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HomeMy WebLinkAbout09 DEFERRED COMP 05-20-02AGENDA REPORT , 05-2O-02 520-20 MEETING DATE: May 20, 2002 \~,~-~.~ TO: FROM: SUBJECT: WILLIAM A. HUSTON, CITY MANAGER HUMAN RESOURCES DEPARTMENT APPROVE RESOLUTION ADOPTING A DEFERRED COMPENSATION PLAN FOR ELIGIBLE PART-TIME AND OTHER TEMPORARY, SEASONAL AND INTERMITENT EMPLOYEES SUMMARY: This agenda item recommends the formal adoption of a Deferred Compensation Plan for the City's eligible temporary, seasonal and intermittent employees in compliance with the Omnibus Reconciliation Act of 1990. RECOMMENDATION: Adopt Resolution No. 02-51 adopting the U.S. Conference of Mayors (USCM and also known as PEBSCO and/or NRS, Nationwide Retirement Solutions) Deferred Compensation Plan for eligible non-regular part-time and other temporary, seasonal and intermittent employees pursuant to the Omnibus Reconciliation Act of 1990 (OBRA). FISCAL IMPACT: NONE BACKGROUND AND DISCUSSION: City of Tustin employees do not participant in the Federal Social Security system. Instead, our regular full-time and designated regular part-time employees participate in a retirement plan through the Public Employees Retirement System (PERS). Temporary, seasonal and/or intermittent employees are not typically included for participation in the PERS retirement program. Because the City does not participate in Social Security, pursuant to the Omnibus Reconciliation Act of 1990 (OBRA), the City is required to maintain a plan, in lieu of Social Security, that provides those employees not eligible to participate in PERS an investment program that would provide comparable benefits to those they would receive had they participated in the Federal Social Security system. S:\City Council Agenda Items\Staff Report OBRA.doc The City is in compliance with the requirements of OBRA and has utilized our deferred compensation plan through USCM (also known as PEBSCO and/or NRS, Nationwide Retirement Solutions) as the vehicle for a plan for eligible employees in lieu of Social Security. OBRA requires a minimum contribution of 7.5% of wages; this is currently funded by both the City and the employee (the employee contributes 5.5% and the City contributes 2%). Employees are eligible to add funds to this plan in excess of the amount required by OBRA. While the attached Plan document refers to deferral limits of $7,500 or 33 1/3% of participant compensation, the limits on deferrals have recently increased and the Plan adopted will comply with the new higher State and Federal deferral limits. The OBRA Plan is supplemental to our voluntary 457 Plan. There are no additional costs associated with this Resolution. Individuals participating in the OBRA plan will have their funds directed into a fixed investment account pursuant to the contract with USCM. These funds remain on deposit with USCM until an employee retires or terminates employment with the City; at such time the entire amount deposited is available to the employee. The attached Resolution formalizes our current compliance with OBRA utilizing USCM as the third party administrator and authorizes the City Manager, or his designee, to take all steps necessary to administer the plan. Arlene Marks, SPHR Director of Human Resources Attachment: Resolution 02-51 OBRA Plan Document OBRA Administrative Agreement S:\City Council Agenda Items\Staff Report OBRA.doc RESOLUTION NO. 02-51 20 21 24 2O 2'/ 29 A RESOLUTON OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, ESTABLISHING A DEFERRED COMPENSATION PLAN FOR PART-TIME AND OTHER TEMPORARY, SEASONAL AND INTERMITTENT EMPLOYEES WHEREAS, the City has established a Deferred Compensation Plan to be made available to eligible part-time other temporary, seasonal and/or intermittent employees pursuant to Federal legislation permitting such Plans; and WHEREAS, the City recognizes that adoption of a Deferred Compensation Plan will allow City to satisfy its obligations under the Omnibus Budget Reconciliation Act of 1990; and WHEREAS, certain tax benefits could accrue to those participants contributing at least the minimum required amount from their current income in said Deferred Compensation Plan to meet their future financial requirement and/or supplement their Social Security benefits; and WHEREAS, The U.S. Conference of Mayors (USCM) has established a master prototype deferred compensation program for cities and political subdivisions permitting its member cities and their employees to participate in this program; and WHEREAS, U.S. Conference of Mayors, as Plan Administrator, agrees to hold harmless and indemnify the City, its' appointed and elected officers and participants from any loss from USCM or PEBSCO's failure to perform its duties and services pursuant to the USCM Program; NOW, THEREFORE, The City Council of the City of Tustin, California does hereby resolve as follows: The City Council hereby adopts the U. S. Conference of Mayors Deferred Compensation Program and it attendant investment options and hereby establishes the City of Tustin Deferred Compensation Plan for the participation of all eligible part-time and other temporary, seasonal, and/or intermittent employees. The City Manager, or his designee, is hereby authorized to execute for the City, individual Acknowledgement Cards with each said employee and to act as the "Administrator" of the Plan representing the City, and to execute such agreements and contracts as are necessary to implement the Program. It is implicitly understood that in addition to the incidental expenses of collection and disbursing the employee's deferral and other minor administrative matters, there shall be a cost to the City for the Program in an annual amount per participant as specified in certain other agreements. Passed and adopted at a regular meeting of the Tustin City Council held on the 20th day of May, 2002. JEFFREY M.THOMAS, MAYOR ATTEST: CITY CLERK C:\WlNDOWS\Temporary Internet Files\OLK185\Reso OBRA Plan. DOC OBRA DEFERRED COMPENSATION PROGRAM THE DEFERRED COMPENSATION PLAN FOR PUBLIC EMPLOYER OBRA PLAN DOCUMENT CITY OF TUSTIN The Plan consists of the provisions set forth in this document, and is applicable to each Public Employee who participates in the Plan. The Plan is effective as to each such Public Employee upon the date he becomes a "PARTICIPANT" by signing and filing with the Administrator the ACKNOWLEDGEMENT FORM/CARD referred to herein, or in the case of a TAKEOVER PLAN, the EMPLOYER'S execution of an ENTITY AUTHORIZATION FORM. ARTICLE I Definitions 1.01. The following terms shall, for purposes of this Plan, have the meaning set forth below. (a) ACKNOWLEDGEMENT FORM/CARD means the application to the ADMINISTRATORS to participate in the PLAN. (b) ADMINISTRATOR means the third party administrator selected by the EMPLOYER to administer the PLAN. (c) COMPENSATION means all payments made by the EMPLOYER as remuneration for services rendered, including salaries, fees, etc. (d) EMPLOYER means the above-referenced EMPLOYER or any of its agencies, departments, subdivisions or instrumentalities for which services are performed by a PARTICIPANT. (e) ENTITY AUTHORIZATION FORM shall mean the form which the EMPLOYER shall provide to the ADMINISTRATOR acknowledging that the EMPLOYER has established this OBRA Plan as a TAKEOVER PLAN. (f) INCLUDIBLE COMPENSATION means, for the purposes of the limitations on deferrals, compensation for services performed for the EMPLOYER which is currently includible in gross income after giving effect to all provisions of the IRC. The amount of INCLUDIBLE COMPENSATION shall be S:\OBRA\OBRA PLAN DOCUMENT.doc Page 1 of 9 determined without regard to any community property laws. (g) IRC means the Internal Revenue Code of 1986, as now in effect or as hereafter amended. (h) OBRA means the Omnibus Budget Reconciliation Act of 1990, as now in effect or as hereafter amended. (i) PARTICIPANT means any PUBLIC EMPLOYEE who is subject to IRC Section 3121 (b). (7) (F), as amended by OBRA, and the regulations thereunder, and who must participate under this Plan by signing the ACKNOWLEDGEMENT FORM/CARD. (J) PLAN means the OBRA Deferred Compensation Plan For PUBLIC EMPLOYEES as set forth in this document and as it may be amended from time to time. (k) PLAN YEAR means the calendar year in which the PLAN becomes effective, and each succeeding calendar year during the existence of this PLAN. PUBLIC EMPLOYEE means any person who received any type of compensation from the EMPLOYER for which services are rendered (including, but not limited to, elected or appointed officials, and salaried employees). (m) SEPARATION FROM SERVICE means Separation From Service as defined in IRC Section 402(e)(4)(A)(iii), and on account of the PARTICIPANT'S death or retirement. (n) TAKEOVER PLAN shall mean this Plan when established by an EMPLOYER to replace an existing OBRA plan. ARTICLE II Election to Defer Compensation 2.01. A new PUBLIC EMPLOYEE shall, as a condition of employment, participate in the PLAN by signing and filing with the ADMINISTRATOR an ACKNOWLEDGEMENT FORM/CARD and thereby consenting to a reduction of salary by the deferral amount specified in the ACKNOWLEDGEMENT FORM/CARD. The amount of the reduction ("deferred amount") must equal at least 7.5% of the PARTICIPANT'S COMPENSATION, or such other minimum amount as shall be required for the PLAN to be considered a retirement system under OBRA, and the reduction in the PARTICIPANT'S salary shall begin immediately thereafter. S:\OBRA\OBRA PLAN DOCUMENT.doc Page 2 of 9 2.02. A PUBLIC EMPLOYEE who is newly eligible to participate in the PLAN shall, prior to becoming eligible to participate in the PLAN, sign and file with the ADMINISTRATOR an ACKNOWLEDGEMENT FORM/CARD and thereby consent to a reduction of salary by the deferral amount specified in the ACKNOWLEDGEMENT FORM/CARD. The deferred amount must equal at least 7.5% of the PARTICIPANT'S COMPENSATION, or such other minimum amount as shall be required for the PLAN to be considered a retirement system under OBRA, and the reduction in the PARTICIPANT'S salary shall begin no earlier than the first pay period commencing during the first month after the date on which the ACKNOWLEDGEMENT FORM/CARD is filed with the ADMINISTRATOR. 2.03. If the OBRA PLAN is a TAKEOVER PLAN, a PUBLIC EMPLOYEE who participated in the predecessor plan shall become a PARTICIPANT in the PLAN upon the EMPLOYER'S execution of the ENTITY AUTHORIZATION FORM. The deferred amount of each such PARTICIPANT must equal at least 7.5% of the PARTICIPANT'S COMPENSATION, or such other minimum amount as shall be required for the PLAN to be considered a retirement system under OBRA, and the reduction in the PARTICIPANT'S salary shall begin immediately thereafter. 2.04. A PARTICIPANT may amend the deferred amount by signing and filing with the ADMINISTRATOR a written amendment on a form and in the procedural manner approved by the ADMINISTRATOR. Any amendment which increases the deferred amount for any pay period shall be effective only if an agreement providing for such additional deferred amount is entered into before the beginning of the month in which the pay period commences. Any .amendment of the deferred amount shall be effective prospectively only and only if the amendment does not reduce the deferred amount below 7.5% of the PARTICIPANT'S COMPENSATION, or such other minimum amount as shall be required for the PLAN to be considered a retirement system under OBRA. Notice to ALL PARTICIPANTS to Read These Provisions Providing Deferral Limitations Under the Plan. 2.05. The maximum deferred amount under the PLAN for the PARTICIPANT'S taxable year shall not exceed the lesser of (a) $7,500 or (b) 33 1/3% of the PARTICIPANT'S INCLUDIBLE COMPENSATION as provided in the IRC Section 457. 2.06. In applying the deferral limitations of Section 2.05, any amounts excluded from the PARTICIPANT'S gross income for the taxable year under IRC Sections 403(b), 402(a)(8) and 402(h) (1)(B) and deductible contributions to an organization described in IRC Section 501 (c) (18), shall be treated as amounts deferred as provided in IRC Section 457(c). S:\OBRA\OBRA PLAN DOCUMENT.doc Page 3 of 9 ARTICLE III Plan Transfers 3.01. If a PARTICIPANT terminates employment with the EMPLOYER and accepts employment with another employer which maintains an eligible deferred compensation plan (as defined in IRC Section 457) and the new employer's plan accepts transfers, the PARTICIPANT may transfer his account balance from the PLAN to the plan maintained by the new employer. 3.02. Transfers from other eligible deferred compensation plans (as deferred in IRC Section 457) to the PLAN will be accepted at the PARTICIPANT'S request if such transfers are in cash or non-annuity products currently offered under the PLAN. Any such transferred amount shall not be subject to the limitations of Section 2.05, provided, however, that the actual amount deferred during the calendar year under both plans shall be taken into account in calculating the deferral limitation for that year. 3.03. If a PARTICIPANT is no longer eligible to participate in the PLAN but elects to participate in the EMPLOYER'S voluntary Section 457 deferred compensation plan, the value of the PARTICIPANT'S deferred account under the PLAN shall be transferred to the EMPLOYER'S voluntary Section 457 deferred compensation plan, upon receipt of investment instructions from the PARTICIPANT. ARTICLE IV Payment Upon Participant's Death Upon the death of the PARTICIPANT the benefits payable under this PLAN will be paid to the PARTICIPANT'S estate in a lump sum. ARTICLE V Accounts and Reports 5.01. The EMPLOYER shall remit the amounts deferred to the ADMINISTRATOR. The ADMINISTRATOR shall have no duty to determine whether the funds paid to it by the EMPLOYER are correct, whether the 7.5% deferral amount, as described in Section 2.01 of the PLAN, is actually being deferred, nor to .collect or enforce such payment or percentage amount. 5.02. For convenience and to facilitate an orderly administration of the PLAN, the ADMINISTRATOR shall maintain a deferred account with respect to each PARTICIPANT. The PARTICIPANT will be provided with an address to which the PARTICIPANT can write to obtain account balance information. S:\OBRA\OBRA PLAN DOCUMENT.doc Page 4 of 9 5.03. Within ninety (90) days after the end of the calendar year, the ADMINISTRATOR shall file with the EMPLOYER a written report of the assets of the PLAN, a schedule of all receipts and disbursement, and a report of all material transactions of the PLAN during the preceding year. 5.04. The ADMINISTRATOR'S records shall be open to inspection during normal business hours by the EMPLOYER or its designated representative. ARTICLE VI Investment of Deferred Amount 6.01. The deferred amounts shall be delivered by the EMPLOYER to the ADMINISTRATOR for investment as designated by the EMPLOYER in the investment option selected by the EMPLOYER. 6.02. The EMPLOYER shall use the EMPLOYER'S investment specifications so as to determine the value of the deferred account maintained with respect to the PARTICIPANT as if the deferred amounts had been invested according to such specifications. The EMPLOYER shall be under no obligation to invest the deferred amounts as specified by the PARTICIPANT. 6.03. Interest applicable to each PARTICIPANT'S deferred account shall be credited to the account as it occurs. 6.04. All assets of the PLAN, including all deferred amounts, property and rights purchased with deferred amounts, and all income attributable to such deferred amounts, property or rights, shall remain (until made available to the PARTICIPANT or PARTICIPANT'S estate) solely the property and rights of the EMPLOYER (without being restricted to the provision of benefits under the PLAN), subject only to the claims of creditors of the EMPLOYER. Contracts and other evidences of the investments of all assets under this PLAN shall be registered in the name of the EMPLOYER which shall be the owner and beneficiary thereof. The rights of the PARTICIPANT created by this PLAN shall be those of a general creditor of the EMPLOYER, and in an amount equal to the fair market value of the deferred account maintained with respect to the PARTICIPANT. The PARTICIPANT acknowledges that his rights are no greater than those of a general creditor of the EMPLOYER and that in any suit for an accounting, to impose a constructive trust, or to recover any sum under this Plan, the PARTICIPANT'S rights are limited to those of a general creditor of the EMPLOYER. S:\OBRA\OBRA PLAN DOCUMENT.doc Page 5 of 9 ARTICLE VII Benefits 7.01. Commencement of Distributions: The PARTICIPANT may elect the time at which distributions under the Plan are to commence by designating the month and year during which the first distribution is to be made. The earliest distribution commencement date that may be elected by the PARTICIPANT shall be the earlier of: (a) 31 days after the date on which the PARTICIPANT separates from service; or (b) The date on which the PARTICIPANT attains age 70 1/2 or terminates deferrals under this PLAN, whichever is later. The PARTICIPANT shall make such election no later than thirty (30) days following separation from service or thirty (30) days following attainment of age 70, whichever occurs first. Benefits payable to the PARTICIPANT will be equivalent of the total benefits that would have been invested under the PLAN. The date elected for commencement of distributions ("the Elected Commencement Date") shall be not later than the Mandatory Commencement Date, which is the later of: (a) April 1 of the calendar year following the calendar year in which the PARTICIPANT attains age 70 1/2; or (b) April 1 of the calendar year following the calendar year in which the PARTICIPANT separates from service with the EMPLOYER. Such election shall not be changed once the election is made. Failure to file an election with the ADMINISTRATOR within the appropriate time period will result in the ADMINISTRATOR beginning distributions on the Mandatory Commencement Date. 7.02. Mode of Payment: At least thirty (30) days prior to the date on which a PARTICIPANT is eligible for benefits to commence under the PLAN, the Employer shall notify the ADMINISTRATOR in writing, mailed to the ADMINISTRATOR'S Home Office, of the PARTICIPANT'S election, subject to this paragraph 7.02, of the benefit described in para.qraph 7.02(b). Benefits shall be paid in accordance with the following: S:\OBRA\OBRA PLAN DOCUMENT.doc Page 6 of 9 (a) If the PARTICIPANT'S account value is less than $5,000.00, the ADMINISTRATOR shall make a lump sum distribution to the PARTICIPANT; or (b) If the PARTICIPANT' S account value is equal to or greater than $5,000.00, the PARTICIPANT shall elect either a lump sum distribution or a payout for the PARTICIPANT which provides for monthly payments of a designated amount. 7.03. Payments to PARTICIPANT'S Estate: If the PARTICIPANT dies while employed with the EMPLOYER, or the PARTICIPANT dies before the benefits to which the PARTICIPANT is entitled under this PLAN have been exhausted, the benefit payable under this PLAN shall be paid to the PARTICIPANT'S estate in a lump sum. ARTICLE VIII Administration of the Plan 8.01. The EMPLOYER may at any time amend, modify, or terminate the PLAN without the consent of the PARTICIPANT. 8.02. Any companies that may issue any policies, contracts, or other forms of investment media used by the EMPLOYER or specified by the PARTICIPANT, are not parties to this PLAN and such companies shall have no responsibility or accountability to PARTICIPANT or the PARTICIPANT'S estate with regard to the operation of this PLAN. 8.03. Participation in this PLAN by a PUBLIC EMPLOYEE shall not be construed to give a contract of employment to the PARTICIPANT or to alter or amend an existing employment contract of the PARTICIPANT, nor shall participation in this PLAN be construed as affording to the PARTICIPANT any representation or guarantee regarding the PARTICIPANT'S continued employment. 8.04. The EMPLOYER and the ADMINISTRATOR do not represent or guarantee that any particular Federal or State income, payroll, personal property, or other tax consequence will occur because of the PARTICIPANT'S participation in this PLAN. The PARTICIPANT should consult with the PARTICIPANT'S own representative regarding all questions of Federal or State income, payroll, personal property, or other tax consequences arising from participation in this PLAN. 8.05. The ADMINISTRATOR shall have the power to appoint agents to act for and in the administration of this PLAN and to select depositories for the assets of this PLAN. S:\OBRA\OBRA PLAN DOCUMENT.doc Page 7 of 9 8.06. Whenever used herein, the masculine gender shall include the feminine and the singular shall include the plural unless the provision of the PLAN specifically require a different construction. 8.07. The laws of the state of the EMPLOYER shall apply in determining the construction and validity of this PLAN. 8.08. The rights of the PARTICIPANT under this PLAN shall not be subject to the rights of creditors of the PARTICIPANT or the PARTICIPANT'S estate, and shall be exempt from execution, attachment, prior assignment, or any other judicial relief or order for the benefit of creditors or other third person. 8.09. It is agreed that neither the PARTICIPANT nor the PARTICIPANT'S estate nor any other designee shall have any right to commute, sell, assign, pledge, encumber, transfer, or otherwise convey the right to receive any payment hereunder which payments and right thereto are expressly declared to be nonassignable and nontransferable. 8.10. This PLAN, and any properly adopted amendments or modifications, 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. 8.11. This PLAN and any properly adopted amendments or modifications, shall be binding on the parties hereto and their respective heirs, administrators, executors, trustees, successor, and assignees. ARTICLE IX Notice to ALL PARTICIPANTS to Read These Provisions Providing Broad Powers and Absolute Safeguards to the EMPLOYER 9.01. The EMPLOYER, the ADMINISTRATOR, or their respective agents, shall be authorized to resolve any questions of fact necessary to decide the PARTICIPANT'S right under this PLAN and such decision shall be binding on the PARTICIPANT. 9.02. The EMPLOYER, the ADMINISTRATOR, or their respective agents, shall be authorized to construe the PLAN and to resolve any ambiguity in the PLAN. 9.03. The PARTICIPANT specifically agrees not to seek recovery against the EMPLOYER, the ADMINISTRATOR or any other employee, contractee, or agent of the EMPLOYER or ADMINISTRATOR, or any endorser for any loss sustained by the PARTICIPANT or the PARTICIPANT'S estate, for the nonperformance of their duties, negligence, or any other misconduct of the above named persons S:\OBRA\OBRA PLAN DOCUMENT.doc Page 8 of 9 except that this paragraph shall not excuse fraud or wrongful taking by any person. 9.04. The EMPLOYER, the ADMINISTRATOR, or their respective agents, if in doubt concerning the correctness of their action in making a payment of a benefit, may suspend the payment until satisfied as to the correctness of the payment or the person to receive the payment or allow the filing in any State court of competent jurisdiction, a suit in such form as they consider appropriate for a legal determination of the benefits to be paid and the persons to receive them. The EMPLOYER shall comply with the final orders of the court in any such suit and the PARTICIPANT, for himself and the PARTICIPANT'S estate, consents to be bound thereby insofar as it affects the benefits payable under this PLAN or the method or manner of payment. 9.05. The EMPLOYER, the ADMINISTRATOR, and their respective agents are hereby held harmless from all court costs and all claims f or the attorneys I fees arising from any action brought by the PARTICIPANT or any executor of PARTICIPANT'S estate under this PLAN or to enforce the PARTICIPANT'S or the PARTICIPANT'S estate's rights under this PLAN, including any amendments, modifications or termination hereof. ARTICLE Xl Effective Date This PLAN shall be effective on the date and year written below. IN WITNESS WHEREOF, the undersigned has executed this PLAN this~ 2002. day of City of Tustin By: Title: S:\OBRA\OBRA PLAN DOCUMENT.doc Page 9 of 9 UNITED STATES CONFERENCE OF MAYORS OBRA DEFERRED COMPENSATION PROGRAM ADMINISTRATIVE AGREEMENT This United States Conference of Mayors OBRA Deferred Compensation Program Administrative Agreement (hereinafter "Agreement")is executed this day of , 2002, by and among the United States Conference of Mayors (hereinafter "USCM") of Washington D.C., Public Employees Benefit Services Corporation (hereinafter "PEBSCO"), and (hereinafter "Employer"). WHEREAS, the USCM endorses and sponsors a prototype OBRA deferred compensation program ("Program") designed to supplement the USCM Master Deferred Compensation Program under which the Employer has heretofore or in connection herewith adopted a deferred compensation plan; and WHEREAS, Employer recognizes that adoption of a deferred compensation plan ("Plan") under the Program will allow Employer to satisfy its obligations under the Omnibus Budget Reconciliation Act of 1990 (hereinafter "OBRA"); and WHEREAS, Employer recognizes that through the adoption of a Plan under the Program, all such regulatory, operational, administrative and other Plan management responsibilities are assumed by USCM on behalf of the Employer, in accordance with the Plan document, except as may be described herein, and certain responsibilities have been and may be delegated by USCM, to PEBSCO as Program Administrator; and WHEREAS, Employer recognizes the important contribution of USCM's technical expertise in the design, implementation and administration of a national program established and administered in compliance with all applicable regulatory authorities; and WHEREAS, Employer recognizes the benefit of USCM's making arrangements on behalf of the Employer for a functional administrative system to administer the Program; and WHEREAS, Employer has enacted the necessary resolution/ court order to adopt the OBRA Deferred Compensation Program and this Administrative Agreement and to establish its Plan for its employees. NOW, THEREFORE, in consideration of the premises set forth hereinabove, and the promises contained hereinafter, the parties agree as follows: I. THE PROGRAM USCM endorses a prototype Section 457 Plan designed as a supplement to Employer's voluntary 457 Plan and developed in cooperation with USCM and PEBSCO, a third party administrator, which permits Employer and its employees to enjoy the advantages derived from Section 457 of the Internal Revenue Code of 1986, as amended, while allowing Employer to satisfy its requirements under OBRA. S:\OBRA\UNITED STATES CONFERENCE OF MAYORS.doc Page I of 5 II. REGULATORY CONSIDERATIONS PEBSCO has represented and warranted to USCM that the Program and the Plans adopted thereunder meet all necessary criteria for approval by all federal and state regulatory authorities governing such programs. III. PROGRAM ADMINISTRATOR: USCM has agreed to sponsor the Program in its present form, and has selected and exclusively contracted with a third party administrator, PEBSCO, qualified to fulfill the responsibility for all administrative requirements necessary for the successful operation of the Program. IV. PEBSCO RESPONSIBILITIES: PEBSCO agrees to the following terms and conditions of the Program as provided below: A, Provide Employer with a Deferred Compensation Plan Agreement and necessary agreements for execution with its participating employees subject to OBRA which is and will be maintained in compliance with the provisions of the Internal Revenue Code and OBRA. B, Provide Employer with such technical assistance as is reasonably necessary to install and implement the Program. C, Maintain a comprehensive administrative service system to facilitate employee deferrals, reconciliations, disbursements to the investment media, maintain individual and Employer account records, coordinate employee distributions, and assure proper tax reporting systems. Do Maintain such accounting and audit systems as are necessary to ensure the fiscal integrity of the Program. E, Make PEBSCO representatives available to Employer's representatives to discuss issues or questions relating to PEBSCO's fulfillment of its obligations under this Agreement or the general operation of the Plan. Fo Compute and deduct from any disbursements under the Program all appropriate federal and state income taxes required by law to be withheld from plan distributions and also furnish to all participants receiving payments or benefits from the Program, appropriate tax reporting forms. S:\OBRA\UNITED STATES CONFERENCE OF MAYORS.doc Page 2 of 5 V. EMPLOYER RESPONSIBILITIES: The Employer agrees to the following terms and conditions of the Program as provided below: A, Provide USCM and PEBSCO its full cooperation and support in administering the necessary deferral system for employee contributions; and notify PEBSCO in writing, within fourteen (14) days of a participant's separation from service with an Employer. B, Disseminate from time to time such informational materials as provided to it for employee distribution. C, Name an official or committee of the Employer to act as local coordinator on behalf of the Employer on all material matters relating to activities of the Plan. D, Accept the terms and conditions of the investment media and, if applicable, insurance contracts issued to the Employer pursuant to the Plan adopted by the Employer. E. Use the OBRA Plan Document, informational materials, and other forms provided to it as a participant under the Program in connection with the Plan. Fo Notify PEBSCO of the dollar amount to be deferred on behalf of each participant, which the Employer shall be responsible for ensuring that such amount is no less than 7.5% of a participant's compensation or such other minimum amount as shall be required for the Plan to be considered a retirement system under OBRA. In the event a participant under the Plan elects to join the voluntary USCM Deferred Compensation Plan or another deferred compensation plan adopted by the Employer, the Employer is responsible for ensuring that each participant's annual deferral amount does not exceed the applicable limits set forth in Section 457. Go Direct Plan participants desiring to increase contributions to the Plan to PEBSCO for completion of appropriate forms. Ho The Employer acknowledges and agrees that PEBSCO shall not be responsible for monitoring deferrals to other section 457, 403(b), 401(a), 414(h) plans or other defined benefit plans referenced by the Internal Revenue Code or for monitoring interplan coordination between the Plan and the USCM Deferred Compensation Plan adopted by Employer or any other Section 457 plan which Employer may have. S:\OBRA\UNITED STATES CONFERENCE OF MAYORS.doc Page 3 of 5 VI. ADMINISTRATIVE CHARGE VII. A, PEBSCO shall bill the Employer semi-annually for the amount of the Administrative Charge set forth below during the term of this Agreement. In the event this Agreement is terminated, the Administrative Charge shall be prorated through the effective termination date. The billings will occur semi- annually, based upon the average participant count as of December 31 and June 30 of that year. "Average participant count" is defined as the participant count on December 31 plus June 30, divided by two. Bo The Administrative Charge during the periods set forth herein shall not exceed but, in the discretion of PEBSCO may be less than, the following amounts: 1994-1999 $20/per participant 2000-2005 $22/per participant 2006-2011 $28/per participant 2012-2017 $36/per participant TERMINATION A, B, This Agreement shall automatically terminate in the event and as of the date the USCM Deferred Compensation Plan administrative agreement entered into by and among USCM, Employer and PEBSCO in connection with the voluntary USCM Deferred Compensation Plan is terminated. PEBSCO may terminate this Agreement upon thirty (30) days written notice if the Employer fails to accept any amendment or modification to the Plan as proposed by PEBSCO or if the Employer amends, modifies or terminates the Plan without the prior written consent of PEBSCO. C. Any party may terminate this Agreement upon ninety (90) days written notice should another party fail to perform its obligations hereunder; provided, the defaulting party shall have the right to cure the default or breach during such period. Any written notice given hereunder for failure to perform shall specifically state the nature of the default or breach. If the specified default or breach is not corrected during such period, this Agreement shall terminate. VIII. INDEMNIFICATION USCM agrees to hold harmless and indemnify the Employer, its appointed and elected officers and participants from any loss from USCM or PEBSCO's failure to perform its duties and services pursuant to the USCM Program. S:\OBRA\UNITED STATES CONFERENCE OF MAYORS.doc Page 4 of 5 IX. CONTRACT TERM This Agreement is effective until terminated in accordance with Section VII. above. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first described above. EMPLOYER City of Tustin Signature Title PUBLIC EMPLOYEES BENEFIT SERVICES CORPORATION Signature Title UNITED STATES CONFERENCE OF MAYORS Executive Director S:\OBRA\UNITED STATES CONFERENCE OF MAYORS.doc Page 5 of 5