NOV Inc. 401(k) Plan
Notes to Financial Statements (continued)
5. Common Collective Trusts
The Harris Associates Oakmark International collective fund, is a common collective trust fund established, operated and maintained by SEI Trust Company, which
is a direct filing entity with the U.S. Department of Labor. There are currently no redemption restrictions on this investment.
The Wells Fargo Short
Term Investment Fund S is a common collective trust fund which invests primarily in short term fixed income securities, which is a direct filing entity with the U.S. Department of Labor. There are currently no redemption restrictions on this
investment.
The State Street U.S. Bond Index fund is a common collective trust fund which invests primarily in government Treasury securities, corporate
bonds, mortgage-backed securities (MBS), asset-backed securities (ABS), and munis to simulate the universe of bonds in the market. There are currently no redemption restrictions on this investment.
6. Related-Party Transactions and Parties of Interest Transactions
Certain investments of the Plan are managed by Principal , the trustee of the Plan; therefore, these transactions qualify as party-in-interest transactions. Additionally, a portion of the Plans assets are invested in the Companys common stock. Because the Company is the plan sponsor, transactions involving the
Companys common stock qualify as party-in-interest transactions. All of these transactions are exempt from the prohibited transactions rules under ERISA.
7. Income Tax Status
The Plan has received a
determination letter from the IRS dated May 12, 2014, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (IRC) and; therefore, the related trust is exempt from taxation. Once qualified, the Plan is
required to operate in conformity with the IRC to maintain its qualified status. The plan sponsor believes the Plan is being operated in compliance with the applicable requirements of the IRC and; therefore, believes that the Plan is qualified and
the related trust is tax-exempt.
U.S. generally accepted accounting principles require plan management to
evaluate uncertain tax positions taken by the Plan. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the IRS. The Plan is
subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.
12