ITT (ITT) 11-KAnnual report of employee stock purchases

    The following description of the ITT Retirement Savings Plan (the "Plan") is provided for general information purposes only. Participants should refer to the Plan document for more complete information.

    The Plan is a defined contribution plan covering substantially all U.S. employees of ITT Inc. (the "Company"). The Benefits Administration Committee, consisting of certain executive officers and employees of the Company, controls and manages the operation and administration of the Plan. Great-West Trust Company ("Trustee") is the trustee of the Plan and Empower Retirement ("recordkeeper") serves as the Plan recordkeeper.

    The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA") and the Internal Revenue Code ("IRC").

    Certain full-time salaried and hourly U.S. and non-U.S. citizen employees of the Company are eligible to participate upon hire in the continental U.S. and are automatically enrolled in the Plan. Certain part-time and temporary U.S. citizen employees are eligible to participate upon completion of one year of service in the continental U.S. One year of service is defined as completion of at least 1,000 hours of service in the continental U.S. in the twelve month period beginning on the date hired by the Company, or at least 1,000 hours of service in the course of any calendar year after the calendar year in which hired.

    Participants are permitted to contribute 1% to 50% of their pre-tax or after-tax eligible pay during each pay period, subject to certain IRC limitations. Eligible pay is defined as base salary and any other compensation, such as overtime, shift differentials, regular commissions, regularly occurring incentive pay and differential wage payments, but does not include the cost of any public or private employee benefit plan, foreign service allowances, special bonuses or commissions, and other special pay or allowances of a similar nature.

    Participants are also able to make Roth 401(k) contributions. Roth 401(k) contributions are made on an after-tax basis. Roth 401(k) contributions are eligible for Company matching contributions. The combined Roth 401(k) and pre-tax 401(k) contributions cannot exceed the annual IRS or Plan limits specified above. Distributions from the Roth 401(k) account are free from income tax, as long as it has been at least five tax years since the participant first made a Roth contribution to the Plan and the participant is at least age 59 1/2.

    The Company generally makes a "matching" contribution equal to 50% of each participant’s elected contribution, up to 6% of eligible pay, except for unionized employees at the Industrial Process Seneca Falls facility who are eligible for a "matching" company contribution equal to 100% of each participant's elective contributions, up to 3% of eligible pay. The Company also generally provides a "core" contribution of 3% of eligible pay to participants whose age plus years of service as of January 1st of each year is less than 50 and provides a core contribution equal to 4% of eligible pay to participants whose age plus years of service is 50 or greater. Certain unionized employees at the Industrial Process Seneca Falls facility are eligible for a "core" contribution of 6% of eligible pay. Effective May 2, 2020, the Company suspended employer contributions for non-union employees in response to COVID-19. On December 30, 2020, employer contributions were reinstated for the 2021 plan year and the Company implemented a one-time discretionary contribution equal to 2.5% of each participant's eligible earnings from May 3, 2020 to December 31, 2020. The one-time discretionary contribution of $2,655,322 was funded in 2021 and was reflected as a receivable to the Plan as of December 31, 2020.

    Each participant has an individual account, which is maintained by the Plan's recordkeeper, reflective of the participant’s contributions and withdrawals, the Company’s contributions, the participant's share of investment gains and losses based on the participant's investment election, and an allocation of Plan administrative expenses. Plan recordkeeping fees are $13.50 per quarter and administrative fees are $8.25 per quarter. Recordkeeping fees are renegotiated every three years and administrative fees are reviewed annually.

    Participants direct the investment of their account balance into various investment options offered by the Plan. The Plan currently offers collective trust funds ("CTs"), mutual funds, a separately managed ITT Stock Fund, and a self-directed brokerage account as investment options for participants. The ITT Stock Fund has been designated as an Employee Stock Ownership Plan ("ESOP"). Under the terms of the ESOP, plan participants are given the option to make an election regarding the dividends on all contributions (participant and company) that are invested in the ITT Stock Fund. These dividends, when declared, can either be reinvested in the Plan or paid in cash on a quarterly basis. Participants are allowed to invest a maximum of 20% of their total plan account balance in the ITT Stock Fund. On a daily basis, participants may transfer amounts between investment options subject to certain restrictions and fees.

    Participants are entitled to exercise voting rights on the shares of ITT common stock held in the ITT Stock Fund. Prior to each annual or certain special meetings of ITT shareholders, the Trustee is required to notify participants of such voting rights and request instructions on how to vote shares held in the participant accounts. Once instructions are received, the Trustee votes whole and proportional shares as authorized. Shares with no valid voting instructions are voted in the same manner and in the same proportion as the shares that are voted.

    Investment securities, in general, are exposed to various risks, such as interest rate risk, credit risk, and overall market volatility. Due to the level of risk associated with certain investment securities held by the Plan, it is reasonably possible that values realized at the time of sale could materially differ from amounts reported in the financial statements and materially affect participants' account balances.

    Participants are immediately vested in their contributions and Company contributions, plus actual earnings thereon.

    Upon termination of employment (including death, disability or retirement), if account balances are $1,000 or less, the participant or surviving beneficiary will receive a lump sum distribution. If account balances are greater than $1,000 but less than or equal to $5,000, and payment is not requested within 90 days following termination, account balances will be rolled over to an Individual Retirement Account ("IRA") in the participant's name at Millennium Trust Company, LLC. If account balances exceed $5,000, the participant or surviving beneficiary may elect to leave the benefits in the Plan or have the benefits distributed through a lump sum, take installment distributions not to exceed a period longer than his or her life expectancy, or direct a rollover of the account balance

to another qualified plan or IRA. Participants reaching age 70 ½ in 2020 and thereafter must take their first required minimum distribution by April 1 of the year they reach 72.

    Although it has not expressed any intention to do so, the Company has the right under the Plan, in certain circumstances, to discontinue its contributions at any time and to terminate the Plan subject to the provisions set forth in ERISA. In the event that the Plan is terminated, participant balances would become immediately vested.

    The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

    The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein. Actual results could differ from those estimates.

    The Plan’s investments are all stated at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

    Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. The net appreciation (depreciation) in fair value of investments includes both realized gains (losses) and unrealized appreciation (depreciation).

    Notes receivables from participants are measured at their unpaid principal balance plus any accrued interest. Delinquent participant loans are reclassified as distributions based upon the terms of the Plan document. The financial statements include the delinquent loan balances until specifically written off. Form 5500 reflects the delinquent loans as distributions. See Note 6 for a reconciliation of the Plan's financial statements to Form 5500.

    Plan administration fees charged to the Plan for investments in mutual funds and CTs are paid by participants via a quarterly administrative fee. Investment provider fees are paid from the assets of the plan and allocated to each participant based on the participant's choice of investments.

    Benefit payments to participants are recorded upon distribution.

    In measuring plan assets at fair value, a fair value hierarchy is applied which categorizes and prioritizes the inputs used to estimate fair value into three levels. The fair value hierarchy is based on maximizing the use of observable inputs and minimizing the use of unobservable inputs when measuring fair value. Classification within the fair value hierarchy is based on the lowest level input that is significant to the fair value measurement. The three levels of the fair value hierarchy are defined as follows:

The following is a description of the valuation methodologies used to measure Plan assets at fair value as of the measurement date.