How You Earn Benefits

All Retirement Plan funds are held "in trust" for the exclusive benefit of all participants and their beneficiary(ies). The Retirement Plan is different from the 401(k) Savings Plan (which is a defined contribution plan) in that the plan trustee does not actually establish a separate account for you under the plan. Rather, a "notional" recordkeeping account is established in your name that represents the value of your cash balance benefit. Technically, you don't "own" this notional recordkeeping account. However, when you leave JPMorgan Chase, you'll be eligible to receive a benefit based upon the value of your cash balance account from the trust, if you are vested.

When you begin participating in the Retirement Plan, the company will set up a notional recordkeeping cash balance account in your name to track the growth of your benefit. Your benefit grows each month through pay credits and interest credits made to this account.

For each month you work for JPMorgan Chase or a subsidiary that has adopted the plan and are a plan participant, you will receive a pay credit to your cash balance account equal to a percentage of your benefits pay up to the annual legal compensation limit. (Please see "Important Terms" for the definition of "Benefits Pay.") This limit is $230,000 for 2008, and is subject to change periodically.

Your pay credit percentage is based on your completed years of pay credit service as the chart below shows. For example, if you have completed five years of pay credit service and your monthly benefits pay is $3,000, your pay credit for the month would be $120, or 4% of benefits pay.


Determining Pay Credits Based on Years of Pay Credit Service
If you have completed this many years of pay credit service...	Your pay credit percentage for the month is...
1–4	3%
5–9	4%
10–14	5%
15–19	6%
20–24	7.5%
25 or more	9%

You become eligible for an increase in the percentage used to determine pay credits on the first day of the month in which your service increases. For example, if you were hired in June 2004, your pay credit percentage would increase from 3% to 4% beginning June 1, 2009, when you have completed five years of pay credit service.

IMPORTANT NOTE: If you were a participant in a heritage retirement plan on December 31, 2004, your pay credit percentage will not be less than the pay credit percentage you were receiving on that date. You'll continue to accrue pay credits at that higher level, until the schedule above provides a greater percentage.

Depending on your particular employment history, a different pay credit schedule may apply. If you terminate employment and are subsequently rehired, your eligibility for alternate pay credit percentages or schedules will generally not be reinstated. Please see "Appendices" for more information on the provisions described in this Important Note.

Please see "If Your Situation Changes" for special rules regarding the level of pay credits you are entitled to if you are receiving long-term disability (LTD) benefits under the JPMorgan Chase LTD Plan.

Your cash balance account also receives interest credits each month based on your account balance at the end of the previous month and the applicable interest credit rate. For example, interest credits allocated as of June 30 would be calculated by multiplying your account balance on May 31 by the monthly interest credit rate.

The annual interest credit rate for any year is currently based on the yield of the average one-year Treasury rate for the month of October of the prior calendar year, plus 1%, with a minimum interest crediting rate of 4.5%. Based on this formula, the interest credit rate for 2008 is 5.10%. The monthly interest credit rate is equal to 1/12th of the annual interest credit rate.

Please Note: Your projections may be higher or lower than the actual benefit you receive. This difference may be due to any number of factors, including your age, service, the benefits pay used for the projection, the payment option you elect, or future changes to the plan. Projections may also vary because the actual interest rates differ from the projected interest rates used to calculate interest credits and/or to convert the account balance into an annuity form of payment. These factors will change each year based on market interest rates and IRS requirements and cannot be known until your final benefit is calculated. Certain grandfathered and minimum benefits may not be reflected in your projections.

Vesting means you have a non-forfeitable right to the value of your plan account. In general, you become 100% vested in the value of your Retirement Plan account after completing three years of total service. (Please see "Important Terms" for the definition of "Total Service" under the Retirement Plan.)

If your employment with JPMorgan Chase ends before you are fully vested, your cash balance account will be forfeited. If you are later rehired, your forfeited balance may be restored subject to the plan's break in service rules. These rules are described in "If Your Situation Changes."

An unfunded, non-qualified plan that JPMorgan Chase provides for eligible participants. Because benefits under the Retirement Plan cannot be based on benefits pay in excess of the legal limit under the Internal Revenue Code (IRC) ($230,000 in 2008), the Excess Retirement Plan provides pay and interest credits on benefits pay of up to $1 million less the legal limit for that calendar year.

The Excess Retirement Plan benefit will be distributed (less applicable tax withholding) in the year following termination. For individuals leaving the firm between January 1 and June 30, payment will be made in January of the year following termination. For individuals leaving the firm between July 1 and December 31, payment will be made in July of the year following termination. Benefits from a non-qualified plan cannot be "rolled over" into another tax-qualified retirement plan or an IRA.