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HomeMy WebLinkAboutCity Council Resolution 97-10 RESOLUTION 97 - ~o RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SARATOGA AMENDING 457 DEFERRED COMPENSATION PLAN TO ESTABLISH A TRUST PURSUANT TO SMALL BUSINESS JOB PROTECTION ACT OF 1996 Recitals WHEREAS, the City of Saratoga has employees rendering valuable services; and WHEREAS, the City of Saratoga has established a Deferred Compensation Plan for such employees that serves the interest of the City by enabling it to provide reasonable retirement security for its employees, by providing increased flexibility in its personnel management system, and by assisting in the attraction and retention of competent personnel; and WHEREAS, the City has determined that the continuance of the Deferred Compensation Plan will serve these objectives; and WHEREAS, amendments to the Internal Revenue Code contained in the Small Business Job Protection Act of 1996 have been enacted that required changes to the structure of and allow enhancements of the benefits of the Deferred Compensation Plan. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Saratoga that the existing Deferred Compensation Plan is hereby amended and restated in the form of the ICMA Retirement Corporation Deferred Compensation Plan and Trust; BE IT FURTHER RESOLVED that the assets of the Plan shall be held in trust, with the City serving as Trustee, for the exclusive benefit of the Plan participants and their beneficiaries, and the assets shall not be diverted to any other purpose. The Trustee's beneficial ownership of the Plan assets held in the ICMA Retirement Trust shall be held for the further exclusive benefit of the Han participants and their beneficiaries; BE IT FURTHER RESOLVED that the Plan will not permit loans unless otherwise determined by resolution of the City Council in the future; BE IT FURTHER RESOLVED that the City hereby agrees to serve as Trustee under the Plan. The above and foregoing resolution was passed and adopted by the Saratoga City Council at a meeting held on the 5th day of March, 1997, by the following vote: AYES: Councilmembers Bogosian, Jacobs, Shaw, Wolfe, and Mayor MDran NOES: None ABSENT: None :~..//~ . .r~4.~4 ATTEST: .......... ~ Mayo Deputy City "' 457 Deferred Compensation Plan and Truss Document Nol, ember 1996 DEFERRED COMPENSATION PLAN & TRUST 2.{34 Beneficiary: The person or persons designated by the Participant in his Joinder Agreement who shall ARTICLE I. PURPOSE receive any benefits payable hereunder in the event of the Participant's death. In the event that the Participant The Employer hereby establishes the Employer's De- names two or more Beneficiaries. each Beneficiary shall ferred Compensation Plan and Trust. hereafter referred be entitled to equal shares of the benefits payable at the to as the "Plan." The Plan consists of the provisions set Participant's death, unless otherwise provided in the forth in this document. Participant's Joinder Agreement. If no bene~darv is designated in the Joinder Agreement. if the Designated The primary purpose of this Plan is to provide retirement Beneficiary predeceases the Participant, or' if the desig- income and other deferred benefits to the Employees of the nated Beneficiary does not survive the Participant for a Employer and the Employees' Beneficiaries in accordance period of fifteen (15) days, then the estate of the Par- with the provisions of Section 457 ofthe Internal R. ev- ticipant shall be the Beneficiary. enue Code of 1986, as amended (the "Code"). 2.05 Deferred Compensation: The amount of Normal This Plan shall be an agreement solely between the Compensation otherwise payabl.e to the Participant Employer and participating Employees. The Plan and which the Participant and the Employer mutually agree Trust forming a part hereof are established and shall be to defer hereunder, any amount credited.to a maintained for the exclusive benefit of eligible Employ- Participant's Account by reason of a transfer under ees and their Beneficiaries. No part of the corpus or section 6.09, or any other amount which the Employer income of the Trust shall revert to the Employer or be agrees to credit to a Participant's Account.' used for or diverted to purposed other than the exclu- sive benefit of Participants and their Beneficiaries. 2.06 Employee: Any individual who provides services for the Employer, whether as an employee of the ARTICLE II. DEFINITIONS Employer or as an independent contractor, and who has been designated by the Employer as eligible to partici- 2.01 Account: The bookkeeping account maintained for pate in the Plan. each Participant reflecting the cumulative amount of the Participant's Deterred Compensation, including any 2.07 lncludible Compensation: The amount of an income, gains, losses, or increases or decreases in market Employee's compensation from the Employer for a value attributable to the Employer's investment of the taxable year that is attributable to services performed for Participant's Deferred Compensation, and further the Employer and that is includible in the Employee's reflecting any distributions to the Participant or the gross income for the taxable year for federal income tax Participant's Beneficiary and any fees or expenses purposes; such term does not include any amount charged against such Participant's Deferred Compensa-' excludable from gross income under this Plan or any tion. other plan described in Section 457Ib) of the Code or any other amount excludable from gross income for 2.02 Accounting Date: Each business day that the New federal income tax purposes. lncludibte Compensation York Stock Exchange is open for trading, as provided in shall be determined without regard to any community Section 6.06 for valuing the Trust's assets. property laws. 2.03 Administrator: The person or persons named to 2.08 Joinder Agreement: An agreement entered into carry out certain nondiscretionary administrative rune- be/ween an Employee and the Employer, including any tions under the Plan. as hereinafter described. The amendments or modifications thereof. Such agreement Employer may remove any person as Administrator shall fix the amount of Deferred Compex4sation, specify upon 60 days' advance notice in writing to such person, a preference among the investment alternatives desig- in which case the Employer shall name another person nated by the Employer, designate the Employee's or persons to act as Administrator. The Administrator Beneficiary or Beneficiaries, and incorporate the terms, may resign upon 60 days' advance notice in writing to conditions, and provisions of the Plan by reference. the Employer, in which case the Employer shall name another person or persons to act as Administrator. ICMA RETIREMENT CORPORATION 2.09 Normal Compensation: The amount of compensa- to have actually terminated. In the case of a Participant tion which would be payable to a Participant by the who is an independent contractor of the Employer, Employer for a taxable year' if no Joinder Agreement Separation from Service shall be deemed to have oc- were in effect to defer compensation under this Plan. curred when the Participant's contract under which services are performed has completely expired and 2.10 Normal Retirement Age: Age 70-I/2, unless the terminated, there is no foreseeable possibility that the Participant has elected an alternate Normal Retirement Employer will renew the contract or enter into a ne,,v Age by written instrument delivered to th~ Administra- contract for the Participant's services. and is not antici- tor prior to Separation from Service. A Participant's pared that the Participant will become an Employee of Normal Retirement Age determines the period during the Employer. which a Participant may utilize the catch-up limitation of Section 5.02 hereunder. Once a Participant has to 2.15 Trust: The Trust created under Article VI of the any extent utilized the catch-up limitation of Section Plan which shall consist of all compensation deferred 5.02, his Normal Retirement Age may not be changed. under the Plan, plus any income and gains thereon, less any losses, expenses and distributions to Participants and A Participant's alternate Normal Retirement Age may Beneficiaries. not be earlier than the earliest date that the Participant will become eligible to retire and receive unreduced ARTICLE !11. ADMINISTRATION retirement. benefits under the Employer's basic retire- ment plan covering the Participant. and may not be later 3.01 Duties of the Employer: The Employer shall have than the date the Participant will attain age 70-1/2~ Ira the authority to make all discretionary decisions affect- Participant continues employment after attaining age ing the rights or benefits of Participants which may be 70-1/2, not having previously elected alternate Normal required in the administration of this Plan. The Retirement Age, the Participant's alternate Normal Employer's decisions shall be afforded the maximum Retirement Age shah not be later than the mandatory deference permitted by applicable law. retirement age, if any, established by the Employer, or the age at which the Participant actually separates from 3.02 Duties of Administrator: The Administrator, as service if the Employer has no mandatory retirement agent fbr the Employer, shall perform nondiscretionary age. If the Participant will not become eligible to administrative functions in connection with the Plan. receive benefits under a basic retirement plan main- including the maintenance of Participants' Accounts, rained by the Employer, the Participant's alternate the provision of periodic reports of the status of each Normal Retirement Age may not be earlier than age 55 Account, and the disbursement of benefits on behalf and m. ay not be later than age 70-1/2. of the Employer in accordance with the provisions of this Plan. 2.11 Participant: Any Employee who has jo!ned the Plan pursuant to the requirements of Article IV. ARTICLE IV, PARTICIPATION IN THE PLAN 2.12 Plan Year: The calendar year. 4.01 Initial Participation: An Employee may become a Participant by entering into a joinder Agreement prior 2.13 Retirement: The first date upon which both of the to the beginning of the calendar month in which the · following shall have occurred with respect to a particE- joinder Agreement is to become effective to defer pant: Separation from Service and attainment of age 65. compensation not yet earned. 2. t4 Separation From Service: Severance of the 4.02 Amendment of Joinder Agreement: A PartiCipant Participant's employment with the Employer which may amend an executed joinder Agreement to change constitutes a "separation from service" within the the amount of compensation not yet earned which is to meaning of Section 4OZ(d)(4)(A)(iii) of the Code. In be deferred (including the reduction of such future general, a Participant shall be deemed to have severed deferrals to zero) or to change his investment preference his employment with the Employer for purposes of this (subject to such restrictions as may result from the Plan when, i'n accordance with the established practices of nature of terms of any investment made by the Era- the Employer, the employment relationship is considered ployer). Such amendment shall become effective as of 457 Vej!I eel Compensation Plan ~znd T,~( Document Noveraber 1998 the beginning of the calendar month commencing after ARTICLE VI. TRUST AND INVESTMENT the date the amendment is executed. A Participant may OF ACCOUNTS at any time amend hisJoinder Agreement to change the designated Beneficiary, and such amendment shall 6.01 Investment of Deferred Compensation: A Trust is become effective immediately. hereby created to hold all the assets of the Plan for the exclusive benefit of Participants and Beneficiaries, ARTICLE, V. LIMITATIONS ON DEFERRALS except. that expenses and taxes may be paid fi'om the Trust as provided in Section 6.03. The trustee shall be 5.01 Normal Limitation: Except as provided in section the Employer or such other person. which agrees to act 5.02, the maximum amount of Deferred Compensation in-that capacity hereunder. for any Participant for ~ny taxable year shall not exceed the lesser of $7,500.00, as adjusted for the cost-of-living 6.02 Investment Powers: The trustee or the Plan Ad- in accordance with Code section 457(e)(151 for taxable ministrator, acting as agent for the trustee, shall have years beginning after December 3I, 1996 (the "dollar the powers listed in this Section with respect to invest- limitation"), or 33-1/3 percent of the Participant's ment of Trust assets, except to the extent that the !ncludible Compensation for the taxable year. This investment of Trust assets is directed by Participants, limitation will ordinarily be equivalent to the lesser of pursuant to Section 6.05. the dollar limitation in effect for the taxable year or 25' percent of the Participant's Normal Compensation. (a) To invest and reinvest the Trust without dis- tinction between principal and income in any form 5.02 Catch-.Up Limitation: For each of. the last three (3) of tangible or intangible property, real, personal, or taxable years of a Participant ending before his attain- mixed, and wherever situated, including, but not by ment of Normal Retirement Age, the maximum amount way of limitation, common or preferred stocks, of Deferred Compensation shall be the lesser of: (1). shares of regulated investment companies' and other $15,000 or (2) the sum of(i) the Normal Limitation for mutual funds, bonds, loans, notes, debentures, the taxable year, and (ii) the Normal Limitation for mortgages, certificates of deposit, interest, or par- each prior taxable year of the Participant commencing ticipatiom equipment trust certificates, commercial after 1978 less the amount of the Participant's Deferred paper including but not limited to participation in Compensation for such prior taxable years. A prior pooled commercial paper accounts, contracts with taxable year shall be taken into account under the insurance companies including but not limited to preceding sentence only if (i) the Participant was eli-~ insurance, individual or group annuity, deposit gible to participate in the Plan for such ye. ar (or in any administration, and guaranteed interest contracts, other eligible deferred compensation plan established deposits at reasonable rates of interest at banking under'Section 457 of the Code which is properly taken institutions including but not limite~i to savings into account pursuant to regulations under section'457), accounts and certificates' of deposit, and other forms and (ii) compensation (if any) deferred under the Plan of securities or investment's of any kind, class, or (or such other plan) was subject to the deferral limita~- character whatsoever and representing interests in tions set forth in SecTion 5.01 any form of enterprise, wherever it may be located, organized or operated within or without the United 5.03 Other Plans: The amount excludable from a States of America, whether such investments are Participant's gross income under this Plan or any other income producing or not, without being limited in eligible deferred compensation plan under section 457 any respect by statute or court rule or decision of of the Code shall 'not exceed $7,500.00 (or such greater any jurisdiction now or hereafter in force purport- amount allowe'd under Sections 5.01 or 5.02 of the ing to limit or otherwise affect such investments. Plan), less any amount excluded from gross income Assets of the Trust may be invested in securities or under section 403(b), 402(a)(8), or 402(h)(1)(B) of the new ventures that involve a higher degree of risk Code, or any amount with respect to which a deduction than investments that have demonstrated their is allowable by reason of a contribution to an organiza- investment performance over an extended period tion described in section 501 Ic)(18) of the Code. of time. ICMA RETIREMENT COKPOR. ATION (b) To in.vest and reinvest all or any part of the otherwise dispose of any such property. without assets of the Trust in any common, collective or regard to restrictions applicable to ~duciaries or commingled trust fund that is maintained by a bank others and without the approval of any court. or other institution and that is available to Em- ployee plans described under sections 457 or 401 of (g) To sell for cash or credit, redeem, exchange for the Code, or any successor provisions thereto. and other property, convey, transfer, or otherwise during the period of time that an investment dispose of any property held in the Trust in any through any such medium shall exist, to the extent manner and at any time, by private contract or at of participation of the Plan, the declaration of trust public auction or otherwise. and no other person of such common, collective, or commingled trust shall be bound to see to the application of the fund shall constitute a part of this Plan. purchase money or to inquire into the validity. expediency, or propriety of any such sale or other (c) To invest and reinvest all or any pan of the disposition. assets of the Trust in any group annuity, deposit administration or guaranteed interest contract issued (h) To enter into contracts for or to make commit- by an insurance company or other financial institu- ments either alone or in company with others to tion on a commingled or collective basis with the purchase or sell at any future date any property assets of any other 457 plan or trust qualified under acquired for the Trust. section 401(a) of the Code or any other plan de- scribed in section 401(a)(24) of the Code, and such (i) To vote or to refrain from voting any stocks. contract may be held or issued in the name of the bonds, or other securities held in the Trust, to Plan Administrator, or such custodian as the Plan exercise any other right appurtenant to any securi- Administrator may appoint, as agent and nominee ties or other property held in the Trust, to give for the Employer. During the period that an invest- general or special proxies or powers of attorney with ment through any such contract shall exist. to the or without power. of substitution with respect to extent of participation of the Plan. the terms and such securities and other property, to exercise any conditions of such contract shall constitute a part of conversion privileges, subscription rights, or other the Plan. ' ' options or privileges with respect to such securities and other property and make any payments inciden- (d) To purchase part interests in real property or in tal thereto. and gener~ally to exercise. personally or mortgages on real property, wherever such real by general or limited power of attorney, any of the property may be situated, and to delegate to a powers of an owner with respect to stocks, bonds. property manager or the holder or holders of a securities, or other property held in the Trust at majority interest in such real property or mortgage any time. on real property the management and operation of ~ ' any part interest in such real property or mortgages. (.j) To oppose or to consent to and participa. te in any organization, reorganization, consolidation, (e) To hold cash awaiting investment and to keep merger, combination, readjustment of finances, or ~uch portion of the Trust in cash or cash balances, similar arrangement with respect to any corporation. without liability for interest, in such amounts as may company, or association, any of the securities of from time to time be deemed to be reasonable and which are held in the Trust, to do any act with necessary to meet obligations under the Plan or reference thereto, including the exercise of options. otherwise to be i'n the best interests of the Plan. the making of agreements or subscriptions and the payment of expenses, assessments, or subscriptions (f) To retain. manage, operate, administer. divide, that may be deemed necessary or advisable in subdivide, partition, mortgage, pledge, improve, connection therewith. and to accept, hold, and alter, demolish, remodel, repair. and develop. in any retain any securities or other property that may be · manner any property, or any par. t of or partial so acquired. interest in any property, real or personal, held in the Trust. to lease such property for any period of time, and to grant options to sell. exchange. lease, or 457 Deferred Compensation Plan and Trusl Document November 1996 (k) To deposit any property held in the Trust with (o) To make, execute. acknowledge. and deliver any protective. reorganization, or similar commit- any and all deeds. leases. mortgages. conveyances, tee, and to delegate discretionary power thereto and contracts, waivers, releases, or other instruments in to pay and agree to pay part of its expenses and writing necessary or proper for the accomplishment compensation and any assessments levied with of any of the foregoing powers. respect to any such property so deposited. (p) To open and maintain any bank account or (1) To hold, to authorize the holding of. and to accounts in the name of the Plan, the Employer. or register any investment to the Trust in th'e name of any nominee or agent of'the foregoing, including the Plan, the Employer, or any nominee or agent of the Plan Administrator. in any bank or banks. any of the foregoing, including the Plan Administra- tor, or in bearer form, to deposit or arrange for the (q) To do any and all other acts that may be deposit of securities in a qufili~ed central depository deemed necessary to carry out any of the powers set even though, when so deposited, such securities may forth herein. be merged and held in bulk in the name of the nominee of such depository with 'other securities 6.03 Taxes and Expenses: All taxes of any and all kinds deposited therein by any other person, and to whatsoever that may be levied or assessed under existing organize corporations or trusts under the laws of any or future laws upon, or in respect to the Trust, or the jurisdiction for the purpose of acquiring or holding income thereof. and all commissions or acquisitions or title to any property for the Trust, all with or dispositions of securities and similar expenses 6f invest- without the addition of words or other action to ment and reinvestment of the Trust, shall be paid from indicate that property is held in a fiduciary or the Trust. Such reasonable compensation of the Plan representative capacity but the books and records of Administrator, as may be agreed upon from time to time the Plan shall at all times show that all such invest- by the Employer and the Plan Administrator, and ments are part of the Trust. reimbursement for reasonable expenses incurred by the' Plan Administrator in performance of its duties hereun- (m) Upon such terms as may be deemed advisable der (including but not limited to fees for legal. account- by the Employer or the Plan Administrator. as the ing. investment and custodial services) sh.alt also be paid case may be. for the protection ofthe interests of from the Trust. the Plan or for the preservation of the value of an investment, to exercise and enforce by suit for legal 6.04 Payment of Benefits: The payment of benefits or equitable remedies or by other action. or to from the Trust in accordance with the terms of the Plan waive any right or claim on behalf of the Plan or may be made by the Plan Administrator. or by any .. any default in any obligation owing to the Plan. to custodian or other person so authorized by the Era~ renew, extend the time for payment of, agree to a ployer to make such disbursement. The Plan Adminis- reduction in the rate of interest on, or agree to any trator, custodian or other person shall not be liable with other modification or change in the terms ofany respect to any distribution of Trust assets made at the obligation owing to the Plan, to settle. compromise, direction of the Employer. ad.j~st. or submit to arbitration any claim or right in ~avor of or against the Plan. to exercise and enforce 6.05 Invesm~ent Funds: In accordance with uniform and any and all rights of foreclosure. bid for property in nondiscriminatory rules established by the Employer and fc~reclosure, and take a deed in lieu of foreclosure the Plan Administrator, the Participant may direct his/ wit~ or without paying consideration therefor, to her Accounts to be invested in one (l) or more invest- commence or defend suits or other legal proceedings merit funds availaMe under the Plan: provided, how- whenever any interest of the Plan requires it, and tO ever, that the Participant's investment.directions s~all represent the Plan in all suits or legal proceedings in not violate any investment restrictions established by the any court of law or equi'ty or before any body or Employer. Neither the Employer, the Admini. strator, tribunal. nor any other person shall be liable for any losses incurred by virtue of following such directions or with (n) To employ suitable consultants, depositories, any reasonable administrative delay in implementing agents, and legal counsel on behalf of the Plan. such directions. ICMA RETIREMENT CORPOR. A FION 6.06 Valuation of Accounts: As of each Accounting than cash, unless the Employer and the Administra- Date, the Plan assets held in each investment fund tot agree to hold such other assets under the Plan. offered shall be valued at fair market value and the Any such transferred amount shall be treated as a investment income and gains or losses for each fund deferral subject to the limitations of Article V, shall be determined. Such investment income and gains except that, for purposes of applying the limitations or losses shall be allocated proportionately among all of Sections 5.01 and 5.02, an amount deferred Account balances on a fund-by-fund basis. The alloca- during any taxable year under the plan from which tion shall be in the proportion that each such Account the transfer is accepted shall be treated as if it has balance as of the immediately preceding Accounting been deferred under this Plan during such taxable Date bears to the total of all such Account balances as of year and compensation paid by the transferor era- that Accounting Date. For purposes of this Article, all ployer shall be treated as if it had been paid by the Account balances include the Account balances of all Employer. Participants and Beneficiaries. (b) Outgoing Transfers: An amount may be trans- 6.07 Participant Loan Accounts: Participant Loan firred to an eligible deferred compensation plan Accounts shall be invested in accordance with Section maintained by another employer, and charged to a 8..03 of the Plan. Such Accounts shall not share in any Participant's Account under this Plan, if (I) the investment income and gains or losses of the investment Participant has separated from service with the funds described in Sections 6.05 and 6.06. Employer and become an employee of the other employer, (ii) the other employer's pt.an provides 6.08 Crediting of Accounts: The Participant's Account that such transfer will be accepted, and (iii) the shall reflect the amount and value of the investments or Participant and the employers have signed such other property obtained by the Employer through the agreements as are necessary to assure that the investment of the Participant's Deferred Compensation Employer's liability to pay benefits to the Partici~ pursuant to Sections 6.05 and 6.06. It is anticipated that pant has been discharged and assumed by the other the Employer's investments with respect to a Participant employer. The Employer may require such docu- will conform to the investment preference specified in 'mentalion from the other plan as it deems necessary the Particip. ant's Joinder Agreement, but nothing herein to effectuate the transfer, to confirm that such plan shall be construed to require the Employer to make any is an eligible deferred compensation plan within the particular investment of a Participant's Deferred Corn- meaning of section 457 of the Code, and to assure pensorion. Each Participant shall receive periodic that transfers are provided for under such plan. Such reports, not less frequently than annually, showing the transfers shall be made only under such circum- then current value of his/her Account. stances as are permitted under section 457 of the Code and the regulations thereunder. 6.09 Transfers: (~.10 Employer Liability: In no event shall the (a) Incoming Transfers: A transfer may be accepted Employer's liability to pay benefits to a Participant' from an eligible deferred compensation plan main- under this Plan exceed the value ofthe amounts cred- rained by another employer and credited to a ited to the Participant's Account; neither the Emplc~yer Participant's Account under the Plan if (I) the nor the Administrator shall 'be liable for losses arising Participant has separated from service with that from depreciation or shrinkage in the value of any employer and become an Employee of the Era- investments acquired under this Plan. ployer, and (ii) the other employer's plan provides that such transfer will be made. The Employer may require such documentation from the predecessor plan as it deems necessary to effectuate the transfer, to confirm that such plan is an eligible deferred compensation plan within the meaning of Section 457 of the Code, and to assure that transfers are provided for under such plan. The Employer may refuse to accept a transfer in the form of assets other 457 DeferIred Compensation Plan and Trast Documen~ Novem~,er 1996 ARTICLE VII. BENEFITS (b) One lump-sum payment: 7.01 Retirement Benefits and Election on Separation (c) Approximately equal monthly, quarterly, semi- from Service: Except as otherwise provided in this annual or annual payments, calculated to continue Article VII, the distribution ofa Participant's Account for a period certain chosen by the Par:icipant. shall commence as of April 1 of the calendar year after the Plan Year of the Participant's Retirement, and the (d) Annual Payments equal to the minimun~ distri- distribution of such Retirement benefits shall be made butions required under Section 401 (a)(9) of the in accordance with one 'of the payment options de- Code over the life expectancy of the Participant or scribed in Section 7.02. Notwithstanding the foregoing, over the life expectancies of the Participant and his but subject to the following paragraph of this Section Beneficiary. 7.01, the Participant may irrevocably elect within 60 .days following Separation from'Service to have the (e) Payments equal to payments made by the issuer distribution of benefits commence on a fixed determin- of a retirement annuity policy acquired by the able date other than that described in the preceding. Employer. sentence which is at least 61 days after Separation from Service, but not later than Apri! 1 of the year following (f) A split distribution under which payments under the year of the Participant's Retirement or attainment options (a), (b), (c) or (e) commence or are made at of age 70-1/2, whichever is later. Notwithstanding the the same time, as elected by the Participant under foregoing provisions of this Section 7.01, no election to Section 7.01, provided that all payments commence defer the commencement of benefits after a separation (or are made) by the latest benefit commencement from service shall operate to defer the distribution of date under Section 7.01 and that once a payment is any amount in the Participant's Loan Account in the made subsequent payment~ will be made in substan- event of a default of the Participant's loan. tially nonincreasing amounts. Effective on or after January 1, 1997, the Participant (g) Any payment option elected by the Participant may elect to defer the commencement of distribution of and agreed to by the Employer and Administrator, benefits to a fixed determinable date later than the date provided that such option must provide for substan- described above, but not later than April I of the year tially nonincreasing payments for any period after following the year of the Participant's retirement or the benefit commencement date under Section 7.01. attainment of age 70-1/2, whichever is later, provided '(a) such election is made after the 61st day following A Participant's or Beneficiary's selection of a payment Separation from Service and before commencement of option made a~er December 31, 1995, under Subsec- distributions and (b} the Participant may make Only one tions (a), (c), or (g) above may include the selection of (1) such election. Notwithstanding the foregoing, the an automatic annual cost-of-living increage.-Such Administrator, in order to ensure the orderly adminis- increase will be based on the rise in the Consumer Price tration of this provision, may establish a deadline after Index for All Urban Consumers (CPI-U) from the third which such election to defer the commencement of quarter of the last year in which a cost-of-living in- distribution of benefits shall not be allowed. crease was provided to the third quarter of the current year. Any increase will be made in periodic payment · 7.02 Payment Options: As provided in Sections 7.01, checks beginning the following January. The first cost- 7.04 and 7.05, a Participant or Beneficiary may elect to offliving increase will be based on the rise in the CPI-U have value of the Participant's Account distributed in from the third quarter of 1995 to the third quar:er of accordance with one of the following payment options, 1996, and will be applied to amounts paid beginning provided that such option is consistent with the limita- January 1997. tions set forth in Section ~ Participant's or Beneficiary's election of a payment (a) Equal monthly, quarterly, semi-annual or annual option must be made at leas: 30 days before the pay- payments in an amount chosen by the Participant, merit of benefits is to commence. If a Participant or continuing until his/her Account is exhausted; Beneficiary fails to make a timely electxon of a payment option, benefits shall be paid monthly under option (c) 457 Defe,,ed Compensation Plan and Ttui'' Document No,,ember 1996 7,06 Unforeseeable Emergencies: ARTICLE VIII. LOANS TO PARTICIPANTS (a) In the event an unforeseeable emergency occurs, 8.01 Availability of Loans to Participants: a Participant may apply to the EmI;loyer to receive that part of the value of his/her Account that is (a) Effective January 1, 1997, the Employer may reasonably needed to satis~' the emergency need. If elect to make loans available to Participants in this such an a. pplication is approved by the Employer, Plan. If the Employer has elected to make loans the Participant shall be paid only such amount as the a~-ailable to Participants, a Participant may apply for Employer deems necessary to meet the emergency a loan from the Plan subject to the limitations and need, but payment shall not be made to the extent other provisions of this Article. that the financial h'ardship may be relieved through cessation of deferral Under the Plan, insurance or (b) The Employer shall establish written guidelines other reimbursement, or liquidation of other assets governing the granting of loans, provided that such to the extent such liquidation would not itself cause guidelines are approved by the Plan Administrator severe financial hardship. and are not inconsistent with the provisions of this Article, and that loans are made available to all (b) An unforeseeable emergency shall be deemed to Participants on a reasonably equivalent basis. involve only circumstances of severe financial hardship to the Participant resulting from a sudden 8.02 Terms and Conditions of Loans to Participants: unexpected illness, accident, or disability of the Any loan by the Plan to a Participant under Section Particip.ant or of a dependent (as defined in section 8.01 of the Plan shall satisfy the following requirements: 152(a) of the Code) of the Participant, loss of th~ Participant~s property due to casualty, or other (a) Availability. Loans shall be made available to all similar and extraordinary unforeseeable circum-~ Participants on a reasonably equivalent basis. stances arising as a result of events beyond the control of the Participant, The need to send a (b) Interest Kate. Loans must be adequately secured Participant's child to college or to purchase a new and bear a reasonable interest rate. home shall not be considered unforeseeable emer- gencies. The determination as to whether such an (c) Loan Limit. No Participant loan shall exceed the unforeseeable emergency exists shall be based on the present value of the Participant's Account. merits of each individual case. (d) Foreclosure. In the event of default on any 7.07 Transitional R. ule for Pre-1989 Benefit Elections: installment payment, the outstanding balance of the In th'e event that, prior to January 1, 1989, a Participant loan shall be a deemed distribution'. In such event, or Beneficiary has commenced receiving benefits 'under an actual distribution of a plan loan offset amount a payment option or has irrevocably elected a pa'yment. will not occur until a dis~ributable event occurs in option or benefit commencement date, then that pay- the Plan. ment option or election shall remain in effect notwith- standing any other provision of the Plan. (e) Reduction of Account. Notwithstanding any other provision of this Plan, the portion of the 7.08 De Minimis Accounts: Notwithstanding the fore- Participant's Account balance used as a security going provisions of this Articlej if the value of a interest held by the Plan by reason of a loan out- Participant's AcCount does not exceed $3,500 and (a) no standing to the Participant shall be taken into amount has been deferred under the Plan with respect account for purposes of determining the amount of~ to the Participant during the 2-year period ending on the Account balance payable at the time of death or the date of the distribution and (b) there has been no distribution, but only if the reduction is used as prior distribution under the Plan to the Participant repayment of the loan. pursuant to this Section 7.08, the Participant may elect to receive or the Employer may distribute the Participant's entire Account without the consent of the Participant. Such distribution shall be made in a lump sum. FCMA P, ETIREMENT CO!cLPORe,~ION above for a period of five years or such shorter period of (b) If the designated Beneficiary does not continue time necessary to ensure that the amount of any install- to live for the remaining period of payments under ment is not less than $1,200 per year, without the the payment option, then the commuted value of inclusion of a cost-of-living increase. any remaining payments under the payment option shall be paid in a lump sum to the estate of the 7.03 Limitation on Options: No payment option may be Beneficiary. In the event that the Participant's estate selected by a Participant under subsections 7.02(a) or (c) is the Beneficiary, the commuted value of any unless the amount of any installment is not less than remaining payments under the payment option shall $1,200 per year. No payment option may be selected be paid to the estate in a ~ump sum. by a Participant or Beneficiary, under Sections 7.02, 7.04, or 7.05 unless it' satisfies the requirements of 7.05 Pre-retirement Death Benefits: · Sections 401 (a)(9) asad 457(d)(2) of the Code, including that payments commencing before the death of the (a) Should the Participant die before he has begun Participant shall satisfy the incidental death benefits to receive the benefits provided by Section 7.01, the requirement under section 457(d)(2)(B)(i)(l). A coSt-of- value ofthe Participant's Account shall be payable Hving increase included as part of a payment option to the Beneficiary commencing within the 30-day selected under Section 7.02 shall not be considered to period commencing on the 91st day after the fail to satisfy the requirement under section 457(d)(2)(b) Participant's death, unless the Beneficiary elects a that any distribution made over a period of more than 1 different fixed or determinable benefit commence- year can only be made in substantially n. onincreasing ment date within 90 days of the Participant's death. amounts. Unless otherwise elected by the Participant Such benefit commencement date shall be not later (or spouse, in the case of distributions described in than the later of (I) December 31 of the year lot- Section 7.05 below) by the time distributions are lowing the year of the Participant's death, or (ii) if required to begin, life expectancies shall be recalculated the Beneficiary is the Participant's spouse, Decem- annually. Such election shall be irrevocable as to the bet 31 of the year in which the Participant would Participant (or spouse) and shall apply to all subsequent have attained age 70-1/.2. years. The life expectancy of a nonspouse Beneficiary may not be recaiculated. (b) Unless a Beneficiary elects a different payment option prior to the benefit commencement date, death benefits under this Section shall be paid in 7.04 Post-retirement Death Benefits: approximately equal annual installments over five years, or over such shorter period as may be neces- ~a) Should the Participant die after he/she has begun sary to assure that the a~nount of any annual install- to receive'benefits under a payment option, the ment is not less than $3,500. A Beneficiary shall be remaining paymerits, if any, under the .payment treated as if he/she were a Participant for purposes option shall be payable to the Participant's Benefi- of determining the payment options available uhder ciary within the 30-day period commencing with Section 7.02, provided, however, that the payment :he 61st day after the Participant's death, unless the option chosen by the Beneficiary must provide for Beneficiary elects payment under a different pay- payments to the Beneficiary over a period no longer ment option that is available under Section 7.02 than the life expectancy of the Beneficiary, and within 60 days of the Participant's death. Any provided that such period may not exceed (15) years different payment option elected by a' Beneficiary if the Beneficiary is not the Participant's spouse. under this section must provide for payments at a rate that is at least as rapid under the payment (c) [n the event tl~at the Beneficiary dies before the option that was applicable to the Participant. [n no payment of death benefits has commenced or been event shall the Employer or Administrator be liable completed, the remaining value of the Partidpant's to the Beneficiary for the amount of any payment Account shall be paid to the estate of the Beneft- made in the name of the Participant before ciary in a lump sum. In the event that the the Administrator receives proof of death of the Participant's estate is the Beneficiary, payment shall Participant. be made to the estate in a lump sum. RETIREMENT CORPORd ION (f') Amount of Loan. At the time the loan is made, (within such term) instituted at the end of such the principal amount of the loan plus the outstand- period of suspension. ing balance (principal plus accrued interest) due on any other outstanding loans to the Participant from (i) Prepayment. The Participant shall be permitted the Plan and from all other plans of the Employer to repay the loan in whole or in part at any time that are qualified employer p!ans under section prior to maturity, ~vithout penalty. 72(p)(4) of the Code shall not exceed the least of: (j) Promissory Note. The loan shall be evidenced (1) $50,000, reduced by the excess (if.any) of by a promissory note executed by the Participant and delivered to the Employer. and shall bear (a) The highest outstanding balance of loans interest at a reasonable rate determined by the from the Plan during the one (1) year Employer. period ending on the day before the date on which the loan is made, over (k) Security. The loan shall be secured'by an assignment of the Participant's right, title and (b) The outstanding balance of loans from the interest in and to his/her Account. Plan on the date on which such loan is made; or (1) Assignment or Pledge. For the purposes of paragraphs (f) and (g), assignment or pledge of any (2) One-half of the value of the Participant's portion of the Participant's interest in the Plan and a interest in all of his/her Accounts under loan, pledge, or assignment with respect t6 any this Plan. insurance contract purchased under the Plan, will be treated as a loan. (g) Application for Loan. The Participant must give the Employer adequate written notice, as (m) Other Terms and Conditions. The Employer determined by the Employer, of the amount and shall fix such other terms and conditions of the loan desired time for receiving a loan. No more than as it deems necessary to comply ~vith legal require- one (1) loan may be made by the Plan to a Partici- ments, to maintain the qualification of.the Plan and pant in any calendar year. No loan shall be ap- Trust under section 457 of the Code, or to prevent proved if an existing loan from the Plan to the the treatment of the loan for tax purposes as a Participant is in default to any extent. distribution to the Participant. The Employer, in its discretion for any reason, may fix other terms (h) Length of Loan. Any loan issued shall require and conditions of the loan, not inconsistent with the Participant to repay the loan in substantially the provisions of this Article and section 72(p) of · equal installments of principal and interest, at least the Code. monthly, over a period that does not exceed five (5) years from the date of the loan; provided, however, 8.03 Participant Loan Accounts: that if the proceeds of the loan are applied by the · Participant to acquire any dwelling unit that is to be (a) Upon approval of a loan to a Participant by the used within a reasonable time (determined at the Employer, an amount not in excess of the loan shall time the loan i~ made) after the loan is made as the be transferred from the Participant's other invest- principal residence of the Participant, the five (5) ment fund(s), described in Section 6.05 of the Plan, year limit shall hot apply. In this event, the period to the Participant's Loan Account as of the Account- of repayment shall not exceed a reasonable period ing Date immediately preceding the agFeed upon determined by the Employer. Principal installments date on which the loan is to be made. and interest payments otherwise due may be sus- pended for up to one (1) year during an authorized (b) The assets of a Participant's Loan Account may leave of absence, if the promiss.ory note so provides, be invested and reinvested only in promissory notes but not beyond the original term permitted under received by the Plan from the Participant as consid- this Subsection (h), with a revised payment schedule eration for a loan permitted by Section 8.01 of the Plan or in cash. Uninvested cash balances in a 437 Deft ed Compensation Ptan and Tru Document November I996 Participant's Loan Account shall riot bear interest. Nothing in this Section shall be construed to autho- Neither the Employer, the Administrator, nor any rize any amount to be distributed under the Plan at other person shall be liable for any loss, or by reason a time or in a form that is not permitted under of any breach, that results from the Participant's Section 457 of the Code. Any Payment made to a exercise of such control. person other than the Participant pursuant to this Section shall be reduced by required income tax 11 payrol person other than the Pa. Hicipant may not prevent repayment ~eduction, by such payment from being inc. ludible in the gross check, and shall be invested in one (1) or more income of the Participant for withholding and other investment funds, in accordance with Section income tax reporting purposes. 6.05 of the Plan, as of the next Accounting Date after payment thereof to the Trust. The amount so' (b) Release from Liability to Participant: The invested shall be deducted from the Participant's Employer's liability to pay benefits to a Participant Loan Account. shall be reduced to the extent that amounts have been paid or set aside for payment to a spouse, (d) The Employer shall have the authority to former spouse, or child pursuant to .paragraph (a) of - establish other reasonable rules, not inconsistent the Section· No such transfer shall be effectuated with the provisions of the Plan, governing the unless the Employer or Administrator has been establishment and maintenance of Participant Loan provided with satisfactory evidence that the Em- Accounts. ployer and the Administrator are released from any further claim by the Participant with respect to such ARTICLE IX NON-ASSIGNABILITY amounts. The Participant shall be deemed to have released the Employer and the Administrator from 9.01 In General: Except as provided in Article VIII any claim with respect to such amounts, in any case and Section 9.02, no Participant or Beneficiary shall in which (i) the Employer or Administrator has been h.ave any right to commute, sell, assign, pledge, transfer served with legal process or otherwise joined in a or otherwise convey or encumber the right to receive proceeding relating to such transfer, (ii) the Partici- any payments hereunder, which payments .and rights pant has been notified of th'e pendency of such are expressly declared to be non-assignable and proceeding in the manner prescribed by the law of nan-transt~rable. ,, the jurisdiction in which the proceeding is pending for service of process in such action or by mail from 9.02 Domestic Relations Orders: the Employer or Administrator to the Participant's last known mailing address, and (iii)' the Participant (a) A/!owance Of Transfers: To the extent required fails to obtain an order of the court in the proceed- under final judgement, decree, or 6rder (including ing relieving the Employer or Administrator from approval of a property settlement agreement) made the obligation to comply with the judgment, decree, pursuant to a state domestic relations law. any or order. portion of a Participant's Account may be paid or set aside for payment to a spouse, former spouse, or (c) Participation in Legal Proceedings: The Era- child of the Participant. Where necessary to carry ployer and Administrator shall not be obligated to out the terms of such an order, a separate Account defend against or set aside any judgement. decree, or shall be established with respect to the spouse, order described in paragraph (a) any legal order former spouse, or child who shall be entitled to relating to the garnishment ofa Participant's ben- make investment selections with respect thereto in e~ts. unless the full expense of such legal action is the same manner as the Participant; any amount so borne by the Participant. In the event that the set aside far a spouse, former spouse, or child shall Participant's action (or inaction) nonetheless causes be paid out in a lump sum at the earliest date that the Employer or Administrator to incur such ex- benefits may'be paid to the Participant, unless the pense, the amount of the expense may be charged order directs a different time or form of payment. 'against the Participant's Account and thereby reduce the Employer's obligation to pay benefits to the 'Tvvetve IC~' A KETIKEMENT CORPOK/i ION Participant. In the course of any proceeding relating Except as mav be required to maintain the status of the to divorce, separation, or child support, the Em- Plan as an eligible deferred compensation plan under ployer and Administrator shall be authorized to section 457 of the Code or to comply with other disclose information relating to the Participant's applicable laws, no amendment or termination of the Account to the Participant's spouse, former spouse, Plan shall divest any Participant of any rights with or child (including the legal representatives of the respect to compensation deferred before the date of the spouse, former spouse, or child), or to a court. amendment or termination. ARTICLE X. RELATIONSHIP TO OTHER PLANS ARTICLE llh APPLICABLE LAW AND EMPLOYMENT AGREEMENTS This Plan and Trust shall be construed under the laws of This Plan serves in addition to any other retirement, the state where the Employer is located and is estab- pension, or benefit plan or system presently in existence lished with the intent that it meet the requirements of or hereinafter established for the benefit of the an "eligible deferred compensation plan" under Section Employer's employees, and participation hereunder shall 457 of the Code, as amended. The provisions of this not affect benefits receivable under any such plan or Plan and Trust shall be interpreted wherever possible in system. Nothing contained in this Plan shall be deemed conformity with the requirements of that section. to constitute an employment contract or agreement between any Participant and the Employer or to give ARTICLE Xllh GENDER AND NUMBER any Participant the right to be retained in the employ 'of the Employer. Nor shall anything herein be construed The masculine pronoun, whenever used herein, shall to modify the terms of any employment contract or include the feminine pronoun, and the singular shall agreement between a Participant and the Employer. include the plural, except where the context requires otherwise. ARTICLE Xh AMENDMENT OR TERMINATION OF PLAN The Emplo. yer may at any time amend this Plan pro- vided that. it transmits such amendment in writing to the Administrator at least 30 days prior to the effective date of the amendment. The consent of the Administrator shall not be required in order for such amendment to become'effective. but the Administrator shall be under no obligation to continue acting as Administrator hereunder if it disapproves of such amendment. The Employer may at any time terminate this Plan. The Administrator may at any time propose an amend-. ment'to the Plan by an instrument in writing transmit- ted to the Employer at least 30 days before the effective date of the amendment. Such amendment shall become · effective unless, within such 30-day period, the Em- ployer notifies the Administrator in writing that it disapproves such amendment, in which case such amendment shall not become effective. In the event of such disapproval, the Administrator shall be under no obligation to continue acting as Administrator hereunder. t"" TACHMENT D: SUGGESTED RESOL ~")N B FOR A LEGISLATIVE Bt~Y Rk'r_,&TING TO AMENDING A DE~,~,~n COMPENSATION PLAN · · IN A STATE OR LOCALITY REQUIRING LEGISLATIVE ACTION PRIOR TO ESTABLISHING A TRLIST FOR A SECTION 457 PLAN Name of Employer: State: i j'7i011fll Employer Plan Number Resolution of the above named Employer {'Employer") WHEREAS, the Employer has employees rendering valuable services; and WHEREAS, the Employer has established a deferred compensation plan for such employees that serves the interest of the Employer by enabling it to provide reasonable retirement security for its employees, by providing increased flexibility in its personnel management system, and by assisting in the attraction and retention of competent personnel; and ' WHEREAS, the Employer has determined that the continuance of the deferred compensation plan will serve these objectives; and WHEREAS, amendments to the Internal Revenue Code have been enacted that require changes to the structure of, and allow enhancements of the benefits of, the deferred compensation plan: NOW THEREFORE BE IT RESOLVED that the Employer hereby amends and restates the deferred compensation plan (the "Plan") in the form of: (Select onel [] The ICMA Retirement Corporation Deferred Compensation Plan and Trust. [] The Plan and Trust provided by the Employer (executed copy attached hereto). BE IT FURTHER RESOLVED that the assets of the Plan shall be held in trust, with the Employer serving as trustee, for the exclusive benefit of the Plan participants and their beneficiaries, and the assets shall not be diverted to any other purpose. The Employers beneficial ownership of Plan assets held in the ICMA Retirement Trust shall be held for the further exclusive benefit of the Plan participants and their beneficiaries. Nothwithstanding the fore oing, all Plan rovisions creating a Trust to hold all the assets of the Plan for the exclusive benefit ot Participants an?~eneficiaries s~all become effective once the appropriate body makes the necessary amendments permitting the establishment and maintenance of such a Trust; BE IT FURTHER RESOLVED that the Plan: ISelect one) [] Will permit loans [Note: Loans may not be permitted until a Trust is established to hold all the assets of the Plan for the exclusive benefit ot Participants and Beneficiaries.] [] Will not permit loans BE tT FURTHER RESOLVED that the Employer hereby ~grees to serve as trustee under the Plan. I, ., Clerk of the (City, County, etc.) of ~ do hereby certify that the foregoing resolution, proposed by (Council Member, Trustee, etc.) , was duly passed and adopted in the (Council, Board, etc.) of the (Ci~; County, Etc.) of at a regular meeting thereof assembled this day of ............ 19 .......... by the following vote: AYES: NAYS: · ABSENT: (Seal) Clerk of the (City, County, etc.) Mail in the enclosed postage-paid envelope or to: ICMA R. etirement Corporation * Attention: Implementation Analyst 777 North Capitol Street NE * Washington, DC 20002-4240 ("'~ TACHMENT D: SUGGESTED RESOL .' ')N B FOR A LEGISLATIVE Bt,,,JY 9k~.&TING TO AMENDING'A DE~F. vs COMPENSATION PLAN · · IN A STATE OR LOCALITY REQUIRING LEGISLATIVE ACTION PRIOR TO ESTABt!-~HING At 'RLIST FOR A SECTION 457 PLAN Name of Employer: State: l 31 01 I I I I Employer Plan Number Resolution of the above named EmplOyer ("Employer'') WHEREAS, the Employer has employees rendering valuable services; and WHEREAS, the Emljloyer has established a deferred compensation plan for such employees that serves the interest of the Employer by enabling it to provide reasonable retirement security for its employees, by providing increased flexibility in its personnel management system, and by assisting in the attraction and retention of competent personnel; and ' WHEREAS, the Employer has determined that the continuance of the deferred compensation plan will serve these objectives; and WHEREAS, amendments to the Internal Revenue Code have been enacted that require changes to the structure of, and allow enhancements of the benefits of, the deferred compensation plan: NOW THEREFORE BE IT RESOLVED that the Employer hereby amends and restates the deferred. compensation plan (the "Plan") in the form of: (Select one) F"l The ICMA Retirement Corporation Deferred Compensation Plan and Trust. [] The Plan and Trust provided by the Employer (executed copy attached hereto). BE IT FURTHER RESOLVED that the assets of the Plan shall be held in trust, with the Employer serving as trustee, for the exclusive benefit of the Plan participants and their beneficiaries, and the assets shall not be diverted to any other purpose. The EmpIoyer's beneficial ownership of Plan assets held in the ICMA Retirement Trust shall be held for the further exclusive benefit of the Plan participants and their beneficiaries. Nothwithstanding the fore oin~, all Plan rovisions creating a Trust to hold all the assets of the Plan for the exclusive benefit of Participants an~E~ene~ciaries s~al} become effective once the appropriate body makes the necessary amendments permitting the establishment and maintenance of such a Trust; BE IT FURTHER RESOLVED that the Plan: (Select one) [] Will permit loans [Note: Loans may not be permitted until a Trust is established to hold all the assets of the Plan for the exclusive benefit of Participants and Beneficiaries.] [] Will not permit loans BE IT FURTHER RESOLVED that the Employer hereby agrees to serve as trustee under the Plan. I ...... Clerk of the (City, County, etc.) of , do hereby certify that the foreBoing resolution, proposed by (Council Member, Trustee, etc.) ...... was duly passed and adopted in the (Council, Board, etc.) of the (Ci~; County, Etc,) of at a regular meeting thereof assembled this day of .............. , l 9 ...... by the following vote: AYES: NAYS: ABSENT: (Seal) Clerk of the (City, County, etc.) Mail in the enclosed postage-paid envelope or to: ICMA Retirement Corporation * Attention: Implementation Analyst 777 North Capitol Street NE · Washington. DC 20002-4240 ATTACHMENT B: 457 LAW CHANGES IMPLEMENTATION CHECKLIST Step 1: Review new RC Section 457 deferred compensation plan document. (See attached booklet) If you currently use the RC Section 457 deferred compensation plan document, you will find the language necessary for you to implement the 457 law changes included in the amended RC 457 plan document booklet in this mailing. Using the RC plan document, this will make your implementation of the changes straightforward. One of the changes, the establishment of a plan level trust will require the naming of a plan trustee. (As in RC- administered 401 plans, the employer is named trustee in the 457 plan.) The trustee will hold record title to plan investments and permit deposits and payments from processing accounts according to the instructions of the employer or plan administrator. Under the trust arrangement, processing accounts used for receiving contributions and paying distributions must be subject to the trust. No other plan operations should be affected. .Articie VI of the amended RC 457 plan document constitutes the trust agreement. To. comply with the new trust prc~visions, you need only adopt the amended RC 457 plan document. You do not need to do anything else to establish the trust. If you maintain multiple providers for your 457 plan, pJease refer to ADDITIONAL INFORMATION (Attachment E). The RC 457 plan document also inch~des language providing for indexed maximum contribution amounts, one- time postponement of beginning payment date elections, and small-balance distributions. Finally, the RC 457 plan document now allows you to elect to offer loans u,~der your plan. If you do not use the RC 457 plan document but use your own plan document please refer to ADDITIONAL INFORMATION (Attachment F.). Note: When you established your plan with RC, you adopted the Declaration of Trust of the ICMA Retirement Trust. This made you eligible to invest your plan~ assets in the ICMA Retirement Trust. With the 457 law changes, the Declaration of Trust will need to be modified. However, this will not delay your implementation of any of the new provisions. RC will provide you more information on the process to change the Declaration of Trust in the near future. Step 2.'. Decide whether to offer loans under your 457 plan. The new RC 457 plan document will provide the option of allowing loans from your 457 plan, after you estabEish a tru~,t arrangement. The. availability of*loans under a 4.57 plan raises many administrative issues, especially in cases where an emplc~yer maintains multiple proriders for its 457 plan. For example, the Internal Revenue Code requires that on the date the toan is made, the maximum loan amount a participant may take is roughly $50,000 less the amount of any other outstanding loans in all 457 and 401 plans in which the employee participates. In order to comply with this provision, employers would need to track the outstanding loan amount for each participant 457 and 401 account under each plan administrator. Piease be aware that the U.S. Treasury Department has yet to issue any guidelines for 457 loans. If you elect this option, RC will provide you with*more detailed information on loans, inciuding loan guidelines, in the upcoming months. You may want to take more time to consider the administrative issues associated with 457 loans before implementing a loan provision, which you may do at any point in the future by contacting RC. .c,.. ' ~.: Consult with legal 'counsel to determine whether any state or local laws or regulations must change ~ ed the changes to your 457 plan may become effective. Certain state statutes, regulations and local ordinances may confiic~t with some provisions of the recent legislation, in particular, the "trust provision.: CSome state and local laws or regulations contain an express statement that 457 assets belong to the employer.) tn some cases, these state and/or local laws or regulations may have to be changed before some or all of the new 457 federal law changes may become effective. Employers in New Jei'sey and New York fal[ into this category. Preliminary research indicates that state and/or local law changes may also have to be made before all the federal law changes become ~ffective for employers in the District of Columbia, Maine,/vtinnesota, Nevad;~, Oregon, Pennsyivania, and South Dakota. Your legal counsel may wish to Ioo~: to the state or local government's laws or reg.ulations regarding your deferred-compensation plan. Specifically, your legal counsel should [ook for statutory or regulatory language indicating that the assets of the plan are owned by the employer and subject to the claims ot: the employer's creditors. If you are an er:nployer with a state and/or local law issue, you should be aware that RC has specially designed documents to allow you to adopt the law changes in the most efficient manner possible. The specially designed resolution and statement (Resolution B and Statement B, both found in Attachment D) will allow you to ad~lress all of the 457 law changes at once, even though they will not go into effect at the same time. (If you are an employer in New York or New lersey, you will have to wait until the appropriate action is taken at the state level before any changes can be made.) Step 4: Take appropriate action to implement law 457 changes. L' , the provisions of RC's prior 457 plan document, the amendments contained in the revised plan document a, . ~emed to be adopted by you unless you notify us within 30 days of the date this plan amendment package was mailed. In this situation, the changes are considered implemented automatically and employers do not need to take any action. However, you may wish to consult with legal counsel to determine if additional employer action is necessary. 5ome employers will require the passage of a council resolution and others wilf simply require an affirmative statement of plan amendment. Attachment D contains two suggested resolutions and two suggested affirmative statements of plan amendment to accommodate your particular situation. As a conyenience, RC enclosed the following chart to help you determine your appropriate action, i~c any, to adopt changes to your 457 plan/If alter reading the chart you have any questions about implementing the law changes or 'the plan amendment'pro.cess, please call our Employer Services s~aff at 1-800-325-7272. POOR ORIGINAL... ICMA RETIREMENT CORPORATION Suite 1360 220 San some Street San :ranclsco. CA 941,34 (415) 677-0833 (415) 677-0835 FAX Toll Pee 800-669-7400 ~ January 12, 1997 L~'~ '/J.... '::7 .~!_. /V,? ,.? '~ Mr. Mike ~back ,~-" z V~7 Ci~' Aaom~ "'. :' ~, CiW of S~atoga 777 Davis St. S~ 300 S~ L~o, CA 94577 ~ ~. ~back: Enclosed is the new IC~ R~ement Coloration (RC) plan d~ts. I have requested a n~ set of these doc~ems to be sent to Mr. Thomas F~, F~ce ~ector, CiW of S~atoga. PIece f~l ~ee to call me if you. have ~y questions ~ n~d ~er tomation. .ly, ~chele M~ M~ketmg Repre~ntative /~ Enclos~ cc: ~. ~omas Ffl, F~ce ~ect~, Ci~ of S~atoga (Wi~out ~clos~es) ATTAC: 'ENT D: SUGGESTED AFFIRMATIVE f TEMENT B FOR aMENDING A DEFERR~-~ COMPENSA'I ,ON PLAN IN A STATE OR LOCALITY REQUIRING LEGISLATIVE ACTION PRIOR TO ESTABLISHING A TRUST FOR A SECTION 457 PLAN Name of Employer: State: L310111lJ Ernptoyer Plan Number As a duly authorized agent of the above named Employer, I hereby: AMEND and restate the Employers deferred compensation plan (the "Plan") in the form of: (Select one) [] The ICMA Retirement Corporation Deferred Compensation Plan and Trust. [] The Plan and Trust provided by the Employer (executed copy attached hereto). SPECIFY that the assets of the Plan shall be held in trust, with the Employer serving as trustee, for the exclusive benefit of the Plan participants and their beneficiaries, and the assets shall not be diverted to any other purpose. The Trustee's beneficial ownership of Plan assets held in the ICMA RetirementTrust shall be held for the ¥urther exclusive benefit of the Plan participants and their beneficiaries. Nothwithstanding the foregoing, all Plan provisions creating a Trust to hold all the assets of the Plan for the exclusive benefit of Participants and Beneficiaries shall become effective once the. appropriate body makes the necessary amendments permitting the establishment and maintenance of such a Trust; STIPULATE that the Plan: (Select one) [] Will permit loans [Note: Loans may not be permitted until aTrust is established to hold all the assets of the Plan for the exclusive benefit of Participants and Bene~ciaries.] [] Will not permit loans AND AFFIRM that the Employer hereby agrees to serve as trustee~ under the Plan. DATE: (Title-of Designated Agent) (Signature) Mail in the enclosed postage-paid envelope or to: ICMA Retirement Corporation · Attention: Implementation Analyst 777 North Capitol Street NE. Washington, DC 20002-4240 ICMA RETIREMENT CORPORATION 777 North Capitol Street, NE Washington, DC 20002-4240 1-202-962-4600 November 1, 1996 FAX 1-202-962-4601 Dear Employer: As promised, the ICMA R.etirement Corporation is providing you this package ofm~terials to help you implement the changes to the hws governing Section 457 deferred compensation plans, which in most cases will become effective on January 1, 1997. Included in this package is the new R.C 457 phn document, which will facilitate the implementation of the law changes for the vast majority of employers whose plans are administered by R.C. tn many cases, you need not do anything to implement the new provisions. To determine what action, if any, is required, R.C has developed a concise four-step process: · Step 1: R.eview new R.C Section 457 deferred compensation plan document · Step 2: Determine whether to allow loans under your 457 plan considering the significant additional administrative burden they will entail ' · Step 3: Consult with legal counsel to determine whether any state or local laws or regulations must change before the federal Section 457 law changes may be adopted · Step 4: Take appropriate action to implement 457 law changes depending upon determinations made under Steps 2 and 3 and the procedures you must follow to amend your plan. In addition to the plan document, R.C has developed a number of materials to help you implement the changes under the new law: · Attadunent A: A quick overview of the current hw, the new law and required employer action · Attachment B: A derailed analysis of each step of the implementation process · Attachment C: An easy-to-follow chart, including most scenarios, to help guide you to the correct action · Attachment D: Suggested resolutions and suggested affirmative statements of plan amendment, which you can use if necessary · Attachment E: Additional information you may find useful · As a convenience, a postage-paid return envelope for any documents you need to return to We believe that this comprehensive package should resolve the questions for the wast majority of our employers and put you in a favorable position to easily adopt the new provisions. For other employen, we have provided the information necessary to chart a course toward adoption. As always, R.C's Employer Services Unit is available to speak to you about your specific concerns. Feel free to call them at 1-800-326-7272. Sincerely, Stephen Wm. Nordholt Senior Vice President, Customer Services ICMA-RC Servfces. Inc. is a wholly owned broker.dealer subsMiarf ol the ICMA Retirement Corporation. Member NASD and SIPC ICMA RETIREMENT CORPORATION 777 North Capitol Street, NE- Washington, DC 20002-4240 1-202-962-4600 Toll-l=ree 1-800-669-7400 ATT! ~-IMENT E: ADDITIONAL INFC' 'vtATION Employers maintaining' MULTIPLE PLAN PROVIDERS must determine whether they must establish a separate trust for the 457 assets in each provider's plan.. Many employers with multiple providers consider these proriders to be part of one 457 plan. In this case, only one trust needs to be established for the aggregate 457 assbts. If you consider your multiple plan providers as providing separate 457 plans, you must establish a trust for each of these plans. Employers Who do not use the RC 457 plan document but use their own plan document ma); want to consider converting to the RC 457 plan document. If you currently do not use the RC 457 plan document, you may wish to take this opportunity to adopt the RC plan document because you will find it makes adopting the new provisions easier. tn addition: * The RC plan document is designed to provide employers and participants with as much f!e×ibility as possible within IRS guidelines. . Adopting the RC plan releases you from the burden and cost of continually reviewing and revising your plan document in response to changes in the .Internal Revenue Code. . A favorable private letter ruling is always sought from the Internal Revenue Service for the RC 457 plan document. This is important because a plan deemed ineligible by the IRS could result in a significant tax liability to all plan participants. Information on adopting the RC plan document is available from our Employer Services staff b.y calling toll-free 1-800-326~7272. If you plan to continue to use your own plan document, you may incorporate language from the new RC 457 plan document to implement the 457 law changes. For example, the language necessary to establish the trust may be located in Article VI of the plan document. As soon as your own "individually designed" plan document has been amended based on the 457 taw changes, and it has been adopted, please forward a copy to RC. The plan document may be mailed in the enclosed postage-paid envelope or to: ICMA Retirement Corporation, Attention-Implementation Analyst, 777 North Capitol Street NE, Washington, DC 20002-4240. RC is in the process of obtaining a private letter. ruling for the new RC Section 457 plan document. RC has submitted the new RC 457 plan document to the Internal Revenue Service (IRS), through a participating employer, to obtain a private letter ruling. With the imminent effective date of the law changes, RC will be operating under the new "interim" plan document until the favorable ruling is obtained. This will ensure that you and your participants can take immediate advantage of the new federal law changes. Normally, RC would not begin operating under a 457 plan document until a favorable private letter ruling is received from the IRS, which could-take-as long as a year. Because-the~existing RC plan document was amended simply to conform to changes in the new law, however, RC is comfortable with operating under this amended plan document. ATTACHMENT C: RE~,,OMMENDED ACTIONS FOR ~ING YOUR 457 PLAN Do you have any state What formal action do Do you plan to offer loans Action Recommended and/or local laws that you have to take to amend under your plan? conflict with the federal your 457 plan? 457 law changes? No None No None (Your plan will be considered adopted 30 days following this mailing, with all 457 law changes, excluding the loan provision) ........... No Affirmative statement of No Execute Affirmative amendment Sratement A ................. No Passage of council resolution No Execute Resolution A ............. No None Yes Execute Aff/rmat]~/e Statement A No Affirmative statement of Yes Execute amendment Statement A ..... No Passage of council resolution Yes Execute Resolutio. A ....... , ........... Yes None No Execute Affirmati~,e Statemerit ., Yes Affirmative statement of No Execute Aff/rmative amendment Statement ............. Yes . Passage of council resolution No Execute Reso]u~ic~n ............ Yes None Yes Execute Alcf]rmatix/e Statement ........ Yes Affirmative statement of Yes Execute Affirmoriole amendment Statement ..................... Yes Passage of council resolution Yes Execute Reso/c:tion ICMA RET]KEMENT CO~LPOKA I'ION This deferred compensation plan has been submitted to the Internal Revenue Service by a public employer for a Private Letter Ruling. The IRS has not yet issued a Ruling on the. plan and may require changes in this document prior to issuing a~Ru|ing. If changes are required in the document, you will be notified of the changes. ATTACHlV~.ENT A: OVERVIEW OF 457 LAW CHANGES Employer Action Issue Current Law New Law Reference Guide 457 Plan Level Trust 457 assets must remain solely All amounts deferred under a Employers with a 457 plan in existence the prope o~ the employer, Section 457 plan must be on August 20, 1996 must establish a subject tulle clai~ns of the held in trust for the exclusive plan level trust prior to January 1, ~ 9¢J9. employer's general creditors. benefit of plan participants (However, until the trust is established, and/or beneficiaries. assets will remain unprotected.) The plan [evel trust may be established by adopting the revised RC 457 plan document or by amending your own Jan document with applicable ~nguage, such as language found in the RC plan document. See the Implementation Checklist for more details. 457 Loans Because 457 plan assets are the As acknowledged in an Employers must decide whether sole property of the em Ioyer, a officio} Congressional report, offering loans would be desirable. If it .457'plan cannot inclu~ a loan once 457 plan assets are is decided that loans will be offered, a provision. held in a trust, a plan may plan level trust must first be established. permit loans under the A loan option is available in the revised provisions of section 72(p) of I' RC 457 Inn document. Loans maybe the Internal Revenue Code. elected bP~ a~'opting the RC Inn document and electing to oR~;r loans or by amendin our own plan do~:ument with applic~gb~ language, such as language from the RC plan document. See Implementation Checklist for more details. 457 Annual Contribution The annual contribution The annuat contribution Adopt revised RC 457 plan document Maximum maximum is the lesser of (1) maximum of $7,500 will be or amend your own plan document $7,500 or (2) 33 1F3 percent of indexed to increase in $500 with applicable annual contribution includible compensat/on. increments (rounded down) maximum lan uage, such as language based on changes in the from the RC p~n document. See Consumer Price Index. The Implementation Checklist for more first increase will [ikeiy not details. ' occur t~ntil 199e,. 457 Postponement of Upon separation-from-service. Allows a one-time postpone- Adopt revised RC 457 plan document Beginning Payment the participant must itrevocablr ment of beginning payment or amend your own plan document Date Election elect a be~ginnin8 payment date date elections. For example, with applicable distribution date for plan d~stribut~ons. a participant could postpone change Inn uage, such as .Inn uage his/her ori inal beginnin from the R~ plan document. ee~e payment ~te election o~g Implementation Checklist for more March 31, '1997, to Septera- details. bet 30, ~ 998. 457 withdrawals are permitted Allows one-time employer- Adopt revised RC 457 plan document 457. Small-Balance under the following situations: or employee-initiated or amend your own inn document Account Distributions (1) separation from service distributions of 457 accounts with applicable smaRJbalance account lincluding retirement~.terrnina-~ ~with balances of~:$LS00 or -distribution language, such as language lion, or death} and (2} unfore- less that have been inactive from the RC plan document. See seeable emergency. (have not received contribu- Implementation Checklist for more lions} for at feast two years. details. ff a' sm-~H-ba[ance distr/bu- lion is taken from a p{an, a participant can participate in that plan again. However~ this paflicipant cannot receive another small- balance distribution from the plan.