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HomeMy WebLinkAboutRESO7319• • RESOLUTION NO. 7319 RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO ADOPTING A RETIREMENT PLAN FOR THE CITY'S HOURLY EMPLOYEES; AND APPROVING EXECUTION OF AN AGREEMENT WITH ICMA RETIREMENT CORPORATION FOR ADMINISTRATION OF THE PLAN WHEREAS, the Federal Insurance Contributions Act (the "Act") requires employer and employee contributions to the Social Security system for all employees, with certain exceptions; and WHEREAS, employees who are members of a "public retirement system" and their employers may be exempted from the requirement to make such Social Security contributions; and WHEREAS, the ICMA Retirement Corporation ("ICMA") has offered a deferred compensation plan under Section 457 of the Internal Revenue Code which qualifies as a "public retirement system" for part-time, temporary and seasonal employees, for purposes of the Act's exemption, under the following conditions: 1. At least -i.5 percent of the employee's "compensation" is contributed; 2 Compensation includes at least the employee's base pay up to the Social Security cut off point; 3. Participation is mandatory for qualified employees; and 4. The employee's account in the plan is credited with earnings "at a rate that is reasonable under all the facts and circumstances," or the accounts are held in a separate trust and are credited with actual earnings on the trust fund; and WHEREAS, the Council desires to adopt the plan for hourly employees of the City, and to enter into an agreement with ICMA for administration of the plan. NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION 1. The Council hereby adopts "The City of Palo Alto/PTS 457 Deferred Compensation Plan (the "Plan"), a copy of which plan is on file in the office of the Director of Human Resources, and to which copy reference is hereby made concerning the full particulars thereof, as the "public retirement system" for hourly employees of the City. SECTION 2. The Council hereby approves that certain agreement by and between the City and ICMA for administration of the Plan, and authorizes the City Manager to execute the agreement for and on behalf of the City. A copy of the agreement is attached 940608 lac 0030937 hereto as Exhibit 'A" and incorporated herein by reference. SpCTION 3. The Council finds that this is not a project under the California Environmental Quality Act. INTRODUCED AND PASSED: June 13, 1994 AYES: ANDERSEN, FAZZINO, HUBER, KNISS, MCCOWN, ROSENBAUM, SCHNEIDER, WHEELER NOES: ABSENT: SIMITIAN ABSTENTIONS: ATTEST: City Clerk APPROVED AS TO FORM: enior Asst. City Attorney APPROVED: or _n_ •er Dire or of Finance 1 Di ctor of Human Resources 940608 Lc 0030937 EXHIBIT A ICMA RETIREMENT CORPORATION ADMINISTRATIVE SERVICES AGREEMENT Type: 457 Account Number: 3953 • Plan 0953 ICMA RETIREMENT CORPORATION ADMINISTRATIVE SERVICES AGREEMENT This Agreement, made as of the day of 199 , (herein referred to as the "Inception Date"), between The International City Management Association Retirement Corporation ("RC"), a nonprofit corporation organized and existing under the laws of the State of Delaware; and the City of Palo Alto ("Employer") a City organized and existing under the laws of the State of California with an office at 250 Hamilton Avenue, Palo Alto,California 94203. Recitals Employer acts as a public plan sponsor for a retirement plan ("Plan") with responsibility to obtain investment alternatives and services for employees participating in that Plan; The ICMA Retirement Trust (the "Trust") is a common law trust governed by an elected Board of Trustees for the commingled investment of retirement funds held by state and local governmental units for their employees; RC acts as investment adviser to the Trust; RC has designed, and the Trust offers, a series of separate funds for the investment of plan assets including a growth stock fund, an S&P index fund, an equity income fund, an asset allocation fund, a medium -term bond fund, a U.S. Treasury Securities fund and an enhanced short-term bond fund. These funds, (collectively, the "Funds") are available only to public employers and only through the Trust and RC. In addition to serving as investment adviser to the Trust, RC provides a complete offering of services to public employers for the operation of employee retirement plans including, but not limited to, communications concerning investment alternatives, account maintenance, account record -keeping, investment and tax reporting, form processing, benefit disbursement and asset management. 2 ICMA Plan 3953 RETIREMENT CORPORATION Agreements 1. Appointment of RC Employer hereby designates RC as Administrator of the Plan to perform all non -discretionary functions necessary for the administration of the Plan with respect to assets in the Plan deposited with the Trust. The functions to be performed by RC include: (a) allocation in accordance with participant direction of individual accounts to investment Funds offered by the Trust; (b) maintenance of individual accounts for participants reflecting amounts deferred, income, gain, or loss credited, and amounts disbursed as benefits; (c) provision of periodic reports to the Employer and participants of the status of Plan investments and individual accounts; (d) communication to participants of information regarding their rights and elections under the Plan; and (e) disbursement of benefits as agent for the Employer in accordance with terms of the Plan. 2. Adoption of Trust Employer has adopted the Declaration of Trust of the 1CMA Retirement Trust and agrees to the commingled investment of assets of the Plan within the Trust. Employer agrees that operation of the Plan and investment, management and disbursement of amounts deposited in the Trust shall be subject to the Declaration of Trust, as it may be amended from time to time and shall also be subject to terms and conditions set forth in disclosure documents (such as the Retirement Investment Guide or Employer Bulletins) as those terms and conditions may be adjusted from time to time. It is understood that the term "Employer Trust" as it is used in the Declaration of Trust shall mean this Administrative Services Agreement. 3. Employer Duty to Furnish Information Employer agrees to furnish to RC on a timely basis such information as is necessary for RC to carry out its responsibilities as Administrator of the Plan, including information needed to allocate individual participant accounts to Funds in the Trust, and information as to the employment status of participants, and participant ages, addresses and other identifying information (including tax identification numbers). RC shall be entitled to rely upon the accuracy of any information that is -3- ICMA Plant953 RETIREMENT CORPORATION furnished to it by a responsible official of the Employer or any information relating to an individual participant or beneficiary that is furni' ed try such participant or beneficiary, and RC shall not be responsible for any error arising from its reliance on such information. If within ninety (90) days after the mailing of any report, statement or accounting to the Employer or a participant, the Employer or participant has not notified RC in writing of any error or objection, such report, statement, or accounting shall be deemed to have been accepted by the Employer and the participants. 4. Certain Representations, Warranties, and Covenants RC represents and warrants to Employer that: (a) RC is a non-profit corporation with full power and authority to enter into this Agreement and to perform its obligations under this Agreement. The ability of RC to serve as investment adviser to the Trust is dependent upon the continued willingness of the Trust for RC to serve in that capacity. (b) RC is an investment adviser registered as such with the Securities and Exchange Commission under the Investment Advisers Act of 1940, as amended. ICMA-RC Services, Inc. (a wholly owned subsidiary of RC) is registered as a broker - dealer with the Securities and Exchange Commission (SEC) and is a member in good standing of the National Association of Securities Dealers, Inc. RC covenants with employer that: (c) RC shall maintain and administer the Plan in compliance with the requirements for eligible deferred compensation plans under Section 457 of the Internal Revenue Code; provided, however, RC shall not be responsible for the eligible status of the Plan in the event that the Employer directs RC to administer the Plan or disburse assets in a manner inconsistent with the requirements of Section 457 or otherwise causes the Plan not to be carried out in accordance with its terms; provided, further, that if the plan document used by the Employer contains terms that differ from the terms of RC's standardized plan document, RC shall not be responsible for the eligible status of the Plan to the extent affected by the differing terms in the Employer's plan document. Employer represents and warrants to RC that: (d) Employer is organized in the form and manner recited in the opening paragraph of this Agreement with full power and authority to enter into and perform its obligations under this Agreement and to act for the Plan and participants in the manner contemplated in this Agreement. Execution, delivery, and performance of this Agreement will not conflict with any law, rule, regulation or contract by which the Employer is bound or to which it is a party. -4- • _C�fa Plan f3953 RETIREMENT O R PO R.IT:O 5. Participation in Certain Proceedings The Employer hereby authorizes RC to act as agent, to appear on its behalf, and to join the Employer as a necessary party in all legal proceedings involving the garnishment of benefits or the transfer of benefits pursuant to the divorce or separation of participants in the Employer Plan. The Employer consents to the disbursement by RC of benefits that have been garnished or transferred to a former spouse, spouse or child pursuant to a domestic relations order. 6. Compensation and Payment (a) Plan Administration Fee. The amount to be paid for plan administration services under this Agreement shall be 0.9% per annum of the amount of Plan assets invested in the Trust. Such fee shall be computed and paid monthly on plan assets in the Trust at the end of each month. (b) Account Maintenance Fee. There shall be an annual account maintenance fee of $50.00. The account maintenance fee is payable in full ^n January 1 of each year on each account in existence on that date. For accounts established after January 1, the fee is payable on the first day of the calendar quarter following establishment and is prorated by reference to the number of calendar quarters remaining on the day of payment. (c) Compensation for Advisory Services to the Trust. Employer acknowledges that in addition to amounts payable under this Agreement, RC receives fees from the Trust for investment advisory services furnished to the Trust. (d) Payment Procedures. (i) All payments to RC pursuant to Section 6(a) shall be paid out of the Plan Assets held by the Trust and shali be paid by the Trust. The amount of Plan Assets held in the Trust shall be adjusted by the Trust as required to reflect such payments. (ii) All payments to RC pursuant to Section 6(b) shall be paid directly by Employer, and shall not be deducted from Plan Assets held by the Trust. (e) This offer of pricing is contingent upon (1) the City maintaining the existing assets in the City of Palo Alto's 457 Deferred Compensation Plan #1315, and (2) the City of Palo Alto continuing to offer Plan #1315 to all new and existing employees of the City. 7. Custody Employer understands that amounts invested in the Trust are to be remitted directly to the Trust in accordance with instructions provided to Employer by RC and are not to be remitted to RC. In the event that any check or wire transfer is -5- ICMA Plan 3953 RETIREMENT CORPORATION incorrectly labelled or transferred to RC, RC is authorized, acting on behalf of the. transferor, to transfer such check or wire transfer to the Trust. 8. Responsibility RC shall not be responsible for any acts or omissions of any person other than RC in connection with the administration or operation of the Plan. 9. Term This Agreement may be terminated without penalty by either party on sixty days advance notice in writing to the other. 10. Amendments and Adjustments (a) This Agreement may not be amended except by written instrument signea by the parties. (b) The parties agree that compensation for services under this Agreement and administrative and operational arrangements may be adjusted as follows: RC may propose an adjustment by written notice to the Employer given at least 60 days before the effective date of the adjustment and Vie notice may appear in disclosure documents such as Employer Bulletins and the Retirement Investment Guide. Such adjustment shall become effective unless, within the 60 day period before the effective date the Employer notifies RC in writing that it does not accept such adjustment, in which event RC shall be under no obligation to provide services under this Agreement. (c) No failure to exercise and no delay in exercising any right, remedy, power or privilege hereunder shall operate as a waiver of such right, remedy, power or privilege. 11. Notices All notices required to be delivered under this Agreement shall be delivered personally or by registered or certified mail, postage prepaid, return receipt requested, to (i) RC at 777 North Capitol Street, N.E., Suite 600, Washington, D.C, 20002-4240; (ii) Employer at the office set forth in the first paragraph hereof, or to any other address designated by the party to receive the same by written notice similarly given. 6 Plan 1953 IC`tA RETIREMENT CORPORATION 12. Complete Agreement This Agreement shall constitute the sole agreement between RC and Employer relating to the object of this Agreement and correctly sets forth the complete rights, duties and obligations of each party to the other as of its date. Any prior agreements, promises, negotiations or representations, verbal or otherwise, not expressly set forth in this Agreement are of no force and effect. 13. Governing Law This agreement shall be governed by and construed in accordance with the Idws of the State of California applicable to contracts made in that jurisdiction without reference to its conflicts of laws provisions. In Witness Whereof, the parties hereto have executed this Agreement as of the inception Date first above written. ATTEST: CITY OF PALO ALTO City Clerk Mayor APPROVED AS TO FORM: Senior Asst. City Attorney APPROVED: City Manager Director of Finance Director of Human Resources INTERNATIONAL CITY MANAGEMENT ASSOCIATION RETIREMENT CORPORATION by: ,A % i Stephen Wm. Nordholt/Date / Corporate Secretary 7