What is the main purpose of the AEP System Supplemental Retirement Savings Plan?

The plan's primary purpose is to provide eligible employees with a tax-deferred savings opportunity that is not available under the standard AEP System Retirement Savings Plan due to Internal Revenue Code limitations on high earners.

What was the most significant change made to the plan in this filing?

The most significant change is the increase in the eligible compensation limit for contributions from $1 million to $2 million, effective September 1, 2004. This allows employees whose compensation exceeds $1 million to defer a larger amount into the supplemental plan.

How are contributions made to this supplemental plan?

Employees can make 'Participant Contributions' through payroll deductions via a Pay Reduction Agreement. The company also makes 'Company Contributions,' matching 75% of participant contributions, subject to certain overall limits based on the participant's compensation and their contributions to both the supplemental and the primary savings plan.

What does it mean that this is an 'unfunded non-qualified deferred compensation plan'?

This means the plan is not funded by a separate trust or pool of assets. The contributions recorded in a participant's account represent a general, unsecured liability of AEP. In the event of the company's insolvency, participants are considered general unsecured creditors, and the plan's assets are subject to the claims of the company's creditors. It also implies the plan is not subject to certain protections under ERISA.

AEP 8-K: Material Agreements

Summary

This 8-K filing by American Electric Power Company, Inc. (AEP) details the amendment of its Supplemental Retirement Savings Plan, effective September 1, 2004. The primary change increases the eligible compensation limit for contributions to the plan from $1 million to $2 million. This amendment allows higher-earning employees to defer a greater portion of their compensation on a tax-deferred basis, potentially enhancing their retirement savings. The plan itself is a non-qualified deferred compensation arrangement designed to provide eligible employees with tax-deferred savings opportunities that are not available under the company's primary qualified retirement savings plan due to Internal Revenue Code limitations. The filing includes the amended and restated plan document, outlining details on participant and company contributions, investment options, distribution procedures, and the plan's unfunded, non-qualified nature.

Key Highlights

1AEP amended its Supplemental Retirement Savings Plan, effective September 1, 2004.
2The key amendment increases the eligible compensation limit for plan contributions from $1 million to $2 million.
3This change allows a larger portion of higher executive salaries to be deferred on a tax-advantaged basis.
4The plan is a non-qualified deferred compensation plan, meaning it is not subject to ERISA provisions and represents a general unsecured liability of the company.
5Company contributions are structured as 75% of participant contributions, up to a certain limit tied to overall compensation.
6The filing provides detailed provisions regarding participant elections, distribution options (lump-sum or installments), beneficiary designations, and claims procedures.

AMERICAN ELECTRIC POWER CO INC 8-K Report, Material Agreement (Sep 1, 2004)

Summary

Key Highlights

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