HomeMy WebLinkAbout09 DEFERRED COMP 11-16-98XO. 9
11-16-98
DATE:
November 17, 1998
Inter-Com
TO:
FROM:
SUBJECT:
William A. Huston, City Manager
Ronald A. Nault, Finance Director
AMENDMENTS TO THE CITY OF TUSTIN 457 DEFERRED COMPENSATION PLAN
SUMMARY: The Small Business Job Protection Act of 1996 included several changes in Secti°n
457 of the IRS Code which provide stronger protection of deferred assets and enhance participant
benefits. Approval of the recommended changes will formally amend the City's Plan Document to
incorporate these changes.
RECOMMENDATION:
Direct staff to make the following changes to the City of Tustin Deferred Compensation Plan
Document effective November 17, 1998:
1) Designate the City as Trustee for the City's Deferred Compensation Plan (Self Trustee).
2) Index the annual maximum contribution.
3) Allow for a one time postponement of beginning payment date elections.
4) Allow for a one time distribution of accounts with $3,500 or less that have been inactive for
two years.
DISCUSSION:
HR 3448 was signed into law and became the Small Business Job Protection Act of 1996.
Incorporated in the Act were several changes to Section 457 of the Internal Revenue Service Code
which govern Deferred Compensation Plans. The amendments are for the benefit of the
contributers, our employees, and do not negatively impact the City. The primary change is the
establishment of a trust arrangement that will remove participant assets from the general creditors
of the City.
Staff has reviewed the options available and have determined that the City can self trustee the plan
assets without incurring additional cost to the participant. We will formally assume oversight of the
three providers we currently utilize which we have de facto been doing since the plan's inception.
The additional changes recommended are simply formally adopting the changes in the IRS Code
and incorporating them into the City plan document.
Staff will be available to answer any questions at the City Council meeting.'
Ro~ult ·
Finance Director
RAN:ts
RAN:DeferredCompPlanAmendments.Agenda98.doc