A Year of Vesting Service shall be counted in terms of whole years with completed months of service in excess of completed years being counted as a fractional part of a year. Such term shall be interpreted by VRS and applied in the same manner and to have the same meaning as the term "creditable service" as defined in Va. Code Section 51.1-124.3.

ARTICLE III.



(a) An Employee who is a Participant in the hybrid cash match portion of the Cash Match Plan on the day before the Effective Date of this Plan shall be a Participant on the Effective Date.

(b) An Employee shall become a Participant in the Plan on the first business day of the month coincident with or following the Employee's hire date.

Section 3.02. Cessation of Contributions. A Participant shall cease to be eligible for Contributions under the Plan when (i) he or she is no longer an Employee or (ii) the Plan is terminated.

Section 3.03. Reemployment. If an Employee has a Severance from Employment from his or her Employer and is then reemployed by the Employer or is employed by another Employer, the Employee shall become a Participant in the Plan on the first business day of the month coincident with or following the Employee's reemployment hire date.

ARTICLE IV.

CONTRIBUTIONS

Section 4.01. Mandatory Employee Contributions.

(a) Each Participant shall make a Mandatory Employee Contribution to the Plan equal to a percentage of the Participant's Creditable Compensation established by the Commonwealth and set forth in Va. Code Section 51.1-169(C)(1). The current Mandatory Employee Contribution is one percent of Creditable Compensation.

(b) Mandatory Employee Contributions shall be picked up by the Employer and treated as an employer contribution pursuant to Code Section 414(h)(2). The Employer shall

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remit the picked up Mandatory Employee Contributions directly to the Trust, instead of paying such amounts to the Participants. Participants may not elect to receive such Mandatory Employee Contributions directly instead of having them paid by the Employer to the Plan.

(c) Mandatory Employee Contributions shall be paid to the Plan by the Employer as soon as administratively feasible after being withheld from the Creditable Compensation of a Participant, but no later than 15 business days following the end of the month in which such amount is withheld from the Creditable Compensation of the Participant. Mandatory Employee Contributions shall be allocated to each Participant's Mandatory Employee Contribution Account as of the date made to the Plan.

Section 4.02. Matching Contributions.

(a) The Employer shall make a Matching Contribution to the Plan on behalf of each Participant it employs equal to the percentage of the Participant's voluntary deferrals to the Hybrid Deferred Compensation Plan set forth in Va. Code Section 51.1-169(B)(2). Matching Contributions are currently equal to (i) 100% of the first one percent of Creditable Compensation the Participant contributes to the Hybrid Deferred Compensation Plan as a voluntary deferral plus (ii) 50% of the next three percent of Creditable Compensation the Participant contributes to the Hybrid Deferred Compensation Plan as a voluntary deferral.

(b) Matching Contributions shall be paid to the Plan by the Employer as soon as administratively feasible after the end of the payroll period, but no later than 15 business days following the end of the month in which the payroll period occurs. Matching Contributions shall be allocated to each Participant's Matching Contribution Account as of the date made to the Plan.

Section 4.03. Mandatory Employer Contribution.

(a) The Employer shall make a Mandatory Employer Contribution to the Plan on behalf of each Participant it employs equal to a percentage of the Participant's Creditable Compensation established by the Commonwealth and set forth in Va. Code Section 51.1-169(B)(2). The current Mandatory Employer Contribution is one percent of Creditable Compensation.

(b) Mandatory Employer Contributions shall be paid to the Plan by the Employer as soon as administratively feasible after the end of the payroll period, but no later than 15 business days following the end of the month in which the payroll period occurs. Mandatory Employer Contributions shall be allocated to each Participant's Mandatory Employer Contribution Account as of the date made to the Plan.

Section 4.04. Rollover Contributions to the Plan. Rollover contributions to the Plan are not permitted.


(a) The Plan shall accept as a Transfer Contribution a transfer on behalf of a Participant from the defined benefit plan established and maintained pursuant to Chapter 1 of Title 51.1 of the Va. Code to correct an eligibility error.

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Section 4.06. Leave of Absence. During a paid leave of absence, Contributions shall continue to be made for a Participant on the basis of Creditable Compensation paid by the Employer during the leave. No Contributions shall be made on behalf of a Participant who is on an unpaid leave of absence.

Section 4.07. Disability. Mandatory Employer Contributions under Section 4.03 shall continue to be made on behalf of a Participant who is permanently and totally disabled within the meaning of Code Section 22(e)(3) and Va. Code Section 51.1-1172 based on the Participant's Creditable Compensation in effect immediately prior to his or her disability.


ARTICLE V.



(a) Notwithstanding any provision of the Plan to the contrary, Annual Additions to the Plan and any other Code Section 401(a) plan maintained by the Employer or a Related Employer for a Participant in a Limitation Year shall not exceed the limitations set forth in Code Section 415(c).






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(b) If a Participant has Excess Annual Additions for a Plan Year, an adjustment to comply with this Article shall be made as soon as administratively possible, but no later than the time permitted under Internal Revenue Service guidance: (i) first, to any other plan sponsored and maintained by the Employer that is required to be aggregated with this Plan; (ii) second, to the Mandatory Employee Contributions under this Plan; (iii) third, to the Matching Contributions under this Plan; and (iv) fourth, to the Mandatory Employer Contributions under this Plan.

ARTICLE VI.

ACCOUNTING




ARTICLE VII.





(c) A Participant shall have the right to direct the investment of his or her Account among the Investment Funds by filing the Applicable Form with the Administrator. A Participant may change his or her investment election as often as determined by the Administrator. A Participant may elect to transfer all or any portion of his or her Accounts

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invested in any one Investment Fund to another Investment Fund, subject to the limitations of the Investment Fund, by filing a request on the Applicable Form with the Administrator.


ARTICLE VIII.

TRUST

Section 8.01. Trust Fund. All Contributions under the Plan shall be transferred to the Trustee to be held in Trust as part of the Trust Fund in accordance with the provisions of the Plan and the Investment Funds, as applicable. All assets held in connection with the Plan, including all Contributions, all property and rights acquired or purchased with such amounts, and all income attributable to such amounts, property or rights, shall be held in, managed, invested and distributed in Trust as part of the Trust Fund, in accordance with the provisions of the Plan. All benefits under the Plan shall be distributed solely from the Trust Fund, and VRS and/or Employer shall have no liability for any such benefits other than the obligation to make Contributions as provided in the Plan.


ARTICLE IX.

DISTRIBUTIONS


(a) A Participant or Beneficiary is not entitled to a distribution of his or her Vested Accounts under the Plan until the Participant has had a Break in Service following a Severance from Employment.

(b) A Participant or Beneficiary may submit a request for a distribution to the Administrator on the Applicable Form. The Employer shall certify that the Participant has had a Severance from Employment, if applicable.

Section 9.02. Forms of Payment. Subject to Section 9.06, the terms of the Investment Funds, and any restrictions established by VRS, a Participant may elect to receive his or her Vested Account under any form of payment approved by the Administrator which may include a lump sum payment, annuity payment, periodic payment, or partial lump sum with remainder paid as a periodic payment or annuity payment.

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Section 9.03. Reemployment. If a Participant who is a former Employee subsequently becomes an Employee again after distribution of his or her Accounts has begun under a payment option other than annuity payments, such distributions shall immediately cease, and the Employee shall not receive any benefits under the Plan until the Employee is entitled to a distribution under Section 9.01.

Section 9.04. Mandatory Cash-Out. A lump sum payment of the Participant's Account may be made at the Participant's Severance from Employment without his or her consent, provided that the Account balance does not exceed $1,000, unless the Participant elects to have such distribution paid directly to an eligible retirement plan specified by the Participant in a direct rollover. Any lump sum payments made under this Section 9.04 shall be made in a uniform and nondiscriminatory manner.










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(e) Notwithstanding anything in this Section 9.06 to the contrary, for 2020 or such longer period as provided in legislation modifying or extending the Coronavirus Aid, Relief, and Economic Security Act of 2020, the minimum distribution requirements will be satisfied as provided in this paragraph (e).

(1) A Participant or Beneficiary who would have been required to receive a required minimum distribution in 2020 (or paid in 2021 for the 2020 calendar year for a Participant with a required beginning date of April 1, 2021) but for the enactment of Code Section 401(a)(9)(I) ("2020 RMDs") and who would have satisfied that requirement by receiving distributions that are equal to the 2020 RMDs, will not receive these distributions unless the Participant or Beneficiary chooses to receive the distributions. Participants and Beneficiaries described in the preceding sentence will be given the opportunity to elect to receive the distributions described in the preceding sentence.

(2) A Participant who would have been required to receive 2020 RMDs and who would have satisfied that requirement by receiving distributions that are one or more payments (that include the 2020 RMDs) in a series of substantially equal periodic payments made at least annually and expected to last for the life (or life expectancy) of the Participant, the joint lives (or joint life expectancies) of the Participant and the Beneficiary, or for a period of at least 10 years ("Extended 2020 RMDs"), will receive these distributions unless the Participant or Beneficiary chooses not to receive the distributions. Participants and Beneficiaries described in the preceding sentence will be given the opportunity to elect to stop receiving the distributions described in the preceding sentence.



(a) Generally, and except as described in paragraph (b), if a Participant receives any amount under the Plan, his or her tax for the taxable year in which such amount is received is increased by an amount equal to 10% of the portion of such amount which is includible in gross income. Such amount shall be included in gross income to the extent allocable to income on the Investment Fund and shall not be included in gross income to the extent allocable to the investment in the Investment Fund as provided in Code Section 72(e)(2)(b).

(b) The penalty described in paragraph (a) generally does not apply to any distribution (i) made on or after the date on which the Participant attains age 59½, (ii) made on or after the death of the Participant, (iii) attributable to the Participant becoming disabled within the meaning of Code Section 72(m)(7), (iv) which is part of a series of substantially equal periodic

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payments made (not less frequently than annually) for the life or life expectancy of the Participant or the joint lives (or joint life expectancies) of such Participant and his or her designated Beneficiary, (v) made to a Participant after Severance from Employment following the attainment of age 55, (vi) which is a qualified reservist distribution within the meaning of Code Section 72(t)(2)(G)(iii), or (vii) any other circumstance permitted by the Code or the Internal Revenue Service.

Section 9.08. Transfers from the Plan.

(a) The Plan shall transfer a Participant's Mandatory Employee Contributions from this Plan to the defined benefit plan established and maintained pursuant to Chapter 1 of Title 51.1 of the Va. Code to correct an eligibility failure.


Section 9.09. Transfer upon Privatization or Cessation of Employer. If an Employer ceases to be eligible to participate in a governmental plan under Code Section 414(d), or ceases to exist as an ongoing concern, the assets attributable to the Participants employed by such Employer may be transferred to a qualified plan under Code Section 401(a) maintained by the employer.

ARTICLE X.

LOANS


ARTICLE XI.

VESTING

Section 11.01. Vesting.

(a) A Participant shall be 100% Vested in his or her Mandatory Employee Contribution Account and Transfer Contribution Account at all times.

(b) A Participant shall be Vested in his or her Matching Contribution Account and Mandatory Employer Contribution Account based on his or her Years of Vesting Service, as follows:

Years of Vesting Service Vested PercentageLess than 2 0%

2 50%3 75%

4 or more 100%

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(c) For purposes of computing a Participant's Years of Vesting Service under paragraph (b), all Years of Vesting Service shall be counted; provided, however, the following rules shall apply:

(1) If a Participant again becomes an Employee after ceasing to be an Employee, Years of Vesting Service completed prior to the date a Participant receives a refund of his or her accumulated contributions as described in Va. Code Section 51.1-161 shall be disregarded.

(2) Unless disregarded under subparagraph (1), if a Participant again becomes an Employee after ceasing to be an Employee, Years of Vesting Service and any fractions thereof will be counted in determining Years of Vesting Service, whether or not the Participant received a distribution of his or her Vested Accounts under the Plan.

(d) Notwithstanding paragraph (b), a Participant shall be 100% Vested in his or her Matching Contribution Account and Mandatory Employer Contribution Account on his or her Normal Retirement Date.

(e) A Participant shall forfeit his or her non-Vested Matching Contribution Account and non-Vested Mandatory Employer Contribution Account upon the earlier of the following dates:

(1) the Participant receives a refund of his or her accumulated contributions as described in Va. Code Section 51.1-161; or

(2) the Participant receives a distribution from the Plan of any Vested Account under the Plan.

If a Participant incurs a forfeiture and again becomes an Employee, amounts forfeited under this paragraph (e) shall not be restored; however, his or her Years of Vesting Service related to his or her prior employment may be counted under paragraph (c).

Section 11.02. Felony Convictions. Notwithstanding Section 11.01, if a Participant (i) is convicted of a felony and (ii) his or her Employer determines that the felony arose from misconduct occurring on or after July 1, 2011, in any position in which the Participant was covered for retirement purposes under any retirement system administered by the Board, the Participant shall forfeit his or her Matching Contributions and Mandatory Employer Contributions, if any. Such forfeiture shall occur following the Employer's notification to VRS that a felony conviction arising from such misconduct has been obtained and the administrative process as set forth in Va. Code Section 51.1-124.13 has concluded. If the Participant is or becomes a Participant in service after such forfeiture, he or she shall be entitled to the benefits based solely on his or her service after the forfeiture.

Section 11.03. Forfeitures. Forfeitures arising under Section 11.01 and 11.02 shall be allocated to a forfeiture account under the Plan and shall be used to reduce Plan expenses.

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ARTICLE XII.
















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(b) If a Distributee elects to have an Eligible Rollover Distribution paid to the Distributee, the distribution may be excluded from the gross income of the Distributee provided

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that said distribution is contributed to an Eligible Retirement Plan no later than the 60th day following the day on which the Distributee received the distribution.









ARTICLE XIII.

EMPLOYERS

Each Employer shall participate in the Plan on the same terms without modification. Any amendment of the Plan by VRS shall be effective and binding on each Employer.

ARTICLE XIV.


Section 14.01. Authority of the Administrator. The Administrator is responsible for performing the duties required for operation of the Plan. The Administrator shall have all power necessary or convenient to enable it to exercise its authority under the Plan. In connection therewith, the Administrator may provide rules and regulations, not inconsistent with the provisions hereof, for the operation and management of the Plan, and may from time to time

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amend or rescind such rules or regulations. The Administrator is authorized to accept service of legal process for the Plan.

Section 14.02. Responsibility of the Employer. The Employer is responsible for notifying Participants that they are eligible to participate in the Plan, providing the Administrator complete and accurate information as needed to administer the Plan, and such other responsibilities as may be delegated to Employer by the Administrator from time to time. An Employer that is either a state agency that has decentralized its payroll function or a Political Subdivision is responsible for timely remitting Contributions for its Employees to the Trust. The Department of Accounts of the Commonwealth is responsible for timely remitting Contributions to the Trust on behalf of Employees of any other Employer.




ARTICLE XV.




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ARTICLE XVI.


Section 16.01. Amendment and Termination. While it is expected that the Plan shall continue indefinitely, the Commonwealth reserves the right to amend, freeze, or terminate the Plan, or to discontinue any further Contributions to the Plan at any time. The Board may, consistent with Va. Code Section 51.1-607 et seq., make any amendment to the Plan, provided that no such amendment shall reduce, suspend or terminate the accrued benefits otherwise payable to a Participant or Beneficiary hereunder as of the date of such amendment. To the extent required by the exclusive benefit rule, any amendment shall not be effective to the extent that the amendment has the effect of causing any Plan assets to be diverted to or inure to the benefit of the Employer, or to be used for any purpose other than providing benefits to Participants and Beneficiaries and defraying reasonable expenses of administering the Plan.




ARTICLE XVII.

MISCELLANEOUS


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(e) Notwithstanding paragraph (a), pursuant to Va. Code Section 51.1-124.4(A), the Administrator shall honor any process for a debt to the Employer who has employed such person, and except for administrative actions pursuant to Chapter 19 (Section 63.2-1900 et seq.) of Title 63.2 of the Va. Code or any court process to enforce a child or child and spousal support obligation. Under no circumstances may a payment under this paragraph (d) take place before a Participant has a Severance from Employment.



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(b) If a Participant whose employment is interrupted by qualified military service or who is on a leave of absence for qualified military service under Code Section 414(u), timely resumes employment with the Employer in accordance with USERRA as an Employee, the Participant may elect to make the Mandatory Employee Contributions upon resumption of employment with the Employer that would have been required (at the same level of Compensation) without the interruption of leave. Except to the extent provided under Code Section 414(u), this right applies for five years following the resumption of employment (or, if sooner, for a period equal to three times the period of the interruption or leave). Such Mandatory Employee Contributions may only be made during such period and while the Participant is reemployed by the Employer.

(c) If a Participant whose employment is interrupted by qualified military service or who is on a leave of absence for qualified military service under Code Section 414(u), timely resumes employment with the Employer in accordance with USERRA as an Employee, the Employer shall make Mandatory Employer Contributions that would have been made if the Participant had remained employed during the Participant's qualified military service. If such a Participant elects to make voluntary deferrals to the Hybrid Deferred Compensation Plan, the Employer shall also make the Matching Contributions that would have been made if the Participant had remained employed during the Participant's qualified military service. Contributions must be made no later than 90 days after the date of reemployment or when the Mandatory Employer Contributions and/or Matching Contributions, as applicable, are normally due for the year in which the qualified military service was performed, if later. To the extent provided under Code Section 401(a)(37), in the case of a Participant whose employment is interrupted by qualified military service and who dies while performing qualified military service, the survivor of such Participant shall be entitled to any additional benefit (other than benefit accruals) provided under the Plan as if the Participant timely resumed employment in accordance with USERRA and then, on the next day, terminated employment on account of death.

(d) Differential wage payments within the meaning of Code Section 414(u)(12)(D) shall be treated as Plan Compensation under the Plan.





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Section 17.04. Federal and State Taxes. It is intended that Contributions, plus any earnings thereunder, are excludable from gross income for federal and state income tax purposes until paid to Participants or Beneficiaries. However, the Administrator does not guarantee that any particular federal or state income, payroll or other tax consequence will occur as a result of participation in this Plan.




Section 17.08. Stale Distribution Checks. A distribution check for an amount less than $10.00 shall be forfeited if it remains uncashed 180 days following its issuance. A distribution check for an amount less than $250.00 shall be forfeited if it remains uncashed five years following its issuance. If a Participant is subsequently located, his or her benefit will be restored and a replacement check will be issued, but no earnings will be paid for the time that the check was outstanding. All forfeitures under this Section 17.08 shall be held in a separate

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account under the Plan and shall be used to reduce Plan expenses or to restore benefits to Participants who have been located under this Section.






By:

Printed Name:

Title:

Date:

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Amended and Restated Effective January 1, 2021

I\15595456.2

OPTIONAL RETIREMENT PLAN OF THE

COMMONWEALTH OF VIRGINIAFOR

EMPLOYEES OF INSTITUTIONS OF HIGHER EDUCATION

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ARTICLE III. ELIGIBILITY AND PARTICIPATION...........................................................8Section 3.01. Participation ..........................................................................................8Section 3.02. Cessation of Contributions ...................................................................9Section 3.03. Reemployment .......................................................................................9Section 3.04. Prohibition Against Simultaneous Participation................................9

ARTICLE IV. CONTRIBUTIONS..............................................................................................9Section 4.01. Employer Contributions and Supplemental Employer

Contributions.........................................................................................9Section 4.02. Mandatory Employee Contributions.................................................10Section 4.03. Rollover Contributions to the Plan....................................................11Section 4.04. Transfers to the Plan...........................................................................11Section 4.05. Expenses of Plan..................................................................................12

ARTICLE V. LIMITATIONS ON CONTRIBUTIONS..........................................................12Section 5.01. Code Section 415(c) Limits .................................................................12Section 5.02. Excess Annual Additions ....................................................................12Section 5.03. Compensation Limitation...................................................................13


ARTICLE VII. INVESTMENT OF CONTRIBUTIONS........................................................14Section 7.01. Investment Funds ................................................................................14Section 7.02. Default Provider ..................................................................................15Section 7.03. Default Investments.............................................................................15


ARTICLE IX. DISTRIBUTIONS ..............................................................................................15Section 9.01. Distribution Restrictions.....................................................................15Section 9.02. Forms of Payment ...............................................................................16Section 9.03. Reemployment .....................................................................................16

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Section 9.04. Death Benefit .......................................................................................16Section 9.05. Required Minimum Distribution Rules ............................................16Section 9.06. Additional Tax on Early Withdrawals ..............................................18

ARTICLE X. LOANS..................................................................................................................18



ARTICLE XIII. PARTICIPATING INSTITUTIONS ............................................................21Section 13.01. Plan Terms...........................................................................................21Section 13.02. Permissible Amendments ...................................................................21Section 13.03. Withdrawal from Plan by Participating Institution ........................22

ARTICLE XIV. ADMINISTRATION OF THE PLAN...........................................................22Section 14.01. Authority of the Administrator..........................................................22Section 14.02. Responsibility of the Participating Institution .................................22Section 14.03. Powers of the Administrator ..............................................................22Section 14.04. Delegation by Administrator..............................................................22Section 14.05. Employment of Consultants ...............................................................23





ARTICLE XVII. MISCELLANEOUS ......................................................................................24Section 17.01. Non-Alienation.....................................................................................24Section 17.02. Military Service ...................................................................................25Section 17.03. Limitation of Rights and Obligations ................................................25Section 17.04. Federal and State Taxes......................................................................26Section 17.05. Erroneous Payments ...........................................................................26Section 17.06. Payments to Minors or Incompetents................................................26Section 17.07. Missing or Lost Participants ..............................................................26

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Section 17.08. No Reversion........................................................................................27Section 17.09. Claims of Other Persons .....................................................................27Section 17.10. Counterparts........................................................................................27

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OPTIONAL RETIREMENT PLAN OF THE COMMONWEALTH OF VIRGINIA

FOR EMPLOYEES OF INSTITUTIONS OF HIGHER EDUCATION

ARTICLE I.



(a) Pursuant to the Section 51.1-126 the Code of Virginia ("Va. Code"), the Board of Trustees of the Virginia Retirement System ("Board") established the Optional Retirement Plan of the Commonwealth of Virginia for Employees of Institutions of Higher Education ("Plan"), effective July 1, 1985, in order to provide retirement benefits for eligible employees engaged in the performance of teaching, administrative, or research duties with an institution of higher education in the Commonwealth of Virginia. Eligible employees may elect to participate in the Plan in lieu of retirement benefits available under Va. Code Section 51.1-124.1 et seq. or Va. Code Section 51.1-169.

(b) The Plan is, and is intended to remain, a defined contribution plan qualified under Code Section 401(a) and a money purchase pension plan within the meaning of Treasury Regulation Section 1.401-1(b)(1)(i). The Plan is a governmental plan within the meaning of Code Section 414(d) and Section 3(32) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). As a governmental plan, ERISA does not apply.

(c) The Plan was most recently amended and restated effective January 1, 2014.


(a) The Plan is now being amended and restated effective January 1, 2021.

(b) Except as otherwise specifically provided herein, the Plan as hereinafter set forth establishes the rights and obligations with respect to individuals who are Employees on and after January 1, 2021, and to transactions under the Plan on and after January 1, 2021. The rights and benefits, if any, of individuals who are not Employees on or after January 1, 2021, shall be determined in accordance with the terms and provisions of the Plan that were in effect on the date of their Severance from Employment, except as otherwise specifically provided herein or in a subsequent amendment.

ARTICLE II.




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(e) In resolving any conflict between provisions of the Plan and in resolving any other uncertainty as to the meaning or intention of any provision of the Plan, the interpretation that causes the Plan to (i) constitute a qualified plan under the provisions of Code Section 401 with the earnings of the Trust exempt from income tax under Code Section 501, (ii) constitute a money purchase pension plan within the meaning of Treasury Regulation Section 1.401-1(b)(1)(i), (iii) be a governmental plan as defined in ERISA Section 3(32) and Code Section 414(d), and (iv) comply with all applicable requirements of the Code, shall prevail over any different interpretation.



(1) "Employer Contribution Account" means the account maintained to reflect the Participant's interest under the Plan attributable to his or her Employer Contributions and Supplemental Employer Contributions pursuant to Section 4.01.





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(d) "Annual Addition" means the annual addition as defined in Code Section 415(c) and as modified in Code Sections 415(l)(1) and 419A(d)(2). In general, Code Section 415(c) defines annual addition as the sum of the following amounts credited to a Participant's accounts for the Limitation Year under this Plan and any other defined contribution plan maintained by the Participating Institution:


(2) Employer contributions, including Employer Contributions and Supplemental Employer Contributions under Section 4.01;

(3) forfeitures;

(4) amounts allocated to an individual medical account, as defined in Code Section 415(l)(2), which is part of a pension or annuity plan maintained by the Participating Institution or a Related Employer, or both, as applicable; and

(5) mandatory employee contributions to a defined benefit plan maintained by the Participating Institution, unless the contributions are picked up by the Participating Institution pursuant to Code Section 414(h)(2).


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(i) "Code" means the Internal Revenue Code of 1986, as amended from time to time.

(j) "Commonwealth" means the Commonwealth of Virginia and an agency or instrumentality thereof.

(k) "Contributions" means Employer Contributions, Supplemental Employer Contributions, Mandatory Employee Contributions, Rollover Contributions, and Transfer Contributions.

(l) "Cost-of-Living Adjustment" means the cost-of-living adjustment prescribed by the Secretary of the Treasury under Code Section 401(a)(17) or 415(d) for any applicable year.

(m) "Creditable Compensation" has the meaning set forth in Va. Code Section 51.1-124.3, as interpreted by VRS. Creditable Compensation generally means the Employee's annual salary, not including overtime pay, payment of a temporary nature, or payments for extra duties. Creditable Compensation shall not include any amounts paid after Severance from Employment except for regular pay that would have been paid to the Employee prior to a Severance from Employment if the Employee continued in employment with the Participant Employer and that is otherwise Creditable Compensation.

(n) "Effective Date" of the Plan means July 1, 1985, and of this amendment and restatement means January 1, 2021.

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(o) "Eligible Employee" means an Employee who is a part-time or full-time permanent salaried faculty member engaged in the performance of teaching, administrative, or research duties with a Participating Institution; provided, however, that an Eligible Employee shall not include an adjunct faculty member.

(p) "Employee" means any common law employee employed by an Employer. An Employee does not include an independent contractor.

(q) "Employer" means the Commonwealth or an Institution.

(r) "Employer Contributions" mean the contributions made to the Plan by the Employer on behalf of a Participant pursuant to Section 4.01.

(s) "Excess Annual Additions" mean that portion of a Participant's Mandatory Employee Contributions, Employer Contributions, and Supplemental Employer Contributions to the Plan and contributions to another 401(a) defined contribution plan maintained by the Participating Institution or a Related Employer for a Limitation Year which exceeds the limits of Code Section 415.


(u) "Institution" means (i) an institution of higher education established under Subtitle IV of Title 23.1 of the Va. Code, and includes any state university, state college, or state community college that is an agency of the Commonwealth, (ii) the Institute for Advanced Learning and Research, (iii) the New College Institute, (iv) the Southern Virginia Higher Education Center, and (v) the Southwestern Virginia Higher Education Center.

(v) "Investment Funds" means the mutual funds, collective investment trust funds, insurance company separate accounts, annuity contracts, or other investment vehicles made available to Participants for the investment of their Accounts. The Administrator, in its sole and absolute discretion, shall select the Investment Funds and may add or delete Investment Funds.

(w) "Limitation Year" means the 12 month period beginning January 1.

(x) "Mandatory Employee Contributions" mean the contributions required to be made by a Participant to the Plan pursuant to Section 4.02.

(y) "Normal Retirement Age" means:

(1) with respect to a Pre-July 1, 2010 Participant, age 65; and

(2) with respect to a Post-June 30, 2010 Participant, the Participant's full retirement age under Social Security.

(z) "Participant" means any Eligible Employee who is or may become eligible to receive a benefit of any type under the Plan. A Participant shall also mean, when appropriate to

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the context, a former Eligible Employee who is eligible to receive a benefit of any type under the Plan. Participants shall be classified as follows:

(1) A "Pre-July 1, 2010 Participant" means a person who on June 30, 2010, is a member of a retirement plan administered by the Virginia Retirement System as that term is defined in Va. Code Section 51.1-124.3 (which term excludes the Virginia Cash Match Plan and the Deferred Compensation Plan of the Commonwealth of Virginia). For this purpose, a Participant is a member of such a plan if the Participant has creditable service under a defined benefit plan or any account balance under a defined contribution plan. A Pre-July 1, 2010 Participant shall also include a person who prior to March 15, 2010, entered into a written employment contract for employment in a covered position in the case of a defined benefit plan administered by VRS or an eligible position in the case of a defined contribution plan administered by VRS even if the employment pursuant to such agreement commences on or after July 1, 2010. A subsequent Severance from Employment shall not alter the Participant's status as a Pre-July 1, 2010 Participant. However, if, upon reemployment following a Severance from Employment, a person no longer has creditable service under a defined benefit plan or any account balance under a defined contribution plan administered by VRS, such person shall no longer be a Pre-July 1, 2010 Participant. For the purposes of this definition, an account balance includes a payout annuity.

(2) A "Post-June 30, 2010 Participant" means any Participant other than a Pre-July 1, 2010 Participant.

(aa) "Participating Institution" means an Institution other than an Institution that has established a separate optional retirement plan pursuant to Va. Code Section 51.1-126(B)(1).

(bb) "Plan" means the Optional Retirement Plan of the Commonwealth of Virginia for Employees of Institutions of Higher Education, as amended from time to time.

(cc) "Plan Compensation" means all compensation as defined in Code Section 415(c)(3). In general, Code Section 415(c)(3) defines compensation as all of an Employee's wages as defined in Code Section 3401(a) for the purposes of income tax withholding at the source but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)); provided, however, Plan Compensation shall also include the amount of any elective deferrals, as defined in Code Section 402(g)(3), and any amount contributed or deferred by the Participating Institution at the election of the Employee and which is not includible in the gross income of the Employee by reason of Code Section 125, 403(b), 132(f)(4), 401(k), or 457(b). Plan Compensation for a Plan Year includes compensation paid by the later of (i) two and one-half months after an Employee's Severance from Employment, or (ii) the end of the Plan Year that includes the date of the Employee's Severance from Employment, if:

(1) the payment is regular compensation for services during the Employee's regular working hours, or compensation for services outside the Employee's regular working hours (e.g., overtime or shift differential), commissions, bonuses, or other

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similar payments and the payment would have been paid to the Employee prior to a Severance from Employment if the Employee had continued in employment with the Participating Institution; or


Plan Compensation does not include any amounts "picked up" by the Participating Institution within the meaning of Code Section 414(h).

(dd) "Plan Year" means the 12 month period beginning July 1.

(ee) "Provider" means a service provider that has been approved by the Administrator to offer Investment Funds and/or other related services for Participants under the Plan. The Administrator, in its sole and absolute discretion, shall select the Provider and may add or delete any Provider.

(ff) "Related Employer" means the Participating Institution and any other entity which is under common control with the Participating Institution under Code Section 414(b), (c) or (m). For this purpose, the Board shall determine which entities are Related Employers based on a reasonable, good faith standard and taking into account the special rules applicable under Notice 89-23, 1989-1 C.B. 654.

(gg) "Rollover Contributions" mean the contributions made to the Plan pursuant to Section 4.03.

(hh) "Section" means, when not preceded by the word Code, a section of the Plan.

(ii) "Severance from Employment" means the complete termination of the employment relationship between the Employee, the Participating Institution, and any employer who participates in a retirement plan established under Chapters 1, 2, 2.1, or 3 of Title 51.1 of the Va. Code.

(jj) "Spouse" means the person to whom the Participant is legally married under federal law.

(kk) "Supplemental Employer Contributions" mean the contributions made to the Plan by the Participating Institution on behalf of a Participant pursuant to Section 4.01.

(ll) "Transfer Contributions" mean the contributions made to the Plan pursuant to Section 4.04.

(mm) "Trust" means the Master Trust for the Optional Retirement Plan of the Commonwealth of Virginia for Employers of Institutions of Higher Education, which may incorporate one or more qualified trusts under Code Section 401(a), custodial accounts treated as qualified trusts under Code Section 401(f), and/or annuity contracts treated as qualified trusts under Code Section 401(f), established under the Plan to hold Plan assets.

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(nn) "Trust Fund" means the assets of the Plan held pursuant to the terms of the Plan and the Trust.

(oo) "Trustee" means the trustee or any successor trustee designated and appointed by VRS, and includes a custodian of a custodial account or an insurer of an annuity contract under Code Section 401(f).

(pp) "USERRA" means the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended from time to time.

(qq) "Va. Code" means the Code of Virginia, as amended from time to time.

(rr) "Vested" means the interest of the Participant or Beneficiary in his or her Accounts which is unconditional, legally enforceable, and nonforfeitable at all times.

(ss) "VRS" means the Virginia Retirement System.

(tt) "VRS Defined Benefit Plan" means the defined benefit retirement plan established under Va. Code Section 51.1-124.1 et seq. and administered by VRS.

(uu) "VRS Hybrid Retirement Program" means the hybrid retirement program established under Va. Code Section 51.1-169 and administered by VRS.

ARTICLE III.




(b) An Employee who becomes an Eligible Employee on or after the Effective Date of this amended and restated Plan shall make an irrevocable election within 60 days of becoming an Eligible Employee to participate in the Plan. An Eligible Employee shall make this election by following the enrollment procedures prescribed by the Administrator.

(1) An Eligible Employee who makes an irrevocable election to participate in the Plan shall become a Participant in the Plan as of the date he or she becomes an Eligible Employee, and shall remain a Participant in the Plan for as long as the Eligible Employee is employed by his or her Participating Institution or another Participating Institution without a Break in Service. If an Eligible Employee who makes an irrevocable election to participate in the Plan transfers to or becomes employed by, without a Break in Service, any Institution which has opted with the approval of the Board to maintain and administer its own optional retirement plan, the Eligible Employee's irrevocable election shall continue to apply and such Eligible Employee shall become a participant in the optional retirement plan maintained by such other Institution under the terms and conditions of that Institution's optional retirement plan.

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(2) If an Eligible Employee fails to make a timely election, he or she shall be deemed to have irrevocably elected to participate in the VRS Defined Benefit Plan or VRS Hybrid Retirement Program, as applicable based on his or her membership date.

(c) Notwithstanding paragraph (b), an Employee who has been in continuous service without a Break in Service in the performance of teaching, administrative, or research duties with another Institution when he or she becomes an Eligible Employee, and who was most recently covered by:

(1) the VRS Defined Benefit Plan or the VRS Hybrid Retirement Program, may not participate in the Plan and shall continue his or her participation in the VRS Defined Benefit Plan or the VRS Hybrid Retirement Program, as applicable; or

(2) the Plan or such Institution's optional retirement plan, shall become a Participant in the Plan on the date such Employee becomes an Eligible Employee.

(d) The Participating Institution shall notify the Eligible Employee of his or her eligibility to participate in the Plan. To become a Participant under the Plan, an Eligible Employee must complete the Applicable Forms, which may include enrollment, beneficiary designation, and investment election forms, and return them to the Administrator or Agent, as applicable.

Section 3.02. Cessation of Contributions. A Participant shall cease to be eligible for Contributions under the Plan when (i) he or she is no longer an Eligible Employee, (ii) his or her Participating Institution ceases to be a Participating Institution, or (iii) the Plan is terminated.

Section 3.03. Reemployment. A former Eligible Employee who subsequently becomes an Eligible Employee again shall participate in the Plan as described in Section 3.01.

Section 3.04. Prohibition Against Simultaneous Participation. A Participant in this Plan may not at the same time either (i) participate in the VRS Defined Benefit Plan or the VRS Hybrid Retirement Program or (ii) receive benefits from the VRS Defined Benefit Plan or the VRS Hybrid Retirement Program, other than as a contingent annuitant.

ARTICLE IV.

CONTRIBUTIONS

Section 4.01. Employer Contributions and Supplemental Employer Contributions.

(a) Each Participant shall receive an Employer Contribution each payroll period as follows:

(1) On behalf of each Pre-July 1, 2010 Participant, an Employer shall make an Employer Contribution to the Plan equal to ten and four-tenths percent (10.4%) of the Participant's Creditable Compensation, or such other rate that may be established from time to time by the Commonwealth pursuant to Va. Code Section 51.1-126.

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(2) On behalf of each Post-June 30, 2010 Participant, an Employer shall make an Employer Contribution to the Plan equal to eight and five-tenths percent (8.5%) of the Participant's Creditable Compensation, or such other rate that may be established from time to time by the Commonwealth pursuant to Va. Code Section 51.1-126.

(b) Each Participant may receive a Supplemental Employer Contribution each payroll period as follows:

(1) A Participating Institution may make a Supplemental Employer Contribution to the Plan on behalf of each Pre-July 1, 2010 Participant who elected to participate in the Plan prior to January 1, 1991, of up to two and seventeen one-hundredths percent (2.17%) of the Participant's Creditable Compensation.

(2) A Participating Institution may make a Supplemental Employer Contribution to the Plan on behalf of each Post-June 30, 2010 Participant of up to four-tenths of one percent (0.4%) of the Participant's Creditable Compensation.

(c) Supplemental Employer Contributions under paragraph (b)(1) are set forth in Appendix A attached hereto, as may be amended from time to time, and Supplemental Employer Contributions under paragraph (b)(2) are set forth in Appendix B attached hereto, as may be amended from time to time.

(d) Subject to Article V, Employer Contributions and Supplemental Employer Contributions, as applicable, shall be made on behalf of a Participant who is on an authorized educational leave of absence, and who is receiving at least half of his or her Creditable Compensation, based on the Creditable Compensation that the Participant receives during the period of leave.

(e) Employer Contributions and Supplemental Employer Contributions shall be paid to the Plan as soon as administratively practicable following each payroll period, but no later than as permitted by law for the Plan Year during which they are being made. Employer Contributions and Supplemental Employer Contributions shall be allocated to each Participant's Employer Contribution Account as of the date made to the Plan, but no later than the last day of the Plan Year.


(a) Each Post-June 30, 2010 Participant is required as a condition of employment to make a Mandatory Employee Contribution to the Plan each Plan Year equal to five percent of his or her Creditable Compensation or such other rate that may be established from time to time by the Commonwealth pursuant to Va. Code Section 51.1-126.

(b) Mandatory Employee Contributions shall be picked up by the Participating Institution and treated as paid by the Participating Institution pursuant to Code Section 414(h)(2); provided, however, that Mandatory Employee Contributions shall be treated as "member contributions" paid by the Participant for purposes of Va. Code Section 51.1-126.F.1. The Participating Institution shall remit the picked up Mandatory Employee Contributions directly to the Plan, instead of paying such amounts to the Participant. A Participant may not elect to

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receive such Mandatory Employee Contributions directly instead of having them paid by the Participating Institution to the Plan.

(c) Subject to Article V, a Participant who is on an authorized educational leave of absence, and who is receiving at least half of his or her Creditable Compensation, shall continue to make Mandatory Employee Contributions based on the Creditable Compensation that he or she receives during the period of leave.

(d) Mandatory Employee Contributions shall be paid to the Plan by the Participating Institution each payroll period on a basis consistent with its payroll practices, but no later than as permitted by law for the Plan Year during which they are being made.


(a) A Participant may transfer to the Plan as a Rollover Contribution a distribution from:





A Rollover Contribution under this paragraph shall be made directly from such prior plan, or if such amount was distributed to the Participant, shall be made within 60 days after the Participant receives the rollover amount, unless the 60 day deadline is waived under Code Section 402(c)(3)(B) or a later deadline is established under Internal Revenue Service guidance.



(d) Before a Rollover Contribution is made, the Participant shall designate on the Applicable Form the Investment Funds in which to invest his or her Rollover Contribution.


(a) The Plan shall accept as a Transfer Contribution a transfer of a Participant's

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accumulated contributions from the VRS Defined Benefit Plan pursuant to Va. Code Section 51.1-161(C). The Plan shall not accept a transfer from any other plan.



Section 4.05. Expenses of Plan. All reasonable expenses of administering the Plan shall be charged against and paid from the Participant's Accounts, subject to the terms of the applicable Investment Funds, unless paid by the Participating Institution. The Administrator shall have the right to allocate expenses associated with maintaining the Accounts of terminated Employees to such Accounts, even if no expenses are allocated to the Accounts of active Employees, in accordance with rules promulgated by the Internal Revenue Service.

ARTICLE V.



(a) Notwithstanding any provision of the Plan to the contrary, Annual Additions to the Plan and any other Code Section 401(a) plan maintained by the Participating Institution or a Related Employer for a Participant in a Limitation Year shall not exceed the limitations set forth in Code Section 415(c).






(b) If a Participant has Excess Annual Additions for a Plan Year, an adjustment to comply with this Article shall be made as soon as administratively possible, but no later than the time permitted under Internal Revenue Service guidance: (i) first, to all plans not hereinafter described, (ii) second, to any profit sharing plan (such as a plan providing matching contributions based on the employee's elective deferrals to a 403(b) or 457(b) plan) that is required to be aggregated with this Plan, (iii) third, to any money purchase pension plan (such as this Plan) that is required to be aggregated with this Plan, (iv) fourth, to any target benefit plan that is required

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to be aggregated with this Plan, and (v) fifth, to any welfare benefit fund and individual medical benefit account.

(c) If a Participant is a participant in two or more plans of the same type described in paragraph (b), the adjustment provided for in paragraph (b) to such plans shall be made: (i) to contributory plans or aspects thereof first, and then to non-contributory plans or aspects thereof, and (ii) to plans or aspects thereof in the same limitation category separately maintained and administered by the Participating Institution in accordance with rules established by such Participating Institution, and then to the Virginia Cash Match Plan.

Section 5.03. Compensation Limitation.

(a) For Plan Years beginning on or after January 1, 1996, Creditable Compensation and Plan Compensation during any Plan Year shall not exceed the Code Section 401(a)(17) limit (as increased by the Cost-of-Living Adjustment for the year). Notwithstanding anything in the Plan to the contrary, Creditable Compensation and Plan Compensation during a Plan Year shall be limited as follows:

(1) Effective for Plan Years beginning before January 1, 1996, the limitation on Creditable Compensation and Plan Compensation under Code Section 401(a)(17) shall be deemed to be satisfied in accordance with the applicable rules and regulations prescribed by the Secretary of Treasury for governmental plans.

(2) For Plan Years beginning on or after January 1, 1996, if and to the extent, required by Code Section 401(a)(17) for a governmental plan, Creditable Compensation and Plan Compensation taken into account under the Plan for any Plan Year for a Participant who was not a Participant on or before April 9, 1996 shall not exceed, (i) for Plan Years beginning after 1995 and before 2002, $150,000 (as increased by the Cost-of-Living Adjustment for the year) and, (ii) for Plan Years beginning after December 31, 2001, $200,000, (as increased by the Cost-of-Living Adjustment for the year).

(3) For Plan Years beginning on or after January 1, 1996, as provided in the transitional rule of P.L. 103-66, § 13212(d)(3), Creditable Compensation and Plan Compensation taken into account under the Plan for any Plan Year for an individual who became a Participant on or before April 9, 1996 (an eligible participant within the meaning of P.L. 103-66, § 13212(d)(3)(B)) shall be limited to the greater of (i) the maximum amount of Creditable Compensation and Plan Compensation permitted to be taken into account under the Plan as in effect on July 1, 1993, or (ii), (A) for Plan Years beginning after 1995 and before 2002, $150,000 (as increased by the Cost-of-Living Adjustment for the year), or, (B) for Plan Years beginning after December 31, 2001, $200,000, (as increased by the Cost-of-Living Adjustment for the year). If the terms of the Plan as in effect on July 1, 1993, did not impose a limitation on the maximum amount of Creditable Compensation and Plan Compensation that could be taken into account under the Plan, there shall be no limitation on the maximum amount of Creditable Compensation and Plan Compensation that Participants can make as described in this paragraph.

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ARTICLE VI.

ACCOUNTING




ARTICLE VII.





(c) At the time an Eligible Employee becomes a Participant in the Plan, and each October thereafter, the Participant shall elect a Provider to receive his or her Contributions to the Plan. An October election shall be effective for all Contributions made on or after the following January 1st. All Contributions made on behalf of the Participant on or after the effective date of the Participant's election (i.e., the date the Eligible Employee becomes a Participant in the Plan or January 1st, as applicable) shall be made to the Provider elected by the Participant, and invested in Investment Funds offered by the Provider and selected by the Participant. Only one Provider may receive Contributions on behalf of a Participant at one time. A Participant may transfer his or her Account balance held with a previous Provider to his or her new Provider at any time.

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(d) A Participant shall have the right to direct the investment of his or her Account among the Investment Funds offered by his or her elected Provider by filing the Applicable Form with the Provider. A Participant may change his or her investment election as often as determined by the Provider. A Participant may elect to transfer all or any portion of his or her Accounts invested in any one Investment Fund offered by his or her Provider to another Investment Fund offered by his or her Provider, subject to the limitations of the Investment Fund, by filing a request on the Applicable Form with the Provider.

Section 7.02. Default Provider. If a Participant does not elect a Provider, Contributions may be invested with a default Provider selected by the Administrator in its sole discretion. The Participant may elect a different Provider in accordance with Section 7.01(c).


ARTICLE VIII.

TRUST

Section 8.01. Trust Fund. All Contributions under the Plan shall be transferred to the Trustee to be held in Trust as part of the Trust Fund in accordance with the provisions of the Plan and the Investment Funds, as applicable. All assets held in connection with the Plan, including all Contributions, all property and rights acquired or purchased with such amounts, and all income attributable to such amounts, property or rights, shall be held in, managed, invested and distributed in Trust as part of the Trust Fund, in accordance with the provisions of the Plan. All benefits under the Plan shall be distributed solely from the Trust Fund, and VRS and/or Participating Institution shall have no liability for any such benefits other than the obligation to make Contributions as provided in the Plan.


ARTICLE IX.

DISTRIBUTIONS



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(c) A Participant or Beneficiary may submit a request for a distribution to the Administrator on the Applicable Form. The Participating Institution shall certify that the Participant has had a Severance from Employment, if applicable.


(a) Subject to Section 9.05, the terms of the Investment Funds, and any restrictions established by VRS, a Participant may elect to receive his or her Vested Account under any form of payment approved by the Administrator, which may include a lump sum payment, annuity payment, periodic payment, or partial lump sum with remainder paid as a periodic payment or annuity payment.


Section 9.03. Reemployment. If a Participant who has had a Severance from Employment is subsequently reemployed in a position covered for retirement purposes under the provisions of Chapters 1, 2, 2.1, or 3 of Title 51.1 of the Va. Code, and distribution of his or her Accounts has begun under a payment option other than annuity payments, such distributions shall immediately cease, and the Eligible Employee shall not receive any benefits under the Plan until the Employee is entitled to a distribution under Section 9.01.








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(e) Notwithstanding anything in this Section 9.05 to the contrary, for 2020 or such longer period as provided in legislation modifying or extending the Coronavirus Aid, Relief, and Economic Security Act of 2020, the minimum distribution requirements will be satisfied for 2020 as provided in paragraph (1) or (2) below, as determined by the terms of the trust, custodial account, and/or annuity contract incorporated under the Trust and governing the Participant's or Beneficiary's required minimum distribution:

(1) Effective March 27, 2020, or as soon as administratively practicable thereafter, a Participant or Beneficiary who would have been required to receive a required minimum distribution in 2020 (or paid in 2021 for the 2020 calendar year for a Participant with a required beginning date of April 1, 2021) but for the enactment of Code Section 401(a)(9)(I) ("2020 RMDs") and who would have satisfied that requirement by receiving distributions that are

(i) equal to the 2020 RMDs, will not receive these distributions unless the Participant or Beneficiary chooses to receive the distributions; or

(ii) one or more payments (that include the 2020 RMDs) in a series of substantially equal periodic payments made at least annually and expected to last for the life (or life expectancy) of the Participant, the joint lives (or joint life expectancies) of the Participant and the Beneficiary, or for a period of at least 10 years ("Extended 2020 RMDs"), will receive these distributions unless the Participant or Beneficiary chooses not to receive the distributions.

Participants and Beneficiaries described in paragraphs (i) and (ii) will be given the opportunity to elect to receive and/or stop receiving the distributions, as applicable, described in those paragraphs.

(2) Effective March 27, 2020, or as soon as administratively practicable thereafter, a Participant or Beneficiary who would have been required to receive a 2020 RMD, and who would have satisfied that requirement by receiving distributions that are

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(i) equal to the 2020 RMDs or (ii) Extended 2020 RMDs, will receive this distribution unless the Participant or Beneficiary chooses not to receive such distributions. Participants and Beneficiaries described in the preceding sentence will be given the opportunity to elect to stop receiving the distribution described in the preceding sentence.





ARTICLE X.

LOANS


ARTICLE XI.

VESTING



(a) Notwithstanding Section 11.01, if a Participant (i) is convicted of a felony and (ii) his or her Participating Institution determines that the felony arose from misconduct occurring on or after July 1, 2011, in any position in which the Participant was covered for retirement purposes under any retirement system administered by the Board, the Participant shall forfeit his

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or her Employer Contribution Account, Supplemental Employer Contribution Account, and Transfer Contribution Account, if any. Such forfeiture shall occur following the Participating Institution's notification to VRS that a felony conviction arising from such misconduct has been obtained and the administrative process as set forth in Va. Code Section 51.1-124.13 has concluded. If the Participant is or becomes a Participant in service after such forfeiture, he or she shall be entitled to the benefits based solely on his or her service after the forfeiture.

(b) Forfeitures arising under paragraph (a) shall be allocated to a forfeiture account under the Plan, and shall be used to reduce Plan expenses.

ARTICLE XII.













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ARTICLE XIII.

PARTICIPATING INSTITUTIONS

Section 13.01. Plan Terms. Except as provided under Section 13.02, each Participating Institution shall adopt the Plan on the same terms without modification. Any amendment of the Plan by VRS shall be effective and binding on each Participating Institution.

Section 13.02. Permissible Amendments. A Participating Institution may elect to make, or discontinue, Supplemental Employer Contributions under Section 4.02. Supplemental Employer Contributions shall be made from funds other than the general fund of the state treasury.

Section 13.03. Withdrawal from Plan by Participating Institution. Upon receipt of approval by the Board in writing, a Participating Institution may withdraw from the Plan if it has established its own optional retirement plan pursuant to Va. Code Section 51.1-126(B)(1). The Board shall approve the withdrawal of a Participating Institution from the Plan only if the Participating Institution provides sufficient assurances that it has adopted a plan document and has established administrative procedures to administer its optional retirement plan in accordance with all state and federal statutes, regulations, and other guidance.

ARTICLE XIV.



Section 14.02. Responsibility of the Participating Institution. The Participating Institution is responsible for notifying Participants that they are eligible to participate in the Plan, providing the Administrator complete and accurate information as needed to administer the Plan, and such other responsibilities as may be delegated to Participating Institution by the Administrator from time to time. A Participating Institution that has decentralized its payroll function is responsible for timely remitting Contributions for its Participants to the Trust. The Department of Accounts of the Commonwealth is responsible for timely remitting Contributions to the Trust on behalf of Participants with any other Participating Institution.

Section 14.03. Powers of the Administrator. The Administrator shall have the power and discretion to construe and interpret the Plan, including any ambiguities, to determine all questions of fact or law arising under the Plan, and to resolve any disputes arising under and all questions concerning administration of the Plan. The Administrator may correct any defect, supply any omission or reconcile any inconsistency in the Plan in such manner and to such extent

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as the Administrator may deem expedient and, subject to the Plan's claims procedures, the Administrator should be the sole and final judge of such expediency. Benefits under the Plan shall be paid only if the Administrator decides in its discretion that the Participant or Beneficiary is entitled to them.



ARTICLE XV.





ARTICLE XVI.


Section 16.01. Amendment and Termination. While it is expected that the Plan shall continue indefinitely, the Commonwealth reserves the right to amend, freeze, or terminate the Plan, or to discontinue any further Contributions to the Plan at any time. The Board may, consistent with Va. Code Section 51.1-126, make any amendment to the Plan, provided that no such amendment shall reduce, suspend or terminate the accrued benefits otherwise payable to a Participant or Beneficiary hereunder as of the date of such amendment. To the extent required by the exclusive benefit rule, any amendment shall not be effective to the extent that the amendment has the effect of causing any Plan assets to be diverted to or inure to the benefit of the Employer, or to be used for any purpose other than providing benefits to Participants and Beneficiaries and defraying reasonable expenses of administering the Plan.

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ARTICLE XVII.

MISCELLANEOUS




(c) Notwithstanding paragraph (a), the Plan shall offset from the benefit otherwise payable to a Participant or his or her Spouse such amounts as are permitted to be offset under a

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court order, civil judgment, or settlement agreement in accordance with Code Section 401(a)(13)(C).


(e) Notwithstanding paragraph (a), pursuant to Va. Code Section 51.1-124.4(A), the Administrator shall honor any process for a debt to the Participating Institution that has employed such person, and except for administrative actions pursuant to Chapter 19 (Section 63.2-1900 et seq.) of Title 63.2 of the Va. Code or any court process to enforce a child or child and spousal support obligation. Under no circumstances may a payment under this paragraph (e) take place before a Participant has a Severance from Employment.



(b) If a Participant whose employment is interrupted by qualified military service or who is on a leave of absence for qualified military service under Code Section 414(u), timely resumes employment with the Participating Institution in accordance with USERRA as an Eligible Employee, the Participant may elect to make the Mandatory Employee Contributions upon resumption of employment with the Participating Institution that would have been required (at the same level of Compensation) without the interruption of leave. Except to the extent provided under Code Section 414(u), this right applies for five years following the resumption of employment (or, if sooner, for a period equal to three times the period of the interruption or leave). Such Mandatory Employee Contributions may only be made during such period and while the Participant is reemployed by the Participating Institution. Such Mandatory Employee Contributions shall be picked up by the Participating Institution and treated as paid by the Participating Institution pursuant to Code Section 414(h)(2).

(c) If a Participant whose employment is interrupted by qualified military service or who is on a leave of absence for qualified military service under Code Section 414(u), timely resumes employment with the Participating Institution in accordance with USERRA as an Eligible Employee, the Employer shall make the Employer Contributions and the Participating Institution shall make the Supplemental Employer Contributions that would have been made if the Participant had remained employed during the Participant's qualified military service.

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Contributions must be made no later than 90 days after the date of reemployment or when the Employer Contributions and Supplemental Employer Contributions are normally due for the year in which the qualified military service was performed, if later.


(e) Differential wage payments within the meaning of Code Section 414(u)(12)(D) shall be treated as Creditable Compensation and Plan Compensation under the Plan.


(a) as conferring upon any Participant, Beneficiary or any other person any right or claim against VRS, Participating Institution, Administrator, or Trust, except to the extent that such right or claim shall be specifically expressed and provided in the Plan;

(b) as a contract or agreement between VRS and/or the Participating Institution and any Participant or other person; or

(c) as an agreement, consideration, or inducement of employment or as affecting in any manner or to any extent whatsoever the rights or obligations of VRS, the Participating Institution, or any Employee to continue or terminate the employment relationship at any time.



Section 17.06. Payments to Minors or Incompetents. If a Participant or Beneficiary entitled to receive any benefits hereunder is a minor or is determined to be legally incapable of giving valid receipt and discharge for such benefits by a court or by the Administrator, benefits shall be paid to such person as the Administrator may designate for the benefit of such

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Participant or Beneficiary. Such payments shall be considered a payment to the Participant or Beneficiary and shall, to the extent made, be deemed a complete discharge of any liability for such payments under the Plan.

Section 17.07. Missing or Lost Participants. In the event that the Administrator does not have current contact information for or is unable to identify a Participant or Beneficiary under the Plan, the Administrator shall make reasonable attempts to determine the address and identity of the Participant or Beneficiary entitled to benefits under the Plan. A reasonable attempt to locate a missing or lost Participant or Beneficiary shall include (i) providing notice to the Participant at the Participant's last known address via certified mail; (ii) determining whether the Participating Institution's records or the records of another plan maintained by the Participating Institution has a more current address for the Participant; (iii) attempting to contact any named Beneficiary of the Participant; and (iv) searching for the missing Participant via free electronic search tools, such as Internet search engines, public record databases, obituaries, and social media. If such search methods are unsuccessful, based on the facts and circumstances, the Administrator may use other search methods, including using Internet search tools, commercial locator services, credit reporting agencies, information brokers, investigation databases, and analogous services that may involve charges. The Administrator may charge missing Participants and Beneficiaries reasonable expenses for efforts to find them. In the event that the Administrator is unable to locate a Participant or Beneficiary entitled to benefits under the Plan, the Trustee shall continue to hold the benefits due to such person under the Plan.

Section 17.08. No Reversion. Under no circumstances or conditions will any Contributions revert to, be paid to, or inure to the benefit of, directly or indirectly, VRS or the Participating Institution, but shall be held for the exclusive purpose of providing benefits to Participants and their Beneficiaries and defraying the reasonable expenses of administering the Plan. However, if Contributions are made by VRS or the Participating Institution by mistake of fact, these amounts and, if applicable, any interest earned therein, may be returned to VRS or Participating Institution, as applicable, within one year of the date that they were made.

Section 17.09. Claims of Other Persons. The provisions of the Plan will not be construed as giving any Participant or any other person, firm, or corporation, any legal or equitable right against VRS or Participating Institution, its officers, employees, or directors, except the rights as specifically provided for in this Plan or created in accordance with the terms and provisions of this Plan.


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By: ___________________________________

Printed Name: __________________________

Title: __________________________________

Date: __________________________________

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APPENDIX A

PRE-JULY 1, 2010 PARTICIPANTSUPPLEMENTAL EMPLOYER CONTRIBUTIONS

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APPENDIX B

POST-JUNE 30, 2010 PARTICIPANTSUPPLEMENTAL EMPLOYER CONTRIBUTIONS

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POLITICAL APPOINTEES

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ARTICLE III. ELIGIBILITY AND PARTICIPATION...........................................................8Section 3.01. Participation ..........................................................................................8Section 3.02. Reemployment .......................................................................................8Section 3.03. Prohibition Against Simultaneous Participation................................9

ARTICLE IV. CONTRIBUTIONS..............................................................................................9Section 4.01. Employer Contributions .......................................................................9Section 4.02. Mandatory Employee Contributions...................................................9Section 4.03. Rollover Contributions to the Plan....................................................10Section 4.04. Transfers to the Plan...........................................................................10Section 4.05. Expenses of Plan..................................................................................11





ARTICLE IX. DISTRIBUTIONS ..............................................................................................13Section 9.01. Distribution Restrictions.....................................................................13Section 9.02. Forms of Payment ...............................................................................13Section 9.03. Reemployment .....................................................................................14Section 9.04. Mandatory Cash-Out..........................................................................14Section 9.05. Death Benefit .......................................................................................14Section 9.06. Required Minimum Distribution Rules ............................................14

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Section 9.07. Permissive Service Credit Transfers to VRS....................................15Section 9.08. Additional Tax on Early Withdrawals ..............................................16

ARTICLE X. LOANS..................................................................................................................16



ARTICLE XIII. ADMINISTRATION OF THE PLAN ..........................................................19Section 13.01. Authority of the Administrator..........................................................19Section 13.02. Responsibility of the Employer ..........................................................20Section 13.03. Powers of the Administrator ..............................................................20Section 13.04. Delegation by Administrator..............................................................20Section 13.05. Employment of Consultants ...............................................................20

ARTICLE XIV. REQUESTS FOR INFORMATION AND OTHER CLAIMS PROCEDURES ...............................................................................................20



ARTICLE XV. AMENDMENT AND TERMINATION .........................................................21Section 15.01. Amendment and Termination............................................................21Section 15.02. Adverse Effects ....................................................................................21Section 15.03. Distribution Upon Termination of the Plan......................................21

ARTICLE XVI. MISCELLANEOUS........................................................................................21Section 16.01. Non-Alienation.....................................................................................21Section 16.02. Military Service ...................................................................................22Section 16.03. Limitation of Rights and Obligations ................................................23Section 16.04. Federal and State Taxes......................................................................23Section 16.05. Erroneous Payments ...........................................................................23Section 16.06. Payments to Minors or Incompetents................................................24Section 16.07. Missing or Lost Participants ..............................................................24Section 16.08. Stale Distribution Checks ...................................................................24Section 16.09. No Reversion........................................................................................24Section 16.10. Claims of Other Persons .....................................................................24Section 16.11. Counterparts........................................................................................25

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FOR POLITICAL APPOINTEES

ARTICLE I.



(a) Pursuant to the Section 51.1-126.5 the Code of Virginia ("Va. Code"), the Board of Trustees of the Virginia Retirement System ("Board") established the Optional Retirement Plan of the Commonwealth of Virginia for Political Appointees ("Plan"), effective January 17, 1998, in order to provide retirement benefits for eligible employees. Eligible employees may elect to participate in the Plan in lieu of retirement benefits available under Va. Code Section 51.1-124.1 et seq. or Va. Code Section 51.1-169.






ARTICLE II.




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(1) "Employer Contribution Account" means the account maintained to reflect the Participant's interest under the Plan attributable to his or her Employer Contributions pursuant to Section 4.01.





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(d) "Annual Addition" means the annual addition as defined in Code Section 415(c) and as modified in Code Sections 415(l)(1) and 419A(d)(2). In general, Code Section 415(c) defines annual addition as the sum of the following amounts credited to a Participant's accounts for the Limitation Year under this Plan and any other defined contribution plan maintained by the Employer:


(2) Employer contributions, including Employer Contributions under Section 4.01;

(3) forfeitures;

(4) amounts allocated to an individual medical account, as defined in Code Section 415(l)(2), which is part of a pension or annuity plan maintained by the Employer or a Related Employer, or both, as applicable; and

(5) mandatory employee contributions to a defined benefit plan maintained by the Employer, unless the contributions are picked up by the Employer pursuant to Code Section 414(h)(2).


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(k) "Contributions" means Employer Contributions, Mandatory Employee Contributions, Rollover Contributions, and Transfer Contributions.


(m) "Creditable Compensation" has the meaning set forth in Va. Code Section 51.1-124.3, as interpreted by VRS. Creditable Compensation generally means the Employee's annual salary, not including overtime pay, payment of a temporary nature, or payments for extra duties. Creditable Compensation shall not include any amounts paid after Severance from Employment except for regular pay that would have been paid to the Employee prior to a Severance from Employment if the Employee continued in employment with the Participant Employer and that is otherwise Creditable Compensation. Creditable Compensation shall not exceed the limits under Code Section 401(a)(17), increased by the Cost-of-Living Adjustment.

(n) "Effective Date" of the Plan means January 17, 1998, and of this amendment and restatement means January 1, 2021.

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(o) "Eligible Employee" means an Employee employed by an Employer in a position described in Subdivision 3, 4, or 20 of Va. Code Section 2.2-2905 or an officer or employee appointed by the Attorney General or Lieutenant Governor to a position designated as a deputy, counsel, or director position.

(p) "Employee" means any common law employee employed by the Employer. An Employee does not include an independent contractor.

(q) "Employer" means the Commonwealth.

(r) "Employer Contributions" mean the contributions made to the Plan by the Employer on behalf of a Participant pursuant to Section 4.01.

(s) "Excess Annual Additions" mean that portion of a Participant's Mandatory Employee Contributions and Employer Contributions to the Plan, and contributions to another 401(a) defined contribution plan maintained by the Employer or a Related Employer for a Limitation Year which exceeds the limits of Code Section 415.


(u) "Investment Funds" means the mutual funds, collective investment trust funds, insurance company separate accounts, annuity contracts, or other investment vehicles made available to Participants for the investment of their Accounts. The Administrator, in its sole and absolute discretion, shall select the Investment Funds and may add or delete Investment Funds.

(v) "Limitation Year" means the 12 month period beginning January 1.

(w) "Mandatory Employee Contributions" mean the contributions required to be made by a Participant to the Plan pursuant to Section 4.02.

(x) "Normal Retirement Age" means:



(y) "Participant" means any Eligible Employee who is or may become eligible to receive a benefit of any type under the Plan. A Participant shall also mean, when appropriate to the context, a former Eligible Employee who is eligible to receive a benefit of any type under the Plan. Participants shall be classified as follows:

(1) A "Pre-July 1, 2010 Participant" means a person who on June 30, 2010, is a member of a retirement plan administered by the Virginia Retirement System as that term is defined in Va. Code Section 51.1-124.3 (which term excludes the Virginia Cash Match Plan and the Deferred Compensation Plan of the Commonwealth of Virginia). For this purpose, a Participant is a member of such a plan if the Participant has creditable

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service under a defined benefit plan or any account balance under a defined contribution plan. A Pre-July 1, 2010 Participant shall also include a person who prior to March 15, 2010, entered into a written employment contract for employment in a covered position in the case of a defined benefit plan administered by VRS or an eligible position in the case of a defined contribution plan administered by VRS even if the employment pursuant to such agreement commences on or after July 1, 2010. A subsequent Severance from Employment shall not alter the Participant's status as a Pre-July 1, 2010 Participant. However, if, upon reemployment following a Severance from Employment, a person no longer has creditable service under a defined benefit plan or any account balance under a defined contribution plan administered by VRS, such person shall no longer be a Pre-July 1, 2010 Participant. For the purposes of this definition, an account balance includes a payout annuity.


(z) "Plan" means the Optional Retirement Plan of the Commonwealth of Virginia for Political Appointees, as amended from time to time.

(aa) "Plan Compensation" means all compensation as defined in Code Section 415(c)(3). In general, Code Section 415(c)(3) defines compensation as all of an Employee's wages as defined in Code Section 3401(a) for the purposes of income tax withholding at the source but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)); provided, however, Plan Compensation shall also include the amount of any elective deferrals, as defined in Code Section 402(g)(3), and any amount contributed or deferred by the Employer at the election of the Employee and which is not includible in the gross income of the Employee by reason of Code Section 125, 403(b), 132(f)(4), 401(k), or 457(b). Plan Compensation for a Plan Year includes compensation paid by the later of (i) two and one-half months after an Employee's Severance from Employment, or (ii) the end of the Plan Year that includes the date of the Employee's Severance from Employment, if:

(1) the payment is regular compensation for services during the Employee's regular working hours, or compensation for services outside the Employee's regular working hours (e.g., overtime or shift differential), commissions, bonuses, or other similar payments and the payment would have been paid to the Employee prior to a Severance from Employment if the Employee had continued in employment with the Employer; or


Plan Compensation does not include any amounts "picked up" by the Employer within the meaning of Code Section 414(h). Plan Compensation shall not exceed the limits under Code Section 401(a)(17), increased by the Cost-of-Living Adjustment.

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(bb) "Plan Year" means the 12 month period beginning July 1.

(cc) "Related Employer" means the Employer and any other entity which is under common control with the Employer under Code Section 414(b), (c) or (m). For this purpose, the Board shall determine which entities are Related Employers based on a reasonable, good faith standard and taking into account the special rules applicable under Notice 89-23, 1989-1 C.B. 654.

(dd) "Rollover Contributions" mean the contributions made to the Plan pursuant to Section 4.03.

(ee) "Section" means, when not preceded by the word Code, a section of the Plan.

(ff) "Severance from Employment" means the complete termination of the employment relationship between the Employee, the Employer, and any employer who participates in a retirement plan established under Chapters 1, 2, 2.1, or 3 of Title 51.1 of the Va. Code.

(gg) "Spouse" means the person to whom the Participant is legally married under federal law.

(hh) "Transfer Contributions" mean the contributions made to the Plan pursuant to Section 4.04.

(ii) "Trust" means the Master Trust for the Defined Contribution Plans of the Commonwealth of Virginia, which may incorporate one or more qualified trusts under Code Section 401(a), custodial accounts treated as qualified trusts under Code Section 401(f), and/or annuity contracts treated as qualified trusts under Code Section 401(f), established under the Plan to hold Plan assets.

(jj) "Trust Fund" means the assets of the Plan held pursuant to the terms of the Plan and the Trust.

(kk) "Trustee" means the trustee or any successor trustee designated and appointed by VRS, and includes a custodian of a custodial account or an insurer of an annuity contract under Code Section 401(f).

(ll) "USERRA" means the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended from time to time.

(mm) "Va. Code" means the Code of Virginia, as amended from time to time.

(nn) "Vested" means the interest of the Participant or Beneficiary in his or her Accounts which is unconditional, legally enforceable, and nonforfeitable at all times.

(oo) "VRS" means the Virginia Retirement System.

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(pp) "VRS Defined Benefit Plan" means the defined benefit retirement plan established under Va. Code Section 51.1-124.1 et seq. and administered by VRS.

(qq) "VRS Hybrid Retirement Program" means the hybrid retirement program established under Va. Code Section 51.1-169 and administered by VRS.

ARTICLE III.




(b) An Employee who becomes an Eligible Employee on or after the Effective Date of this amended and restated Plan shall make an irrevocable election to participate in the Plan. An Eligible Employee who makes an irrevocable election to participate in the Plan shall remain a Participant in the Plan for as long as he or she remains an Eligible Employee. The Eligible Employee shall make this election by following the enrollment procedures prescribed by the Administrator. If an Eligible Employee fails to make a timely election, he or she shall be deemed to have irrevocably elected to participate in the VRS Defined Benefit Plan or VRS Hybrid Retirement Program, as applicable based on his or her membership date. An Eligible Employee who elects to participate in the Plan shall become a Participant in the Plan as of the date he or she becomes an Eligible Employee.

(c) Notwithstanding paragraph (b), an Employee who has been in continuous service without a Break in Service with another Employer when he or she becomes an Eligible Employee, and who was most recently covered by:


(2) the Plan, shall become a Participant in the Plan on the date such Employee becomes an Eligible Employee.

(d) VRS shall notify the Eligible Employee of his or her eligibility to participate in the Plan. To become a Participant under the Plan, an Eligible Employee must complete the Applicable Forms, which may include enrollment, beneficiary designation, and investment election forms, and return them to the Administrator or Agent, as applicable.

Cessation of Contributions. A Participant shall cease to be eligible for Contributions under the Plan when (i) he or she is no longer an Eligible Employee or (ii) the Plan is terminated.


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Section 3.03. Prohibition Against Simultaneous Participation. A Participant in this Plan may not at the same time either (i) participate in the VRS Defined Benefit Plan or the VRS Hybrid Retirement Program or (ii) receive benefits from the VRS Defined Benefit Plan or the VRS Hybrid Retirement Program, other than as a contingent annuitant.

ARTICLE IV.

CONTRIBUTIONS

Section 4.01. Employer Contributions.


(1) On behalf of each Pre-July 1, 2010 Participant, an Employer shall make an Employer Contribution to the Plan equal to ten and four-tenths percent (10.4%) of the Participant's Creditable Compensation, or such other rate that may be established from time to time by VRS pursuant to Va. Code Section 51.1-126.5.

(2) On behalf of each Post-June 30, 2010 Participant, an Employer shall make an Employer Contribution to the Plan equal to eight and five-tenths percent (8.5%) of the Participant's Creditable Compensation, or such other rate that may be established from time to time by VRS pursuant to Va. Code Section 51.1-126.5.

(b) Subject to Article V, Employer Contributions shall be made on behalf of a Participant who is on an authorized educational leave of absence, and who is receiving at least half of his or her Creditable Compensation, based on the Creditable Compensation that the Participant receives during the period of leave.

(c) Employer Contributions shall be paid to the Plan as soon as administratively practicable following each payroll period, but no later than as permitted by law for the Plan Year during which they are being made. Employer Contributions shall be allocated to each Participant's Employer Contribution Account as of the date made to the Plan, but no later than the last day of the Plan Year.


(a) Each Post-June 30, 2010 Participant is required as a condition of employment to make a Mandatory Employee Contribution to the Plan each Plan Year equal to five percent of his or her Creditable Compensation, or such other rate that may be established from time to time by VRS pursuant to Va. Code Section 51.1-126.5.

(b) Mandatory Employee Contributions shall be picked up by the Employer and treated as paid by the Employer pursuant to Code Section 414(h)(2). The Employer shall remit the picked up Mandatory Employee Contributions directly to the Plan, instead of paying such amounts to the Participant. A Participant may not elect to receive such Mandatory Employee Contributions directly instead of having them paid by the Employer to the Plan.

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(c) Mandatory Employee Contributions shall be paid to the Plan by the Employer each payroll period on a basis consistent with its payroll practices, but no later than as permitted by law for the Plan Year during which they are being made.












(a) The Plan shall accept as a Transfer Contribution a transfer of a Participant's accumulated contributions from the VRS Defined Benefit Plan or VRS Hybrid Retirement Program pursuant to Va. Code Section 51.1-161(C). The Plan shall not accept a transfer from any other plan.



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ARTICLE V.



(a) Notwithstanding any provision of the Plan to the contrary, Annual Additions to the Plan and any other Code Section 401(a) plan maintained by the Employer or a Related Employer for a Participant in a Limitation Year shall not exceed the limitations set forth in Code Section 415(c).






(b) If a Participant has Excess Annual Additions for a Plan Year, an adjustment to comply with this Article shall be made as soon as administratively possible, but no later than the time permitted under Internal Revenue Service guidance: (i) first, to all plans not hereinafter described; (ii) second, to any profit sharing plan (such a plan providing matching contributions based on the employee's elective deferrals to a 403(b) or 457(b) plan) that is required to be aggregated with this Plan; (iii) third, to any money purchase pension plan (such as this Plan) that is required to be aggregated with this Plan; (iv) fourth, to any target benefit plan that is required to be aggregated with this Plan; and (v) fifth, to any welfare benefit fund and individual medical benefit account.

(c) If a Participant is a participant in two or more plans of the same type described in paragraph (b), the adjustment provided for in paragraph (b) to such plans shall be made: (i) to contributory plans or aspects thereof first, and then to non-contributory plans or aspects thereof; and (ii) to plans or aspects thereof in the same limitation category separately maintained and administered by the Employer in accordance with rules established by such Employer, and then to the Virginia Cash Match Plan.

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ARTICLE VI.

ACCOUNTING




ARTICLE VII.







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ARTICLE VIII.

TRUST

Section 8.01. Trust Fund. All Contributions under the Plan shall be transferred to the Trustee to be held in Trust as part of the Trust Fund in accordance with the provisions of the Plan and the Investment Funds, as applicable. All assets held in connection with the Plan, including all Contributions, all property and rights acquired or purchased with such amounts, and all income attributable to such amounts, property or rights, shall be held in, managed, invested and distributed in Trust as part of the Trust Fund, in accordance with the provisions of the Plan. All benefits under the Plan shall be distributed solely from the Trust Fund, and VRS and/or Employer shall have no liability for any such benefits other than the obligation to make Contributions as provided in the Plan.


ARTICLE IX.

DISTRIBUTIONS




(c) A Participant or Beneficiary may submit a request for a distribution to the Administrator on the Applicable Form. The Employer shall certify that the Participant has had a Severance from Employment, if applicable.


(a) Subject to Section 9.06, the terms of the Investment Funds, and any restrictions established by VRS, a Participant may elect to receive his or her Vested Account under any form of payment approved by the Administrator, which may include a lump sum payment, annuity payment, periodic payment, or partial lump sum with remainder paid as a periodic payment or annuity payment.


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(c) A Participant's Accounts shall be distributed to the Participant beginning no later than his or her “required beginning date” as defined in this paragraph or, if applicable, as defined in subsequent legislation or regulations that amend the definition of required beginning date for purposes of Code Section 401(a)(9). Subject to the preceding sentence, required beginning date shall mean April 1 of the calendar year following the calendar year in which the Participant attains age 70½ (age 72 for distributions required to be made after December 31, 2019, with respect to a Participant who would have attained age 70½ after December 31, 2019) or, if later, April 1 of the calendar year following the calendar year that the Participant has a Severance from

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Employment. The Administrator or its Agent shall calculate the amounts required to be distributed to a Participant under this Section and notify such Participant of such distributions prior to the date distributions must begin.






Section 9.07. Permissive Service Credit Transfers to VRS.

(a) A Participant who ceases to be an Eligible Employee but who remains employed by the Commonwealth may transfer his or her Account balance to the VRS Defined Benefit Plan or VRS Hybrid Retirement Program, as applicable, in a manner determined by VRS.

(b) If the Participant makes such an election, the Participant's Account shall be transferred to VRS and his or her participation in the Plan shall cease. With the exception of the

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Mandatory Employee Contribution Account and Rollover Contribution Account, any portion of the Participant's Account which exceeds the amount required under VRS to purchase all of the Participant's creditable service under VRS as an Eligible Employee under the Plan shall be forfeited by the Participant. Years of creditable service are determined in the same manner as under VRS. Forfeitures arising under this paragraph (b) shall be allocated to a forfeiture account. The Employer shall use the forfeitures to reduce future Employer Contributions.




ARTICLE X.

LOANS


ARTICLE XI.

VESTING

Section 11.01. Vesting. Except as provided under Section 9.07, a Participant shall be 100% Vested in his or her Accounts at all times.


(a) Notwithstanding Section 11.01, if a Participant (i) is convicted of a felony and (ii) his or her Employer determines that the felony arose from misconduct occurring on or after July 1, 2011, in any position in which the Participant was covered for retirement purposes under any retirement system administered by the Board, the Participant shall forfeit his or her Employer Contribution Account and Transfer Contribution Account, if any. Such forfeiture shall occur following the Employer's notification to VRS that a felony conviction arising from such

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misconduct has been obtained and the administrative process as set forth in Va. Code Section 51.1-124.13 has concluded. If the Participant is or becomes a Participant in service after such forfeiture, he or she shall be entitled to the benefits based solely on his or her service after the forfeiture.


ARTICLE XII.














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(a) If the Distributee of an Eligible Rollover Distribution does not elect to have the Eligible Rollover Distribution paid directly from the Plan to an Eligible Retirement Plan in a Direct Rollover pursuant to Code Section 401(a)(31), the Eligible Rollover Distribution shall be

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subject to a mandatory 20% federal income tax withholding under Code Section 3405(c). Only that portion of the Eligible Rollover Distribution that is not paid directly from the Plan to an Eligible Retirement Plan in a Direct Rollover shall be subject to the mandatory withholding requirement under Code Section 3405(e), and only to the extent such amount would otherwise be includible in the Distributee's taxable gross income.










ARTICLE XIII.


Section 13.01. Authority of the Administrator. The Administrator is responsible for performing the duties required for operation of the Plan. The Administrator shall have all power necessary or convenient to enable it to exercise its authority under the Plan. In connection therewith, the Administrator may provide rules and regulations, not inconsistent with the provisions hereof, for the operation and management of the Plan, and may from time to time

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amend or rescind such rules or regulations. The Administrator is authorized to accept service of legal process for the Plan.

Section 13.02. Responsibility of the Employer. The Employer is responsible for notifying Participants that they are eligible to participate in the Plan, providing the Administrator complete and accurate information as needed to administer the Plan, and such other responsibilities as may be delegated to Employer by the Administrator from time to time. An Employer that is a state agency and has decentralized its payroll function is responsible for timely remitting Contributions for its Employees to the Trust. The Department of Accounts of the Commonwealth is responsible for timely remitting Contributions to the Trust on behalf of Employees of any other Employer.




ARTICLE XIV.




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ARTICLE XV.


Section 15.01. Amendment and Termination. While it is expected that the Plan shall continue indefinitely, the Commonwealth reserves the right to amend, freeze, or terminate the Plan, or to discontinue any further Contributions to the Plan at any time. The Board may, consistent with Va. Code Section 51.1-126.5, make any amendment to the Plan, provided that no such amendment shall reduce, suspend or terminate the accrued benefits otherwise payable to a Participant or Beneficiary hereunder as of the date of such amendment. To the extent required by the exclusive benefit rule, any amendment shall not be effective to the extent that the amendment has the effect of causing any Plan assets to be diverted to or inure to the benefit of the Employer, or to be used for any purpose other than providing benefits to Participants and Beneficiaries and defraying reasonable expenses of administering the Plan.




ARTICLE XVI.

MISCELLANEOUS


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(e) Notwithstanding paragraph (a), pursuant to Va. Code Section 51.1-124.4(A), the Administrator shall honor any process for a debt to the Employer that has employed such person, and except for administrative actions pursuant to Chapter 19 (Section 63.2-1900 et seq.) of Title 63.2 of the Va. Code or any court process to enforce a child or child and spousal support obligation. Under no circumstances may a payment under this paragraph (e) take place before a Participant has a Severance from Employment.



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(b) If a Participant whose employment is interrupted by qualified military service or who is on a leave of absence for qualified military service under Code Section 414(u), timely resumes employment with the Employer in accordance with USERRA as an Eligible Employee, the Participant may elect to make the Mandatory Employee Contributions upon resumption of employment with the Employer that would have been required (at the same level of Compensation) without the interruption of leave. Except to the extent provided under Code Section 414(u), this right applies for five years following the resumption of employment (or, if sooner, for a period equal to three times the period of the interruption or leave). Such Mandatory Employee Contributions may only be made during such period and while the Participant is reemployed by the Employer. Such Mandatory Employee Contributions shall be picked up by the Employer and treated as paid by the Employer pursuant to Code Section 414(h)(2).

(c) If a Participant whose employment is interrupted by qualified military service or who is on a leave of absence for qualified military service under Code Section 414(u), timely resumes employment with the Employer in accordance with USERRA as an Eligible Employee, the Employer shall make the Employer Contributions that would have been made if the Participant had remained employed during the Participant's qualified military service. Contributions must be made no later than 90 days after the date of reemployment or when the Employer Contributions are normally due for the year in which the qualified military service was performed, if later.







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By:

Printed Name:

Title:

Date:

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Amended and Restated Effective January 1, 2021 I\15595384.2



PUBLIC SCHOOL SUPERINTENDENTS

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ARTICLE III. ELIGIBILITY AND PARTICIPATION...........................................................8Section 3.01. Participation ..........................................................................................8Section 3.02. Cessation of Contributions ...................................................................8Section 3.03. Reemployment .......................................................................................9Section 3.04. Prohibition Against Simultaneous Participation................................9

ARTICLE IV. CONTRIBUTIONS..............................................................................................9Section 4.01. Employer Contributions .......................................................................9Section 4.02. Mandatory Employee Contributions...................................................9Section 4.03. Rollover Contributions to the Plan....................................................10Section 4.04. Transfers to the Plan...........................................................................10Section 4.05. Expenses of Plan..................................................................................11





ARTICLE IX. DISTRIBUTIONS ..............................................................................................13Section 9.01. Distribution Restrictions.....................................................................13Section 9.02. Forms of Payment ...............................................................................13Section 9.03. Reemployment .....................................................................................14Section 9.04. Mandatory Cash-Out..........................................................................14Section 9.05. Death Benefit .......................................................................................14Section 9.06. Required Minimum Distribution Rules ............................................14

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Section 9.07. Additional Tax on Early Withdrawals ..............................................15

ARTICLE X. LOANS..................................................................................................................16



ARTICLE XIII. PARTICIPATING EMPLOYERS................................................................19Section 13.01. Adoption of Plan by Participating Employer ...................................19Section 13.02. Plan Terms...........................................................................................19Section 13.03. Cessation of Contributions by Participating Employer ..................19






ARTICLE XVII. MISCELLANEOUS ......................................................................................21Section 17.01. Non-Alienation.....................................................................................21Section 17.02. Military Service ...................................................................................22Section 17.03. Limitation of Rights and Obligations ................................................23Section 17.04. Federal and State Taxes......................................................................23Section 17.05. Erroneous Payments ...........................................................................23Section 17.06. Payments to Minors or Incompetents................................................24Section 17.07. Missing or Lost Participants ..............................................................24Section 17.08. Stale Distribution Checks ...................................................................24Section 17.09. No Reversion........................................................................................24

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Section 17.10. Claims of Other Persons .....................................................................24Section 17.11. Counterparts........................................................................................25

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I\15595384.2


FOR PUBLIC SCHOOL SUPERINTENDENTS

ARTICLE I.



(a) Pursuant to the Section 51.1-126.6 the Code of Virginia ("Va. Code"), the Board of Trustees of the Virginia Retirement System ("Board") established the Optional Retirement Plan of the Commonwealth of Virginia for Public School Superintendents ("Plan"), effective April 1, 2001, in order to provide retirement benefits for eligible employees of public schools. Eligible employees may elect to participate in the Plan in lieu of retirement benefits available under Va. Code Section 51.1-124.1 et seq. or Va. Code Section 51.1-169.






ARTICLE II.




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(1) "Employer Contribution Account" means the account maintained to reflect the Participant's interest under the Plan attributable to his or her Employer Contributions pursuant to Section 4.01.





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(d) "Annual Addition" means the annual addition as defined in Code Section 415(c) and as modified in Code Sections 415(l)(1) and 419A(d)(2). In general, Code Section 415(c) defines annual addition as the sum of the following amounts credited to a Participant's accounts for the Limitation Year under this Plan and any other defined contribution plan maintained by the Participating Employer:


(2) Employer contributions, including Employer Contributions under Section 4.01;

(3) forfeitures;

(4) amounts allocated to an individual medical account, as defined in Code Section 415(l)(2), which is part of a pension or annuity plan maintained by the Participating Employer or a Related Employer, or both, as applicable; and

(5) mandatory employee contributions to a defined benefit plan maintained by the Participating Employer, unless the contributions are picked up by the Participating Employer pursuant to Code Section 414(h)(2).


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(k) "Contributions" mean Employer Contributions, Mandatory Employee Contributions, Rollover Contributions, and Transfer Contributions.


(m) "Creditable Compensation" has the meaning set forth in Va. Code Section 51.1-124.3, as interpreted by VRS. Creditable Compensation generally means the Employee's annual salary, not including overtime pay, payment of a temporary nature, or payments for extra duties. Creditable Compensation shall not include any amounts paid after Severance from Employment except for regular pay that would have been paid to the Employee prior to a Severance from Employment if the Employee continued in employment with the Participant Employer and that is otherwise Creditable Compensation. Creditable Compensation shall not exceed the limits under Code Section 401(a)(17), increased by the Cost-of-Living Adjustment.

(n) "Effective Date" of the Plan means April 1, 2001, and of this amendment and restatement means January 1, 2021.

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(o) "Eligible Employee" means an Employee employed by a Participating Employer in a position described in Va. Code Section 22.1-60; provided, however, that an Eligible Employee does not include an Employee who becomes an Eligible Employee after the effective date of a Participating Employer's election to cease Contributions to the Plan for such Employees pursuant to Section 13.04.

(p) "Employee" means any common law employee employed by the Participating Employer. An Employee does not include an independent contractor.

(q) "Employer Contributions" mean the contributions made to the Plan by the Participating Employer on behalf of a Participant pursuant to Section 4.01.

(r) "Excess Annual Additions" mean that portion of a Participant's Mandatory Employee Contributions and Employer Contributions to the Plan and contributions to another 401(a) defined contribution plan maintained by the Participating Employer or a Related Employer for a Limitation Year which exceeds the limits of Code Section 415.

(s) "HEART" means the Heroes Earnings Assistance and Relief Tax Act of 2008, as amended from time to time.

(t) "Investment Funds" means the mutual funds, collective investment trust funds, insurance company separate accounts, annuity contracts, or other investment vehicles made available to Participants for the investment of their Accounts. The Administrator, in its sole and absolute discretion, shall select the Investment Funds and may add or delete Investment Funds.

(u) "Limitation Year" means the 12 month period beginning January 1.

(v) "Mandatory Employee Contributions" mean the contributions required to be made by a Participant to the Plan pursuant to Section 4.02.

(w) "Normal Retirement Age" means:



(x) Participant" means any Eligible Employee who is or may become eligible to receive a benefit of any type under the Plan. A Participant shall also mean, when appropriate to the context, a former Eligible Employee who is eligible to receive a benefit of any type under the Plan. Participants shall be classified as follows:

(1) A "Pre-July 1, 2010 Participant" means a person who on June 30, 2010, is a member of a retirement plan administered by the Virginia Retirement System as that term is defined in Va. Code Section 51.1-124.3 (which term excludes the Virginia Cash Match Plan and the Deferred Compensation Plan of the Commonwealth of Virginia). For this purpose, a Participant is a member of such a plan if the Participant has creditable service under a defined benefit plan or any account balance under a defined contribution

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plan. A Pre-July 1, 2010 Participant shall also include a person who prior to March 15, 2010, entered into a written employment contract for employment in a covered position in the case of a defined benefit plan administered by VRS or an eligible position in the case of a defined contribution plan administered by VRS even if the employment pursuant to such agreement commences on or after July 1, 2010. A subsequent Severance from Employment shall not alter the Participant's status as a Pre-July 1, 2010 Participant. However, if, upon reemployment following a Severance from Employment, a person no longer has creditable service under a defined benefit plan or any account balance under a defined contribution plan administered by VRS, such person shall no longer be a Pre-July 1, 2010 Participant. For the purposes of this definition, an account balance includes a payout annuity.


(y) "Participating Employer" means any school board established pursuant to Article VIII, Section 7 of the Constitution of Virginia and Chapter 5 (Section 22.1-28 et seq.) of Title 22.1 of the Va. Code that has elected to offer the Plan to its Employees pursuant to Va. Code Section 51.1-126.6(B).

(z) "Plan" means the Optional Retirement Plan of the Commonwealth of Virginia for Public School Superintendents, as amended from time to time.

(aa) "Plan Compensation" means all compensation as defined in Code Section 415(c)(3). In general, Code Section 415(c)(3) defines compensation as all of an Employee's wages as defined in Code Section 3401(a) for the purposes of income tax withholding at the source but determined without regard to any rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed (such as the exception for agricultural labor in Code Section 3401(a)(2)); provided, however, Plan Compensation shall also include the amount of any elective deferrals, as defined in Code Section 402(g)(3), and any amount contributed or deferred by the Participating Employer at the election of the Employee and which is not includible in the gross income of the Employee by reason of Code Section 125, 403(b), 132(f)(4), 401(k), or 457(b). Plan Compensation for a Plan Year includes compensation paid by the later of (i) two and one-half months after an Employee's Severance from Employment, or (ii) the end of the Plan Year that includes the date of the Employee's Severance from Employment, if:

(1) the payment is regular compensation for services during the Employee's regular working hours, or compensation for services outside the Employee's regular working hours (e.g., overtime or shift differential), commissions, bonuses, or other similar payments and the payment would have been paid to the Employee prior to a Severance from Employment if the Employee had continued in employment with the Participating Employer; or


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Plan Compensation does not include any amounts "picked up" by the Participating Employer within the meaning of Code Section 414(h). Plan Compensation shall not exceed the limits under Code Section 401(a)(17), increased by the Cost-of-Living Adjustment.

(bb) "Plan Year" means the 12 month period beginning July 1.

(cc) "Related Employer" means the Participating Employer and any other entity which is under common control with the Participating Employer under Code Section 414(b), (c) or (m). For this purpose, the Board shall determine which entities are Related Employers based on a reasonable, good faith standard and taking into account the special rules applicable under Notice 89-23, 1989-1 C.B. 654.

(dd) "Rollover Contributions" mean the contributions made to the Plan pursuant to Section 4.03.

(ee) "Section" means, when not preceded by the word Code, a section of the Plan.

(ff) "Severance from Employment" means the complete termination of the employment relationship between the Employee, the Participating Employer, and any employer that participates in a retirement plan established under Chapters 1, 2, 2.1, or 3 of Title 51.1 of the Va. Code.

(gg) "Spouse" means the person to whom the Participant is legally married under federal law.

(hh) "Transfer Contributions" mean the contributions made to the Plan pursuant to Section 4.04.

(ii) "Trust" means the Master Trust for the Defined Contribution Plans of the Commonwealth of Virginia, which may incorporate one or more qualified trusts under Code Section 401(a), custodial accounts treated as qualified trusts under Code Section 401(f), and/or annuity contracts treated as qualified trusts under Code Section 401(f), established under the Plan to hold Plan assets.

(jj) "Trust Fund" means the assets of the Plan held pursuant to the terms of the Plan and the Trust.

(kk) "Trustee" means the trustee or any successor trustee designated and appointed by VRS, and includes a custodian of a custodial account or an insurer of an annuity contract under Code Section 401(f).

(ll) "USERRA" means the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended from time to time.

(mm) "Va. Code" means the Code of Virginia, as amended from time to time.

(nn) "Vested" means the interest of the Participant or Beneficiary in his or her Accounts which is unconditional, legally enforceable, and nonforfeitable at all times.

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(oo) "VRS" means the Virginia Retirement System.

(pp) "VRS Defined Benefit Plan" means the defined benefit retirement plan established under Va. Code Section 51.1-124.1 et seq. and administered by VRS.

(qq) "VRS Hybrid Retirement Program" means the hybrid retirement program established under Va. Code Section 51.1-169 and administered by VRS.

ARTICLE III.




(b) An Employee who becomes an Eligible Employee on or after the Effective Date of this amended and restated Plan shall make an irrevocable election to participate in the Plan. An Eligible Employee who makes an irrevocable election to participate in the Plan shall remain a Participant in the Plan for as long as he or she remains an Eligible Employee. The Eligible Employee shall make this election by following the enrollment procedures prescribed by the Administrator. If an Eligible Employee fails to make a timely election, he or she shall be deemed to have irrevocably elected to participate in the VRS Defined Benefit Plan or VRS Hybrid Retirement Program, as applicable based on his or her membership date. An Eligible Employee who elects to participate in the Plan shall become a Participant in the Plan as of the date he or she becomes an Eligible Employee.

(c) Notwithstanding paragraph (b), an Employee who has been in continuous service without a Break in Service with another Participating Employer when he or she becomes an Eligible Employee, and who was most recently covered by:


(2) the Plan, shall become a Participant in the Plan on the date such Employee becomes an Eligible Employee.

(d) VRS shall notify the Eligible Employee of his or her eligibility to participate in the Plan. To become a Participant under the Plan, an Eligible Employee must complete the Applicable Forms, which may include enrollment, beneficiary designation, and investment election forms, and return them to the Administrator or Agent, as applicable.

Section 3.02. Cessation of Contributions. A Participant shall cease to be eligible for Contributions under the Plan when (i) he or she is no longer an Eligible Employee or (ii) the Plan is terminated.

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Section 3.04. Prohibition Against Simultaneous Participation. A Participant in this Plan may not at the same time either (i) participate in the VRS Defined Benefit Plan or the VRS Hybrid Retirement Program or (ii) receive benefits from the VRS Defined Benefit Plan or the VRS Hybrid Retirement Program other than as a contingent annuitant.

ARTICLE IV.

CONTRIBUTIONS

Section 4.01. Employer Contributions.


(1) On behalf of each Pre-July 1, 2010 Participant, a Participating Employer shall make an Employer Contribution to the Plan equal to ten and four-tenths percent (10.4%) of the Participant's Creditable Compensation, or such other rate that may be established from time to time by VRS pursuant to Va. Code Section 51.1-126.6.

(2) On behalf of each Post-June 30, 2010 Participant, a Participating Employer shall make an Employer Contribution to the Plan equal to eight and five-tenths percent (8.5%) of the Participant's Creditable Compensation, or such other rate that may be established from time to time by VRS pursuant to Va. Code Section 51.1-126.6.

(b) Subject to Article V, Employer Contributions shall be made on behalf of a Participant who is on an authorized educational leave of absence, and who is receiving at least half of his or her Creditable Compensation, based on the Creditable Compensation that the Participant receives during the period of leave.

(c) Employer Contributions shall be paid to the Plan as soon as administratively practicable following each payroll period, but no later than as permitted by law for the Plan Year during which they are being made. Employer Contributions shall be allocated to each Participant's Employer Contribution Account as of the date made to the Plan, but no later than the last day of the Plan Year.


(a) Each Post-June 30, 2010 Participant is required as a condition of employment to make a Mandatory Employee Contribution to the Plan each Plan Year equal to five percent of his or her Creditable Compensation, or such other rate that may be established from time to time by VRS pursuant to Va. Code Section 51.1-126.6.

(b) Mandatory Employee Contributions shall be picked up by the Participating Employer and treated as paid by the Participating Employer pursuant to Code Section 414(h)(2). The Participating Employer shall remit the picked up Mandatory Employee Contributions

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directly to the Plan, instead of paying such amounts to the Participant. A Participant may not elect to receive such Mandatory Employee Contributions directly instead of having them paid by the Participating Employer to the Plan.

(c) Mandatory Employee Contributions shall be paid to the Plan by the Participating Employer each payroll period on a basis consistent with its payroll practices, but no later than as permitted by law for the Plan Year during which they are being made.












(a) The Plan shall accept as a Transfer Contribution a transfer of a Participant's accumulated contributions from the VRS Defined Benefit Plan or VRS Hybrid Retirement Program pursuant to Va. Code Section 51.1-161(C). The Plan shall not accept a transfer from any other plan.

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Section 4.05. Expenses of Plan. All reasonable expenses of administering the Plan shall be charged against and paid from the Participant's Accounts, subject to the terms of the applicable Investment Funds, unless paid by the Participating Employer. The Administrator shall have the right to allocate expenses associated with maintaining the Accounts of terminated Employees to such Accounts, even if no expenses are allocated to the Accounts of active Employees, in accordance with rules promulgated by the Internal Revenue Service.

ARTICLE V.



(a) Notwithstanding any provision of the Plan to the contrary, Annual Additions to the Plan and any other Code Section 401(a) plan maintained by the Participating Employer or a Related Employer for a Participant in a Limitation Year shall not exceed the limitations set forth in Code Section 415(c).






(b) If a Participant has Excess Annual Additions for a Plan Year, an adjustment to comply with this Article shall be made as soon as administratively possible, but no later than the time permitted under Internal Revenue Service guidance: (i) first, to any other plan sponsored and maintained by the Participating Employer that is required to be aggregated with this Plan; and (ii) second, to this Plan.

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ARTICLE VI.

ACCOUNTING




ARTICLE VII.







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ARTICLE VIII.

TRUST



ARTICLE IX.

DISTRIBUTIONS




(c) A Participant or Beneficiary may submit a request for a distribution to the Administrator on the Applicable Form. The Participating Employer shall certify that the Participant has had a Severance from Employment, if applicable.




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(c) A Participant's Accounts shall be distributed to the Participant beginning no later than his or her “required beginning date” as defined in this paragraph or, if applicable, as defined in subsequent legislation or regulations that amend the definition of required beginning date for purposes of Code Section 401(a)(9). Subject to the preceding sentence, required beginning date shall mean April 1 of the calendar year following the calendar year in which the Participant attains age 70½ (age 72 for distributions required to be made after December 31, 2019, with respect to a Participant who would have attained age 70½ after December 31, 2019) or, if later,

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April 1 of the calendar year following the calendar year that the Participant has a Severance from Employment.








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ARTICLE X.

LOANS


ARTICLE XI.

VESTING



(a) Notwithstanding Section 11.01, if a Participant (i) is convicted of a felony and (ii) his or her Participating Employer determines that the felony arose from misconduct occurring on or after July 1, 2011, in any position in which the Participant was covered for retirement purposes under any retirement system administered by the Board, the Participant shall forfeit his or her Employer Contribution Account and Transfer Contribution Account, if any. Such forfeiture shall occur following the Participating Employer's notification to VRS that a felony conviction arising from such misconduct has been obtained and the administrative process as set forth in Va. Code Section 51.1-124.13 has concluded. If the Participant is or becomes a Participant in service after such forfeiture, he or she shall be entitled to the benefits based solely on his or her service after the forfeiture.


ARTICLE XII.



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ARTICLE XIII.


Section 13.01. Adoption of Plan by Participating Employer. A Participating Employer must enter into an agreement with VRS before its Employees may become Participants in the Plan.


Section 13.03. Cessation of Contributions by Participating Employer. A Participating Employer may elect to cease all Contributions to the Plan for Employees who become Eligible Employees after the effective date of the Participating Employer's election.'

ARTICLE XIV.


Section 14.01. Authority of the Administrator. The Administrator is responsible for performing the duties required for operation of the Plan. The Administrator shall have all power necessary or convenient to enable it to exercise its authority under the Plan. In connection

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therewith, the Administrator may provide rules and regulations, not inconsistent with the provisions hereof, for the operation and management of the Plan, and may from time to time amend or rescind such rules or regulations. The Administrator is authorized to accept service of legal process for the Plan.

Section 14.02. Responsibility of the Participating Employer. The Participating Employer is responsible for notifying Participants that they are eligible to participate in the Plan, providing the Administrator complete and accurate information as needed to administer the Plan, and such other responsibilities as may be delegated to Participating Employer by the Administrator from time to time. A Participating Employer is responsible for timely remitting Contributions for its Employees to the Trust.




ARTICLE XV.




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ARTICLE XVI.


Section 16.01. Amendment and Termination. While it is expected that the Plan shall continue indefinitely, the Commonwealth reserves the right to amend, freeze, or terminate the Plan, or to discontinue any further Contributions to the Plan at any time. The Board may, consistent with Va. Code Section 51.1-126.6, make any amendment to the Plan, provided that no such amendment shall reduce, suspend or terminate the accrued benefits otherwise payable to a Participant or Beneficiary hereunder as of the date of such amendment. To the extent required by the exclusive benefit rule, any amendment shall not be effective to the extent that the amendment has the effect of causing any Plan assets to be diverted to or inure to the benefit of the Participating Employer, or to be used for any purpose other than providing benefits to Participants and Beneficiaries and defraying reasonable expenses of administering the Plan.




ARTICLE XVII.

MISCELLANEOUS


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(e) Notwithstanding paragraph (a), pursuant to Va. Code Section 51.1-124.4(A), the Administrator shall honor any process for a debt to the Participating Employer that has employed such person, and except for administrative actions pursuant to Chapter 19 (Section 63.2-1900 et seq.) of Title 63.2 of the Va. Code or any court process to enforce a child or child and spousal support obligation. Under no circumstances may a payment under this paragraph (e) take place before a Participant has a Severance from Employment.



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(b) If a Participant whose employment is interrupted by qualified military service or who is on a leave of absence for qualified military service under Code Section 414(u), timely resumes employment with the Participating Employer in accordance with USERRA as an Eligible Employee, the Participant may elect to make the Mandatory Employee Contributions upon resumption of employment with the Participating Employer that would have been required (at the same level of Compensation) without the interruption of leave. Except to the extent provided under Code Section 414(u), this right applies for five years following the resumption of employment (or, if sooner, for a period equal to three times the period of the interruption or leave). Such Mandatory Employee Contributions may only be made during such period and while the Participant is reemployed by the Participating Employer. Such Mandatory Employee Contributions shall be picked up by the Participating Employer and treated as paid by the Participating Employer pursuant to Code Section 414(h)(2).

(c) If a Participant whose employment is interrupted by qualified military service or who is on a leave of absence for qualified military service under Code Section 414(u), timely resumes employment with the Participating Employer in accordance with USERRA as an Eligible Employee, the Participating Employer shall make the Employer Contributions that would have been made if the Participant had remained employed during the Participant's qualified military service. Contributions must be made no later than 90 days after the date of reemployment or when the Employer Contributions are normally due for the year in which the qualified military service was performed, if later.







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Section 17.07. Missing or Lost Participants. In the event that the Administrator does not have current contact information for or is unable to identify a Participant or Beneficiary under the Plan, the Administrator shall make reasonable attempts to determine the address and identity of the Participant or Beneficiary entitled to benefits under the Plan. A reasonable attempt to locate a missing or lost Participant or Beneficiary shall include (i) providing notice to the Participant at the Participant's last known address via certified mail; (ii) determining whether the Participating Employer's records or the records of another plan maintained by the Participating Employer has a more current address for the Participant; (iii) attempting to contact any named Beneficiary of the Participant; and (iv) searching for the missing Participant via free electronic search tools, such as Internet search engines, public record databases, obituaries, and social media. If such search methods are unsuccessful, based on the facts and circumstances, the Administrator may use other search methods, including using Internet search tools, commercial locator services, credit reporting agencies, information brokers, investigation databases, and analogous services that may involve charges. The Administrator may charge missing Participants and Beneficiaries reasonable expenses for efforts to find them. In the event that the Administrator is unable to locate a Participant or Beneficiary entitled to benefits under the Plan, the Trustee shall continue to hold the benefits due to such person under the Plan.


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By:

Printed Name:

Title:

Date:

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Approve amendments to the master trust documents for the deferred compensation and defined contribution plans, effective January 1, 2021.


Requested Action

The Virginia Retirement System Board of Trustees approves the First Amendment to the Master Trust for the Deferred Compensation Plan of the Commonwealth of Virginia, the First Amendment to the Master Trust for the Defined Contribution Plans of the Commonwealth of Virginia and the First Amendment to the Optional Retirement Plan of the Commonwealth of Virginia for Employees of Institutions of Higher Education, all effective January 1, 2021.


In connection with the amendment and restatement of the 457 deferred compensation plans and the 401(a) defined contribution plans, to be effective January 1, 2021, VRS staff consulted with outside benefits counsel to determine what changes would be needed to the master trusts relating to the plans. The amendment documents, copies of which are attached to this RBA, account for the addition of two new plans (Hybrid 457 and Hybrid Cash Match), add language suggested by counsel ensuring continued compliance with the exclusive benefit rule, and clarify further (at counsel’s recommendation) the requirement that there be separate accounting for each plan within the trust. The master trust documents were amended and restated effective January 1, 2014, coincident with the introduction of the Hybrid Retirement Plan into the VRS benefit structure. Outside counsel’s recommendations are designed to provide additional assurance that VRS does and will continue to comply with state and federal law with respect to the master trusts. The Defined Contribution Plans Advisory Committee has reviewed the amendments and recommends the approval of this RBA.


Code of Virginia § 51.1-124.22(8) authorizes the Board to make determinations necessary to carry out the provisions of Title 51.1 of the Code of Virginia, and § 51.1-124.22(10) requires the Board to adopt rules and policies that bring the Retirement System into compliance with any applicable law or regulation of the Commonwealth of Virginia or the United States.

The above action is approved.

_________________________________________________ ________________________________O’Kelly E. McWilliams, III, Chairman DateVRS Board of Trustees

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First Amendment to the Master Trust for the Optional Retirement Plan of theCommonwealth of Virginia for Employees of Institutions of Higher Education

(as Restated Effective January 1, 2014)

Page 1 of 2

FIRST AMENDMENTTO THE MASTER TRUST FOR THE OPTIONAL RETIREMENT PLAN

OF THE COMMONWEALTH OF VIRGINIA FOR EMPLOYEES OF INSTITUTIONS OF HIGHER EDUCATION

(As Restated Effective January 1, 2014)

The Board of Trustees of the Virginia Retirement Systems hereby amends the Master Trust for the Optional Retirement Plan of the Commonwealth of Virginia for Employees of Institutions of Higher Education (as Restated Effective January 1, 2014) (the "Trust") pursuant to Article VII of the Trust, effective January 1, 2021, unless otherwise stated herein, as set forth below, to reflect certain discretionary changes and to make certain clarifications.

1. Section 3.2 of the Trust, Exclusive Benefit, is amended to be and read as follows:

3.2. Exclusive Benefit. Except as otherwise expressly provided herein, no part of the corpus or income of the Fund shall revert to or be used or enjoyed by the Employer or be used for, or diverted to, purposes other than the exclusive benefit of the Plan’s Participants or their Beneficiaries and the defrayal of reasonable expenses (including taxes) of the Plan and the portion of the Fund that equitably belongs to the Plan. The rights of all persons hereunder are subject to the terms of the Trust and the Plan.

2. Section 5.2(a) of the Trust, a part of Section 5.2 Accounts, is hereby amended to be and read as follows:

5.2(a) The Trustee shall keep true and accurate accounts of all investments, receipts, and disbursements and other transactions hereunder, and all accounts, books and records relating thereto shall be open to inspection and audit at all reasonable times by any person or persons designated by the Auditor of Public Accounts or the Joint Legislative Audit and Review Commission of the General Assembly of the Commonwealth of Virginia. A separate account shall be maintained to reflect the interest of each Plan in the Fund, including contributions to the Plan, disbursements from the Plan, and investment experience allocable to the Plan. A transaction or accounting method which has the effect of directly or indirectly transferring value from the account of one Plan into the account of another Plan violates this separate accounting requirement.

3. In all other respects, the Trust shall be and remain unchanged.

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First Amendment to the Master Trust for the Optional Retirement Plan of theCommonwealth of Virginia for Employees of Institutions of Higher Education

(as Restated Effective January 1, 2014)

Page 2 of 2

IN WITNESS WHEREOF, the undersigned has executed this amendment to the Trust this _______________ day of _____________________, 2020.


By: ___________________________________

Printed Name: __________________________

Title: __________________________________

Date: __________________________________

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First Amendment to the Master Trust for the Deferred Compensation Planof the Commonwealth of Virginia (as Restated Effective January 1, 2014)

Page 1 of 2

FIRST AMENDMENTTO THE MASTER TRUST FOR THE DEFERRED COMPENSATION PLAN

OF THE COMMONWEALTH OF VIRGINIA


The Board of Trustees of the Virginia Retirement Systems hereby amends the Master Trust for the Deferred Compensation Plan of the Commonwealth of Virginia (as Restated Effective January 1, 2014) (the "Trust") pursuant to Article VII of the Trust, effective January 1, 2021, unless otherwise stated herein, as set forth below, to reflect the addition of the Virginia Hybrid 457 Deferred Compensation Plan to the Trust to reflect certain other discretionary changes, and to make certain clarifications.

1. The first two paragraphs of the preamble to the Trust are amended to be and read as follows:

The Board maintains the Commonwealth of Virginia 457 Deferred Compensation Plan and the Virginia Hybrid 457 Deferred Compensation Plan (the "Plan) as eligible deferred compensation plans within the meaning of Internal Revenue Code Section 457(b), as applicable to governmental plans as defined in Section 414(d) of the Code. The purpose of each Plan is to provide for the deferral of compensation by eligible employees pursuant to the terms of the Plan in consideration of their services and to provide Participants with a convenient way to save for retirement.

Each Plan is available under the terms and conditions set forth in the applicable Enabling Statutes and the plan documents governing each Plan, to the extent not inconsistent with the Enabling Statute.

2. Section 1.15 of the Trust, defining Plan, is amended to be and read as follows:

1.15 "Plan": The Commonwealth of Virginia 457 Deferred Compensation Plan described in Chapter 6 of Title 51.1 of the Code of Virginia (1950), as amended, and the Virginia Hybrid 457 Deferred Compensation Plan described in Section 51.1-169 of the Code of Virginia (1950), as amended, each of which is intended to be maintained as an eligible deferred compensation plan under Section 457(b) of the Code as applicable to governmental plans as defined in Section 414(d) of the Code. When used herein, the term "Plan" shall be construed as referring to a particular plan unless the context indicates otherwise.


3.2. Exclusive Benefit. Except as otherwise expressly provided herein, no part of the corpus or income of the Fund shall revert to or be used or enjoyed by

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First Amendment to the Master Trust for the Deferred Compensation Planof the Commonwealth of Virginia (as Restated Effective January 1, 2014)

Page 2 of 2

the Employer or be used for, or diverted to, purposes other than the exclusive benefit of the Plan’s Participants or their Beneficiaries and the defrayal of reasonable expenses (including taxes) of the Plan and the portion of the Fund that equitably belongs to the Plan. The rights of all persons hereunder are subject to the terms of the Trust and the Plan.




IN WITNESS WHEREOF, the undersigned has executed this amendment to the Trust this _______________ day of _____________________, 2020.


By: ___________________________________

Printed Name: __________________________

Title: __________________________________

Date: __________________________________

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First Amendment to Master Trust for the Defined Contribution Plansof the Commonwealth of Virginia (As Restated Effective January 1, 2014)

Page 1 of 2

FIRST AMENDMENTTO THE MASTER TRUST FOR THE DEFINED CONTRIBUTION PLANS

OF THE COMMONWEALTH OF VIRGINIA


The Board of Trustees of the Virginia Retirement Systems hereby amends the Master Trust for the Defined Contribution Plans of the Commonwealth of Virginia (as Restated Effective January 1, 2014) (the "Trust") pursuant to Article VII of the Trust, effective January 1, 2021, unless otherwise stated herein, as set forth below, to reflect certain discretionary changes and to make certain clarifications.


3.2. Exclusive Benefit. Except as otherwise expressly provided herein, no part of the corpus or income of the Fund shall revert to or be used or enjoyed by the Employer or be used for, or diverted to, purposes other than the exclusive benefit of the Plan’s Participants or their Beneficiaries and the defrayal of reasonable expenses (including taxes) of the Plan and the portion of the Fund that equitably belongs to the Plan. The rights of all persons hereunder are subject to the terms of the Trust and the Plan.



3. A revised Appendix A, List of Included Plans, is hereby attached hereto.


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First Amendment to Master Trust for the Defined Contribution Plansof the Commonwealth of Virginia (As Restated Effective January 1, 2014)

Page 2 of 2

IN WITNESS WHEREOF, the undersigned has executed this first amendment to the Trust this _______________ day of _____________________, 2020.


By: ___________________________________

Printed Name: __________________________

Title: __________________________________

Date: __________________________________

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MASTER TRUST FOR THE DEFINED CONTRIBUTION PLANS OF THE COMMONWEALTH OF VIRGINIA (As Restated Effective January 1, 2014)

Appendix A(As of January 1, 2021)List of Included Plans

Included Plan Name Enabling Statute

Effective Date of Inclusion as Included

Plan

Effective Date of Termination as Included Plan

Optional Retirement Plan of the Commonwealth of Virginia for Political Appointees

§ 51.1-126.5 July 1, 1998 N/A

Virginia Cash Match Plan

§ 51.1-606 March 10, 2000 N/A

Hybrid Cash Match Plan

§ 51.1-169 January 1, 2021 N/A

The Optional Retirement Plan of the Commonwealth of Virginia for Public School Superintendents

§ 51.1-126.6 April 1, 2001 N/A

Virginia Supplemental Retirement Plan

§ 51.1-617 July 1, 2004 N/A

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Audit and Compliance CommitteeCommittee Report to the Board of Trustees

December 10, 2020Page 1 of 2

ReportIn accordance with Item 4-0.01 of Chapter 56 of the 2020 Special Session I Acts of Assembly of the Code of Virginia as it relates to conducting business during the COVID-19 pandemic, the Audit and Compliance Committee convened electronically on December 10, 2020 and discussed the following:

APPROVAL OF MINUTES

The Committee approved the minutes of its September 29, 2020 meeting.

EXIT ON THE 2020 COMPREHENSIVE ANNUAL FINANCIAL AUDIT

The APA informed the Committee the audit work over the 2020 VRS Comprehensive Annual Financial Report (CAFR) was in its final stage. Upon completion, the APA anticipates issuing an unmodified opinion on VRS's financial statements. They noted their companion “Report on Internal Controls and Compliance” would be issued later this month (December) and at this time they do not anticipate including any formal recommendations.

ENTRANCE WITH THE APA REGARDING EMPLOYER ASSURANCES (GASB 68 AND 75)

The APA then provided the Committee with an overview of its upcoming examinations designed to provide participating employers and their auditors the assurances necessary to prepare their own annual financial statements in accordance with Governmental Accounting Standards Board (GASB) Statements:

No. 68, which focuses employer reporting over pension plans, and No. 75, which deals with employer reporting over other post-employment benefit plans.

The APA anticipates issuing its opinions on these matters on or about June 30, 2021.

AUDIT REPORTS

The Committee received one audit report.

The review of Member and Employer Contributions determined the processing of monthly contributions, adjustments and related data submitted by participating employers and recorded by VRS are valid and accurate. There were no formal recommendations as a result of this review.

QUARTERLY REVIEW ON MODERNIZATION PROGRAM – PHASE 4

Management presented its status report on the Modernization Program - Phase 4. Management discussed the development of the remaining member portal functionality, related testing and roll-out activities and presented an overview of the online retirement process, including online retirement pilot results.

Internal Audit presented its Quarterly Review and indicated agreement with management’s representations regarding the Modernization Program – Phase 4 overall schedule, budget and scope. Internal Audit acknowledged management’s efforts and continued work, noting continued diligent

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Audit and Compliance CommitteeCommittee Report to the Board of Trustees

December 10, 2020Page 2 of 2

management of resources across concurrent projects and initiatives remains critical to bringing the phase to a close. Looking forward, VRS risk adverse strategies indicate full release of final implementation for all users to be deferred until sometime in fiscal year 2022 to ensure the integrity of VRS and its processing.

QUARTERLY REPORT ON FRAUD, WASTE AND ABUSE HOTLINE CASES

Two alleged Fraud, Waste and Abuse Hotline complaints reported to Internal Audit via the Office of the State Inspector General during the period of August 1, 2020 through October 31, 2020 were presented to the Committee. Both cases alleged abuse of short-term disability benefits. One case was determined to be unfounded and therefore closed. One case was reported as currently under review, but after the completion of quarterly report was subsequently determined to be unfounded and closed.

QUALITY ASSURANCE REVIEW OF THE INTERNAL AUDIT DEPARTMENT

The Audit Director presented the results of the Department’s Annual Quality Assurance Improvement Program Review as of June 30, 2020, noting the review concluded there is reasonable assurance that the VRS Internal Audit Department is operating in conformance with the International Standards for the Professional Practice of Internal Auditing.

MISCELLANEOUS UPDATES

The Audit Director provided the Committee with the following updates:

Management’s Quarterly Travel Expense and Per Diem ReportThe Committee received management’s quarterly travel expense and per diem report.

Next Committee Meeting DateThe Committee’s next meeting is scheduled for March 16, 2021 at 2 p.m.

Respectfully submitted to the Board of Trustees on December 10, 2020.

________________________________Joseph W. Montgomery, ChairAudit and Compliance Committee

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New Coverage Elections December 2020

1

Coverage Elected Details

Enhanced Hazardous Duty 1.85% Multiplier - Town of Christiansburg (Montgomery County)Effective December 1, 2020

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FY 2021 Agency Roadmap Update – November Page 1 of 2

Implement New myVRS Functionality - Online Retirement Processing Implement New myVRS Functionality - Payment, Health Insurance Maintenance ERM ImplementationCardinal HCM Implementation - The Plan (Track 1), Agency (Track 2) and Retiree (Track 3)

Upgrade Angular JS Framework to Angular (in VNAV Application)IT Security - Fraud Prevention InitiativesOffice 365Cloud TransitionSecure PrintRollout Access Management System to All Operating Units

Employee Engagement Initiative N/SPerformance Management Evaluation Process N/SVSDP and VLDP Long Term Care Plans RFPAnalysis and Planning for Financial System UpgradeVRS Strategic Plan Development (2022-2026)Review and Update Agency PoliciesRecords Retention Program Transformation Initiative Strategy DevelopmentActuarial Experience StudyPost Pandemic Return to the Office

COLA 2020FYE 2020Retirement Wave 2020Teacher ContractsMBPsAnnual Code of Ethics TrainingVRS User IT Security Policy TrainingFOIA Training N/SCAFRPAFRGASB 67GASB 68 N/SGASB 74GASB 75 N/SActuarial ValuationsMyVRS Annual Updates N/S1099/W2 N/S

November 2020 Status Report

Aug Sep Oct Nov Dec JanStat

us 2020 2021

Jul Apr MayOperational/Ongoing Activities

Mar Apr May

Mar

Jun

2021

JunJan Feb

JunFeb

VRS RoadmapFISCAL YEAR 2021 Off plan, mitigation needed

Project timeline

Off plan, mitigation in place

Stat

us

Mar Apr May

Dec Jan Feb Mar Apr

Nov Dec Jan Feb

Other Projects2

JunStat

us 2020 2021

Jul

Status IndicatorProceeding as planned

Completed

N/S Not started

Aug Sep OctAgency Performance Objectives (APOs)

Jul Aug MaySep

IT Initiatives1

Stat

us

Oct Nov

2020 2021Jul Aug Sep Oct Nov Dec

2020

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FY 2021 Agency Roadmap Update – November Page 2 of 2

Yellow Status ItemsItem Due Date CommentsUpgrade Angular JS Framework to Angular (in VNAV Application)

June 2021 The Angular JS Framework upgrade is progressing but intermediate deliverables have been impacted as key resources are currently allocated to the myVRS enhancements. The resources will return to the Angular JS Framework upgrade in January.

Rollout Access Management System to All Operating Units

December 2020

Deployment of shared resources to critical projects and data cleanup initiative have impacted the overall project schedule. Onboarding of all Administration Business Units is complete. The project is expected to be complete by December 2020.

Red Status ItemsItem Due Date CommentsN/A

Realignments/AdjustmentsItem Due Date CommentsN/A

Annual Roadmap Review N/SFYE 2021 N/SRetirement Wave 2021 N/SCommonwealth Bond DisclosureORPHE Surcharge Billing for FY 2022 N/SData FixesReleases (including top BOLT items)Retirement and State Workforce CommissionEmployer Compliance Review N/SBiennium Budget Preparation N/SVRS Fund Sensitivity and Stress Testing Report for GA N/SLegislation FY 2021 - Placeholder N/S

2Other initiatives are led by other business units and supported by Technology Services.

Operational/Ongoing Activities

Stat

us 2020 2021

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

1Initiatives led directly by Technology Services.

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MEMORANDUM TO: FROM: RE...2020/12/10 · December 4, 2020 MEMORANDUM TO: VRS Board of Trustees...

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