HomeMy WebLinkAboutCC Resolution 10527 (Deferred Compensation Plan Amendment)RESOLUTION NO. 10527
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN
RAFAEL AMENDING THE DEFERRED COMPENSATION PLAN,
EFFECTIVE NOVEMBER 15, 1999.
WHEREAS, the City of San Rafael (Employer) has employees currently
participating in a 457 deferred compensation plan administered by National Deferred
Compensation, Inc. (NDC) and ICMA Retirement Corporation (ICMA), and
WHEREAS, the Employer has employees rendering valuable services; and
WHEREAS, FundSelect Advisors Inc, was identified as one of the City's two
approved deferred compensation programs when the Plan was last amended on
December 21, 1998, and
WHEREAS, subsequent to the last plan amendment, FundSelect Advisors Inc.
was acquired by National Deferred Compensation, Inc (NDC), and
WHEREAS, the Employer has established two deferred compensation plans 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, NDC and ICMA are able to administer the deferred compensation
plan for Employer in accordance with the terms of their respective agreements.
WHEREAS, amendments to the Internal Revenue Code have been enacted that
allow enhancements of the benefits of the deferred compensation plan;
NOW, THEREFORE, BE IT RESOLVED,
1. The Employer hereby amends and restates the deferred
compensation 457 plan (the "Plan") and adopts the Plan referred to
as "Exhibit A".
2. The City Manager, or his/her designee, is hereby authorized to
execute all necessary agreements with NDC and ICMA incidental to
the administration of the Plan and shall do all things necessary and
proper to implement this Resolution.
This Amended and Restated Plan adopted by Employer hereby supersedes and
replaces any prior plan applicable to FundSelect Advisors Inc., NDC and ICMA.
I, JEANNE M. LEONCINI, Clerk of the City of San Rafael, hereby certify that the
foregoing resolution was duly and regularly introduced and adopted at a regular meeting
of the City Council of said City held on Monday, the 151' day of November 1999, by the
following vote to wit:
AYES: COUNCILMEMBERS: Cohen, Heller, Miller, Phillips & Mayor Boro
NOES: COUNCILMEMBERS: None
ABSENT: COUNCILMEMBERS: None
Jeanne M. Le ncini, City Clerk
Council material\resolutions\city\1999\deferred compensation plan.doc
Exhibit A
DEFERRED COMPENSATION PLAN
(Amended and Restated Plan and Trust/Custodial Document)
Section 1. Name: The name of this Plan and Trust/Custodial Document is the
City of San Rafael, State of California, Deferred Compensation Plan, hereinafter
referred to as the "Plan". This Plan is the continuation in restated form of the
City of San Rafael Deferred Compensation Plan previously established by the
City of San Rafael City Council.
Section 2. Purpose: The primary purpose of the Plan is to attract and retain
personnel by permitting them to enter into agreements with the Employer that will
provide for deferral of payment of a portion of their current Compensation until
death, disability, retirement, termination of employment or other events as
provided herein, in accordance with applicable provisions of State law and
Section 457 and other applicable Sections of the Internal Revenue Code. Except
as otherwise stated herein, this amended and restated Plan shall become
effective November 15, 1999.
This Plan and Investment and Trust/Custodial Fund is intended to be exempt
from taxation under Section 501(a) of the Internal Revenue Code (Code) and
intended to comply with Section 457(g) of such Code. The Trustees/Custodian
shall be empowered to submit or designate appropriate agents to submit this
Plan and Investment and Trust/Custodial Fund to the Internal Revenue Service for
a determination of the eligibility of the Plan under Section 457, and the exempt
status of the Investment and Trust/Custodial Fund under Section 501(a), if the
Trustees/Custodian conclude that such a determination is desirable.
Section 3. Definitions: For the purposes of this Plan when used and capitalized
herein the following words and phrases shall have the meanings set forth below.
3.1 "Account" means the bookkeeping account maintained for each
Participant reflecting the cumulative amount of the Participant's Deferred
Compensation, including any income, gains, losses or increases or
decreases in market value attributable to the Employer's investment of the
Participant's Deferred Compensation and further reflecting any
distributions to the Participant or the Participant's Beneficiary and any fees
or expenses charged against such Participant's Deferred Compensation.
3.2 "Accounting Date" means each business day that the New York
Stock Exchange is open for trading, as provided in Section 6.6 for valuing
the trust's assets.
3.3 "Administrator" means the service provider or providers with whom
the Employer contracts either investment, recordkeeping or other
management services for the Plan. The Employer may remove any person
as Administrator upon 60 day's advance notice in writing to such person,
in which case the Employer shall name another person or persons to act a
Administrator. The Administrator may resign upon 60 day's advance
notice in writing to the Employer, in which case the Employer shall name
another person or persons to act as Administrator.
3.4 "Beneficiary" means the person or persons a Participant designates
to receive his/her interest under the Plan after the Participant's death,
(provided that a married Participant may designate someone other than
his/her spouse as his/her Beneficiary only with his/her spouse's consent).
The designation may be made, and may be revoked and changed, only by a
written instrument (in form acceptable to the Employer) signed by the
Participant, consented to by the Participant's spouse, if necessary, and
filed with the Employer prior to the Participant's death, or if no designated
Beneficiary survives the Participant, his/her Beneficiary shall be his/her
spouse if he/she is married, or, if not, his/her estate.
3.5 "Code" means the Internal Revenue Code of 1986, as amended.
3.6 "Compensation" means the total of all amounts of salary or wages
which would be paid by the Employer to or for the benefit of an Employee
(if he/she were not a Participant in the Plan) for services performed during
the period that the Employee is a Participant, including any amounts of
Deferred Compensation that may be credited to the Participant's Account.
Compensation shall be taken into account at its present value and its
amount shall be determined without regard to any community property
laws.
3.7 "Trustee/Custodian" means a bank, trust company, financial
institution, or other legally authorized entity appointed by the Employer to
have custody of assets in the Investment and Trust/Custodial Fund.
3.8 "Deferred Compensation" means the amount of Compensation
which the Participant defers pursuant to his/her Participation Agreement in
accordance with the provisions of this Plan.
3.9 "Disability" means the inability of a Participant to engage in his/her
usual occupation by reason of a medically determinable physical or mental
impairment as determined by the Employer on the basis of advice from a
physician or physicians.
3.10 "Election Period" means the fifty-nine (59) day period after
separation from service with the Employer during which a Participant may
elect to defer commencement of benefit payments under the Plan.
3.11 "Employee" means any officer, employee or elected official of the
Employer, provided, however, that all extra -help or temporary employees
and/or any contract employee whose contract does not provide for
participation in the Plan shall not be "employees".
3.12 "Employer" means the City of San Rafael.
3.13 "Employer Contribution" means the contribution made by the
Employer pursuant to Subsection 5.2 of the Plan.
3.14 "Employment Period" means a period from January 1 through
December 31 of the same year, except that the first Employment Period of
an Employee hired on any date other than January 1 shall be the period
beginning with the date of employment and ending on December 31 of the
same year.
3.15 "Includible Compensation" means Compensation which (taking into
account the provisions of the Code, including Section 403(b) and Section
457) is currently includible in gross income for federal income tax
purposes. Such term does not include any amount excludable from gross
income under this Plan or any other plan described in Section 457(b) of the
Code or any other amount excludable from gross income for federal
income tax purposes. Includible Compensation shall be determined
without regard to any community property laws.
3.16 "Investment and Trust/Custodial Fund" means a fund established by
the Employer as a convenient method of setting aside a portion of its
assets to meet its obligations under the Plan, as provided in Subsection
6.1.
3.17 "Joinder Agreement": An agreement entered into between an
Employee and the Employer, including any amendments or modification
thereof. Such agreement shall fix the amount of Deferred Compensation,
specify a preference among the investment alternatives designated by the
Employer, designate the Employee's Beneficiary or Beneficiaries, and
incorporate the terms, conditions and provisions of the Plan by reference.
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3.18 "Normal Retirement Age" means the date a Participant attains age
70 '/Z or, at the election of the Participant, any earlier date that is no earlier
than the earliest age at which the Participant has the right to retire under
the Marin County Employee Retirement System and to receive immediate
retirement benefits calculated without actuarial reduction, but in any event
not later than the date or age at which the Participant separates from
service with the Employer. If a Participant is employed by the Employer
beyond age 70 1/2 , his/her Normal Retirement Age may be the age at which
he separates from service with the Employer; provided that the distribution
requirements of Subsection 7.5 are still satisfied with respect to the
Participant, and provided further that a Participant who has utilized the
catch-up deferral provisions of Subsection 5.3(b) may not thereafter
change his/her Normal Retirement Age.
3.19 "Participant" means any Employee who fulfills the participation
requirements under Section 4.
3.20 "Participation Agreement" means the agreement executed and filed
by an Employee with the Employer pursuant to Section 4, under which the
Employee elects to become a Participant in the Plan and to defer
Compensation thereunder.
3.21 "Plan Year" means the calendar year.
3.22 "Retirement" means the first date upon which both of the following
shall have occurred with respect to a Participant: Separation from Service
and attainment of age 65.
3.23 "Separation From Service" means severance of the Participant's
employment with the Employer which constitutes a "separation from
service" within the meaning of Section 402(d)(4)(A)(iii) of the Code. In
general, a Participant shall be deemed to have severed his employment
with the Employer for purposes of this Plan when, in accordance with the
established practices of the Employer, the employment relationship is
considered to have actually terminated.
3.24 "Trust" means all compensation deferred under the Plan, plus any
income and gains thereon, less any losses, expenses and distributions to
Participants and Beneficiaries.
Section 4. Participation in the Plan:
4.1 Participation: Each Employee may elect to become a Participant in
the Plan and defer payment of Compensation not yet earned by executing a
written Participation Agreement and filing it with the Employer at any time
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during active employment with the Employer. Compensation shall be
deferred for any calendar month only if a Participation Agreement
providing for such deferral has been entered into and is effective before
the beginning of such month.
4.2 Modification of Deferral: A Participation Agreement shall remain in
effect until it is terminated or modified. A Participant may modify an
existing Participation Agreement to effect subsequent deferrals in
accordance with rules established by the Employer. Such modification
must be filed by the Participant with the Employer prior to the beginning of
the month for which the modification is to be effective.
4.3 Termination of Deferral: A Participant may terminate further deferral
of Compensation under the Plan effective at the beginning of any month by
filing with the Employer an executed notice of termination of his/her
Participation Agreement prior to the effective date of termination. Once
further deferral of Compensation is terminated, a Participant may rejoin the
Plan in accordance with rules established by the Employer. No previously
deferred amounts shall be payable to an Employee upon terminating
further deferral of Compensation under the Plan unless otherwise due
pursuant to Section 7 hereof.
4.4 Selection of Investment Options: The Participation Agreement shall
also provide for the selection, pursuant to Subsection 6.5, of one (1) or
more investment options in the Investment and Trust/Custodial Fund to
which the Participant's Deferred Compensation shall be allocated; provided
that any amounts so allocated equal or exceed a minimum of ten dollars
($10.00) per pay period. The Employer shall invest the Participant's
deferrals in accordance with such selection.
Section 5. Amount of Deferrals and Deferral of Compensation
5.1 Deferral of Compensation: During each Employment Period in which
an Employee is a Participant in the Plan, the Employer shall defer payment
of such part of the Participant's Compensation as is specified by the
Participant in the Participation Agreement which the Participant has
executed and filed with the Employer.
5.2 Employer Contribution: During each Employment Period in which an
Employee is a Participant in the Plan, the Employer may make an Employer
Contribution to the Participant's Account equal to the percentage of the
Participant's Compensation specified by resolution or labor contract
approved by the Employer.
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5.3 Limitation: The amount of Compensation which may be deferred by
a Participant and the amount of Employer Contributions, if any, made to a
Participant's Account are subject to the following limitations:
a) Annual Limitation: Except as provided in Paragraph (b) below,
the maximum amount that a Participant may defer during an
Employment Period, when added to the amount of any Employer
Contribution for such Participant during the Employment Period,
shall not exceed the lesser of (1) eight thousand dollars ($8,000), as
may be adjusted for cost -of -living by the Secretary of the Treasury or
(2) 33 1/3% of the Participant's Includible Compensation. The
minimum amount that a Participant may defer is ten dollars ($10.00)
per pay period.
b) Catch -Up Deferrals: For one or more of a Participant's last
three Employment Periods ending before the Participant attains
Normal Retirement Age, the maximum amount a Participant may
defer during the Employment Period, when added to the amount of
any Employer Contribution for such Participant during the
Employment Period established in Paragraph (a) above, plus so
much of such maximum amounts determined under such Paragraph
(a) for Employment Periods beginning after December 31, 1978, but
before the current Employment Period in which the Participant was
eligible to participate in the Plan (or in another eligible deferred
compensation plan under Section 457(b) of the Code) less the
amount of compensation actually deferred under such Paragraph (a)
for such prior Employment Periods shall not exceed fifteen thousand
dollars ($15,000) per each of such three Employment Periods.
The provisions of this Paragraph (b) shall not apply more than once
to each Participant.
c) Aggregation of Plans: In applying Paragraphs (a) and (b)
above, the amount that may be deferred by a Participant under the
Plan for any employment Period shall be reduced by:
(i) the amount deferred by the Participant for such
Employment Period under any other eligible deferred
compensation plan under Section 457(b) of the Code,
(ii) any Employment Period under Section 403(b) of the
Code,
(iii) any amount excluded from the Participant's gross
income for such Employment Period under Section 402(a)(8)
or Section 402(h)(B) of the Code, and
(iv) any amount with respect to which a deduction is
allowable for such Employment Period by reason of a
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contribution on behalf of the Participant to an organization
described in Section 501(C)(1 8) of the Code.
The Participant shall inform the Employer of his/her participation in
any of the above listed plans and is solely responsible for any
violation of this Paragraph (c) above.
Section 6 Investment and Trust/Custodial Fund Provisions:
6.1 Investment of Deferred Compensation: A trust is hereby created to
hold all the assets of the Plan for the exclusive benefit of Participants and
Beneficiaries, except that expenses and taxes may be paid from the Trust
as provided in Section 6.3. The Trustee shall be the Employer or such other
person which agrees to act in that capacity hereunder.
6.2 Investment Powers: The Trustee or the Plan Administrator acting as
agent for the trustee, shall have the power listed in this Section 6.2 with
respect to investment of Trust assets, except to the extent that the
investment of Trust assets is directed by Participants, pursuant to Section
6.5. Trustee shall have the power:
a) To invest and reinvest the Trust without distinction between
principal and income in any form of tangible or intangible property,
real personal, or mixed, and wherever situated, including, but not by
way of limitation, common or preferred stocks, shares of regulated
investment companies and other mutual funds, bonds, loans, notes,
debentures, mortgages, certificates of deposit, interest, or
participation, equipment trust certificates, commercial paper
including but not limited to participation in pooled commercial paper
accounts, contracts with insurance companies including but not
limited to insurance, individual or group annuity, deposit
administration, and guaranteed interest contracts, deposits at
reasonable rates of interest at banking institutions including but not
limited to savings accounts and certificates of deposit, and other
forms of securities or investments of any kind, class, or character
whatsoever and representing interests in any form of enterprise,
wherever it may be located, organized or operated within or without
the United States of America, whether such investments are income
producing or not, without being limited in any respect by statute or
court rule or decision of any jurisdiction now or hereafter in force
purporting to limit or otherwise affect such investments. Assets of
the Trust may be invested in securities or new ventures that involve
a higher degree of risk than investments that have demonstrated
their investment performance over an extended period of time.
b) To invest and reinvest all or any part of the assets of the Trust
in any common, collective or commingled trust fund that is
maintained by a bank or other institution and that is available to
Employee plans described under Sections 457 or 401 of the Code, or
any successor provisions thereto, and during the period of time that
an investment through any such medium shall exist, to the extent of
the participation of the Plan, the declaration of trust of such
common, collective or commingled trust funds shall constitute a part
of this Plan.
c) To invest and reinvest all or any part of the assets of the Trust
in any group annuity, deposit administration or guaranteed interest
contract issued by an insurance company or other financial
institution on a commingled or collective basis with the assets of
any other 457 plan or trust qualified under Section 401(a) or any
other plan described in Section 401(a)(24) of the Code, and such
contract may be held or issued in the name of the Plan
Administrator, or such custodian as the Plan Administrator may
appoint, as agent and nominee for the Employer. During the period
that an investment through any such contract shall exist, to the
extent of participation of the Plan, the terms and conditions of such
contract shall constitute a part of the Plan.
d) To hold cash awaiting investment and to keep such portion of
the Trust in cash or cash balances, without liability for interest, in
such amounts as may from time to time be deemed to be reasonable
and necessary to meet obligations under the Plan or otherwise to be
in the best interests of the Plan.
e) To vote or to refrain from voting any stocks, bonds or other
securities held in the Trust, to exercise any other right appurtenant
to any securities or other property held in the Trust, to give general
or special proxies or powers of attorney with or without power of
substitution with respect to such securities and other property, to
exercise any conversion privileges, subscription rights, or other
options or privileges with respect to such securities and other
property and make any payments incidental thereto, and generally to
exercise, personally or by general or limited power of attorney, any
of the powers of an owner with respect to stocks, bonds securities,
or other property held in the Trust at any time.
f) To oppose or to consent to and participate in any organization,
reorganization, consolidation, merger, combination, readjustment of
finances, or similar arrangement with respect to any corporation,
company, or association, any of the securities of which are held in
the Trust, to do any act with reference thereto, including the exercise
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of options, the making of agreements or subscriptions and the
payment of expenses, assessments, or subscriptions that may be
deemed necessary or advisable in connection therewith, and to
accept, hold, and retain any securities or other property that may be
so acquired.
g) To hold, to authorize the holding of, and to register any
investment to the Trust in the name of the Plan, the Employer, or any
nominee or agent of any of the foregoing, including the Plan
Administrator, or in bearer form, to deposit or arrange for the deposit
of securities in a qualified central depository even though, when so
deposited, such securities may be merged and held in bulk in the
name of the nominee of such depository with other securities
deposited therein.
h) Upon such terms as may be deemed advisable by the
Employer or the Plan Administrator, as the case may be, for the
protection of the interest of the Plan or for the preservation of the
value of an investment, to exercise and enforce by suit for legal or
equitable remedies or by other action with the Employer's
authorization, or to waive any right or claim on behalf of the Plan or
any default in any obligation owing to the Plan, to renew, extend the
time for payment of, agree to a reduction in the rate of interest on, or
agree to any other modification or change in the terms of any
obligation owing to the Plan, to settle, comprise, adjust or submit to
arbitration any claim or right in favor of or against the Plan, to
exercise and enforce any and all rights of foreclosure, bid for
property in foreclosure, and take a deed in lieu of foreclosure with or
without paying consideration therefore, to commence or defend
suits or other legal proceedings whenever any interest of the Plan
requires it, and to represent the Plan in all suits or legal proceedings
in any court of law or equity or before any body or tribunal.
i) To employ suitable consultants, depositories, agents and legal
counsel on behalf of the plan.
j) To open and maintain any bank account or accounts in the
name of the Plan, the Employer, or any nominee or agent of the
foregoing, including the Plan Administrator, in any bank or banks.
k) To do any and all other acts that may be deemed necessary to
carry out any of the powers set forth herein and under applicable
state and federal laws.
6.3 Taxes and Expenses: All taxes of any kinds whatsoever that may be
levied or assessed under existing or future laws upon, or in respect to the
9
Trust, or the income thereof, and all commissions or acquisitions or
dispositions of securities and similar expenses of investment and
reinvestment of the Trust, shall be paid from the Trust. Such reasonable
compensation of the Plan Administrator, as may be agreed upon from time
to time by the Employer and the Plan Administrator, and reimbursement for
reasonable expenses incurred by the Plan Administrator in performance of
its duties hereunder (including but not limited to fees for legal, accounting,
investment and custodial services) shall also be paid from the Trust.
6.4 Payment of Benefits: The payment of benefits from the Trust in
accordance with the terms of the Plan may be made by the Plan
Administrator, or by any custodian or other person so authorized by the
Employer to make such disbursement. The Plan Administrator, custodian
or other person shall not be liable with respect to any distribution of Trust
assets made at the direction of the Employer.
6.5 Investment Funds: In accordance with uniform and
nondiscriminatory rules established by the Employer and the Plan
Administrator, the Participant may direct his/her Accounts to be invested in
one (1) or more investment funds available under the Plan; provided,
however, that the Participant's investment directions shall not violate any
investment restrictions established by the Employer. Neither the
Employer, the Administrator, nor any other person shall be liable for any
losses incurred by virtue of following such directions or with any
reasonable administrative delay in implementing such direction.
The Plan Administrator or the Employer shall adopt various investment
options for the investment of deferred amounts by Participants or their
Beneficiaries, and shall monitor and evaluate the appropriateness of
continued offering by the Plan. The Trustees/Custodian or the Employer
may determine which options are no longer appropriate for offering. In
adopting or removing such options, the Trustees/Custodian or Employer,
the Participants or their Beneficiaries shall be entitled to select from
among the available options for investment of their deferred amounts. In
the event options are removed from the active list, the Trustees/Custodian
or Employer may require Participants to move balances to an alternative
option offered by the Plan. If any Participants fail to act in response to the
written notice, the Trustees/Custodian or Employer shall transfer monies
out of the ineligible investment option to an alternative option chosen by
the Trustees/Custodian or Employer. By exercising such right to select
investment options or by failing to respond to notice to transfer from a
removed option where the Trustees/Custodian or Employer move the
monies on behalf of such Participants, the Participants and their
Beneficiaries agree that none of the Plan fiduciaries will be liable for any
investment losses, or lost investment opportunity in situations where
monies are moved by Trustees/Custodian or Employer, that are
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experienced by a Participant or Beneficiary in the investment options(s)
they select or are selected from them if they fail to take appropriate action
in regard to a no longer available fund.
6.6 Valuation of Accounts: As of each Accounting Date, the Plan assets
held in each investment fund offered shall be valued at fair market and the
investment income and gains or losses shall be determined. Such
investment income and gains or losses shall be allocated proportionately
among all Account balances on a fund -by -fund basis. The allocation shall
be in the proportion that each such Account balance as of the immediately
preceding Accounting Dates bears to the total of all such Accounting Date.
For purposes of this Section, all Account balances include the Account
balances of all Participants and Beneficiaries.
6.7 Crediting of Accounts: The Participant's Account shall reflect the
amount and value of the investments or other property obtained by the
Employer through the investment of the Participant's Deferred
Compensation pursuant to Sections 6.5 and 6.6. It is anticipated that the
Employer's investments with respect to a Participant will conform to the
investment preference specified in the Participant's Joinder Agreement,
but nothing here shall be construed to require the Employer to make any
particular investment of a Participant's Deferred Compensation. Each
Participant shall receive periodic reports, not less frequently than annually,
showing the then current value of his/her Account.
6.8 Employer Liability: In no event shall the Employer's liability to pay
benefits to a Participant under this Plan exceed the value of the amounts
credited to the Participant's Account; neither the Employer nor the
Administrator shall be liable for losses arising from depreciation or
shrinkage in the value of any investments acquired under this Plan.
Section 7 Distribution of Benefits
7.1 Payments on Separation from Service: Subject to the provisions of
Subsection 7.5, upon a Participants Separation from Service with the
Employer for any reason (including disability), the entire amount credited
to his/her Account (less any federal, state or local income tax required to
be withheld therefrom) shall be paid to him in a single lump sum
immediately after the expiration of the Election Period; provided, however,
that during such Election Period a Participant (including a Participant who
has utilized the catchup deferral provisions of Subsection 5.3(b) with an
Account balance in excess of an amount specified by the Employer, which
amount shall not exceed the amount specified in Section 457(e)(9)(A) of the
Code, as the same may be adjusted from time -to -time, may irrevocably
elect in writing (on a form acceptable to the Employer) a specific later date
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for first receiving payment under the Plan. In addition, a Participant may
elect a different method of payment as provided in Subsection 7.2 by filing
the appropriate form with the Employer no later than sixty (60) days prior to
the Participant's elected payment date. The Account balance of a
Participant with less than the amount specified by the Employer in his/her
Account at the time of his/her separation from service shall be paid in a
single lump sum to the Participant (less applicable taxes) as soon as
practicable following his/her separation from service.
A Participant who has elected a specific later date for the first receiving a
payment under the Plan, as set forth above, may elect to further defer the
date upon which such payment(s) will begin. Such election to further defer
payment may be made only once, to a later date, as long as payments have
not yet begun when such election is made.
7.2 Optional Forms of Benefit Payments: Subject to the provisions of
Section 7.5, as an alternative to payment in a lump sum, a Participant
whose Account balance exceeds the amount specified by the Employer
under Subsection 7.1 above, may elect to receive payment under the Plan
as follows:
a) Equal monthly, quarterly, semi-annual or annual payments in
an amount chosen by the Participant, continuing until his/her
Account is exhausted.
b) Approximately equal monthly, quarterly, semi-annual or
annual payments, calculated to continue for a period certain chosen
by the Participant.
c) Annual Payments equal to the minimum distributions required
under Section 401(a)(9) of the Code over the life expectancy of the
Participant or over the life expectancies of the Participant and his
Beneficiary.
d) Payments equal to payments made by the issuer of a
retirement annuity policy acquired by the Employer.
e) A split distribution under which payments under options (a),
(b) or (d) commence or are made at the same time, as elected by the
Participant under Section 7.1, provided that all payments commence
(or are made) by the latest benefit commencement date under
Section 7.5 and that once a payment is made subsequent payments
will be made in substantially non -increasing amounts.
f) Any payment option elected by the Participant and agreed to
by the Employer and Administrator, provided that such option must
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provide for substantially non increasing payments for any period
after the benefit commencement date under Section 7.1.
A Participant's or Beneficiary's selection of a payment option made after
December 31, 1995, under Subsections (a), (b) or (f) above may include the
selection of an automatic annual cost -of -living increase. Such increase
will be based on the rise in the Consumer Price Index for All Urban
Consumers (CPI -U) from the third quarter of the last year in which a cost of
living index was provided to the third quarter of the current year. Any
increase will be made in periodic payment checks beginning the following
January. The first cost -of -living increase will be based on the rise in the
CPI -U from the third quarter of 1995 to the third quarter of 1996 and will be
applied to amounts paid beginning January 1997.
A Participant's or Beneficiary's election of a payment option must be made
at least 30 days before the payment of benefits is to commence. If a
Participant or Beneficiary fails to make a timely election of a payment
option, benefits shall be paid monthly under option (b) above for a period
of five years without the inclusion of a cost -of -living increase.
7.3 Emergency Withdrawals: Except as otherwise provided in
Subsection 7.5 distributions to or on behalf of a Participant shall be made
only in the event of his/her separation from service with the Employer,
unless such Participant experiences an unforeseeable emergency.
"Unforeseeable emergency" means a severe financial hardship to the
Participant resulting from:
a) A sudden and unexpected illness or accident of the Participant or
a dependent of the Participant as defined in Section 152(a) of the
Code,
b) the Participant's loss of property due to casualty, or
c) other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant.
Examples of events which may cause an "unforeseeable emergency"
are catastrophic illness, flood, fire, earthquake, death in the family or
disabling injury. Withdrawals will not be permitted for expenditures
normally budgetable, such as a down payment on a home, purchase
of an automobile or educational expenses. Withdrawals will not be
allowed to the extent that the hardship may be relieved:
(i) through reimbursement or compensation by insurance
or otherwise,
B
7.4
(ii) by liquidation of the Participant's assets (to the extent
such liquidation would not itself cause severe financial
hardship), or
(iii) by cessation or temporary suspension of deferrals under
the Plan.
Withdrawals of amounts because of an unforeseeable emergency
will be permitted only to the extent reasonable needed to satisfy the
emergency. Former Employees who have not yet received
distribution of their entire Account balances shall also be eligible for
emergency withdrawals under the same conditions as active
Participants. A Participant or former Employee who experiences
such an unforeseeable emergency may apply to the Employer for a
withdrawal which shall be permitted at the discretion of the
Employer, only to the extent it complies with the requirements of this
Subsection 7.3. Any amount approved hereunder for emergency
withdrawal shall be paid to the Participant in a single lump sum (less
any applicable withholding taxes). The withdrawal shall be effective
at the later of the date specified in the Participant's application or the
date approved by the Employer.
Payments on the Death of a Participant
a) Death After Benefit Commencement: If the Participant dies
after having begun to receive installment payments in accordance
with Section 7.2, payment of the remainder of such scheduled
payments shall be suspended for a period of sixty (60) days after the
Participant's death. During each sixty (60) day suspension period,
the Beneficiary of such Participant may elect, subject to the
distribution requirements of Subsection 7.5, to receive the balance
then credited to the Participant's Account in a single lump sum or in
installments as specified under Section 7.2, provided that the
Participant's Account will be distributed to the Beneficiary at least as
rapidly as under the method of distribution being used prior to the
Participant's death. If no such election is made by the Beneficiary by
the end of the sixty (60) day suspension period, the remaining
installment payments selected by the Participant (adjusted, if
necessary, to comply with the distribution requirements of
Subsection 7.5) shall be paid to the Beneficiary.
b) Death Prior to Benefit Commencement: Subject to the
provisions of Section 7.5, if the Participant dies before distribution of
his/her Account commences, his/her Beneficiary shall receive
distribution of such Participant's Account as provided under Section
7.1, treating the Beneficiary as if he/she were the Participant;
provided, however, that if the Beneficiary elects installment
14
payments, the Participant's entire Account shall be distributed over a
period not to exceed fifteen (15) years (or the life expectancy of the
Participant's surviving spouse, if such spouse is the Participant's
Beneficiary).
7.5 Provisions Required Pursuant to Code Section 401 (a)(9)
a) Timing and Amount of Required Distributions
1) Notwithstanding any of the foregoing, distribution of a
Participant's entire Account shall commence not later than
April I following the calendar year in which he attains age 70
'/z, whether or not the Participant has separated from service
with the Employer. Unless the form of distribution is a single
lump sum payment, distributions shall be made over a period
not exceeding the life expectancy of the Participant, or the
joint life expectancy of the Participant and his/her Beneficiary.
2) If the Participant's entire Account is to be distributed in
a form other than a single lump sum payment, then the amount
to be distributed each year must be at least an amount equal
to the quotient obtained by dividing the Participant's entire
Account balance (determined as of the last valuation date of
the preceding calendar year) by the life expectancy of the
Participant or (if applicable) the joint life expectancy of the
Participant and his/her designated Beneficiary. Life
expectancy and joint life expectancy shall be computed by the
use of the return multiples contained in Section 1.72-9 of the
Treasury Regulations.
b) Distribution After Death
1) If the Participant dies after having begun to receive
installment payments in accordance with Subsection 7.2, the
remaining portion of such Participant's Account shall continue
to be distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death.
2) If the Participant dies before distribution of his/her
Account commences, the Participant's entire Account shall be
distributed in one of the distribution options provided under
Subsections 7.1 and 7.2 no later than December 31 of the
calendar year which contains the fifth anniversary of the
Participant's death except; (i) that if the beneficiary is not the
Participant's spouse, and such non -spousal beneficiary elects
to commence distribution by December 31, of the year
15
following the year the Participant died, such non -spousal
beneficiary may elect a periodic payment not exceeding fifteen
(15) years, as set forth in Section 7.4(b) above, or (ii) that if the
designated Beneficiary is the Participant's surviving spouse,
such spouse may elect to receive distribution of the
Participant's entire Account in substantially equal monthly,
quarterly, semiannual or annual installment payments over the
life expectancy of the surviving spouse. Such distributions
are required to commence on or before the later of (i)
December 31 of the calendar year immediately following the
year in which the Participant would have attained age 70 '/Z. If
the spouse dies before such payments begin, subsequent
distributions shall be made as if the spouse had been the
Participant. For purposes of this subparagraph, payments will
be calculated by use of the return multiples specified in
Section 1.72-9 of the Treasury Regulations.
c) Interpretation: The provisions of the Subsection 7.5 shall
override any distribution options in the Plan that are inconsistent
with this Subsection. All distributions under the Plan shall be made
in accordance with Treasury Regulations issued under Section
401(a)(9) of the Code. The provisions of this Subsection shall be
effective as of January 1, 1989.
7.6 Effect of Reemployment: If a Participant who separates from service
again becomes an Employee, no distributions shall be made or continued
to the Participant while he/she is so employed. Any amounts which the
Participant was entitled to receive on his/her prior separation from service
shall be held until the Participant or his/her Beneficiary is again entitled to
a distribution under the terms of the Plan.
7.7 De Minimus Distributions: Notwithstanding any other provision of
the Plan, if the Participant has not deferred any amount for a two (2) year
period and the total amount of the Participant's Account under the Plan
does not exceed five thousand dollars ($5,000), a Participant may elect to
receive, or the Plan may elect to distribute without the Participant's
consent, the entire value of the Participant's Account in a lump sum
distribution. No subsequent distribution under this provisions of such
Participant may be made, once such distribution occurs.
Section 8 Nonassignability: The interest of a Participant in the contractual
obligation of the Employer, establish by the Plan, shall not be assignable in
whole or in part, directly or by operation of law or otherwise, in any manner.
16
Section 9 Miscellaneous:
9.1 No Effect on Employment: Neither the establishment of the Plan nor
any modification thereof, nor the establishment of an Account, nor any
agreement between the Employer and the Custodian, nor the payment of
any benefits, shall be construed as giving to any Participant or other
person any legal or equitable right against the Employer except as herein
provided, and in no event shall the terms of employment of the Employee
or Participant be modified or in any way affected hereby.
9.2 Construction: This Plan shall be construed, administered and
enforced according to the Constitution and laws of the State of California.
9.3 Plan -to -Plan Transfers: Plan -to -plan transfers shall be permitted as
follows:
a) Transfers from Plan: To the extent and in the manner
permitted under Section 457(e)(10) of the Code and the Treasury
Regulations thereunder, the balance in the Account of Participant
who is no longer an Employee and who subsequently becomes a
participant in another eligible deferred compensation plan under
Section 457(b) of the Code shall be transferred to his/her account in
the plan of his/her new employer; provided that such plan provides
for the receipt of such transferred amounts. If a Participant's
Account has been transferred to such plan, the Participant shall not
be entitled to receive any benefit under this Plan, notwithstanding
anything in this Plan to the contrary.
b) Transfers to Plan: If prior to becoming an Employee, an
individual participated in another eligible deferred compensation
plan under Section 457(b) of the Code, the Employer may in its
discretion accept transfer of any amount credited to the deferred
compensation account of such Employee under that plan and, in the
event of such transfer, shall establish for the Employee an Account
under the Plan to which such amount shall be treated as an amount
deferred under and subject to the terms of the Plan, except that no
amount so transferred will be taken into account in applying the
deferral limitations set forth in Subsection 5.1.
Section 10 Amendment and Termination
10.1 Amendment and Termination: The Employer may at anytime and
from time to time by action of its governing or appointing board as
evidenced by an instrument in writing duly executed by the Employer
modify, amend, suspend, or terminate the Plan in whole or in part
17
(including retroactive amendments) or cease deferring Compensation
pursuant to the Plan for some or all Participants. In the event of such an
action, the Employer shall deliver to each affected Participant a notice of
such modification, amendment or termination or a notice that it shall cease
deferring Compensation; provided, however, that the Employer shall not
have the right to reduce or affect the value of any Participant's Account or
any rights accrued under the Plan prior to such modification, amendment,
termination or cessation.
10.2 Interpretation: This Plan is intended to qualify as an eligible deferred
compensation plan under Section 457 of the Code, and shall be interpreted
and administered in a manner consistent with such qualification. The
Employer reserved the right to amend the Plan to the extent that it may be
necessary to conform the Plan to the requirements of Section 457 of the
Code and any other applicable law, regulation or ruling, including
amendments that are retroactive to the effective date of the Plan. In the
event that the Plan is deemed by the Internal Revenue Service to be
administered in a manner inconsistent with Section 457 of the Code, the
Employer shall correct such administration within the period provided in
Section 457 of the Code. The Employer reserves the right to take such
action and to such things as are required to make the Plan, as
administered, consistent with Section 457 of the Code.
Section 11 Plan Administration
11.1 Administration: The Plan shall be maintained by the Employer,
which may recommend rules and regulations for the administration of the
Plan consistent with the terms of the Plan. All rules and regulations
recommended by the Employer shall be final and conclusive upon
adoption by resolution of the City Council of the Employer.
11.2 Powers: The Employer shall have all powers to perform all duties
necessary to exercise its functions including, but not limited to, the:
a) Determination of Employee's eligibility, participation and
benefits under the Plan;
b) Establishment and maintenance of written records showing at
any time the interest of a Participant in his/her book Account;
c) Interpretation and construction of the provisions of the Plan;
d) Direction of the Employer (or the Trustee/Custodian on behalf
of the Employer) to make disbursement of benefits under the Plan;
I8
e) Appointment of such agents, advisors, counselors and
delegates including an Administrator as may be necessary and
appropriate for the administration and operation of this Plan and the
delegation to such agent, advisors, counselors and delegates of any
of its discretionary and ministerial powers and duties in accordance
with this Section; and
f) Composition of any provision to Participants of all forms as
described in this Plan.
11.3 Revocability of Administrative Action: Any action taken by the
Employer with respect to the rights or benefits under the Plan of any
person shall be revocable by the Employer as to payments or distributions
not therefore made pursuant to such actions and appropriate adjustments
may be made in future payments or distributions to a Participant or
Beneficiary to offset any excess payment or underpayment theretofore
made to such Participant or Beneficiary.
Section 12 Gender and Number: The masculine pronoun, whenever used
herein, shall include the feminine pronoun, and the singular shall include the
plural, except where the context requires otherwise.
19