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HomeMy WebLinkAbout1996-12-16 City Council (33)City of Palo Alto City Manager’s Report TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: Human Resources AGENDA DATE: December 16, 1996 CMR:495:96 SUBJECT:Retirement Plan Alternative for Hourly Employees REQUEST To adopt a Resolution of" Intention to approve the amended Alternative Retirement Plan for hourly employees, as well as an amendment to the contract between the ICMA Retirement Corporation (RC) and the City of" Palo Alto, to provide simplified employer administration of" the Plan and to reduce administrative costs. RECOMMENDATIONS Staff recommends the adoption of the attached resolution approving the amended Plan and the new Administrative Services Agreement with RC effective January 1, 1997. POLICY IMPLICATIONS No change in existing policy. EXECUTIVE SUMMARY On July 1, 1994, the City of Palo Alto adopted a retirement plan alternative to the Federal Insurance Contributions Act (FICA) for all hourly employees working less than 1,000 hours per fiscal year, as allowed under Section 3121 of the Internal Revenue Code. The adoption of an alternative retirement plan resulted in cost savings of approximately $115,000 annually. The alternative retirement plan requires that at least 7.5 percent of the employee’s compensation must be contributed to the plan. The annual participant fee is paid by the City of Palo Alto. The maximum annual participant fee is $50.00 ($12.50 per quarter). Under the plan, employee contributions are refunded to the employee upon termination of employment with the City, unless the employee requests that contributions be left in his or her account. CMR:495:96 Page 1 of 2 On July 1, 1995, the Ci~; elected to participate in a pilot program with RC to streamline the administration of the alternative retirement plan, which required a signed enrollment form and. a signed withdrawal form, or a signed request not to withdraw funds form. The pilot plan was designed to minimize paperwork and bus.vwork by transmitting enrollment data by diskette. In addition, hourly employees who separate from service and have an account balance of $3,500 or less, are limited to a lump sum disbursement of their account. The pilot plan proved to be a success, and RC is now offering this new streamlined administration system to all public agencies. FISCAL IMPACT The annual employer paid participant fee charged by RC will be reduced from $50.00 to $18.00, saving the City approximately $13,000 annually. ENVIRONMENTAL ASSESSMENT This is not a project under the California Environmental Quality Act(CEQA). ATTACHMENTS 1.Resolution 2.Administrative Services Agreement PREPARED BY: Leonard Zucker, Benefits Manager DEPARTMENT HEAD REVIEW: CITY MANAGER APPROVAL: JA)’~. ROUNDi~ CMR:495:96 Page 2 of 2 RESOLUTION NO. RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO ADOPTING MODIFICATIONS TO THE 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 City of Palo Alto adopted a retirement plan for the City’s part-time, temporary and seasonal employees pursuant to Resolution No. 7319 adopted June 13, 1994; and WHEREAS, ICMA Retirement Corporation ("ICMA") has administered this deferred compensation plan pursuant to Section 457 of the Internal Revenue Code; and WHEREAS, ICMA has proposed that the City approve a modified version of the deferred compensation plan which would permit electronic filings, with a resulting reduction in plan administration costs; and WHEREAS, ~ICMA has also proposed modifications to the deferred compensation plan relating to lump-sum payouts to certain employees upon separation from employment with the City; and WHEREAS, the Council desires to adopt the proposed modifications to the deferred compensation plan for hourly employees of the City, and to enter into an agreement with ICMA for administration of the plan, as modified. NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION I. The Council hereby adopts the amendments to the "The City of Palo Alto/PTS 457 Deferred Compensation Plan (the "Plan"), a copy of which is amended plan attached hereto as Exhibit A and incorporated herein by reference. 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 hereto as Exhibit B and incorporated herein by reference. // // // // // // // 1 961127 lac 0031467 SECTION 3. The Council finds that this is not a project under the California Environmental Quality Act. INTRODUCED AND PASSED : AYES : NOES : ABSENT : ABSTENTIONS : ATTEST: City Clerk APPROVED AS TO FORM: Senior Asst. City Attorney APPROVED: Mayor City Manager Deputy City Manager, Administrative Services Director of Human Resources 2 961127 lac 0031467 DEFERRED COBIPENSATION PLAN FOR PART-TIME, TEMPORARY AND SEASONAL EMPLOYEES ARTICLE I. INTRODUCTION The Employer hereby establishes the Employer’s Part-time, Temporary and Seasonal Employees Deferred Compensation Plan, hereafter referred to as the "Plan." The Plan consists of the provisions set forth in this document. The primary purpose of this Plan is to provide retirement income and other deferred benefits to the Employees of the Employer in accordance with the provisions of Section 457 of the Internal Revenue Code of 1986, as amended (the "Code"). This Plan shall be an agreement solely between the Employer arid participating Part-time, Temporary and Seasonal Employees. ARTICLE U. DEFINITIONS ¯2.01 Account: The boo’k_keeping 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. 2.02 Administrator: The person or persons named to carD’ out certain nondiscretionary administrative functions under the Plan, as hereinafter described. The Employer may remove any person as Administrator upon 60 days’ advance notice in writing to such person, in which ca~ the Employer shall name another person or persons to a~ as Administrator. The Administrator may resign upon 60 days’ advance notice in v-citing to the Employer, in which case the Employer shall name another person or persons to act as Administrator. 2.03 BeneficiaD’: The person or persons designated by the Participant, in writing to the Administrator, who shall receive any benefits payable hereunder in the event of the Participant’s death. In the event that the Participant names two or more Beneficiaries, each Beneficiary shall be entitled to equal shares of the benefits payable at the Participant’s death, unless other-wise provided by the Participant. A Participant may at any time change his!her designated Beneficiary, and such change shall become effective immediately. If no beneficiary is designated by the Participant, if the Designated Beneficiary predeceases the Participant, or if the designated Beneficiary does not survive the Participant for a period of fifteen (15) days, then the estate of the Participant shall be the Beneficiary. 2.04 Deferred Compensation: The amount of Normal Compensation otherwise payable to the Participant which the Participant and the Employer mutually agree to defer hereunder, any amount credited to a Participant’s Account by reason of a transfer under section 6.03, or any other amount which the Employer agrees to credit to a Participant’s Account. 2.05 Earnings: Earnings, which form the basis for computing the minimum amount of compensation that must be deferred under this Plan, are all &each Participant’s W-2 earnings which are actually paid to the Participant during the Plan Year, plus the Deferred Compensation and/or any contributions made EXHIBIT A 7/t/96 1 pursuant to a salary reduction agreement which are not includible in the gross income of the Employee under section 125, 402(e)(3), 402(h)(1)(B), 403(b), or 414(h)(2) of the Code. 2.06 Employee: Any individual who provides services for the Employer, who is not a member of a retirement system, as defined in Treas. Regs. section 31.3121(b)(7)-2, maintained by the Employer, and who has been designated by the Employer as eligible to participate in the Plan. A Participant’s alternate Normal Retirement Age may not be earlier than age 55 and may not be later than age 70-1/2. Notwithstanding the foregoing, if a Participant continues employment after attaining age 70-1/2, not having previously elected an alternate Normal Retirement Age, the Participant’s alternate Normal Retirement Age shall not be later than the mandatory retirement age, if any, established by the Employer, or the age at which the Participant actually separates from service if the Employer has no mandatory retirement age. 2.07 Includible Compensation: The amount of an Employee’s compensation from the Employer for a taxable year thai is attributable to services performed for the Employer and that is includible in the Employee’s gross income for the taxable year 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. 2.08 Normal Compensation: The amount of compensation which would be payable to a Partidpant by the Employer for a taxable year if no agreement were in effect to defer compensation under this Plan. 2.09 Normal Retirement Age: Age 70-1/2, unless the Participant has elected an alternate Normal Retirement Age by written instrument delivered to the Administrator prior to Separation from Service. A Participant’s Normal Retirement Age determines the period during which a Participant may utilize the catch-up limitation of Section 5.02 hereunder. Once a Participant has to any extent utilized the catch-up limitation of Section 5.02, his/her Normal Retirement Age may not be changed. 2.10 Participant: Any Employee who has joined the Plan pursuant to the requirements of Article IV.: 2.11 Plan Year: The calendar year. 2.12 Retirement: The first date upon which both ofthe following shall have occurred with respect to a participant: Separation from Service and attainment of age 65. 2.13 Separation From Service: Severance of the Participant’s employment with the Employer which constitutes a "separation from service" with the meaning of Section 402(d)(4)(A)(iii) of the Code. In general, a Participant shall be deemed to have severed his/her 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. In the case of a Participant who is an independent contractor of the Employer, Separation from Service shall be deemed to have occurred when the Participant’s contract under which services are performed has completely expired and terminated, there is no foreseeable possibility that the Employer will renew the contract or enter into a new contract for the Participant’s services, and it is not anticipated that the Participant will become an Employee of the 7/1/96 2 Employer. ARTICLE lII. ADMINISTRATION 3.01 Duties of the Employer: The Employer shall have the authority to make all discretionary decisions affecting the rights or benefits of Participants which may be required in the administration of this Plan. 3.02 Duties of Administrator: The Administrator, as agent for the Employer, shall perform nondiscretionary administrative functions in connection with the Plan, including the maintenance of Participants’ Accounts, the provision of periodic reports of the status of each Account, and the disbursement of benefits on behalf of the Employer in accordance with the provisions of this Plan. ARTICLE IV. PARTICYPATION ~N THE PLAN 4.01 Initial Participation: A new Employee will become a Participant and have compensation deferred for the calendar month during which the Participant first becomes an Employee. An employee of the Employer who becomes eligible to participate in this Plan shall become a Participant and have compensation deferred beginning in the calendar month following the calendar month in which the Participant becomes eligible to participate in this Plan. The minimum amount of Deferred Compensation for any Participant for any taxable year shall be 7.5% of Earn!ngs for the taxable year. 4.02 Changes in Participant Election: A Participant may change the amount of compensation not yet earned which is to be deferred provided that no change may reduce future deferrals to less than 7.5% of Earnings. Such change shall become effective as of the beginning of the calendar month commencing after the date the change is executed. ARTICLE V.LI~IITATIONS ON DEFERRALS 5.01 Normal Limitation: Except as provided in section 5.02, the maximum amount of Deferred Compensation for any Participant for any taxable year shall not exceed the lesser of $7,500.00 or 33-1/3 percent of the Participant’s Includible Compensation for the taxable year. This limitation will ordinarily be equivalent to the lesser of $7,500.00 (or any higher dollar amount permitted under Code section 457(b) at the beginning oft.he taxable year) or 25 perc.ent of the Participant’s Normal Compensation. 5.02 Catch-Up Limitation: For each of the last three (3) taxable years of a Participant ending before his/her attainment of Normal Retirement Age, the maximum amount of Deferred Compensation shall be the lesser of: (1) $15,000 or (2) the sum of(i) the Normal Limitation for the taxable year, and (ii) the Normal Limitation for each prior taxable year of the Participant commencing after 1978 less the amount of the Participant’s Deferred Compensation for such prior taxable years. A prior taxable year shall be taken into account under the preceding sentence only if (i) the Participant was eligible to participate in the Plan for such year (or in any other eligible deferred compensation plan established under Section 457 of the Code which is properly taken into account pursuant to regulations under section 457), and (ii) eompensation (if any) deferred under the Plan (or such other plan) was subject to the deferral limitations set forth in Section 5.01 5.03 Other Plans: The amount excludable from a Participant’s gross income under this Plan or any other eligible deferred compensation plan under section 457 of the 7/1/96 3 Code shall not exceed $7,500.00 (or such greater amount allowed under Code section 457(b) at the begirming of the taxable year), less any amount excluded from gross income under section 403(b), 402(a)(8), or 402(h)(1)(B) of the Code, or any amount with respect to which a deduction is allowable by reason of a contribution to an organization described in section 501(c)(18) of the Code. ARTICLE VI.INVESTMENTS Ahq) ACCOUNT VALUES 6.01 Investment of Deferred Compensation: The Employer shall have all powers with respect to the investment of the Participant’s Deferred Compensation. All investments of Participant’s Deferred Compensation made by the Employer, including all property and rights purchased with such amounts and all income attributable thereto, shall be the sole property of the Employer and shall not be held in trust for Participants or as collateral security for the fulfillment of the Employer’s obligations under the Plan. Such property shall be subject to the claims of general creditors of the Employer, and no Participant or Beneficiary shall have any vested interest or secured or preferred position with respect to such property or have any claim against the Employer except as a general creditor. 6.02 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. Each Participant shall receive periodic reports, not less frequently than annually, showing the then current value of his!her Account. 6.03 Transfers: (a) Incoming Transfers: A transfer may be accepted from an eligible deferred compensation plan maintained by another employer and credited to a Participant’s Account under the Plan if (i) the Participant has separated from service with that employer and become an Employee of the Employer, and (ii) the other employer’s plan provides that such transfer will be made. The Employer may require such documentation from the predecessor plan as it deems necessary to effectuate the transfer, to confirm that such plan is an eligible deferred compensation plan within the meaning of Section 457 of the Code, and to assure that transfers are provided for under such plan. The Employer may refuse to accept a transfer in the form of assets other than cash, unless the Employer and the Administrator agree to hold such other assets under the Plan. Any such transferred amount shall be treated as a deferral subject to the limitations of Article V, except that, for purposes of applying the limitations of Sections 5.01 and 5.02, an amount deferred during any taxable year under the plan from which the transfer is accepted shall be treated as if it has been deferred under this Plan during such taxable year and compensation paid by the transferor employer shall be treated as if it had been paid by the Employer. (b) Outgoing Transfers: An amount may be transferred to an eligible deferred compensation plan maintained by another employer, and charged to a Participant’s Account under this Plan, if(i) the Participant has separated from service with the Employer and become an employee of the other employer, (ii) the other employer’s plan provides that such transfer will be accepted, and (iii) the Participant and the employers have 7/I/96 4 signed such agreements as are necessary to assure that the Employer’s liability to pay benefits to the Participant has been discharged and assumed by the other employer. The Employer may require such documentation from the other plan as it deems necessary to effectuate the transfer, to confirm that such plan is an eligible deferred compensation plan within the meaning of section 457 of the Code, and to assure that transfers are provided, for under such plan. Such transfers shall be made only under such circumstances as are permitted under section 457 of the Code and the regulations thereunder. 6.04 Employer Liability: In no event shall the Employer’s liability to pay benefits to a Participant under Article VI exceed the value of the amounts credited to the Participant’s Account; the Employer shall not be liable for losses arising from depreciation or shrinkage in the value of any investments acquired under this Plan. ARTICLE VII. BENEFITS 7.01 Retirement Benefits and Election on Separation from Service: (a) If a Participant Separatesfrom Service and the value of his/her Account at the time of Separation from Service is 5;3,500 or less, the distribution of the Participant’s Account shall be made in one lump sum as soon as practicable after the Administrator receives notification from the Employer that the Participant has Separated from Service. Such Participant ~vill not have the right to irrevocably elect to have the distribution of benefits commence on a fixed or deterrninable date other than that described herein nor may the Participant elect an alternate payment option described in Section 7.02. The Participant may, however, transfer his/her Account pursuant to Section 6.03. (b) If a Participant Separates from Service and the. value of his/her Account is greater than $3,500 at the time of Separation from Service, the distribution of a Participant’s Account shall commence as of April 1 of the calendar year after the Plan Year of the Participant’s Retirement, and the distribution of such Retirement benefits shall be made in accordance with one of the payment options described in Section 7.02. Notwithstanding the foregoing, the Participant may irrevocably elect within 60 days following Separation from Service to have the distribution of benefits commence on a fixed or determinable date other than that described in the preceding sentence which is at least 61 days after Separation from Service, but not later than April 1" of the year following the year of the Participant’s Retirement or attainment of age 70-1/2, whichever is later. 7.02 Payment Options: As provided in Sections 7.01 (b), 7.04 and 7.05, a Participant whose Account value exceeds $3,500 at the time of Separation from Service or Beneficiary of a Participant whose Account value exceeds 5;3,500 on the date of the Participant’s death may elect to have the value of the Participant’s Account distributed in accordance with one of the following payment options, provided that 7/1/96 5 such option is consistent with the limitations set forth in Section 7.03. (a) Equal monthly, quarterly, semi-annual or annual payments in an amount chosen by the Participant, continuing until his/her Account is exhausted; (b) One lump-sum payment; (c) Approximately equal monthly, quarterly, semi-annual or annual payments, calculated to continue for a period certain chosen by the Participant. (d) 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/her Beneficiary. (e) Payments equal to payments made by the issuer of a retirement annuity policy acquired by the Employer. (f) Any other payment option elected by the Participant and agreed to by the Employer and Administrator, provided that such option must provide for substantially nonincreasing payments for any period after the latest benefit commencement date under Section 7.01. A Participant’s or Beneficiary’s ~lection of a payment option must be made at least 30 days before the payment of benefits is to commence. Ifa Participant or Beneficiary fails to make a timely election of a payment option, benefits shall be paid monthly under option (c) above for a period of five years. 7.03 Limitation on Options: No payment option may be selected by a Participant or Beneficiary under Sections 7.02, 7.04, or 7.05 unless it provides that the amount of any annual installment is not less than $3,500 per year. No payment option may be selected by a Participant or Beneficiary under Sections 7.02, 7.04, or 7.05 unless it satisfies the requirements of Sections 401(a)(9) and 457(d)(2) of the Code, including that payments commencing before the death of the Participant shall satisfy the incidental death benefits requirement under section 457(d)(2)0B)(i)(l). Unless otherwise elected by the Participant, all determinations under Section 401(a)(9) shall be made without recalculation of life expectancies. 7.04 Post-retirement Death Benefits: (a) Should the Participant die after heTshe has begun to receive benefits under a payment option, the remaining payments, if any, under the payment option shall be payable to the Participant’s Beneficiary within the 30-day period commencing with the 61 st day after the Participant’s death, unless the Beneficiary elects payment under a different payment option that is available under Section 7.02 within 60 days of the Participant’s death. Any different payment option elected by a Beneficiary under this section must provide for payments at a rate that is at least as rapid under the payment option that was applicable to the Participant. In no event shall the Employer or Administrator be liable to the Beneficiary for the amount of any payment made in the name of the Participant before the Administrator receives proof of death of the Participant. 7/1/96 6 (b) If the designated Beneficiary does not continue to live for the remaining period of payments under the pa.vment option, then the commuted value of any remaining payments under the payment option shall be paid in a lump sum to the estate of the Beneficiary. In the event that the Participant’s estate is the Beneficiary, the commuted value of any remaining payments under the payment option shall be paid to the estate in a lump sum. 7.05 Pre-retirement Death Benefits: (a) Should the Participant die before he/she has begun to receive the benefits provided by Section 7.01(a), the value of the Participant’s Account shall be payable to the Beneficiary in one lump sum as soon as practicable after the 90th day following the Participant’s date of death or as soon thereafter as the Administrator receives notification that the Participant has died. (b) Should the Participant die before he/she has begun to receive the benefits provided by Section 7.02(b), and the value of the Participant’s Account exceeds $3,500 on the date of the Participant’s death, the value of the Participant’s Account shall be payable to the Beneficiary commencing within the 30-day period commencing on the 91st day aider the Participant’s death, unless the Beneficiary elects a different fixed or determinable benefit commencement date within 90 days of the Participant’s death. Such benefit commencement date shall be not later than the later of(i) December 31 of the year following the year of the Participant’s death, or (ii) if the Beneficiary is the Participant’s spouse, December 31 of the year in which the Participant would have attained age 70-1/2. Unless a Beneficiary elects a different payment option prior to the benefit commencement date, death benefits under this Section shall be paid in approximately equal annual installments over five years, or over such shorter period as may be necessary to assure that the amount of any annual installment is not less than $3,500. A Beneficiary shall be treated as if he/she were a Participant for purposes of determining the payment options .available under Section 7.02, provident, however, that the payment option chosen by the Beneficiary must provide for payments to the Beneficiary over a period no longer than the life expectancy of the Beneficiary, and provided that such period may not exceed (15) years if the Beneficiary is not the Participant’s spouse. (c) In the event that the Beneficiary dies before the payment of death benefits has commenced or been completed, the remaining value of the Participant’s Account shall be paid to the estate of the Beneficiary in a lump sum. In the event that the Participant’s estate is the Beneficiary, payment shall be made to the estate in a lump sum. 7.06 Unforeseeable Emergencies: (a) In the event an unforeseeable emergency occurs, a Participant may apply to the Employer to receive that part of the value of his/her Account that is reasonably needed to satisfy the emergency need. If such an application is approved by the Employer, the 7/1/96 7 Participant shall be paid only such amount as the Employer deems necessary to meet the emergency need, but payment shall not be made to the extent that the financial hardship may be relieved through cessation of deferral under the Plan, insurance or other reimbursement, or liquidation of other assets to the extent such liquidation would not itself cause severe financial hardship. (b) An unforeseeable emergency shall be deemed to involve only circumstances of severe financial hardship to the Participant resulting from a sudden unexpected illness, accident, or disability of the Participant or of a dependent (as defined in section 152(a) of the Code) of the Participant, loss of the Participant’s property due to casualty, or other similar and extraordinary unforeseeable circumstances arising as a result of events beyond the control of the Participant. The need to send a Participant’s child to college or to purchase a new home shall not be considered unforeseeable emergencies. The determination as to whether such an unforeseeable emergency exists shall be based on the merits of each individual case. ARTICLE VIII. NON-ASSIGNABILITY 8.01 In General: Except as provided in Section 8.02, no Participant or Beneficiary shall have any fight to commute, sell, assign, pledge, transfer or otherwise convey or encumber the right to receive any payments hereunder, which payments and rights are expressly declared to be non-assignable and non-transferable. 8.02 Domestic Relations Orders: (a) Allowance of Transfers: To the extent required under final judgement, decree, or order (including approval of a property settlement agreement) made pursuant to a state domestic relations law, any portion of a Participant’s Account may be paid or set aside for payment to a spouse, former spouse, or child of the Participant. Where necessary to carry out the terms of such an order, a separate Account shall be established with respect to the spouse, former spouse, or child who shall be entitled to make investment selections with respect thereto in the same manner as the Participant; any amount, so set aside for a spouse, former ~pouse, or child shall be paid out in a lump sum at the earliest date that benefits may be paid to the Participant, unless the order directs a different time or form of payment. Nothing in this Section shall be construed to authorize any amount to be distributed under the Plan at a time or in a form that is not permitted under Section 457 of the Code. Any payment made to a person other than the Participant pursuant to this Section shall be reduced by required income tax withholding; the fact that payment is made to a person other than the Participant may not prevent such payment from being includible in the gross income of the Participant for withholding and income tax reporting purposes. (b) Release from Liability to Participant: The Employer’s liability to pay benefits to a Participant shal! be reduced to the extent that amounts have been paid or set aside for payment to a spouse, former spouse, or child pursuant to paragraph (a) of the Section. No such transfer shall be 7/1/96 8 effectuated unless the Employer or Administrator has been provided with satisfactory evidence that the Employer and the Administrator are released from any further claim by the Participant with respect to such amounts. The Participant shall be deemed to have released the Employer and the Administrator from any claim with respect to such amounts, in any case in which (i) the Employer or Administrator has been served with legal process or otherwise joined in a proceeding relating to such transfer, (ii) the Participant has been notified of the pendency of such proceeding in the manner prescribed by the law of the jurisdiction in which the proceeding is pending for service of process in such action or by mail from the Employer or Administrator to the Participant’s last "known mailing address, and (iii) the Participant fails to obtain an order of the court in the proceeding relieving the Employer or Administrator from the obligation to comply with the judgment, decree, or order. (c) Participation in Legal Proceedings: The Employer and Administrator shall not be obligated to defend against or set aside any judgement, decree, or order described in paragraph (a) any legal order relating to the garnishment of a Participant’s benefits, unless the full expense of such legal action is borne by the Participant. In the event that the Participant’s action (or inaction) nonetheless causes the Employer or Administrator to incur such expense, the amount of the expense may be charged against the Participant’s Account and thereby reduce the Employer’s obligation to pay benefits to the Participant. In the course of any proceeding relating to divorce, separation, or child support, the Employer and Administrator shall be authorized to disclose information relating to the Participant’s Account to the Participant’s spouse, former spouse, or child (including the legal representatives of the spouse, former spouse, .or child), or to a court. ARTICLE IX. RELATIONSHIP TO OTHER PLANS AND EI~IPLOYMENT AGREEMENTS This plan serves in addition to any other retirement, pension, or benefit plan or system presently in e~stence or hereinafter established for the benefit of the Employer’s employees, and parti.cipation hereunder shall not affect benefits receivable under any such plan or system. Nothing contained in this Plan shall be deemed to constitute an employment contract or agreement between any Participant and the Employer or to give any Participant the right to be retained in the employ of the Employer. Nor shall anything herein be construed to modify the terms of any employment contract or agreement between a Participant and the Employer. ARTICLE X.AMENDMENT TERMENATION OF PLAN OR The Employer may at any time amend this Plan provided that it transmits such amendment in writing to the Administrator at least 30 days prior to the effective date of the amendment. The consent of the Administrator shall not be 7/1/96 9 required in order for such amendment to become effective, but the Administrator shall be under no obligation to continue acting as Administrator hereunder if it disapproves of such amendment. The Employer may at any time terminate this Plan. Upon termination of this Plan by the Employer, all Accounts will be distributed to Participants and Beneficiaries in one lump sum as soon as practicable following written notification to the Administrator by the Employer that the Plan is terminated. The Administrator may at any time propose an amendment to the Plan by an instrument in writing transmitted to the Employer at least 30 days before the effective date of the amendment. Such amendment shall become effective unless, within such 30-day period, the Employer notifies the Administrator in writing that it disapproves such amendment, in which case such amendment shall not become -effective. In the event of such disapproval, the Administrator shall be under no obligation to continue acting as Administrator hereunder. If this Plan document constitutes an amendment and restatement of the Plan as previously adopted by the Employer, the amendments contained herein shall become effective on January 1, 1996, and the terms of the preceding Plan document shall remain in effect through December 31, 1995. Except as may be required to maintain the status of the Plan as an eligible deferred compensation plan under section 457 of the Code or to comply with other applicable laws, no amendment or termination of the Plan shall divest any Participant of any rights with respect to compensation deferred before the date of the amendment or termination. This Plan shall be construed under the laws of the state where the Employer is located and is established with the intent that it meet the requirements of an "eligible deferred compensation plan" under Section 457 of the Code, as amended. The provisions of this Plan shall be’ interpreted wherever possible in conformity with the requirements of that section. ARTICLE XII. GENDER AND NU~I"BER The masculine pronoun whenever used herein, shall include the feminine pronoun, and the singular shall include the plural, except where the context requires otherwise. ARTICLE XI. APPLICABLE LAW 7/1/96 10 RETIREMENT CORPORATION ADMINISTRATIVE SERVICES AGREEMENT Type" 457 Account Number: 3953 EXHIBIT B Pla 3953 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 PTS ("Employer") a City organized and existing under the laws of the State of California with an office at 250 Hamilton Avenue, Palo Alto, California 94301-2531. Recitals Employer acts as a public plan sponsor for a retirement plan ("Plan") with responsibility to obtain investment alternatives and services for part-time, seasonal and temporary 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 (the "Funds") for the investment of plan assets as referenced in the Trust’s principal disclosure document, "Making Sound Investment Decisions: A Retirement Investment Guide." The Funds are available only to public employers and only through the Trust and RC. However, investment in the PLUS Fund is the only option available to participants in this plan. 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. This Agreement supersedes the prior Administrative Services Agreement entered into between the parties on or about August 22, 1994. Pla 3953 IC.MA RETIREMENT CORPORATION Agreernents 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) maintenance of individual accounts for participants reflecting amounts deferred, income, gain, or loss credited, and amounts disbursed as benefits; (b) provision of periodic reports to the Employer and participants of the status of Plan investments and individual accounts; (c) communication to participants of information regarding their rights and elections under the Plan; and (d) disbursement of benefits as agent for the Employer in accordance with terms of the Plan. Employer Agreements Employer agrees to the following with respect to the plan: (a) there is no necessity for individual employee signatures upon enrollment and/or disbursement; (b) if the employee’s address is not provided upon enrollment by the Employer, then the Employer’s address will be used as the contact address; and (c) Employer will provide employees with communications on employee right to file a W-4 form along with the Employer’s request for disbursement. ICMA RETIREMENT TRUST Employer continues to be a party to the Declaration of Trust of the ICMA Retirement Trust and 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" -3- Pla ’~ 3953 ICMA RETIREMENT CORPORATION as it is used in the Declaration of Trust shall mean this Administrative Services Agreement. Emplo,ver Dut,v 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 furnished to it by a responsible official of the Employer or any information relating to an individual participant or beneficiary that is furnished by 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. Certain Rapresentations, 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; -4- Pla 3953 ICMA RETtRIqMi:NT CORPORATION 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. o 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. Cnmpensation and Payment (a) Plan Administration Fee. The amount to be paid for plan administration services under this Agreement shall be 0.75% 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 $18.00. The account maintenance fee is payable in full on 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 7(a) shall be paid out of the Plan Assets held by the Trust and shall be paid by the 3953 ICMA RET[REMEN-t CORPORATION 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 7(b) shall be paid directly by Employer, and shall not be deducted from Plan Assets held by the Trust. 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 incorrectly labeled or transferred to RC, RC is authorized, acting on behalf of the transferor, to transfer such check or wire transfer to the Trust. 9.R~,spnn.~ihilit,v 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. This Agreement may be terminated without penalty by either party on sixty days advance notice in writing to the other. 11.Amendm~,nts and Ad]ustm~.nts (a) This Agreement may not be amended except by written instrument signed by the parties. (b) The parties agree that compensation for services under this Agreement and administrative and operational arrangements may be adiusted 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 the 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 even the parties shall negotiate with respect to the adjustment. (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. -6- Pla 3953 ICMA RETIREMENT CORPORATION 12.Notices All notices required to be delivered under Section 11 of this Agreement shall be delivered personally or by registered or certified mail, postage prepaid, return receipt requested, to (i) Legal Department, ICMA Retirement Corporation, 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. 13.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. 14.Governing Law This agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made in that jurisdiction without reference to its conflicts of laws provisions. -7- IC.MA Plar 3953 RETIREMENT CORPORATION In Witness Whereof, the parties hereto have executed this Agreement as of the Inception Date first above written. ATTEST:CITY OF PALO ALTO PTS by’ City Clerk Mayor APPROVED AS TO FORM: Senior Asst. City Attorney APPROVED: City Manager INTERNATIONAL CITY MANAGEMENT ASSOCIATION RETIREMENT CORPORATION ,/- ~f. , \ ~ , by’d Stephen Wm. Nor6holt/Date / Corporate Secretary Director of Human Resources Deputy City Manager, Administrative Services Risk Manager -8-