Note 1 — Description of Plan
The following description of The Lincoln Electric Company Employee Savings Plan, as amended and restated (“the Plan”), provides only general information. Participants should refer to the Plan document for a complete description of the Plan’s provisions.
General
The Plan is a defined contribution plan covering certain employees of The Lincoln Electric Company and certain related entities (“the Company”), as defined by the Plan. The Plan provides that regular, full-time employees are eligible to make participant contributions immediately and all other eligible employees after completion of 1,000 hours in any year of service with the Company. Such employees will be eligible for Company contributions following six months of regular, full-time employment or 1,000 hours in any year of service with the Company. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
Effective January 1, 2022, the Company amended the Plan to receive residual assets from The Lincoln Electric Company Retirement Annuity Program (“RAP”), a frozen defined benefit plan of the Company, which was terminated effective as of the close of business on December 31, 2020. The residual assets from the RAP (following satisfaction of all RAP benefit liabilities) were deposited into a suspense account under the Plan in 2022 and will be used to fund certain employer contributions beginning in the 2022 Plan year and ending no later than the 2028 Plan year. On January 3, 2022, $68,023,914 of assets were deposited into the suspense account under the Plan and are reflected in the Statement of Changes in Net Assets Available for Benefits as Transfers from other qualified plans. During 2022, $11,118,817 from the suspense account was used to fund employer discretionary contributions and the balance in the account as of December 31, 2022 was $56,905,097.
In April, May, and June 2022, the Techalloy, Inc. Employee Savings Plan, the Tennessee Rand, Inc. 401(k) Plan, the Wayne Trail Technologies, Inc. 401(k) Profit Sharing Plan, and Coldwater Machine Company, LLC 401(k) Plan were merged into the Plan and were terminated. Total assets transferred to the Plan were $600,237, $12,073,035, $14,005,048, and $17,161,798, respectively, and are reflected in the Statement of Changes in Net Assets Available for Benefits as Transfers from other qualified plans.
Contributions and Vesting
Participant Contributions
Each year, participants may make pre-tax and after-tax Roth contributions to the Plan of 1% to 80% (in whole percentages) of their base pay and/or bonus pay up to the maximum amount as set by the Internal Revenue Service ("IRS") ($20,500 for 2022). Participants who are at least 50 years old by the end of the Plan year are allowed to make catch-up contributions for that year (up to an additional $6,500 for 2022). Participants are immediately vested in their contributions plus actual earnings thereon. Participants have the right to direct Fidelity Management Trust Company (“the Trustee”) to invest their contributions to the Plan in any of the investment funds available under the Plan in 1% increments or to invest contributions in a self-directed brokerage account. Eligible employees of The Lincoln Electric Company who become eligible participants in the Plan will be automatically enrolled in the Plan unless action is taken by the employee to elect not to contribute to the Plan. Participants enrolled under this approach will have 4% of their base salary contributed to the Plan.
The Plan is subject to certain non-discrimination standards under Section 401(k) of the Internal Revenue Code (“IRC”). In order to comply with these standards, tests are performed to provide a limit on the amount of benefits provided to highly compensated employees. As a result, certain participants who are defined as highly compensated employees may have a portion of their contributions refunded to them after the end of the plan year and are recorded as Corrective distributions payable in the Statements of Net Assets available for Benefits.