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Home My WebLink AboutCM PARS Defined Contribution Plan�'TM �F� Agenda Item No: 10 Meeting Date: April 20, 2009 n, SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: MANAGEMENT SERVICES Prepared by: Jim Schutz, \� Assistant City City Manager Approval SUBJECT: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL AMENDING THE CITY'S PUBLIC AGENCY RETIREMENT SYSTEM (PARS) DEFINED CONTRIBUTION PLAN RECOMMENDATION: Adopt Resolution amending the City's PARS Defined Contribution Plan BACKGROUND: Effective July 1, 2000, the City adopted the City of San Rafael PARS Defined Contribution Plan (the "Plan") which is a tax qualified governmental plan for management employees. This plan provides supplemental retirement benefits to eligible employees. The Plan was amended and restated effective January 1, 2003 in accordance with Section 7.3 of the Plan. This plan is a tax -qualified retirement plan pursuant to the Internal Revenue Code Section 401. All rules related to this plan are governed by the Plan document. The City makes Plan changes, as required from time to time, in order to have the Plan remain in compliance with existing IRS regulations. ANALYSIS: Staff recommends amending the Plan at this time to provide for two changes related to employer contributions and vesting. First, employer contributions are currently allowed on a regular basis according to a formula based on the employee's salary. With the amendment, the employer may make additional employer contributions at its discretion. For example, should one or more management employees be selected to participate in the Voluntary Retirement Separation Program, staff would like the PARS Plan to be an available option for their unit. If the unit selects the PARS option, the City's cash contribution would fall under the guidelines of the defined contribution plan. FOR CITY CLERK ONLY File No.: Council Meeting: Disposition: SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 The second change contained in the amendment adds new vesting language which relates to any additional employer contribution. It contains the current vesting language and adds that the participant shall be 100% vested in the employer contribution account under Section 2.1(b) at all times. FISCAL IMPACT: There is no fiscal impact to the City amending the PARS Plan. OPTIONS: • Approve the Resolution to amend the defined contribution plan as presented. • Modify or deny the Resolution. ACTION REQUIRED: Adopt Resolution as presented Encl. RESOLUTION RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL AMENDING THE CITY'S PUBLIC AGENCY RETIREMENT SYSTEM (PARS) DEFINED CONTRIBUTION PLAN WHEREAS, the City of San Rafael (the "Employer") has previously adopted the City of San Rafael PARS Defined Contribution Plan (the "Plan") as amended and restated effective January 1, 2003; and WHEREAS, the Employer has the right to amend the Plan in accordance with Section 7.3 of the Plan; and WHEREAS, the Employer deems it to be in the best interest of the Employer and the Plan to amend the Plan to provide for additional Employer Contributions, at its discretion, for Employees eligible under Section 1.1 of the Plan. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN RAFAEL DOES RESOLVE, DETERMINE AND ORDER AS FOLLOWS: The CITY MANAGER is authorized execute the changes to the City's PARS Defined Contribution Plan as outlined in the attached Amendment. I, Esther C. Beirne, 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 the City of San Rafael, held on Monday, the 20th of April, 2009, by the following vote, to wit: AYES: Councilmembers: NOES: Councilmembers: ABSENT: Councilmembers: Esther C. Beirne, City Clerk AMENDMENT TO THE CITY OF SAN RAFAEL PARS DEFINED CONTRIBUTION PLAN WHEREAS, the City of San Rafael (the "Employer") has previously adopted the City of San Rafael PARS Defined Contribution Plan (the "Plan") as amended and restated effective January 1, 2003; and WHEREAS, the Employer has the right to amend the Plan in accordance with Section 7.3 of the Plan; and WHEREAS, the Employer deems it to be in the best interest of the Employer and the Plan to amend the Plan to provide for additional Employer Contributions, at its discretion, for Employees eligible under Section 1.1 of the Plan. NOW, THEREFORE, BE IT RESOLVED, that the Plan is hereby amended as follows: 1. Article II, Section 2.1 is hereby amended and restated as follows: 2.1 Employer Contributions There is hereby created and established and shall be maintained by the Plan Administrator the Employer Contribution Account. The Employer may make contributions to the Plan pursuant to (a) and/or (b) below. (a) For each day that an Employee remains a Participant under this Plan, it is the intention of the Employer to make contributions to the Plan in an amount as determined by the Plan Administrator. In no event shall Employer Contributions under this Section 2.1(a) exceed five percent (5%) of Compensation. Such contributions shall be made no later than the close of the Plan Year and subject to the limitation provisions of Section 2.7 of the Plan. Contributions shall be credited to the Employer Contribution Account. Employer Contributions will be allocated to each Participant in the ratio that such Participant's compensation bears to the compensation of all Participants. However, the Employer assumes no commitment to make any contributions at any time. (b) The Employer may make additional Employer Contributions to the Plan, at its discretion, for Employees eligible under Section 1.1 of the Plan. Such contributions, if any, shall be credited to the Employer Contribution Account and subject to the limitation provisions of Section 2.7 of the Plan. 2. Article IV, Section 4.1 is hereby amended to read as follows: 4.1 Vesting in Employer Contribution Account (a) A Participant shall be Vested in his or her Employer Contribution Account under Section 2.1(a) pursuant to the following schedule based on Years of Service calculated as of the Participant's last date of employment with the Employer. NB 1:577609.1 Years of Service Completed percent Vested 0-3.99 0.00% 4 25.00% 5 50.00% 6 75.00% 7 100.00% If a Participant terminates his or her employment with the Employer prior to his or her Normal Retirement Date and is not fully Vested in his or her Employer Contribution Account on his or her date of termination, he or she shall forfeit that portion of his or her Employer Contribution Account in which he or she was not Vested as of the Valuation Date next following. Any amounts so forfeited shall be returned to the Employer. (b) A Participant shall be 100% Vested in her or her Employer Contribution Account under Section 2.1(b) at all times. IN WITNESS WHEREOF, this Amendment is hereby adopted effective as of April 20, 2009. DATED: City of San Rafael By: Name: Kenneth Nordhoff Title: City Manager NB 1:577609.1 2