HomeMy WebLinkAbout1996-06-24 City Council (27)City of Palo Alto
City Manager’s Report
TO:
FROM:
HONORABLE CITY COUNCIL
CITY MANAGER DEPARTMENT:Human Resources
AGENDA DATE:
SUBJECT:
June 24, 1996 CMR:303:96
Resolution to Amend the Deferred Compensation Plan Document
for Active Employees
REQUEST
This request is for approval of an amendment to the City of Palo Alto’s Deferred Compensation Plan
for active employees.
RECOMMENDATIONS
Staff recommends Council approval of the attached Resolution and Deferred Compensation Plan
document. The amendment will create a single umbrella plan to replace current individual provider
plans and incorporate technical changes made in the Internal Revenue Code,and in state and federal
laws.
POLICY IMPLICATIONS
This request does not represent any changes in existing policies.
EXECUTIVE SUMMARY
The City of Palo Ait0 has provided City employees with a deferred compensation plan since 1977.
Existing agreements with the City employee representation units provide for maintaining a deferred
compensation plan. This plan permits employees, on a voluntary basis, to "defer" receiving a portion
of their current salary and invested earnings for payment at a later date. Neither the deferred amount,
nor earnings on the investments, are subject to current federal and state income taxes. Taxes
become payable when the deferred income, and the earnings, are distributed to the employee,
presumably at retirement. Currently, 60 percent of the City’s employees participate in the plan.
The plan has two administrators, ICMA Retirement Corporation and Hartford Life Insurance Company,
each with its own plan document. The proposed amendment will create one overall plan document,
providing for all administrators and investment options.
The amendment also updates our plan document to reflect changes in the Internal Revenue Code,
and in state and federal laws. These changes include bringing the definition of normal retirement age
into compliance, the addition of Qualified Domestic Relations Order language, the addition of employer
liability language and changing the time period for selection of payout options from 30 to 60 days.
The amendments are highlighted on the attached copy of the Plan.
CMR:303:96 Page 1 of 2
FISCAL IMPACT
There is no fiscal impact.
ENVIRONMENTAL ASSESSMENT
This is not a project for purposes of the California Environmental Quality Act.
ATTACHMENTS
1.Resolution
2.Plan Document
PREPARED BY:Leonard Zucker, Manager of Employee Benefits
DEPARTMENT HEAD REVIEW:
Dir~’ctor of Human Resources
CITY MANAGER APPROVAL:
MING
Manager
CMR:303:96 Page 2 of 2
RESOLUTION NO.
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO
AMENDING AND RESTATING THE CITY OF PALO ALTO
DEFERRED COMPENSATION PLAN AND ESTABLISHING IT AS
THE EXCLUSIVE PLAN FOR ALL ADMINISTRATORS
WHEREAS, on September 27, 1982, the City Council adopted
the "City of Palo Alto Deferred Compensation Plan" (the "Plan").
The Council amended the Plan on December 12, 1983; August 17, 1987;
and September 18, 1989. The Plan has been utilized by Plan
Administrator, The Hartford; and
WHEREAS, by Resolution 6429, adopted September 16, 1985,
the City Council established a separate deferred compensation plan
known as the "International City Management Association Retirement
Association Deferred Compensation Plan" (the "ICMA Plan"); and
WHEREAS, it is desirable for the City to maintain a single
deferred compensation plan which can be used by all administrators.
NOW, THEREFORE, the Council of the City of Palo Alto does
RESOLVE as follows:
SECTION i. The Council hereby approves the "City of Palo
Alto Deferred Compensation Plan" as amended June m, 1996, and
establishes it as the exclusive deferred compensation plan for all
deferred compensation plan administrators for the City of Palo
Alto.
SECTION 2. The approval given in Section i acknowledges,
but does not alter, the existing contractual relationships between
and among the City of Palo Alto and its employees and the City’s
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960603 |a~ 0031334
deferred compensation plan administrators, The Hartford and the
International City Management Association Retirement Corporation.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:APPROVED:
City Clerk
APPROVED A~ TO FORM:
Senior Asst. City Attorney
Mayor
City Manager
Deputy City Manager
Administrative Services
Director of Human Resources
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CITY OF PALO ALTO
ARTICLE 1
General
Section 1.01 Name: The name of this plan shall be the City
of Palo Alto Deferred Compensation Plan. It may be, and sometimes
hereinafter is, referred to as the "Plan" or the "Deferred
Compensation Plan." The Plan was adopted on September 27, 1982,
was amended and restated on December 12, 1983; August 17, 1987 and
September 18, 1989, and is hereby amended and restated to comply
with the requirements of Internal Revenue Code (the "Code") Section
457, as well as to allow for other permissible changes, generally
effective on the date the Employer executes the Plan, except as
otherwise set forth in this document.
Section 1.02 Purpose: The purpose of this Plan is to extend
to Employees of the Employer certain benefits which ordinarily
accrue from participation in a deferred compensation plan. The
Employer does not and cannot represent or guarantee that any
particular federal or state income, payroll or other tax
consequence will occur by reason of an Employee’s participation in
this Plan. The Employee wishing to participate in the Plan should
consult with his/her own attorney or other representative regarding
all tax or other consequences of participation in this Plan.
Section 1.03 - Definitions:
(a) "Account"~ means the book account to which there are
credited the amounts deferred by a Participant pursuant to Section
2.01 hereof, and any interest, dividends, gains, losses or the like
thereon.
(b) "Administrator" means the contractor(s) retained by the
Employer to account for deferrals, the investment and disbursement
of funds, withholding of taxes and to make proper reports to
participants, annuitants and governmental agencies under the Plan.
(c) "Advisory Committee" shall mean a committee consisting of
seven persons elected by the Participants. The primary function of
the Advisory Committee shall be to make recommendations regarding
hardship withdrawals and to give advice to the Plan Executive on
such matters pertaining to the Plan including, but not limited to,
investment and payout options, and the charging of administrative
costs at such times as the Plan Executive may request. Members of
the Advisory Committee must be Participants in the Plan.
(d) "Annuity Contract" has the meaning set forth in Section
4.01(c) (2) herein.
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(e) "Annuity Notice" has the meaning set forth in Section
4.01(c) (i) herein.
(f) "Beneficiary" means any person designated by the
Participant to receive a pension, annuity, death benefit, or other
benefit under the provisions of this Deferred Compensation Plan.
(g) "Benefits" means the benefits payable to a Participant
arising out of such Participant~’s participation in this Plan, and
shall be determined in the manner set forth in Section 4.01(a) (i)
hereof.
(h)Compensation:
(i) "Gross Compensation" for a calendar year means all
compensation for services performed for the Employer paid to or on
behalf of an Employee during, the calendar year;
(2) "Deferred Compensation" means that portion of an
Employee’s Gross Compensation which said Employee has elected to
defer in accordance with the provisions of this Deferred
Compensation Plan;
(3) "Includible Compensation" means Gross Compensation
of an Employee less: all amounts with respect to such Employee
deferred under Section 2.01 hereof and any other eligible deferred
compensation plan under Section 457 of the~ Code for the calendar
year; all amounts payable to such Employee for the calendar year by
the Employer with respect to any wage continuation plans, which
amounts are excludable from such Employee’s gross income under
Section 105(d) of the Code; and all amounts payable to such
Employee for the calendar year by the Employer as a citizen of the
United States living abroad, which amounts are excludable from such
Employee’s gross income under Section 911 of the Code°
(i) "Employee" means any full-time regular employee, part-time
regular employee, .or elected official of the Employer°
(j) "Employer" means the City of Palo Alto.
(k) "Investment Election" of a Participant as of any date
shall mean those investments included in the Investment Options in
which such Participant has as of such date elected to have the
assets credited to his/her Account invested pursuant to Section
2°03 hereof.
(1) "Investment Options~’ as of any date shall mean those
alternative investments designated by the Employer in which assets
credited to a Participant’s Account may be invested pursuant to
Section 2°03°
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(n) "Participant" means any Employee who voluntarily elects
to participate in this Plan by filing a duly executed Participation
Authorization with the Employer.
(o) "Participation Authorization" means the Employee’s
election to participate and authorization to defer compensation
pursuant to the provisions of this Plan, as set forth on the form
provided by the Employer pursuant to Section 3.04 herein.
(p) "PERS" means the Public Employees’ Retirement System as
set forth in sections 20000 et s_9_q of the California Government
Code as adopted by the City of Palo Alto pursuant to a contract
dated March 9, 1942, as amended from time to time.
(q) "Plan Executive" means the City .Manager of the City of
Palo Alto or the duly authorized designee of the City Manager. The
discretion or other functions given to the Employer under the terms
of the Plan shall be exercised by the Plan Executive as the
Employer’s authorized agent.
(r) "Plan Year" means calendar year.
(s) "Separation from Service of the Employer" means
termination of a Participant’s employment resulting from
resignation, discharge, retirement from service of the Employer
upon or after the Participant’s attaining Normal Retirement Age,
disability resulting in termination of employment or death of the
Participant.
(t) "Severe Financial Hardship" shall have the meaning set
forth in Section 4.02 hereof.
(u) "Terminating Participant" means any Participant who
separates from service with the Employer and accepts employment
with a new employer.
ARTICLE 2
~eratlon of Plan
Section 2.01 - Participation
(a) Any Employee may elect to become a Participant of the
Plan and to defer payment of part of his/her Gross Compensation by
executing a written Participation Authorization and filing it in
the manner set forth in Article 3 hereof. The dollar amount
deferred must be at least $i0.00 per pay period or such larger
amount as may be designated by the Plan Executive from time to
time. The maximum that may be deferred under the Plan for the
960531 lac 0031281
Participant’s taxable year by a Participant shall not exceed the
lesser of (a) $7,500, or (b) 33-1/3 percent of the Participant’s
Includible Compensation (twenty-five percent (25%) of a
Participant’s Gross Compensation); provided however, that during
one or more of a Participant’s last three taxable years ending
before such Participant attains Normal Retirement Age, the maximum
amount that may be deferred under the Plan shall be the lesser of
(a) $15,000 or (b) the sum of (i) the lesser of (A) $7500 or (B)
33-1/3 ~ercent of the Participant’s Includable Compensation and
(ii) ~iiiiiiii~iiiiiii~ ~ =c~ch the amount previously set forth under (i)for P~:~::::::::~:~:~:prior to the current Plan Year, less the aggregate
of amounts actually deferred under this Plan for such years
iil~i~i~i~i~i!iiiii~~i~iiIIiI~iii. The amount a Participant elects to
~::~:~::~:~:~:~:::::::~:::::::~:h accordance with Section 3.05 herein.
(b) The maximumamount which a Participant may elect to defer
during a Plan Year pursuant to Section 2.01(a) shall be reduced by
any amounts excluded from gross income pursuant to Section 403(b)
of the Code during such Plan Year. Furthermore, the maximum amount
which a Participant may elect to defer during a Plan Year pursuant
to Section 2.01(a) shall also be reduced by any amounts excluded
from ross income reduction to
i~Section
4(or Section
402(h) (i)~)su(ear or ~educted from
gross income through contributions to a trust exempt from federal
income taxation pursuant to Section 501(c) (18) of the Code during
such Plan Year.
Section 2.02 - Deferral of Compensation. Employer and
Participant mutually acknowledge that the compensation of each
Employee as set forth in the annual salary regulations or
resolutions of the Employer includes the dollar amount of funds
deferred under the terms of this Plan. Employee compensation shall
be paid bi-weekly or as otherwise provided, except that during each
year in which the Employee is a Participant in the Plan, that
portion of his/her said compensation which is specified by the
Employee in the Participation Authorization shall be deferred and
paid in accordance with the provisions of this Plan.
Section 2.03 - Investment of Amounts Credited to Participants’
Accounts.
(a) From time to time, the Plan Executive shall designate
alternative investments (the "Investment Options") in which amounts
credited to a Participant’s Account may be invested under the Plan.
The Administrator shall notify each Participant in writing of the
Investment Options available as of the date of such notice.
(b) The amounts credited to a Participant’s Account shall be
invested in such Investment Options and in such proportions as the
Participant shall elect (the "Investment Election") subject to the
provisions of this subsection (b). A Participant’s Investment
Election, and any change in such Investment Election, shall be made
in writing on such forms and at such times and in accordance with
960531 lae 0031281
4
such procedures as the Plan Executive may prescribe; provided that
such forms and procedures shall be communicated to all Participants
and shall be uniformly applied to all participants in a
nondiscriminatory manner.
(c) In the absence of a Participant’s Investment Election,
amounts credited to such Participant’s Accounts may be invested in
such manner as the Administrator may determine.
Section 2.04 - Employer Responsibility: The designation of
any Investment Option by the Employer shall not be considered to be
an endorsement or guarantee of such Investment Option. Further,neither the Employer, the Plan Executive, nor the Advisory
Committee shall be held responsible for any investment results,
either gains or losses, from any Investment Options in which a
Participant elects to have the amounts credited to his/her Account
invested.
Section 2.05 - Administration of the Plan: The Plan shall be
directed by the Plan Executive who shall have the sole authority
for the operation of the Plan in accordance with its terms and
shall rule on all questions arising out of the administration,
interpretation and application of the Plan, which determination
shall be conclusive and binding on all Participants.
Section 2.06 - Ownership of Deferred Amounts: All amounts
deferred by Participants under the Plan (the "Deferred Amounts"),
all investments made with the Deferred Amounts pursuant to the
Plan, and all interest, dividends, gains or other income with
respect thereto remain (until paid or made available to a
Participant or Beneficiary) solely the property of the Employer
subject only to the claims of general creditors of the Employer,
and neither the existence of the Plan nor of any investments made
pursuant thereto shall be deemed to create a trust or limit use by
the Employer of the funds therein for general Employer purposes.
The obligation of the Employer to make payments pursuant to this
Plan is contractual only, and no Participant or Beneficiary shall
have a preferred claim or lien on or to the Deferred Amounts or any
investment earnings thereon but shall have only the right to
receive the Benefits payable under the Plan. Any contracts and
other evidence of the investment of all assets under this Plan
shall be registered in the name of the Employer which shall be the
owner-beneficiary thereof.
ARTICLE 3
Administration and Accountinq
Section 3.01 - Administration: The Plan Executive shall
direct the Plan and will prescribe such forms, and adopt such rules
and regulations as necessary to carry out the purposes of the Plan.
Also, the Plan Executive may employ investment counsel to provide
advice concerning categories of investment, Investment Options,
guidelines and investment policy; provided, however, that the
advice or recommendations of any such investment counsel shall not
960531 la~ 0031281
5
be binding on the Plan Executive, who shall make the final
determination concerning Investment Options.
Section 3.02 - Election to Participate: An Employee’s
election to participate in this Deferred Compensation Plan shall be
made by filing a duly executed Participation Authorization with the
Administrator, and not otherwise°
Section 3.04 - Participation Authorization: The Administrator
shall establish a form.of Participation Authorization and other
enrollment forms which shall contain, among other provisions, the
following:
(a) A provision whereby the Participant specifies the portion
of his/her Gross Compensation which is to be deferred,
(b) A provision whereby the Participant indicates his/her
Investment Election.
(c) A provision whereby the Participant designates a
Beneficiaryor Beneficiaries, including one or more contingent
Beneficiaries to receive any Benefits which may be payable under
this Plan on death of the Participant°
(d) An acknowledgment by the Participant as to the amount of
his/her gross income without deductions for amounts deferred under
the provisions of this Plan.
(e) A provision whereby the Participant, his/her heirs,
successors and assigns hold harmless the Employer, the Plan
Executive and the.Advisory Committee from any liability hereunder
for all acts performed in good faith, including the acts relating
to the investment of any of the Deferred Amounts and/or the
Participant’s Investment Elections hereunder°
960531 lac 00312~l
Section 3.06 ~- Participant’s Accounts:
(a) Establishment and Maintenance: A separate Account shall
be maintained for each Participant. The Employer shall cause to
have credited to ~eaCh such Account ~amoun~S equal to the
compensation deferred by the Participant under the Plan as well as
that portion, if any, of monies being transferred from an eligible
deferred compensation plan of a prior employer. All interest,
dividends, charges for premiums, capital or market changes with
respect to a Participant’s Investment Elections shall be credited
or debited to the Participant’s Account as. they occur. For
convenience, and to facilitate an orderly administration of the
Plan, individual Accounts for all Participants will be maintained
by the Administrator showing the Participant’s name with all
applicable debit and credit balances. A written report of the
status of the Account of each Participant shall be furnished to
such Participant at such regular intervals as the Plan Executive
shall determine.
(b)Transfers To and From a Participant’s Accouter:
(i) In the event a Participant (the "Terminating
Participant") separates from service and accepts employment with a
new employer, upon written request to the Administrator by such
Participant, with the consent of the Plan Executive which may be
granted or denied in the absolute discretion of the Plan Executive,
and subject to the conditions set forth below, the Employer shall
cause to be transferred to the ownership and control of the new
employer’s eligible deferred compensation plan an amount equal to
the amount credited to such Participant’s Account as of ~the last
day of the quarter which coincides with or next precedes the date
of transfer. Notwithstanding any other provision of this Plan,
payment of Benefits to such a Terminating Participant will not
commence, and all amounts credited to his/her account shall be
automatically transferred°
(2) Transfers under Section 3.06(b) (i) will be subject
to the following conditions:
(A) The Employer has no defined current or future
need for the funds, assets and accumulations in the said
Participant’s Account for the payment of its general creditors or
for any other purpose;
(B) The new employer’s deferred compensation plan
is an "eligible deferred compensation plan" within the meaning of
Section 457(b) of the Code and provides for the acceptance of
transferred accounts of transferring employees, and the new
employer will accept the funds;
960531 lae 0031281
7
(c) The new employer shall have agreed in writing
with the Employee to assume the continuing contractual liability to
pay the Deferred Compensation so transferred according to the
provisions of the new employer’s plan;
(D) The Employee shall have agreed, in writing, to
release the Employer from any and all contractual obligations under
the provisions of this Plan, upon completion of such transfer to
the new employer;
(3) Notwithstanding any provisions of Section 3.06(b),
a Terminating Participant may elect to leave the funds, assets, and
accumulations in his/her Account until such time as he/she would
otherwise receive his/her Benefits in accordance with his/her
stated preference as provided in Article 4 of this Plan;
(4) Notwithstanding any other provision of this Plan,
with the consent of the Plan Executive, which consent may be
granted or denied in the sole and absolute discretion of the Plan
Executive, the Administrator shall be authorized to accept some or
all of the amounts held (whether by a trustee, custodian or
otherwise) on behalf of any other plan, which satisfies the
applicable requirements of Section 457 of the Code and applicable
Treasury regulations issued thereunder, and which is maintained for
the benefit of any persons who are or are about to become
Participants of this Plan. Upon the transfer of any assets of a
Participant pursuant to the preceding sentence, the Administrator
shall credit the Account of such Participant with the amounts so
transferred as of the date of transfer. Thereafter any such
transferred funds shall be treated as any other assets in a
Participant’s Account.
Section 3.07 Administrative Costs: The Plan Executive may
determine, in a manner deemed fair and equitable, the
administrative costs associated with the withholding of Deferred
Compensation pursuant to this Plan or in making investments or
otherwise administering or implementing the Plan. The Plan
Executive may withhold or collect, or have withheld or collected,
such costs, in such manner as he/she deems equitable from the
Deferred Compensation pursuant to the Plan, or the income produced
from any investment, and accordingly adjust the Participants’
Accounts.
960531 lac 0031281
8
ARTICLE 4
Benefits
Section 4.01 - Benefits Generally: The Participant is entitled
to have paid to him/her the Benefits created by his/her
participating in this Deferred Compensation Plan, in accordance
with the provisions of this Article. Amounts paid to a Participant
pursuant to this Article shall be reported to a Participant as
wages subject to withholding for federal and state income taxes and
reportable on Form W-2. All actions and determination of the
Employer under this Article 4 shall be on a uniform and
nondiscriminatory basis.
(a)Separation from Service or Attainment of Aqe 70-1/2:
(i)In the event of:
(A) a Participant’s separation from service with
the Employer resulting from resignation, discharge, retirement from
service with the Employer upon or after attaining Normal Retirement
Age, disability resulting in termination of employment, or death of
the Participate, or
(B) the Participant’s election at any time after
the beginning of the calendar year in which the Participant attains
70-1/2,
the amount credited to the Participant’s Account shall be
determined as of the last day for valuing Participants’ Accounts
(whether such valuation is done quarterly or daily) next preceding
distribution and shall be distributed to the Participant or his/her
Beneficiary in accordance with the provisions of Section 4.01(c)
below. Notwithstanding any other provision in the Plan,
distribution of a Participant’s Benefits must commence no later
than April 1 of the calendar year following the calendar year in
which the Participant attains 70-1/2.
(2) If a Participant becomes disabled as defined by the
disability income provisions in the Employer’s retirement program
applicable to the Participant, and if as a result of such
disability, the Participant separates from service and commences
receiving Benefits, the Administrator shall provide to such
disabled Participant a written statement setting forth the date of
such disabled Participant’s separation from service and the fact
that such disabled Participant separated from service and began
receiving Benefits because of a permanent disability which required
such disabled Participant’s separation from service.
(b) Severe Financial Hardship: In the event of severe
financial hardship resulting from an unforeseen emergency, Benefits
shall be payable in accordance with Section 4.02 hereof.
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(A)Life annuity;
(B)
(c)
(D)
Life annuity with a period certain guaranteed;
Unit refund life annuity;
Joint and survivor annuity;
(I) Any such other payout options
appropriate by the Plan Executive from time to time°
deemed
(2) The options provided in Section 4.01(c) (i) above
shall be actuarially equivalent to the Benefits to which the
Participant would otherwise be entitled under this Section 4.01.
Any annuities shall be provided under an annuity~contract (the
"Annuity Contract") qualified for sale in California, with such
insurance company or other third party as the Administrator shall
determine, subject to the Participant’s consent. Subject to the
requirements set forth in the preceding sentence, an Annuity
960531 lae 0031281
10
Contract may be altered, amended, changed or substituted for, from
time to time by action of the Administrator, and such altered,
amended, changed, or substituted contract or contracts thereafter
may be used in the Plan.
(A) In any Annuity Con£ract or other payout option
which provides for payments beyond a Participant’s life, amounts
payable to the Participant under each Annuity Contract (as
determined by the mortality tables of the entity providing the
annuity) or other payout option must exceed 50% of the maximum that
could have been payable to the Participant if no provision were
made for payment to a Beneficiary. The amounts payable with
respect to the Participant under any Annuity Contract or other
payout option made available pursuant to Section 4.01(c) (I) above
shall be paid in accordance with such regulations, notices or other
administrative guidelines relating to incidental death benefits, as
may be issued by the Secretary of the Treasury pursuant to Code
Section 457(d) (2) (B) (i) (I).
(B) In the event that the distribution of Benefits
to a Participant has begun prior to the time of the Participant’s
death, any Benefits payable to the Beneficiary must be paid over:
(i)The life of the Beneficiary (or any
shorter period), if the Beneficiary is the Participant’s surviving
spouse, or
(ii)A period not in excess of fifteen
(15) years, if the Beneficiary is not the Participant’s surviving
spouse.
(iii)Notwithstanding the foregoing, any
Benefits payable to a Beneficiary must be distributed at least as
rapidly as such Benefits would be distributed to the Participant
under the method of distribution being used at the time of the
Participant’s death.
(C) In the event that the distribution of Benefits
to a Participant has not begun at the time of the Participant’s
death, any Benefits payable to a Beneficiary must be paid over:
(i)The life of the Beneficiary (or any
shorter period), if the Beneficiary is the Participant’s surviving
spouse, or
(ii)The earlier of (a) a period not in
excess of fifteen (15) years, or (b) the later of (I) five years
after the death of the Participant or (II) the Beneficiary’s life
960531 lac 0031281
11
or life expectancy, if the Beneficiary is not the Participant’s
surviving spouse.
(D) Payments under such Annuity Contract or other
payout option shall commence no later than the later of:
(i)60 days after the close of the Plan
Year in which such Participant attains (or would have attained)
Normal Retirement Age, or ’
(ii) 60 days after the close of the Plan
Year of separation from service by such Participant.
(iii)Notwithstanding the foregoing,
payments under such Annuity Contract or other payout option shall
commence no later than:
(a) If the distribution is being
made pursuant to Section 4.01(c) (3) (C) to a Beneficiary who is not
the Participant’s surviving spouse, over such Beneficiary’s life or
life expectancy, one (i) year after the date of the Participant’s
death, or such later date permitted by regulations issued under
Section 4.01(a) (9) of the Code, or
(b) If the distribution is being
made pursuant to Section 4.01(c) (3) (C) to a Beneficiary who is the
Participant’s surviving spouse, over such Beneficiary’s life or
life expectancy, or the date on which the deceased Participant
would have attained age 70-1/2.
(c) If the Participant’s surviving
spouse dies before distribution of Benefits to such spouse begins
pursuant to Section 4.01(c) (3) (D) (iii) (b) above, the time at which
the distribution of Benefits shall commence shall be determined as
if the deceased spouse were the Participant.
(E) Any distribution of Benefits payable over a
period of more than one (I) year can be made only in substantially
non-increasing amounts paid not less frequently than annually.
(d)Distributions to Beneficiaries:
(i) The Participant has the right to name and file
with the Employer, a written beneficiary form designating the
person or persons (the "Beneficiary") who shall receive any
remaining Benefits in the event of the Participant’s death° The
form for this purpose shall be provided by the Employer° It is not
binding on the Employer until it is signed, filed with the Employer
by the Participant, and accepted by the Employer. Any Beneficiary
designation may be changed by the filing of a subsequent
beneficiary designation form. If the Participant dies without
having a Beneficiary form on file, the Benefits shall be made to
the properly appointed fiduciary of the Participant’s probate
estate. However, if a fiduciary has not been appointed and
qualified within one hundred twenty (120) days after the
960531 lae 0031281
12
Participant’s death, the Benefits shall be paid first to a
surviving spouse, next to a surviving child or children, and
thereafter to the surviving parent or parents of the Participant.
The Participant accepts and acknowledges that he/she has the burden
for executing and filing with the Employer a proper Beneficiary
designation form.
(2) In the event of the death of a Participant
prior to the commencement of distributiDn of Benefits, the named
Beneficiary shall have the right to designate that payments to such
Beneficiary shall be in accordance with one of the payment options
available to Participants under Section 4.01(c) above. Such
election by a Beneficiary shall be made in accordance with the
requirements for election of payment options by a Participant under
Section 4.01(c) above.
(3) If the Participant dies after the commencement
of payment of Benefits to him/her pursuant to one of the payment
options set forth in Section 4.01(i) (c) (A) through 4.01(c) (I) (E)
above, and before such Participant’s entitlement to payment of
Benefits has been exhausted, then the remaining Benefits payable
shall be paid to the Participant’s designated Beneficiary in
accordance with the payment option selected by the Participant.
Section 4.02 - Payments for Severe Financial Hardship:
Notwithstanding any other provision herein, in the event of a
severe financial hardship, a Participant may apply to the Plan
Executive to withdraw Benefits, in whole or in part, from the plan
prior to separation from service. Withdrawal of Benefits shall be
limited strictly to that amount reasonably necessary to meet an
unforeseen emergency situation which causes the severe financial
hardship. Any remaining Benefits shall be paid upon such
Participant’s separation from service in accordance with Section
4.01, above. Withdrawal of any Benefits for severe financial
hardship shall be limited to that which results from real and
unforeseen emergencies beyond the control of the Participant which
would cause severe financial hardship if early withdrawal of
Benefits were not permitted. Examples of severe financial hardship
to the Participant include that which results from a sudden and
unexpected illness or accident of the Participant or of a dependent
of the Participant or loss of the Participant’s property due to
casualty or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of
the Participant. In any event, no payments for severe financial
hardship shall be made to the extent such hardship is or may be
relieved through reimbursement or compensation by insurance or
otherwise, by liquidation of such Participant’s assets to the
extent that liquidation of such assets would not itself cause
severe financial hardship, or by cessation of deferrals under the
Plano Examples of what are not considered to be unforeseeable
emergencies include the need to send a Participant’s child to
college or the desire to purchase a home or automobile° The
decision of the Plan Executive concerning severe financial hardship
shall be made after review and recommendation are made by the
Advisory Committee and shall be final as to all Participants°
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Section 4.03 - Exception to Constructive Receipt : A
Participant’s Benefits shall not be treated as made available, and
therefore not bc ~~~ in the Participant’s gross income for
federal income tax purposes, merely because the Participant may
elect to receive his or her Benefits in a lump sum payable
(a) the Participant’s Benefits do-not exceed $3,5002 and
(b) the Participant may not defer any additional amounts
under the Plan.
ARTICLE 5
Miscellaneous
Section 5.01 - Leave of Absence: If a Participant is on an
approved leave of absence from the Employer with compensation,
participation in this Plan will continue. If a Participant is on
an approved leave of absence without compensation and such leave of
absence continues for more than six (6) months, said Participant
will be deemed to have terminated participation in the Plan as of
the end of such six (6) month period. Such termination of
participation will not cause distribution of Benefits. Upon return
from such leave of absence, the Participant’s full compensation on
a non-deferred basis will be thereupon restored. Such Employee may
again become a Participant by meeting the requirements for
eligibility, as herein provided.
Section 5.02 - Retirement System Integration: Benefits,
payable by and deductions for Employee contributions to, any
retirement system of the Employer shall be computed without
reference to amounts deferred pursuant to this DeferredCompensation Plan and shall instead be based upon Gross
Compensation the Participant would receiveif he/she had notelected to participate in this Plan and to defer compensation.
Section 5.03 Amendment: This Plan may be modified, amended
or terminated in whole or in part (including retroactive
amendments) by the Employer at any time. No amendment or
termination of the Plan shall reduce or impair the rights of any
Participant or Beneficiary which have already accrued. Upon
termination of the Plan, the Employer shall distribute all amounts
credited to each Account in accordance with the Participant’s
payment option selected pursuant to Article 4o All Participants
shall be treated in the same manner.
Section 5.04 - Creditors: A Participant may not assign,
transfer, sell, hypothecate, or otherwise dispose of any or all of
his/her Account or any right which he/she may have under the Plan,
and any attempt to do so shall be void.
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Section 5.06 Employment: Participation in the Plan shall
not be construed as giving any Participant any right to continue
his/her employment with the Employer.
Section 5.07 - Successors and Assiqns: The Plan shall be
binding upon and shall inure to the ben~efit of the Employer, its
successors and assigns, all Participants and Beneficiaries and
their heirs and legal representatives.
Section 5°08 - Written Notices: Any notice or other
communication required or permitted under the Plan shall be in
writing, and if directed to the Employer or the Administrator shall
be sent~to the designated office of the Employer, and, if directed
to a Participant or Beneficiary, shall be sent to such Participant
or Beneficiary at either his/her last known address as it appears
on the Employer’s record or to the work site, at the Employer’s
option.
Section 5.09 - Facility of Payment: If any participant
terminates employment with an unpaid debt owing to the Employer,
and neglects or refuses to liquidate the debt by any other means
when due and upon demand, the Employer shall be entitled to collect
the amounts due from the Benefits owed to the Participant under the
Plan.
Section 5.10 Total Agreement. This Plan and the
Participation Authorization, and any subsequentlyadopted amendment
thereof, shall constitute the total agreement or contract between
the Employer and the Participant regarding the Plan. No oral
statement regarding the Plan may be relied upon by the Participant.
Section 5.11 - Gender: As used herein, the masculine shall
include the neuter and the feminine where appropriate.
Section 5.12 Controllinq Law: This Plan is created and
shall be interpreted under the laws of the State of California as
the same shall be at the time any dispute or issue is raised.
IN WITNESS WHEREOF, the Employer has executed this amended and
restated Plan this day of , 1996o
ATTEST:
By:
Mayor
City Clerk
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