Exhibit 10.40.1



 







Exhibit 10.40.1




AMENDMENT TO

FEDERATED DEPARTMENT STORES, INC.

PROFIT SHARING 401(k) INVESTMENT PLAN




     This document (“this Amendment” or “the Amendment”) amends the Federated Department Stores,
Inc. Profit Sharing 401(k) Investment Plan (the “Plan”) in the manner and for the purposes that are
described below.



     Preamble



     1. Adoption and Effective Date of Amendment. This Amendment is adopted to reflect
certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”).
This Amendment is intended as good faith compliance with the requirements of EGTRRA that are
addressed herein and is to be construed in accordance with EGTRRA (and guidance issued thereunder).
Except as otherwise provided, this amendment shall be effective as of the first day of the Plan’s
first plan year beginning after December 31, 2001.



     2. Supersession of Inconsistent Provisions. This Amendment shall supersede the
provisions of the Plan to the extent those provisions are inconsistent with the provisions of this
Amendment.



     3. Definitions. Except as is otherwise provided in this Amendment or unless the
context otherwise requires, any terms that are capitalized in this Amendment and that are defined
in the Plan shall have the same meanings as they have under the Plan.



     Section A. Limitations on Benefits 



     1. Effective Date. This section A, and the Plan changes made under this section A,
shall be effective as of January 1, 2002 and for the Plan’s limitation years (as defined in Section
6A.1.2 of the Plan) ending after December 31, 2001.



     2. Plan Changes. In order to reflect the increase in the limitations of Section
415(c) of the Code permitted by EGTRRA, Section 6A.1.1 of the Plan is amended in its entirety to
read as follows:




     6A.1.1 General Rules. Subject to the other provisions of this Section
6A.1 and except to the extent permitted under Section 15.22 below and Section 414(v)
of the Code, but notwithstanding any other provision of the Plan to the contrary, in
no event shall the annual addition to a Participant’s accounts for any limitation
year exceed the lesser of:



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          (a) $40,000 (as adjusted for increases in the cost-of-living under Section
415(d) of the Code by the Secretary of the Treasury or his or her delegate for such
limitation year); or




          (b) 100% of the Participant’s compensation for such limitation year.




The part of the annual addition attributable to contributions to a defined benefit
plan for medical benefits under Code Section 401(h) or to contributions to a welfare
benefit fund for funding for post-retirement medical benefits under Code Section
419A(d) shall not be applied against the limit set forth in paragraph (b) above,
however.



     Section B. Increase in Compensation Limit 



     1. Effective Date. This section B, and the Plan changes made under this section B,
shall be effective as of January 1, 2002 and for Plan Years, and limitation years (as defined in
Section 6A.1.2 of the Plan), beginning after December 31, 2001.



     2. Plan Changes. In order to reflect the increase in the annual compensation limit of
Section 401(a)(17) of the Code permitted by EGTRRA, a new Section 15.19 reading as follows is added
to the Plan immediately after Plan Section 15.18:




     15.19 Increase in Compensation Limit for Periods Beginning After December
31, 2001.




          15.19.1 Increase in Limit. Notwithstanding any other provision of the
Plan to the contrary (and in lieu of any maximum annual compensation limit set forth
in any other provision of the Plan that by its terms or its context relates to the
requirements of Section 401(a)(17) of the Code), the annual compensation of each
Participant taken into account in determining allocations under the Plan for any
Plan Year beginning after December 31, 2001 shall not exceed $200,000. Annual
compensation means any compensation taken into account under the Plan during a Plan
Year or such other consecutive 12-month period over which compensation is otherwise
determined under the Plan (for purposes of this Section 15.19, a “determination
period”), including but not limited to Compensation (as defined in Section 1.8
above) for any determination period.




          15.19.2 Cost-of-Living Adjustment. The $200,000 limit on annual
compensation in Section 15.19.1 above shall be adjusted for cost-of-living increases
in accordance with Section 401(a)(17)(B) of the Code. The cost-of-



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living adjustment in effect for a calendar year applies to annual compensation
for the determination period that begins with or within such calendar year.



     Section C. Modification of Top Heavy Rules 



     1. Effective Date. This section C, and the Plan changes made under this section C,
shall be effective as of January 1, 2002 and apply for purposes of determining whether the Plan is
a top heavy plan under Section 416(g) of the Code for Plan Years beginning after December 31, 2001
and whether the Plan satisfies the minimum benefit requirements of Section 416(c) of the Code for
such years.



     2. Plan Changes. In order to reflect the modification of the top heavy rules of
Section 416 of the Code permitted by EGTRRA, Section 14 of the Plan is amended in its entirety to
read as follows:



SECTION 14



TOP HEAVY PROVISIONS





     14.1 Determination of Whether Plan Is Top Heavy. For purposes of this
Section 14, this Plan shall be considered a “Top Heavy Plan” for any Plan Year (for
purposes of this Section 14.1, the “subject Plan Year”) if, and only if, (1) this
Plan is an Aggregation Group Plan during at least part of the subject Plan Year, and
(2) the ratio of the total Present Value of all accrued benefits of Key Employees
under all Aggregation Group Plans to the total Present Value of all accrued benefits
of both Key Employees and Non-Key Employees under all Aggregation Group Plans equals
or exceeds 0.6. All calculations called for in clauses (1) and (2) above with
respect to this Plan and with respect to the subject Plan Year shall be made as of
this Plan’s Determination Date which is applicable to the subject Plan Year, and all
calculations called for under clause (2) above with respect to any Aggregation Group
Plan other than this Plan and with respect to the subject Plan Year shall be made as
of that plan’s Determination Date which is applicable to such plan’s plan year that
has its Determination Date fall within the same calendar year as the Determination
Date being used by this Plan for the subject Plan Year. For the purpose of this
Section 14, the following terms shall have the meanings hereinafter set forth:




          14.1.1 Aggregation Group Plan. “Aggregation Group Plan” refers, with
respect to any plan year of such plan, to a plan (1) which qualifies under Code
Section 401(a), (2) which is maintained by an Associated Employer, and (3) which
either includes a Key Employee as a participant (determined as of the Determination
Date applicable to such plan year) or allows another plan qualified under Code
Section 401(a), maintained by an Associated Employer, and so including at least one
Key Employee as a participant to meet the requirements of



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Section 401(a)(4) or Section 410(b) of the Code. In addition, if the Employer so
decides, any plan which meets clauses (1) and (2) but not (3) of the immediately
preceding sentence shall be treated as an “Aggregation Group Plan” with respect to
any plan year of such plan if the group of such plan and all other Aggregation Group
Plans will meet the requirements of Sections 401(a)(4) and 410(b) of the Code with
such plan being taken into account.




          14.1.2 Determination Date. The “Determination Date” which is
applicable to any plan year of an Aggregation Group Plan refers to the last day of
the immediately preceding plan year (except that, for the first plan year of such a
plan, the “Determination Date” applicable to such plan year shall be the last day of
such first plan year).




          14.1.3 Key Employee. With respect to any Aggregation Group Plan and as
of any Determination Date that applies to a plan year of such plan, a “Key Employee”
refers to a person who at any time during the plan year ending on the subject
Determination Date is:




               (a) An officer of an Associated Employer, provided such person receives
compensation from the Associated Employers of an amount greater than $130,000 (as
adjusted under Section 416(i) of the Code for plan years beginning after December
31, 2002) for the applicable plan year. For this purpose, no more than 50 employees
(or, if less, the greater of three or 10% of the employees of the Associated
Employers) shall be treated as officers;




               (b) A 5% or more owner of any Associated Employer; or




               (c) A 1% or more owner of any Associated Employer who receives compensation of
$150,000 or more from the Associated Employers for the applicable plan year.




For purposes of paragraphs (b) and (c) above, a person is considered to own 5% or
1%, as the case may be, of an Associated Employer if he or she owns (or is
considered as owning within the meaning of Code Section 318, except that
subparagraph (C) of Code Section 318(a)(2) shall be applied by substituting “5%” for
“50%”) at least 5% or 1%, as the case may be, of either the outstanding stock or the
voting power of all stock of the Associated Employer (or, if the Associated Employer
is not a corporation, at least 5% or 1%, as the case may be, of the capital or
profits interest in the Associated Employer). Further, for purposes of this entire
Section 14.1.3, the term “Key Employee” includes any person who is deceased as of
the subject Determination Date but who when alive had been a Key Employee at any
time during the plan year ending on the subject Determination Date, and any accrued
benefit payable to his or her beneficiary shall be deemed to be the accrued benefit
of such person.



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          14.1.4 Non-Key Employee. With respect to any Aggregation Group Plan
and as of any Determination Date that applies to a plan year of such plan, a
“Non-Key Employee” refers to a person who at any time during the plan year ending on
the subject Determination Date is an employee of the Employer or an Associated
Employer and who has never been considered a Key Employee as of such or any earlier
Determination Date. Further, for purposes of this Section 14.1.4, the term “Non-Key
Employee” includes any person who is deceased as of the subject Determination Date
and who when alive had been an employee of an Associated Employer at any time during
the plan year ending on the subject Determination Date, but had not been a Key
Employee as of the subject or any earlier Determination Date, and any accrued
benefit payable to his or her beneficiary shall be deemed to be the accrued benefit
of such person.




          14.1.5 Present Value of Accrued Benefits.




               (a) For any Aggregation Group Plan which is a defined benefit plan (as defined
in Code Section 414(j)), including such a plan which has been terminated, the
“Present Value” of a participant’s accrued benefit, as determined as of any
Determination Date, refers to the lump sum value (calculated as of the latest
Valuation Date which coincides with or precedes such Determination Date and in
accordance with the actuarial assumptions adopted under such defined benefit plan
for valuing lump sum forms of benefits for purposes of such plan’s top heavy
provisions which are in effect as of such Valuation Date) of the monthly retirement
or termination benefit which the participant had accrued under such plan to such
Valuation Date. For this purpose, such accrued monthly retirement or termination
benefit is calculated as if it was to first commence as of the first day of the
month next following the month the participant first attains his or her normal
retirement age under such plan (or, if such normal retirement age had already been
attained, as of the first day of the month next following the month in which occurs
such Valuation Date) and as if it was to be paid in the form of a single life
annuity. Further, the accrued benefit of any participant under such plan (other
than a participant who is a Key Employee) shall be determined under the method which
is used for accrual purposes for all defined benefit plans of the Associated
Employers (or, if there is no such method, as if such benefit accrued not more
rapidly than the slowest accrual rates permitted under the fractional rule of
Section 411(b)(1)(C) of the Code). In addition, the dollar amount of any
distributions made from the plan (including the value of any annuity contract
distributed from the plan) actually paid to such participant prior to the subject
Valuation Date but still within the plan year ending on the subject Determination
Date (or, when the distribution is made other than by reason of the participant’s
separation from service from the Associated Employers, his or her death, or his or
her disability, the five consecutive plan years ending on the subject Determination
Date) shall be added in calculating such “Present Value” of the participant’s
accrued benefit.



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               (b) For any Aggregation Group Plan which is a defined contribution plan (as
defined in Code Section 414(i)), including such a plan which has been terminated,
the “Present Value” of a participant’s accrued benefit, as determined as of any
Determination Date, refers to the sum of (1) the total of the participant’s account
balances under the plan (valued as of the latest Valuation Date which coincides with
or precedes such Determination Date), and (2) an adjustment for contributions due as
of such Determination Date. In the case of a profit sharing or stock bonus plan,
the adjustment in clause (2) above shall be the amount of the contributions, if any,
actually made after the subject Valuation Date but on or before such Determination
Date (and, in the case of the first plan year, any amounts contributed to the plan
after such Determination Date which are allocated as of a date in such first plan
year). In the case of a money purchase pension or target benefit plan, the
adjustment in clause (2) above shall be the amount of the contributions, if any,
which are either actually made or due to be made after the subject Valuation Date
but before the expiration of the period allowed for meeting minimum funding
requirements under Code Section 412 for the plan year which includes the subject
Determination Date. In addition, the value of any distributions made from the plan
(including the value of any annuity contract distributed from the plan) actually
paid to such participant prior to the subject Valuation Date but still within the
plan year ending on the subject Determination Date (or, when the distribution is
made other than by reason of the participant’s separation from service from the
Associated Employers, his or her death, or his or her disability, the five
consecutive plan years ending on the subject Determination Date) shall be added in
calculating such “Present Value” of the participant’s accrued benefit.




               (c) In the case of any rollover (as defined in the appropriate provisions of
the Code), or a direct plan-to-plan transfer, to or from a subject Aggregation Group
Plan, which rollover or transfer is both initiated by a participant and made between
a plan maintained by an Associated Employer and a plan maintained by an employer
other than an Associated Employer, (1) the Aggregation Group Plan, if it is the plan
from which the rollover or transfer is made, shall count the amount of the rollover
or transfer as a distribution made as of the date such amount is distributed by such
plan in determining the “Present Value” of the participant’s accrued benefit under
paragraph (a) or (b) above, as applicable, and (2) the Aggregation Group Plan, if it
is the plan to which the rollover or transfer is made, shall not so consider the
amount of the rollover or transfer as part of the participant’s accrued benefit in
determining such “Present Value” if such rollover or transfer was or is accepted
after December 31, 1983 and shall so consider such amount if such rollover or
transfer was accepted prior to January 1, 1984.




               (d) In the case of any rollover (as defined in the appropriate provisions of
the Code), or a direct plan-to-plan transfer, to or from a



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subject Aggregation Group Plan, which rollover or transfer is not described in
paragraph (c) above, (1) the subject Aggregation Group Plan, if it is the plan from
which the rollover or transfer is made, shall not consider the amount of the
rollover or transfer as part of the participant’s accrued benefit in determining the
“Present Value” thereof under paragraph (a) or (b) above, as applicable, and (2) the
subject Aggregation Group Plan, if it is the plan to which the rollover or transfer
is made, shall consider the amount of the rollover or transfer when made as part of
the participant’s accrued benefit in determining such “Present Value.”




               (e) As is noted in paragraphs (a) and (b) above, the “Present Value” of any
participant’s accrued benefit under any Aggregation Group Plan (that is either a
defined benefit plan or a defined contribution plan) as of any Determination Date
includes the value of any distribution from such a plan actually paid to such
participant prior to the last Valuation Date which coincides with or precedes such
Determination Date but still within the plan year ending on the subject
Determination Date. This rule shall also apply to any distribution under any
terminated defined benefit or defined contribution plan which, if it had not been
terminated, would have been required to be included as an Aggregation Group Plan.




               (f) Notwithstanding the foregoing provisions, the “Present Value” of a
participant’s accrued benefit under any Aggregation Group Plan (that is either a
defined benefit plan or a defined contribution plan) as of any Determination Date
shall be deemed to be zero if the participant has not performed services for any
Associated Employer at any time during the plan year ending on the subject
Determination Date.




          14.1.6 Valuation Date. A “Valuation Date” refers to: (1) in the case
of an Aggregation Group Plan that is a defined benefit plan (as defined in Code
Section 414(j)), the date as of which the plan actuary computes plan costs for
minimum funding requirements under Code Section 412 (except that, for an Aggregation
Group Plan that is a defined benefit plan which has terminated, a “Valuation Date”
shall be deemed to be the same as a Determination Date); and (2) in the case of an
Aggregation Group Plan that is a defined contribution plan (as defined in Code
Section 414(i)), the date as of which plan income, gains, and/or contributions are
allocated to plan accounts of participants.




          14.1.7 Compensation. For purposes hereof, a participant’s
“compensation” shall refer to his or her Compensation as defined in Section 1.8
above, as modified pursuant to the provisions of Section 15.19 below.




     14.2 Effect of Top Heavy Status on Vesting.




          14.2.1 For any Plan Year in which this Plan is considered a Top Heavy Plan,
each Participant who completes at least one Hour of Service in such



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year and who is not fully vested in any of his or her Accounts under Section 6.10
above shall be deemed fully vested in all such Accounts if he or she has completed
by the end of such year at least three years of Vesting Service.




          14.2.2 For any Plan Year in which this Plan is not considered a Top Heavy Plan,
the provisions of this Section 14.2 shall not be effective; except that, if the Plan
is not a Top Heavy Plan in a Plan Year after the Plan was considered a Top Heavy
Plan in the immediately preceding Plan Year, any change back to the appropriate
vesting schedule or provisions set forth in Section 6.10 above shall be considered
an amendment to the vesting schedule (effective and adopted as of the first day of
such new Plan Year) for purposes of Section 13.4.2 above.




     14.3 Effect of Top Heavy Status on Contributions.




          14.3.1 Subject to Sections 14.3.2 and 14.3.3 below, for any Plan Year in which
this Plan is considered a Top Heavy Plan, the amount of the employer contributions
and forfeitures allocated under all Aggregation Group Plans which are defined
contribution plans (as defined in Code Section 414(i)) for such Plan Year to the
accounts of a Participant who is a Non-Key Employee on the last day of such Plan
Year (excluding any contributions made on behalf of the Non-Key Employee by reason
of his or her election under an arrangement qualifying under Section 401(k) of the
Code but including any matching contributions within the meaning of Code Section
401(m)(4)(A) which are allocated to an account of the Non-Key Employee) must be at
least equal to the lesser of (1) 3% of the Participant’s compensation for such Plan
Year or (2) the largest allocation of contributions and forfeitures made for such
Plan Year to the accounts of a Participant who is a Key Employee as of the
Determination Date applicable to such Plan Year under all such Aggregation Group
Plans (measured as a percent of the Key Employee’s compensation for such Plan Year
and including both any contributions made on behalf of the Key Employee by reason of
his or her election under an arrangement qualifying under Section 401(k) of the Code
and any matching contributions within the meaning of Code Section 401(m)(4)(A) which
are allocated to an account of the Key Employee). To the extent necessary, and
regardless of the existence of current or accumulated profits, the Employer shall
make additional contributions to this Plan which are just allocable to the Accounts
of Participants who are Non-Key Employees so that the requirement set forth in the
immediately preceding sentence is met for the subject Plan Year.




          14.3.2 Notwithstanding the provisions of Section 14.3.1 above but subject to
the provisions of Section 14.3.3 below, in the case of any Non-Key Employee who
participates in both this Plan and another Aggregation Group Plan that is a defined
benefit plan (as defined in Code Section 414(j)) which is maintained by an
Associated Employer or in which an Associated Employer participates, the provisions
of Section 14.3.1 shall be inapplicable if the Associated Employer causes such
defined benefit plan to provide an accrued benefit (attributable only to



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employer contributions) for such Non-Key Employee which, if expressed as a single
life annuity commencing on the first day of the month next following the month in
which the Non-Key Employee attains his or her Normal Retirement Age, shall be equal
at least to the product of (1) 2% of the Non-Key Employee’s average annual
compensation for the five consecutive calendar years which produce the highest
result and (2) the Non-Key Employee’s years of service (up to but not exceeding ten
such years). For purposes of computing the product in the foregoing sentence: (1)
compensation received in any calendar year which began prior to January 1, 1984 and
in any calendar year which begins after the end of the last Plan Year in which the
Plan is considered a Top Heavy Plan shall all be disregarded; and (2) years of
service shall refer generally to years of Vesting Service except that years of
service for this purpose shall not include any period which began prior to January
1, 1984, any period which is not included at least in part in a Plan Year as of
which the Plan is considered a Top Heavy Plan, and any period which occurs during a
Plan Year when the Plan benefits (within the meaning of Section 410(b) of the Code)
no Key Employee or former Key Employee.




          14.3.3 Notwithstanding the foregoing provisions of Sections 14.3.1 and 14.3.2
above, such provisions shall not apply so as to cause any additional contribution or
benefit to be provided a Participant for a Plan Year under an Aggregation Group Plan
maintained by an Associated Employer or in which an Associated Employer participates
if (1) such Participant actively participates in an Aggregation Group Plan
maintained by an Associated Employer at a date in the applicable Plan Year which is
later than the latest date in such year on which he or she actively participates in
this Plan and (2) such other plan provides for the same contribution or benefit as
would otherwise be required under Sections 14.3.1 and 14.3.2 above for such Plan
Year.



     Section D. Direct Rollovers of Plan Distributions 



     1. Effective Date. This section D, and the Plan changes made under this section D,
shall be effective as of January 1, 2002 and apply to distributions made under the Plan after
December 31, 2001.



     2. Plan Changes. In order to reflect the modification of the direct rollover
requirements of Section 401(a)(31) of the Code as permitted by EGTRRA, Section 10.8 of the Plan is
amended in its entirety to read as follows:




     10.8 Direct Rollover Distributions.




          10.8.1 Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee’s election under this Section 10.8, a distributee may
elect, at the time and in the manner prescribed by the Committee, to have any
portion of an eligible rollover distribution otherwise payable to him



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paid directly to an eligible retirement plan specified by the distributee in a
direct rollover.




          10.8.2 For purposes of this Section 10.8, the following terms shall have the
meanings indicated below:




               (a) An “eligible rollover distribution” means, with respect to any distributee,
any distribution of all or any portion of the entire benefit otherwise payable under
the Plan to the distributee, except that an eligible rollover distribution does not
include: (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 ten years or more; (2) any distribution to the extent such distribution is
required to be made under Section 401(a)(9) of the Code; or (3) any distribution
that is made under the provisions of the Plan because of a hardship. For purposes
of this paragraph (a), a portion of a distribution shall not fail to be an eligible
rollover distribution merely because the portion consists of after-tax employee
contributions which are not includible in gross income; however, such portion may be
paid only to an individual retirement account or annuity described in Section 408(a)
or (b) of the Code or to a qualified defined contribution plan described in Section
401(a) or 403(a) of the Code that agrees to separately account for amounts so
transferred, including separately accounting for the portion of such distribution
which is includible in gross income and the portion of such distribution which is
not so includible.




               (b) An “eligible retirement plan” means, with respect to any distributee’s
eligible rollover distribution, an individual retirement account described in
Section 408(a) of the Code, an individual retirement annuity described in Section
408(b) of the Code, an annuity plan described in Section 403(a) of the Code, an
annuity contract described in Section 403(b) of the Code, an eligible plan under
Section 457(b) of the Code 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 and which agrees to separately account for amounts transferred into such plan
from this Plan, or a qualified trust described in Section 401(a) of the Code, that
accepts the distributee’s eligible rollover distribution. This definition of
eligible retirement plan shall also apply in the case of a distribution to a
surviving Spouse or to a Spouse or former Spouse who is the alternate payee under a
qualified domestic relation order, as defined in Section 206(d)(3) of ERISA and
Section 414(p) of the Code.




               (c) A “distributee” means a Participant. In addition, a Participant’s
surviving spouse, or a Participant’s Spouse or former Spouse who is the alternate
payee under a qualified domestic relations order (as defined in Section 206(d)(3) of
ERISA and Section 414(p) of the Code), is a distributee with



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regard to any interest of the Participant which becomes payable under the Plan to
such Spouse or former Spouse.




               (d) A “direct rollover” means, with respect to any distributee, a payment by
the Plan to an eligible retirement plan specified by the distributee.




          10.8.3 The Committee may prescribe reasonable rules in order to provide for the
Plan to meet the provisions of this Section 10.8. Any such rules shall comply with
the provisions of Code Section 401(a)(31) and any applicable Treasury regulations
which are issued with respect to the direct rollover requirements. For example,
subject to meeting the provisions of Code Section 401(a)(31) and applicable Treasury
regulations, the Committee may: (1) prescribe the specific manner in which a direct
rollover shall be made by the Plan, whether by wire transfer to the eligible
retirement plan, by mailing a check to the eligible retirement plan, by providing
the distributee a check made payable to the eligible retirement plan and directing
the distributee to deliver the check to the eligible retirement plan, and/or by some
other method; (2) prohibit any direct rollover of any eligible rollover
distributions payable during a calendar year to a distributee when the total of such
distributions is less than $200; or (3) refuse to make a direct rollover of an
eligible rollover distribution to more than one eligible retirement plan.



     Section E. Rollovers From Other Plans 



     1. Effective Date. This section E, and the Plan changes made under this section E,
shall be effective as of January 1, 2002 and apply to Rollover Contributions made to the Plan after
December 31, 2001.



     2. Plan Changes. In order to reflect EGTRRA’s modification of certain rules
permitting rollover contributions under the Code, the following changes are made to the Plan:




     A. Section 4.6 of the Plan is amended in its entirety to read as follows:




          4.6 Rollover Contributions. A Covered Employee may, whether or not he
or she is yet a Participant in the Plan under the provisions of Section 3 above,
cause any distribution applicable to him or her from another eligible plan (as
defined in Section 4.6.1 below) which he or she certifies is an eligible rollover
distribution (within the meaning of the Code) to be paid directly from such other
plan to this Plan pursuant to the terms of the Code, (1) provided that the Committee
receives a written notice from the plan administrator or issuer of such other plan
that the other plan has received a determination letter from the Internal Revenue
Service concluding that the other plan is qualified as an eligible plan under the
Code or that the other plan is intended to be an eligible plan and



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either is intending to obtain such determination letter or is not required under
applicable Internal Revenue Service rules or the Code to obtain such a determination
letter, and (2) provided that the Committee has no information which shows that such
payment is other than an eligible rollover contribution under the Code. Any such
payment to the Plan shall be referred to as a “Rollover Contribution” under the
Plan. In addition, the following provisions shall apply to the making of any
Rollover Contribution to the Plan:




               4.6.1 For purposes of this Section 4.6, an “eligible plan” means: (1) a
qualified plan described in Section 401(a) or 403(a) of the Code, including
after-tax employee contributions held thereunder; (2) an annuity contract described
in Section 403(b) of the Code, excluding after-tax employee contributions held
thereunder; and (3) an eligible plan under Section 457(b) of the Code 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.




               4.6.2 If a Covered Employee makes a Rollover Contribution to the Plan but is
not a Participant in the Plan under the provisions of Section 3 above, he or she
shall still be considered a Participant under the other provisions of the Plan to
the extent such other provisions concern the establishment of an Account to reflect
such contribution, the investment, crediting of Plan earnings and losses, loaning,
withdrawing, and distribution of such Account, and the administration of the Plan
with respect to such Account, but he or she shall not be considered a Participant
for any other purposes of the Plan until he or she qualifies as a Participant under
the provisions of Section 3 above.




               4.6.3 Further, subject to such administrative rules as may be adopted by the
Committee, a Rollover Contribution that is made by a Covered Employee to the Plan
from another eligible plan that is a qualified plan described in Section 401(a) of
the Code may include a note that reflects a loan that was previously made by the
other plan to the Covered Employee and that is still outstanding as of the date of
the Rollover Contribution, provided that all of the following conditions are met:




                    (a) The Committee receives information (e.g., a certification of the
plan administrator of the other plan) that permits it to reasonably conclude that
such loan was not previously included in the Covered Employee’s income for Federal
income tax purposes by reason of the provisions of Section 72(p) of the Code and
that such loan did not qualify as a prohibited transaction under Section 4975 of the
Code or Section 406 of ERISA by reason of the provisions of Section 4975(d)(1) of
the Code or Section 408(b)(1) of ERISA;




                    (b) The loan is secured by a portion of the amount of the Rollover Contribution
that would be sufficient security for the loan



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under the Plan and the Committee’s policies if such loan had been made under
the Plan at the time of the Rollover Contribution; and




                    (c) The only changes to the loan that need to be made by reason of its rollover
to the Plan and in order to administer the loan properly under the Plan are to
change the obligee under the loan to the Plan and, if necessary, to change minor
administrative procedures concerning the payment of the loan (e.g., to
change the dates on which payments under the loan will be paid to conform to the pay
dates that will apply to the Covered Employee while employed by the Employer, to
permit payments to be made by payroll deductions from the Covered Employee’s pay
from the Employer, to credit all payments on the loan to the Account to which the
Rollover Contribution of which the loan note is a part is allocated, and to invest
any payment on the loan to the Investment Fund or Funds in which such Account is
invested at the time of the payment).




If the Committee permits a loan note to be included as part of a Covered Employee’s
Rollover Contribution to the Plan under the provisions of this Section 4.6.3, then
it may make such changes to the loan that are described in paragraph (c) above and
otherwise administer the loan in accordance with the terms of the loan note. Such
loan shall not be deemed to be a loan made by the Plan under the terms of Section
6.9 below.




     B. Section 6.3 of the Plan is amended in its entirety to read as follows:




          6.3 Rollover Accounts and Allocation of Rollover Contribution Thereto.
The Committee shall establish and maintain a separate bookkeeping account, called
herein a “Rollover Account,” for each Participant who makes a Rollover Contribution
to the Plan. Except as otherwise provided in the Plan, the Committee shall allocate
to a Participant’s Rollover Account any Rollover Contribution made on or after the
Effective Amendment Date to the Trust on behalf of the Participant as soon as
administratively practical after it is contributed to the Trust. The Committee
shall keep records, to the extent necessary to administer this Plan properly under
the other provisions of the Plan and under the applicable provisions of the Code,
showing the portion of a Participant’s Rollover Account which is attributable to
each different type of contribution reflected in it, e.g., “pre-tax”
contributions to the extent such amounts were made under another plan on a “pre-tax”
basis (i.e., prior to the Participant being deemed in receipt of such
amounts for Federal income tax purposes) or “after-tax” contributions to the extent
such amounts were made under another plan on an “after-tax” basis (i.e.,
after the Participant was deemed in receipt of such amounts for Federal income tax
purposes).



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     Section F. Rollovers Disregarded in Involuntary Cash-Outs 



     1. Effective Date. This section F, and the Plan changes made under this section F,
shall be effective as of January 1, 2002 and apply to distributions made after December 31, 2001.



     2. Plan Changes. In order to take advantage of EGTRRA’s provisions that allow the
Plan to disregard Rollover Contributions made to the Plan in calculating the value of a
Participant’s benefit under the Plan for purposes of determining whether or not such benefit may be
involuntarily distributed when a distribution is otherwise permitted, a new Section 15.20 reading
as follows is added to the Plan immediately after Plan Section 15.19:




     15.20 Rollovers Disregarded in Involuntary Cash-Outs. For purposes of
Sections 8.1.3, 8A.3.4, 8A.8.6, 8B.7, 9.4.4, and 9A.7.1 of the Plan (which all
generally provide for the automatic lump sum distribution of a benefit that has a
value of $5,000 or less), the value of a benefit payable under the Plan to a
Participant or a beneficiary of a Participant shall be determined without regard to
that portion of the benefit that is attributable to Rollover Contributions of the
Participant to the Plan (and any Trust income or loss allocable thereto).



     Section G. Repeal of Multiple Use Test 



     1. Effective Date. This section G, and the Plan changes made under this section G,
shall be effective as of January 1, 2002 and for Plan Years beginning after December 31, 2001.



     2. Plan Changes. In order to eliminate under the Plan the so-called multiple use test
described in Treasury Regulation Section 1.401(m)-2, as is permitted by EGTRRA, a new Section 15.21
reading as follows is added to the Plan immediately after Plan Section 15.20:




     15.21 Multiple Use Test Eliminated. The multiple use test described in
Treasury Regulation Section 1.401(m)-2, as was carried into effect under the Plan in
Sections 5A.1.2 and 5A.4.4 above, shall not apply and shall be deemed ineffective
under the Plan for any Plan Year beginning after December 31, 2001.



     Section H. Increase in Salary Reduction Contribution Limit 



     1. Effective Date. This section H, and the Plan changes made under this section H,
shall be effective as of January 1, 2002 and for Plan Years beginning after December 31, 2001.



     2. Plan Changes. In order to increase the amount of regular Pre-Tax Savings
Contributions that can be made by Participants under the Plan, as is permitted by EGTRRA, Section
1.26.2 of the Plan is amended in its entirety to read as follows:



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     1.26.2 Also, in no event may a Participant’s Covered Compensation be reduced on
a pre-tax basis for any calendar year by more than $11,000 (or any higher amount to
which this figure is adjusted by the Secretary of the Treasury or his or her
delegate for such calendar year pursuant to Section 402(g) of the Code), except to
the extent permitted under Section 15.22 below and Section 414(v) of the Code.



     Section I. Catch-Up Contributions 



     1. Effective Date. This section I, and the Plan changes made under this section I,
shall be effective as of January 1, 2003 and for Plan Years beginning after December 31, 2002.



     2. Plan Changes. In order to permit so-called catch-up contributions to be made by a
Participant to the Plan in accordance with the provisions of Section 414(v) of the Code, as added
by EGTRRA, when the Participant is eligible to make such contributions, a new Section 15.22 reading
as follows is added to the Plan immediately after Plan Section 15.21:




     15.22 Catch-Up Contributions. Any Participant who is eligible to make
Pre-Tax Savings Contributions under this Plan and who will have attained age 50
before the close of a Plan Year shall be eligible to make catch-up contributions to
the Plan for such Plan Year in accordance with, and subject to the limitations of,
Section 414(v) of the Code. Such catch-up contributions shall not be taken into
account for purposes of any of the provisions of the Plan that implement the
required limitations of Sections 402(g) and 415 of the Code. Also, the Plan shall
not be treated as failing to satisfy any of the provisions of the Plan that
implement the requirements of Section 401(k)(3), 410(b), or 416 of the Code, as
applicable, by reason of the making of such catch-up contributions.



     Section J. Distributions Permitted Upon Separation From Employment 



     1. Effective Date. This section J, and the Plan changes made under this section J,
shall be effective as of January 1, 2002 and apply to any distributions made after December 31,
2001.



     2. Plan Changes. In order to permit the portion of any Participant’s benefit under
the Plan that is attributable to his or her Pre-Tax Savings Contributions to be distributed upon
the Participant’s separation from employment (in contrast to his or her separation from service),
as is allowed under EGTRRA, Section 10.9 of the Plan is amended in its entirety to read as follows:




     10.9 Distribution Restrictions. No withdrawal or distribution of any
portion of a Participant’s Accounts may be distributed unless such withdrawal or
distribution is authorized by another provision of this Plan. In addition, and
notwithstanding any other provision of this Plan to the contrary, in no event may
any



15









 







amount held under the Plan which is attributable to the Participant’s Pre-Tax
Savings Contributions under this Plan be distributed earlier than (1) the
Participant’s separation from employment from the Employer and the Affiliated
Employers, death, or Total Disability, (2) the Participant’s attainment of age
59-1/2, (3) the hardship of the Participant (determined under the other provisions
of the Plan), or (4) the event described in Section 401(k)(10) of the Code
(i.e., a lump sum payment made by reason of the termination of the Plan
without the establishment or maintenance of another defined contribution plan other
than an employee stock ownership plan).



     IN ORDER TO EFFECT THE FOREGOING PLAN CHANGES, Federated Department Stores, Inc., the Plan
sponsor, has caused its name to be subscribed to this Plan amendment this 23 day of December, 2002.



	 	 	 
	 

	 	FEDERATED DEPARTMENT STORES, INC.
	 
	 	 
	 

	 	By: /s/ David W. Clark
	 
	 	 
	 

	 	Title: SVP Human Resources







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