457(b) Planthe Duke457(b) Deferred

Compensation Plan

Plan Today Enjoy Tomorrow

457(b) PlanSAVE MOREFOR RETIREMENTThrough Your 457(b)Deferred Compensation Plan

Duke’s Deferred Compensation Plan canprovide you with an excellent opportunityto significantly increase your retirementsavings. Deferred compensation plansenable you to set aside a portion of yoursalary on a before-tax basis. Amountsyou defer plus earnings are not taxablefor federal or state income tax purposes,until the funds are withdrawn, orotherwise made available by the plan.

Each year, your contribution amountis limited to a maximum dollar amountspecified by the Internal RevenueService. Please check the RetirementManager web site at www.hr.benefits.edu/benefits/retirementmanager for themaximum contribution limit for thisyear. This amount is in addition to themaximum contribution you and Dukecontribute to the 403(b) plan. In orderto participate in the 457(b) plan, youmust select the maximum programoption for the 403(b) plan.

Highlights of the 457(b)Deferred Compensation Plan

Investment OptionsYou have a wide range of investmentoptions available to you throughAIG VALIC, Fidelity, TIAA-CREF andVanguard.

Withdrawal/DistributionsAssets are eligible for distribution whenyou leave employment, retire, or uponyour death (benefits will be paid to yourbeneficiary). Distribution options offeredunder the plan are annuities, lump sum,systematic withdrawals or minimumdistribution option (MDO). You must electa distribution option when you enroll in theplan. However, the distribution option canbe changed as often as you like as long as itis done within 60 days from the time youseparate from service. All distributions willbe taxed as normal income.

EnrollmentYou can enroll in the plan upon eligibility.Elections for deferrals must be made in themonth prior to the month the compensationis earned. (For example: deferrals electedin March will affect the April paycheck).Enrollment instructions are provided onpage 6.

457(b) Plan Legal RequirementsEligible 457(b) plans covering employees oftax-exempt (non-governmental) employersmust be unfunded. Since contributions aredeferred compensation, all assets under theplan remain part of Duke’s general assetsand are subject to the claims of its generalcreditors.

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Q: What is a 457(b) plan?

A: A 457(b) plan is a non-qualified tax-deferredcompensation plan that works very much likeother retirement plans, such as the 403(b)Faculty and Staff Retirement Plan.

Q: How does a 457(b) plan work?

A: Employees set aside money for retirement on apre-tax basis through a deferred compensationagreement with the employer. Under thisarrangement, the employee agrees to take a reductionin salary. The money reduced is directed into aninvestment company offered by the employer. The457(b) contributions grow tax deferred untilwithdrawal at retirement or termination ofemployment. The right to direct investments ofthe plan contributions and the right to designatea beneficiary are granted to plan participants.

However, assets in the plan remain part of Duke’sgeneral assets until they are distributed and aresubject to the claims of its general creditors.

Q: Who is eligible to participate?

A: Faculty and staff of Duke University or DukeUniversity Health System whose annualizedcompensation equals or exceeds 150% of the SocialSecurity taxable wage base are eligible. The applicableannual compensation for this year is available onthe Duke Retirement Manager web site atwww.hr.duke.edu/benefits/retirementmanager.Faculty and staff are eligible only if they haveenrolled in the Faculty and Staff Retirement Planand elected to maximize their 403(b) electivedeferrals through the maximum program option.

Q: How do I enroll in the plan?

A: You can enroll in the 457(b) Plan throughthe Duke Retirement Manager web site atwww.hr.duke.edu/benefits/retirementmanager.Detailed enrollment instructions are available onpage 6 in this brochure.

Q: How much can I contribute?

A: Each year, your contributions are limited to amaximum dollar amount specified by the InternalRevenue Service. You can find the amount forthis year on the Retirement Manager web site.

Q: How often can I change the amount I chooseto defer?

A: You can make changes to your deferral election orstop your deferrals at any time by completing a newdeferred compensation agreement available on linethrough the Duke Retirement Manager web site.Your change will become effective the month afterthe change in election is made. For example, ifyou log on to make your change in October, thechange will affect the November paycheck.

Q: Does Duke contribute to the plan?

A: No, this is a voluntary deferred compensationplan. Duke does not make a contribution.

Q: Can I write a personal check directly to the457(b) plan or to the investment carrier?

A. No, all contributions must be made throughpayroll deduction.

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Plan Today Enjoy Tomorrow

The 457(b) DeferredCompensation Plan significantlyexpands your ability to save

for retirement ona tax-deferred basis.

Q: If account balances in the plan are not funded,would I be better off taking my money in cashand investing it elsewhere?

A: The plan provides significant tax advantages toyou because contributions and investmentearnings grow tax-deferred until distributed. Youshould consult with a tax or financial advisor toevaluate the benefits under the plan comparedto the rewards and risks of alternative investmentstrategies.

Q: How often can I change my fund selections?

A: You may change fund selections at any time bycontacting your selected investment carrier(s).You will receive notification of the fund changeand the effective date from the investment carrier.

Q: How do I add an investment carrier or redirectfuture contributions to a different investmentcarrier?

A: You may add an investment carrier orredirect future contributions to a differentinvestment carrier at any time by loggingonto the Duke Retirement Manager web site atwww.hr.duke.edu/benefits/retirementmanager.You can choose from any of the investmentoptions offerred through AIG VALIC, Fidelity,TIAA-CREF and Vanguard.

Q: Can my investment selections be differentfrom those selected in my Faculty and StaffRetirement Plan account?

A: Yes, investment elections for this plan areindependent of your Faculty and Staff RetirementPlan account. Changes made to one plan do notchange investment selections in the other plan.

Q: Does the plan provide for any catch-upprovision?

A: No, there is no catch-up provision with the DukeUniversity 457(b) Deferred Compensation Plan atthis time.

Q: What happens during a leave of absence?

A: You remain in the plan. However, since deferralsmust be made from income earned during theyear, contributions will be suspended duringunpaid leave. You may still contribute themaximum amount for the year.

Q: When can I receive distributions from thisaccount?

A: Distributions can be made on the 61st day followingseparation from active service in accordance withthe distribution option you elected. You will have60 days following separation from active serviceor retirement to change your distribution option.If no option has been selected you will receive alump sum distribution on the 75th day afterseparation from active service. Distributions fromthe plan are taxed as normal income. Distributionsmust begin by April 1 of the year followingattainment of age 701⁄2, unless you are activelyemployed at Duke. If actively employed at Dukeafter age 701⁄2 you may defer distribution until nolater than April 1 of the year following yourretirement.

Q: What forms of payment are available underthe plan?

A: Distributions available under the plan are thefollowing, subject to the rules of the investmentcarrier:

1. A single, lump-sum payment.

2. Single Life Annuity. An annuity payable inequal installments for the life of the participantthat terminates upon the participant’s death.

3. Joint Life Annuity. An annuity payable inequal installments for the joint lives of theparticipant and his or her beneficiary.

4. Fixed Period Payments. Payments for a fixedperiod of not less than one (1) year and notmore than fifteen (15) years.

5. Minimum Distribution Option. The amountrequired by federal law to be paid fromtax-favored retirement plans, generallybeginning by April 1 of the calendar yearfollowing the year in which the participantturns 701⁄2 or retires, whichever is later.

When you enroll in the plan you must select adistribution option and a projected retirementdate or age. Your selection can be changed asoften as you like as long as it is done within60 days from the time you separate from service.

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Plan Today Enjoy Tomorrow

Q: What happens if I separate from servicebefore retiring?

A: You will still have the same distribution optionsand 60 days from the time you separate fromservice to change any distribution optionpreviously selected. Remember, if you do notselect a distribution option, a lump sum willbe paid to you on the 75th day after separationfrom service.

Q: Can I take a loan against the account balance?

A: No, loans are not available under the plan.

Q: Does the plan provide withdrawals for anunforeseeable emergency?

A: Yes, withdrawals for an “unforeseeableemergency” are permitted; however, they aresubject to review and approval by the PlanAdministrator. Generally, an “unforeseeableemergency” means a severe financial hardshipresulting from a sudden and unexpected illness oraccident of the participant or a dependent, loss ofthe participant’s property due to casualty, or othersimilar extraordinary and unforeseeablecircumstances arising as a result of events beyondthe control of the participant. Conversely, eventssuch as divorce, school tuition, or credit card debtwould not qualify as “unforeseeable emergency”and therefore would not permit you to withdrawfunds. Any funds approved for withdrawal aretaxed as ordinary income.

Q: How are my salary deferrals taxed?

A: Amounts that you defer plus earnings are nottaxable for federal or state income tax purposesduring the year in which the monies are deferred.However, they will be taxed as ordinary incomewhen these monies (contributions plus earnings)are distributed to you. Unlike 403(b) plans, thereis no additional tax penalty for withdrawal beforeage 591⁄2 or for an unforeseeable emergency.

Q: Can I assign my benefits?

A: No, you cannot sell, assign or transfer in advanceof receipt, any of your rights under the planexcept as otherwise provided by a QualifiedDomestic Relations Order (QDRO).

Q: Can I rollover distributions from the plan intoanother qualified retirement account?

A: No, you cannot rollover any monies to othertypes of tax-advantaged plans, i.e., 403(b),401(k), or Individual Retirement Account (IRA);however you may be able to transfer the funds toanother 457(b) plan if that 457(b) plan is willingto accept the transfer.

Q: How do I change my beneficiary?

A: You may contact the investment carrier(s) directlyin order to obtain a form to change your beneficiary.You should keep a copy of the form for yourrecords.

Q: What if I die without having nameda designated beneficiary?

A: While you have the opportunity to name abeneficiary for your account, if you fail to doso your benefits will be paid to your estate.

Q: How do I track my deferrals?

A: You will receive quarterly statements from yourinvestment carrier(s).

Q: Who administers the plan?

A: Duke University is the Plan Administrator and hasthe responsibility for operating and interpretingthe plan.

Q: Whom can I contact if I have questionsabout the plan?

A: If you have any questions about the plan,please contact Duke Human Resources at919-684-5600. If you have questions aboutspecific funds, please contact the investmentcarriers:

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Investment Carrier Phone Number

AIG VALIC 877-375-2424

Fidelity 800-343-0860

TIAA-CREF 800-842-2776

Vanguard 800-523-1188

NOTE: These frequently asked questions are highlights of Duke’s 457(b) Deferred Compensation plan. The plandocument is available on request and its terms and conditions govern the operations of the plan.

Rev. 3/2007