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HomeMy WebLinkAboutCC 3 DEFERRED COMP 11-19-84CONSENT CALENDAR NO. 3 11-19-84 DATE: November 14, 1984 Inter- Corn TO: FROM: $ UB,J ECT: Honorable Mayor and City Council Mary E. Wynn, City Clerk RESOLUTION NO. 84-95 - A Resolution of the City Council of the City of Tustin, California, ESTABLISHING A DEFERRED COMPENSATION PROGRAM RECOMMENDATION: Approve the U.S. Conference of Mayors Deferred Compensation Plan for Public Employees Plan Document by adoption of Resolution No. 84-95. BACKGROUND: As a follow up to the change of Plan Administrators for the City's Deferred Compensation Program to the United States Conference of Mayors which you approved on November 5, 1984, attached is a revised Deferred Compensation Plan together with Resolution No. ,84-95 which adopts the U.S. Conference of Mayors Deferred Compensation Program. The City Attorney has reviewed and approved Resolution No. 84-95 and the Plan Document. Mary E. Wynn City Clerk and Deferred Compensation Committee Chairperson 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. ~4-95 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, ESTABLISHING A DEFERRED COMPENSATION PROGRAM. WHEREAS, the City has considered the establishment of a Deferred Compensation Plan to be made available to all eligi- ble City employees, elected officials, and independent contractors pursuant to Federal legislation permitting such Plans; and WHEREAS, certain substantial tax benefits could accrue to employees, elected officials, and independent contractors participating in said Deferred Compensation Plans; and WHEREAS, such benefits will act as incentives to City employees to voluntarily set aside and invest portions of the current income to meet their future financial requirements and supplement their City retirement and Social Security (if applicable), at no cost to the City; and WHEREAS, the U. S. Conference of Mayors has established a master prototype deferred compensation program for cities and political subdivisions permitting its member cities and their employees to enjoy the advantages of this program; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUSTIN DOES HEREBY RESOLVE AS FOLLOWS: The City Council hereby adopts the U. S. Conference of Mayors Deferred Compensation Program and its attendant invest- ment options and hereby establishes the City of Tustin De- ferred Compensation Plan for the voluntary participation of all eligible City employees, elected officials and independent contractors. The City Clerk, Mary E. Wynn, is hereby authorized to execute for the City, individual participation agreements with each said employee requesting same, and to act as the "Admin- istrator" 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 other than the 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 incidental expenses of collecting and disbursing the em- ployee's deferrals and other minor administrative matters, that there is to be no cost or contribution by the City to the Program. PASSED AND ADOPTED at a regular meeting of the City Council of the City of Tustin, California, held on the day of , 1984. ATTEST: MAYOR CITY CLERK JGR:se:D:ll/7/84(1) 2 U.S CONFERENCE OF MAYORS THE DEFERRED COMPENSATION PLAN FOR PUBLIC EMPLOYEES PLAN DOCUMENT The CiTY OF TUSTI[~, a municipal corr)oration hereby accepts the U.S. Conference of Mayors Deferred Compensation Program and adopts and estab- lishes the C'Tm¥ ~'g Deferred Compensation Plan for Public Employees, (hereinafter called the Plan). The Plan consists of the provisions set forth in this document, and is applicable to each public employee who elects to participate in the Plan. The Plan is effective as to each such public employee upon the date he becomes a"PARTIC- IPANT" by signing and filing the Participation Agreement referred to herein with the Administrator. ARTICLE I Definitions · 1.01. A definition of words and terms used in this plan is attaChed, entitled Exhibit "A", and by this reference is made a part of the Plan. ARTICLE II Election to Defer Compensation 2.01. Compensation will be deferred for any calendar month only if an agreement providing for such de- ferral is entered into before the beginning of such month. 2.02. Upon signing the Participation Agreement, the PARTICIPANT elects to participate in this Plan and consents to the EMPLOYER deferring the amount specified in the Participation Agreement from the PAR- TICIPANT'S gross compensation for each pay period. The dollar amount deferred ("deferred amount") must equal at least $20 per month. 2.03. The PARTICIPANT may revoke his election to participate and may amend the amount of compen- sation to be deferred on his investment specification by signing and filing with the Administrator a written revocation or amendment on a form and in the procedural manner approved by the Administrator. Any such revocation or amendment of the amount of compensation to be deferred shall be effective prospec- tively only. Any amendment of the PARTICIPANT'S investment specification shall be effective prospec- tively only. Any change in the PARTICIPANT'S investment specification shall be effective on a date con- sistent with the rules and specifications of the investment carrier. Changes in investment specifications may be made for both prior and future amounts deferred. 2.04. The original erection to participate shall be effective for pay periods commencing during the first month after the date on which the Participation Agreement is filed with the Administrator. Notice to ALL PARTICIPANTS to Read These Provisions Providing Deferral Limitations and "Catch-up" Deferrals Under the Plan 2.05. Except as provided in section 2.06, the maximum that may be deferred under the Plan for the PAR- TICIPANT'S taxable year shall not exceed the lesser of (a) $7,500 or (b) 331/3 % of the PARTICIPANT'S in- cludible compensation as provided in IRC of 1954 § 457. 2.06. For one or more of the PARTICIPANT'S last 3 taxable years ending before he attains normal retire- ment age under the Plan, the maximum deferral shall be the lesser of (a)$15,000, reduced by any amount excludable under the PARTICIPANT'S gross income for the taxable year beginning after December 31, 1978, under IRC Section 403(b) on account of contributions made by the EMPLOYER; or (b) the sum of (i) the limitation established for purposes of § 2.05 of the Plan for the taxable year (determined without regard to this section), plus (ii) the limitation established for purposes of Section 2.05 for prior taxable years, beginning after December 31, 1978, during which the PARTICIPANT was eligible to participate, less the amount of compensation deferred under the Plan for such prior taxable years, as provided in IRC Sec- tion 457. TSP-187-B 2.07. In applying Section 2.05, an amount excluded on behalf of the PARTICIPANT cluring a taxable year under IRC Section 403(b), including a custodial account described In Section 403(b)(7), shall be treated as an amount deferred. ARTICLE III Accounts and Reports 3.01. THE EMPLOYER shall remit the'deferred amounts to the Administrator or his designated agent. The Administrator shall have no duty to determine whether the funds paid to him by the EMPLOYER are correct, nor to collect or enforce such payment. 3.02. For convenience and to facilitate an orderly administration of the Plan, the Administrator shall maintain a deferred account with respect to each PARTICIPANT. All assets of the Plan, including all defer- red amounts, Property and rights purchased with deferred amounts, and all income attributable to such deferred amounts, property or right.s, shall be the exclusive property of the EMPLOYER and shall be sub- ject to all the claims of creditors of the EMPLOYER, without protection or preference. 3.03. Upon receipt of deferred amounts by the underwriter of the designated investment option made pursuant to this Plan, the PARTICIPANT'S deferred account shall be credited with the amount received. A written report of the status of the PARTICIPANT'S deferred account shall be furnished at least annually and within ninety (90) days after the end of each calendar year. 3.04. Within ninety (90) days after the end of the calendar year, the Administrator shall file with the EM- PLOYER a written report of the assets of the Plan, a schedule of all receipts and disbursements, and a report of all material transactions of the Plan during the preceding year. 3.05.. The Administrator's records shall be open to inspection during the normal business hours by the EMPLOYER or any PARTICIPANT, or their designated representatives. 3.06. 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 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 ageneral creditor of the EMPLOYER. The EMPLOYER acknowledges that the Administrator is the agent of the EMPLOYER. ARTICLE IV Investment of Deferred Amount 4.01. The deferred amount shall be delivered by the EMPLOYER to the Administrator or his designated agent for investment as designated by the EMPLOYER. 4.02. The EMPLOYER may use the Participant'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 in- vested according to such specifications. The EMPLOYER shall be under no obligation to invest the.defer- red amount in such investment specification. All 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 thereof. 4.03. All interest, dividends, charges for premiums and administrative expenses, and changes in value due to market fluctuations applicable to each PARTICIPANT'S deferred account shall be credited or debited to the account as they occur. All reports to the PARTICIPANT shall be based on fair market value as of the reporting date. ARTICLE V Benefits 5.01. Benefits shall be paid in accordance with this Article. Benefits payable to the PARTICIPANT will be the equivalent of the total benefits that would have been created had the deferred amounts been invested TSP-187-B as specified by the PARTICIPANT from time to time. Notwithstanding sub.sections la) through (h) below, the payment of amounts deferred will commence not later than the later of: (i) 60 days after the close of the plan year in which the PARTICIPANT or former PARTICIPANT at- tains (or would have attained) normal retirement age; or (ii) 60 days after.the close of the plan year in which the PARTICIPANT separates from service with the state. la) Norm~lRetirement. Upon the PARTICIPANT, other than an INDEPENDENT CONTRACTOR, attain- ing normal retirement age, he may retire and receive the benefits provided under this Plan. Such benefits shall be paid in accordance with the payment option selected by the PARTICIPANT. lb) Early Retirement. The PARTICIPANT, other than an INDEPENDENT CONTRACTOR, may select ear- ly retirement in accordance with the Employer's Retirement System and receive the benefits provided under the Plan. Such benefits shall be paid in accordance with the payment option selected by the PARTICIPANT. lc) Late Retirement. If the PARTICIPANT, other than an INDEPENDENT CONTRACTOR, continues his employment with the EMPLOYER after attaining normal retirement age, ail benefits payable under this Plan will be deferred (whether or not the PARTICIPANT continues to defer additional sums under this Plan) until the PARTICIPANT retires. At such time, such benefits shall be paid in accordance with the payment option selected by the PARTICIPANT. No deferral or additional credits under this Plan may be made by the PARTICIPANT after the month in which he attains age seventy (70). (d) Separation from Service. if the PARTICIPANT separates from service with the EMPLOYER, benefits shall be paid in accordance with the payment options elected by the PARTICIPANT. An INDEPEN- DENT CONTRACTOR shall hot be considered separated from service with the Employer and shall not receive any benefits hereunder unless (i) at least 12 months have expired since the date on which the last contract, pursuant to which the INDEPENDENT CONTRACTOR provided any services to the Employer, was terminated, and (ii) the INDEPENDENT CONTRACTOR has performed no services for the Employer during the 12-month period referred to herein either as an INDEPENDENT CONTRAC- TOR or employee. (e) Death. If the PARTICIPANT dies while employed with the Employer and before retirement (early or normal) and without separation from service benefits being paid to him under this Plan, or the PAR- TICIPANT dies while benefits are being paid to him under this Plan, and before such benefits have been exhausted, the benefits payabte under this Plan shall be paid to his designated beneficiary. (f) Designated Beneficiary. The PARTICIPANT shall have the right to file with the Administrator, awrit- ten beneficiary or change of beneficiary form designating the person or persons who shall receive the benefits payable under this Plan in the event of the PARTICIPANT'S death. The form for this purpose shall be provided by the Administrator and will have no effect until it is signed, filed with the Adminis- trator by the PARTICIPANT, and accepted by the Administrator. If the PARTICIPANT dies without hav- ing a beneficiary form on file, the estate of the PARTICIPANT will be the presumed beneficiary. The PARTICIPANT accepts and acknowledges that he has the burden for executing and filing with the Ad- ministrator a proper beneficiary designation form. (g) Plan Completion Benefits. Upon the death of the PARTICIPANT, benefits payable pursuant to any life insurance specification may be paid to the PARTICIPANT'S beneficiary pursuant to the payment option elected in accordance with this Plan, except that any income benefit payments which are payable until the year the PARTICIPANT would have attained 65 years of age may be delivered or credited by the EMPLOYER to the Administrator who will hold such amount to be paid to the beneficiary as if such amounts were invested in those investment specifications, other than life in- surance, selected by the PARTICIPANT in the PARTICIPATION AGREEMENT. Where such amounts are to be so delivered or credited, all benefits payable (other than payment pursuant to any life in- surance specification) are to begin when payments of benefits would have begun if the PARTIC+ IPANT were not deceased, subject to the provisions of subsection (h) hereof. TSP-187-B (h) Payment and Settlement Options. Payment, method of payment, and settlement options are available as provided by each of the investment index options, provided, however, that benefits payable toa beneficiary in the event of the death of a PARTICIPANT priorto the complete distribution of benefits to him shall, in all events, be completed during a period not in excess of (i) the life of the beneficiary, if such beneficiary is the surviving spouse of the PARTICIPANT, or (ii) 15 years, in all other circumstances. In addition, no settlement option available to the PARTICIPANT shall provide benefits to beneficiaries which are equal to or greater than one-half of the maximum benefit that would have been payable to the PARTICIPANT if no provision had been made for payment to a beneficiary (as determined by the use of the expected return multiples in Treasury Regulation Sec- tion 1.72-9, or, in the case of payments under a contract issued by an insurance company, by the use of the mortality tables of such company). 5.02. Notwithstanding any other provisions herein, in the event of an Unforeseeable Emergency, a PAR- TICIPANT may request the Administrator to pay benefits to him immediately. If the application for pay- ment is approved by the Administrator, payments shall be effected as of the first day of the month next following such approval. Benefits to be paid shall be limited strictly to the amount necessary to meet the Unforeseeable Emergency constituting financial hardship to the extent such Unforeseeable Emergency is not relieved: (a) through reimbursement or compensation by insurance or otherwise; (b) by liquidation of the PARTICIPANT'S assets, to the extent the liquidation of such assets would not itself cause financial hardship; or (c) by cessation of deferrals under the Plan. Any remaining ben. efits shall be paid in accordance with Section 5.01 of this Plan. Foreseeable personal expenditures normally budgetable, such as a down payment on a home, the purchase of an automobile, college or other education expenses, etc., will not constitute an Unforeseeable Emergency. The decision of the Administrator concerning the payment of benefits under this section shall be final. ARTICLE VI Administration of Plan 6.01. The EMPLOYER may at any time amend, modify, or terminate this Plan with or without the consent of the PARTICIPANT (or any beneficiary thereof) provided: (a) (b) That all amendments shall become effective on the first day of the month following the giving of not less than forty-five (45) days prior notice of the amendment. Notice shall be deemed given when the amendment is posted in the office of the Administrator and the EMPLOYER. To the extent it is possi- ble to do so, the Administrator shall mail a copy of all amendments that become effective during the year to the PARTICIPANT with his annual report. No amendments shall deprive the PARTICIPANT of any of the benefits to which he is entitled under this Plan with respect to deferred amounts credited to his account prior to the effective date of the amendment; and If the Plan is curtailed, terminated, or the acceptance of additional deferred amounts suspended per- manently, the Administrator shall nonetheless be responsible for the supervision of the payment of benefits resulting from amounts deferred prior to the amendment, modification, or termination in ac- cordance with Article V hereof. 6.02. Any companies that may issue any policies, contracts, or other investment media used by the EM- PLOYER or specified by the PARTICIPANT, are not parties to this Plan and such companies shall have no responsibility or accountability to the PARTICIPANT or his beneficiary with regard to the operation of this Plan. 6.03. Participation in this Plan by a public employee shall not be construed to give acontract of employ- ment 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 his continued employment. TSP-187-B 6.04. 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 PARTICI- PANT'S participation in this Plan. The PAR'~ICIPANT should consult with his own representative regard- ing all questions of Federal or State income, payroll, personal property, or other tax consequences arising from participation in this Plan. 6.05. 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. 6.06.' Whenever used herein, the masculine gender shall include the feminine and the singular shall in- clude the plural unless the provisions of the contract specifically require a different construction. 6.07. The law of the State of the Employer shall apply in determining the construction and validity of this Plan. 6.08. The rights of thePAR. TICIPANT under this Plan shall n°t be subject t° the rights °f credit°rs °f the PARTICIPANT or any beneficiary, and shall be exempt from execution, attachment, pJ'ior assignment, or any other judicial relief or order for the benefit of creditors or other third persons. 6.09. It is agreed that neither the PARTICIPANT nor his beneficiary nor any other designee shall have any right to commute, sell, assign, transfer, or otherwise convey the right to receive any payments here- under which payments and right thereto are expressly declared to be nonassignable and nontransferable. 6.10. This Plan, and any property adopted amendment, shallc°nstitutethet°talagreement°rc°ntract between the EMPLOYER and the PARTICIPANT regarding the Plan. No oral statement regarding the Plan may be relied upon by the PARTICIPANT. 6.11. This Plan and any properly adopted amendment, shall be binding on the parties hereto and their respective heirs, administrators, trustees, successors, and assignees and on all designated beneficiaries of the PARTICIPANT. ARTICLE VII Notice to ALL PARTICIPANTS to Read These Provisions Providing Broad Powers and Absolute Safe- guards to the Employer 7.01. The EMPLOYER, or its authorized agent, the Administrator, shall be authorized to resolve any ques- tions of fact necessary to decide the PARTICIPANT'S right under this Plan and such decision shall be binding on the PARTICIPANT and any beneficiary thereof. 7.02. The EMPLOYER, or its authorized agent, the Administrator, shall be authorized to construe the Plan and to resolve any ambiguity in the Plan. 7.03. The PARTICIPANT specifically agrees not to seek recovery against the EMPLOYER, the Adminis- trator or any other employee, contractee, or agent of the EMPLOYER or Administrator, or any Endorser for any loss sustained by the PARTICIPANT or his beneficiary, for the non-performance of their duties, negli- gence, or any other misconduct of the above named persons except that this paragraph shall not excuse fraud or a wrongful taking by any person. 7.04. The EMPLOYER, or its agents including the Administrator, 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 cor- rectness of the payment or the person to receive the payment or allow the filing in any state court of com- petent jurisdiction, a suit in such form as they consider appropriate for alegal determination of the bene- fits 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 his beneficiary, consents to be bound thereby insofar as it affects the benefits payable under this Plan or the method or manner of payment. TSP-187-B 7.05. The EMPLOYER and its agents, including the Administrator are hereby held harmless from all court costs and all claims for the attorneys' fees arising from action brought by the PARTICIPANT or any beneficiary thereof under this Plan or to enforce his rights under this Plan, including any amendments hereof. 7.06. The Administrator shall not be required to participate in any litigation concerning the Plan except upon written demand from the EMPLOYER. The Administrator may compromise, adjust or effect settle- ment of litigation when specifically instructed to do so by the EMPLOYER. IN WITNES~WHEREOF, the undersigned has executed this Plan this day of ,19 __ By MAYOR CITY CLERK TSP-187-B EXHIBIT "A" DEFINITIONS The Following terms shall, for purposes of this Plan and all Exhibits thereto, have the meaning set forth herein. 1. ADMINISTRATOR means, the person, department, agency, or organization appointed by the Employer to administer the Plan. 2. BENEFICIARY means, the person properly designated by a Participant to receive the Participant's benefit. 3. COMPENSATION means, all payments made by the Employer as remuneration for services rendered, including salaries, fees, etc. 4. EMPLOYER means, the CITY OF TUSTIN or any of its agencies, departments, subdivisions or instrumentalities, for whom services are performed by a Participant. INCLUDIBLE COMPENSATION means, for the purposes of the limitations on deferral, compensation for services performed for the Employer which (taking into account amounts deferred under IRC Sec- tions 457 and 403(b)) is currently includible in gross income. The amount of includible compensation shall be determined without regard to any community property laws. INDEPENDENT CONTRACTOR means, any person receiving any type of compensation from the Em- ployer or any of its agencies, departments, subdivisions or instrumentalities for whom services are rendered pursuant to one or more written or oral contracts, if such person is not an employee. 7. IRC means, the Internal Revenue Code of 1954, as amended. NORMAL RETIREMENT AGE means, the age at which the Employee is eligible to retire pursuant to the Employer's Retirement System, by virtue of age, length of service or both, without consent of the Employer and with the right to receive immediate retirement benefits without actuarial or similar reduction because of retirement before some later specified age, but in no event later than age 701/2. In the absence of a formal Employer's Retirement System, normal retirement age shall mean 65. 9. PARTICIPANT means, an individual who is eligible to defer compensation under the Plan and who par- ticipates under this Plan by signing the Participation Agreement. 10. PARTICIPATION AGREEMENT means, the Application to the Administrator to participate in the Plan which is also entitled "Consent to Compensation Change." 11. PLAN means, the Deferred Compensation Plan for Public Employees as set forth in this document and as it may be amended from time to time. 12. PLAN YEAR means, the calendar year in which the Plan becomes effective, and' each succeeding calendar year during the existence of this Plan. 13. SEPARATION FROM SERVICE means, separation from service within the meaning of IRC § 402(e)(4) (A)(iii) and on account of the Participant's death or retirement. 14. UNFORESEEABLE EMERGENCY means, severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or a dependent (as defined in IRC § 152(a)) of the Participant, loss of the Participant's property due to casualty, or other similar or extraor- dinary and unforeseeable circumstances arising as a result of event beyond the control of the Partici- pant. TSP-187-B