exv10w26






Exhibit (b) 10.26




SALLIE MAE SUPPLEMENTAL 401(k) SAVINGS PLAN




1. PURPOSE




     The Sallie Mae Supplemental 401(k) Savings Plan (the “Supplemental Savings Plan”) provides
retirement benefits to certain officers and key employees of the Corporation (defined below) who
are eligible to participate in a tax-qualified 401(k) savings plan sponsored by SLM Corporation or
any of its subsidiaries (a “Qualified 401(k) Plan”). The Supplemental Savings Plan is maintained
for the purpose of providing deferred compensation for a select group of management or highly
compensated employees within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of Title I of
the Employee Retirement Income Security Act of 1974, as amended. The Supplemental Savings Plan
will remain at all times an unfunded plan.



     With respect to amounts deferred hereunder that are subject to Section 409A of the Code, as
amended, and any regulations and other official guidance, applicable provisions of the Supplemental
Savings Plan document shall be interpreted to permit the deferral of compensation in accordance
with Code Section 409A, and any provision that would conflict with such requirements shall not be
valid or enforceable.



2. DEFINITIONS




     2.1 “Corporation” means SLM Corporation and its subsidiaries or any other person, firm or
corporation that may succeed to the business of SLM Corporation by merger, consolidation or
otherwise, and which, by appropriate action, adopts the Supplemental Savings Plan.



     2.2 “Eligible Pay” means an Eligible Employee’s (as defined in Section 4.1) base salary earned
(and not deferred under a non-qualified deferred compensation program) during a calendar year in
excess of the limit set forth in section 401(a)(17) of the Internal Revenue Code (the “Code”),
currently $245,000, except that beginning with the first payroll period in which (i) an Eligible
Employee’s contributions to a Qualified 401(k) Plan are limited by Section 401(a)(17) of the Code
or (ii) after which the Eligible Employee is no longer (or not) eligible to accrue pay credits
under the Corporation’s qualified defined benefit pension plan program (the Sallie Mae Cash Account
Retirement Plan), Eligible Pay means base salary, bonus and commissions earned (and not deferred
under a non-qualified deferred compensation program) and certain other compensation as determined
by the Administrator during a calendar year in excess of the limit set forth in Section 401(a)(17)
of the Code, up to $500,000 over the limit set forth in section 401(a)(17) of the Code.



     2.3 “Employee” means any employee of the Corporation or a subsidiary of the Corporation who
participates in a Qualified 401(k) Plan in which he or she is eligible to participate.



     2.4 “Participant” means an employee who has a Supplemental Savings Plan Account, as defined in
Section 4.2.



     2.5 “Termination of Employment” or “Terminates Employment” means a Participant’s termination
of employment with the Corporation or other separation from service as described in Code Section
409A and the regulations thereunder.



3. EFFECTIVE DATE




     The original effective date of the Supplemental Savings Plan, originally named the
Supplemental SLMA Employees’ Thrift & Savings Plan, was January 1, 1983. The Supplemental Savings
Plan was amended and restated effective as of January 1, 1987 and again effective as of January 1,
1989. The Supplemental Savings Plan was renamed the Supplemental 401(k) Savings Plan and amended
February 28, 1999 and again July 1, 2004. This current version of the Supplemental Savings Plan is
restated effective January 1, 2009.



 









 





4. ELIGIBILITY AND PARTICIPATION 




     4.1 Employees who are participants in a Qualified 401(k) Plan and whose contributions, or
contributions on their behalf, to such Qualified 401(k) Plan are limited as a result of the
limitations imposed by Code Section 401(a)(17) and further, who are designated by the CEO or senior
human resources officer of the Corporation, will be eligible to participate in the Supplemental
Savings Plan (“Eligible Employees”).



     4.2 Eligible Employees will be so advised and an account will be established in their names on
the books of the Corporation (a “Supplemental Savings Plan Account”).



5. PLAN BENEFITS




     Benefits provided under this Supplemental Savings Plan are hypothetical bookkeeping entries or
credits allocated to an Eligible Employee’s Supplemental Savings Plan Account. Four types of
credits may be allocated to a Supplemental Savings Plan Account: a Deferred Pay Credit, an Employer
Matching Contribution Credit, an Employer 2 Percent Core Contribution Credit, and an Investment
Credit. The amount and source of each type of credit is described below. Except as provided in
Section 5.3, each of the types of credits will be allocated to a Supplemental Savings Plan Account
beginning no sooner than with the payroll period during or after the payroll period in which the
Eligible Employee’s Eligible Pay exceeds the IRS limit.



     5.1 Deferred Pay Credit: A Deferred Pay Credit will be credited by the Corporation in an
amount equal to an Eligible Employee’s Eligible Pay times an amount elected by the Participant not
greater than six (6) percent (five (5) percent for Eligible Employees who commence employment with
the Corporation on or after January 1, 2008); this deferral percentage must be equal to a whole
percent.



     5.2 Employer Matching Contribution Credit: A Participant shall be eligible to receive an
Employer Matching Contribution Credit beginning with the first pay period coincident with the date
the Participant completes a twelve month period of service. The Employer Matching Contribution
Credit will be credited by the Corporation in an amount equal to each dollar of a Deferred Pay
Credit credited to a Supplemental Savings Plan Account. In addition, for any Eligible Employee who
is a participant in a qualified savings plan maintained by the Corporation other than the Sallie
Mae 401(k) Savings Plan, an Employer Matching Contribution Credit will be credited by the
Corporation in an amount equal to the maximum employer matching contribution that would have been
credited under the Sallie Mae 401(k) Savings Plan less the employer matching contribution that was
credited under the qualified savings plan in which the Eligible Employee participates (“Match True
Up”).



     5.3 Employer 2 Percent Core Contribution Credit: Beginning on or after the date on which an
Eligible Employee is no longer (or not) eligible to accrue pay credits under the Corporation’s
qualified defined benefit pension plan program, the Sallie Mae Cash Account Retirement Plan, an
Employer 2 Percent Core Contribution Credit will be credited by the Corporation to the Eligible
Employee’s Supplemental Savings Plan Account in an amount equal to an Eligible Employee’s Eligible
Pay times two (2) percent. In addition, any Eligible Employee who is a participant in the Sallie
Mae 401(k) Retirement Savings Plan will be credited with an Employer 2 Percent Core Contribution
Credit to the Eligible Employee’s Supplemental Savings Plan Account. Notwithstanding the
foregoing, the Supplemental Savings Plan Account of an Eligible Employee who commences employment
with the Corporation on or after January 1, 2008 shall not be credited with Employer 2 Percent Core
Contribution Credits as otherwise provided herein.



     5.4 Investment Credits: At the same times as allowed under the Qualified 401(k) Plan, and
subject to the same rules, a Participant may request that his Supplemental Savings Plan Account be
deemed to be credited for these purposes to the core investment funds then offered under the
Qualified 401(k) Plan in accordance with the Participant’s specific direction. In such event, the
Participant’s directions for the “investment” of his Supplemental Savings Plan Account will be
subject to restrictions similar to those on investment and reinvestment that apply under the
Qualified 401(k) Plan. The Corporation may refuse to follow a Participant’s “investment” direction
on a prospective basis or refuse to continue to make the Investment Credits based on the investment
performance of the Qualified 401(k) Plan Account. In no event will amounts credited to the
Participant’s Supplemental Savings Plan Account be eligible for loans. Investment Credits will be
made until the Supplemental Savings Plan Account is fully distributed to the Participant. A
Participant’s Supplemental Savings Plan Account will initially be automatically deemed to be
credited with Investment Credits based on the performance of the core investment selected by the
Participant.



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     Credits will be allocated to a Supplemental Savings Plan Account at the same time that such
amounts would have been credited under the Qualified 401(k) Plan.



6. VESTING




     A Participant will at all times be fully vested in Deferred Pay Credits and Employer Matching
Contributions Credits (including the Match True Up portion). Effective on and after July 1, 2004,
a Participant will be vested in Employer 2 Percent Core Contribution Credits upon the completion of
one (1) Year of Vesting Service, as defined in the Qualified 401(k) Plan. Employer 2 Percent Core
Contributions Credits will become vested over a period of five years. A Participant will be vested
in Investment Credits at the same time and in the same manner that corresponds to his vesting
percentage under each of the three (3) Credits described in this section.



7. DISTRIBUTIONS




     7.1 Distribution of the vested amounts in a Participant’s Supplemental Savings Plan Account
will be made as follows. Effective on and after January 1, 2005, in the first year in which a
Participant becomes eligible to participate in the Supplemental Savings Plan, the Participant must
make an election with respect to the form and timing of payment of his benefit under the
Supplemental Savings Plan, provided the election is made within 30 days after the date the
Participant becomes a Participant in the Supplemental Savings Plan and in a manner acceptable to
the Corporation. In the case of all other Participants, including any new Participant who fails to
make an election within the 30-day period described above, the Participant shall make an election
in a manner acceptable to the Corporation designating the specific time and manner of distribution
of his Supplemental Savings Plan Account by filing the form with the Corporation by a date
established by the Corporation. In the event a Participant fails to make a distribution election,
he shall receive his benefit in a single lump sum payment as soon as practicable following the
first day of the seventh month following the Participant’s Termination of Employment. An election
to change the time and manner of payment of amounts credited to a Participant’s Supplemental
Savings Plan Account and earnings credited to such amounts: 1) must delay distribution of such
amounts for at least 5 years beyond the original distribution date; 2) must be made at least 12
months before the original distribution date; and 3) will not be effective until 12 months after
the new election. Notwithstanding the foregoing, and in accordance with Code Section 409A and any
guidance issued thereunder, (I) a Participant may make an election to change the time and manner of
payment of amounts subject to 409A on or before December 31, 2006, provided that the change in
election (1) is for amounts not otherwise payable in 2006, and (2) does not cause an amount to be
paid from a Participant’s Supplemental Savings Plan Account in 2006; and (II) a Participant may
make an election to change the time and manner of payment of amounts subject to 409A on or before
December 31, 2007, provided that if any such election is made during the calendar year ending on
December 31, 2007, the change in election (1) is for amounts not otherwise payable in 2007, and
(2) does not cause an amount to be paid from a Participant’s Supplemental Savings Plan Account in
2007.



     If a Participant Terminates Employment and is reemployed by the Corporation in the same
calendar year, and before a distribution of the Participant’s Supplemental Savings Plan Account has
been made, the Participant’s election as to the time and manner of payment of his Supplemental
Savings Plan Account in effect on his date of Termination of Employment will be in effect as of the
date he commences reemployment with the Corporation, and can only be modified as provided herein,
provided that in no event will payment be made or commence any earlier than the date as of which
the Participant Terminates Employment with the Corporation.



     Notwithstanding the foregoing, any distribution made to a Participant as a result of the
Participant’s Termination of Employment may not be made earlier than the first day of the seventh
month following the Participant’s date of Termination of Employment.



     7.2 Distributions will be in the form of cash and can be paid in one (1) lump sum payment or
spread out over a maximum of ten (10) annual installments.



     7.3 Distribution of a Participant’s Supplemental Savings Plan Account balance will not be
accelerated upon the occurrence of a Change in Control. For purposes of this Section 7.3, a Change
in Control means a change in



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the ownership or effective control of the Corporation or in the ownership of a substantial
portion of the assets of the Corporation, as determined in accordance with the requirements of Code
Section 409A.



     7.4 In the event of a substantial, unforeseen financial hardship, a Participant, or if
applicable, a beneficiary who succeeds to the Participant’s interest in the vested Supplemental
Savings Plan Account following the Participant’s death, may submit to the Administrator a request
for an early distribution. Such request will be in writing and will advise the Administrator of the
circumstances of the hardship. Should the Administrator agree, such an early distribution will be
made as soon as practicable after the Supplemental Savings Plan Account valuation date immediately
following the date on which the Administrator agreed to the early distribution. For these purposes,
the value of the vested portion of the Participant’s Supplemental Savings Plan Account will be
determined as of the valuation date specified above. Any part of the Participant’s Supplemental
Savings Plan Account that is vested and that is not distributed under this early distribution
provision will be distributed in accordance with the general distribution rule in this Plan.



     For purposes of this Section 7.4, a substantial unforeseen financial hardship means a severe
financial hardship to the Participant resulting from an illness or accident of the Participant, the
Participant’s spouse, the Participant’s beneficiary, or of a Participant’s dependent (as defined in
Code Section 152, without regard to Code Section 152(b)(1), (b)(2), and (d)(1)(B)); 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 insurance, for example, not as a result of a natural disaster); or
similar extraordinary and unforeseeable circumstances arising as a result of events beyond the
control of the Participant. Examples of events that may constitute a substantial unforeseen
financial hardship include the imminent foreclosure of or eviction from the Participant’s primary
residence; the need to pay for medical expenses, including non-refundable deductibles, as well as
for the costs of prescription drug medication; and the need to pay for the funeral expenses of the
Participant’s spouse, the Participant’s beneficiary, or the Participant’s dependent (as defined in
Code Section 152, without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)). Whether a
Participant is faced with a substantial unforeseen financial hardship will be determined based on
the relevant facts and circumstances of each case, but, in any case, a distribution on account of a
substantial unforeseen financial hardship may not be made to the extent that such emergency is or
may be relieved: (i) through reimbursement or compensation by available insurance or otherwise,
(ii) by liquidation of the Participant’s assets, to the extent the liquidation of such assets would
not itself cause severe financial hardship or (iii) by cessation of deferrals under the Plan.



     The amount available for distribution of amounts deferred under the Plan on account of a
substantial unforeseen financial hardship shall be limited to the amount reasonably necessary to
satisfy the emergency need (which may include amounts necessary to pay any Federal, state, local,
or foreign income taxes or penalties reasonably anticipated to result from the distribution), and
shall be determined in accordance with Code Section 409A and the regulations thereunder. In all
events, distributions due to a substantial unforeseen financial hardship shall be made solely in
accordance with the provisions of Code Section 409A and related official guidance.



     7.5 Payment will be made to the Participant, or in the event of his death, his beneficiary. In
no event may the Participant or, if applicable, the beneficiary, elect to defer receipt of payment
under this Supplemental Savings Plan once such payment is due. Additionally, except as provided in
Section 7.4 above, no amounts credited to a Supplemental Savings Plan Account will be subject to
withdrawal while the Participant is employed by the Corporation. Amounts payable under the
Supplemental Savings Plan will be reduced by all amounts required to be withheld under appropriate
State or Federal law.



     7.6 For purposes of this Supplemental Savings Plan, the Participant’s beneficiary will be
deemed to be the same person(s) as designated by the Participant under the Qualified 401(k) Plan
unless the Participant elects otherwise by designating a different person or persons on such form
and in such manner as the Administrator may specify.



     7.7 Unless expressly provided, no amounts payable under the Supplemental Savings Plan will be
deemed to be compensation for purposes of computing benefits payable under any other plan of
compensation or benefit by the Corporation.



     8. SOURCE OF PAYMENT



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     All benefits under the Supplemental Savings Plan will be paid from the general assets of the
Corporation, and no special or separate fund will be established or other segregation of assets
made to assure such payments. Nothing contained in the Supplemental Savings Plan will create a
trust of any kind. In the event that any Participant or other person acquires a right to receive
payments from the Corporation under the Supplemental Savings Plan, such right will be no greater
than the right of any unsecured general creditor of the Corporation.



9. PLAN ADMINISTRATION




     The Supplemental Savings Plan will be administered by the senior human resources officer of
the Corporation (the “Administrator”), who will have full power, discretion and authority to
interpret, construe and administer the Supplemental Savings Plan and any part thereof, and the
Administrator’s interpretation and construction hereof, and actions thereunder, will be binding on
all persons for all purposes. The Administrator may employ legal counsel, consultants, actuaries
and agents as it may deem desirable in the administration of the Supplemental Savings Plan and may
rely on the opinion of such counsel or the computations of such consultants. Except as otherwise
provided by law, the Administrator will not incur any liability whatsoever on account of any matter
connected with or related to the Supplemental Savings Plan or the administration of the
Supplemental Savings Plan, unless the Administrator has acted in bad faith, or has willfully
neglected his duties, in respect of the Supplemental Savings Plan.



10. INTERESTS NOT TRANSFERABLE




     The interest of any Participant, the Participant’s spouse or the Participant’s beneficiary or
beneficiaries under the Supplemental Savings Plan is not subject to the claims of creditors and may
not be voluntarily or involuntarily sold, transferred, assigned, alienated or encumbered.



11. AMENDMENT AND TERMINATION




     The Supplemental Savings Plan may at any time be amended, suspended or terminated, in whole or
in part, by the Corporation. No such action will adversely affect the contractual promise of the
Corporation to pay to a Participant amounts credited under the Supplemental Savings Plan as of the
date of such action, as determined by the Administrator. Notwithstanding the foregoing, the
Supplemental Savings Plan may at any time be amended in such a way as is necessary to ensure that
the requirements of the Internal Revenue Code are satisfied so that the qualified status of the
Qualified 401(k) Plan is preserved. Further, in no event shall any amendment, modification or
termination be made in a manner that is inconsistent with the requirements under Code Section 409A.



12. LIMITATION OF RESPONSIBILITY




     12.1 Neither the establishment of the Supplemental Savings Plan, any modifications thereof,
nor the payment of any amounts under the Supplemental Savings Plan will be construed as giving to
any employee or other person any legal or equitable right against the Corporation, the Board of
Directors of the Corporation, the Administrator, or any officer or employee thereof, except as
herein provided.



     12.2 Nothing in the Supplemental Savings Plan will confer upon any employee of the Corporation
any right to continued employment, or interfere with the right of the Corporation to terminate his
or her employment at any time, for any reason.



13. CLAIMS FOR BENEFITS UNDER THIS PLAN




     13.1 In general, distributions under the Supplemental Savings Plan are automatic and no claim
for benefits need be filed. However, a Participant may submit a claim for benefits under this
Supplemental Savings Plan in writing to the Administrator. If such claim for benefits is wholly or
partially denied, the Administrator will, within a reasonable period of time, but no later than 90
days after receipt of the written claim, notify the Participant of the denial of the claim. Such
notice of denial: (1) will be in writing, (2) will be written in a manner calculated to be
understood by the



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Participant, and (3) will contain (a) the specific reason or reasons for denial of the claim;
(b) a specific reference to the pertinent Supplemental Savings Plan provisions upon which the
denial is based; (c) a description of any additional material or information necessary for the
Participant to perfect the claim; and (d) an explanation of the Supplemental Savings Plan’s claims
review procedure. This 90-day period may be extended if circumstances require additional time, but
in no event will the extension period be more than 90 days. The Participant will be notified of the
extension before the end of the initial 90-day period.



     13.2 Within 60 days of the Participant’s receipt of the written notice of denial of the claim,
or such later time as will be deemed reasonable under the circumstances, or if the claim has not
been granted within a reasonable period of time, the Participant may file a written request with
the Administrator asking that it conduct a full and fair review of the denial of the Participant’s
claim for benefits. Such review may include the holding of a hearing if deemed necessary by the
reviewing party. In connection with the Participant’s appeal of the denial of his benefit, the
Participant may review pertinent documents and may submit issues and comments in writing.



     13.3 The Administrator will deliver to the Participant a written decision on the claim
promptly, but not later than 60 days after the receipt of the Participants request for review,
except that if there are special circumstances (such as the need to hold a hearing) which require
an extension of time for processing, the 60-day period will be extended to 120 days. Such decision
will: (1) be written in a manner calculated to be understood by the Participant, (2) include
specific reasons for the decision, and (3) contain specific references to the pertinent Plan
provisions upon which the decision is based.



14. MISCELLANEOUS




     14.1 Facility of Payment. If it will be found that (a) a person entitled to receive
any payment under the Plan is physically or mentally incompetent to receive such payment and to
give a valid release therefore, and (b) another person or an institution is then maintaining or has
custody of such person, and no guardian, administrator, or other representative of the estate of
such person has been duly appointed by a court of competent jurisdiction, the payment may be made
to such other person or institution referred to in (b) above, and the release of such other person
or institution will be a valid and complete discharge for the payment.



     14.2 Notice of Address. Each person entitled to benefits under the Plan must file with
the Administrator, in writing, his mailing address and each change of mailing address. Any
communication, statement, or notice addressed to such person at such address will be deemed
sufficient for all purposes of the Plan, and there will be no obligation on the part of the
Corporation or the Administrator to search for or to ascertain the location of such person.



     14.3 Data. Each person entitled to benefits under the Plan must furnish to the
Administrator such documents, evidence, or other information as the Administrator considers
necessary or desirable for the purposes of administering the Plan or to protect the Plan. The
Administrator will be entitled to rely on representations made by Participants, spouses and
beneficiaries with respect to age, marital status and other personal facts, unless it knows said
representations are false.



     14.4 Tax Determinations. Notwithstanding any other provision to the contrary herein,
in the event of a determination, as defined in section 1313(a) of the Internal Revenue Code, that
any Participant is subject to Federal income taxation on amounts deferred under this Plan, the
amounts that are includable in the Participant’s federal gross income will be distributed to such
Participant upon the receipt by the Corporation of notice of such determination. Subject to the
requirements of Code Section 409A and any guidance issued thereunder, the Corporation may make such
provisions and take such action as it may deem necessary or appropriate for the withholding of any
taxes which the Corporation is required by any law or regulation of any governmental authority,
whether Federal, state or local, to withhold in connection with any benefits under the Supplemental
Savings Plan, including, but not limited to, the withholding of appropriate sums from any amount
otherwise payable to the Participant (or his beneficiary). Each Participant, however, shall be
responsible for the payment of all individual tax liabilities relating to any such benefits.




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