Note 1. Description of Plan
The following description of the Mayville Engineering Company, Inc. 401(k) Plan (the Plan) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
General
The Plan is a defined contribution plan covering substantially all employees of Mayville Engineering Company, Inc. (the Company). The Plan is intended to be a qualified retirement plan under the Internal Revenue Code (IRC) and the purpose is to enable eligible employees to save for retirement. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended.
COVID-19 Impact
The COVID-19 pandemic has had, and will continue to have, an impact on the Company’s business, financial condition, cash flows, results of operations, supply chain, and raw material availability, although the full extent is still uncertain. The future financial effects of the continuing COVID-19 pandemic are unknown due to many factors. These factors include uncertainty related to the Delta, Omicron, and other variants, uncertainty of the effectiveness of governmental actions to address the pandemic, including health, monetary and fiscal policies, the effect of elevated levels of sovereign and state debt, capital market disruptions, changes in demand and pricing, trade agreements, other geopolitical events, and the availability and volatility in the price of raw materials and other commodities. As a result, predicting the Company’s forecasted financial performance is difficult and subject to many assumptions. In addition, the impacts of the pandemic may result in greater volatility to Plan’s investments, including the Company’s stock.
Eligibility
Employees become eligible to participate in the Plan on the first entry date after an employee’s hire date. The entry dates of the Plan are January 1, April 1, July 1 and October 1.
Employees are also eligible to receive Company profit sharing contributions after they have completed 1,000 hours of service within a plan year and are employed by the Company on the last day of the Plan year. There are certain circumstances where the eligibility rules are waived including military leave, medical leave, retirement and death.
Contributions
Each year, participants may contribute up to 50% of pretax annual compensation, as defined by the Plan. Participants may elect to have any portion, or all of their contributions designated as Roth 401(k) contributions. Participants who have attained age 50 before the end of the Plan year are eligible to make catch-up contributions. Participants may also contribute amounts representing distributions from other qualified defined benefit or defined contribution plans (rollover). Participants direct the investment of their contributions into various investment options offered by the Plan. The Plan includes an auto-enrollment provision whereby all newly eligible employees are automatically enrolled in the Plan unless they affirmatively elect not to participate in the Plan. Automatically enrolled participants have their deferral rate set at 3% of eligible compensation and their contributions invested in a designated balanced fund until changed by the participant. On July 15, 2020, the Company signed an amendment, effective January 1, 2021, implementing an automatic 1% increase each year, for the following 3 years, capped at 6% for automatically enrolled participants.
The Company can contribute a discretionary contribution of Company stock. For a participant to be eligible for the Company contribution, the participant must work 1,000 hours during the year and be employed at the end of the year. The Company contributed a discretionary contribution of $2,057 in the form of Company stock for the year ended December 31, 2021. The Company contribution was funded in the subsequent year; thus, the Company stock contribution was recorded as a contribution receivable on the Statements of Net Assets Available for Benefits.
Contributions are subject to certain Internal Revenue Service (IRS) limitations.