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Home My WebLink About13 GREAT WEST RET 09-19-05 AGENDA REPORT Agenda Item ----ÍL- Reviewed: . -4A--- City Manager WN Finance Director ~ MEETING DATE: SEPTEMBER 19, 2005 WilLIAM A. HUSTON, CITY MANAGER TO: FROM: HUMAN RESOURCES DEPARTMENT SUBJECT: ADOPT REVISED 457 GOVERNMENTAL PLAN DOCUMENT WITH GREAT WEST RETIREMENT SERVICES SUMMARY: Adoption of this agenda item will amend the City's 457(b) Deferred Compensation Plan administered by Great West to comply with the final regulations of the Internal Revenue Code Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). RECOMMENDATION: Adopt Resolution No. 05-102 amending the Great West Retirement Services 457(b) Deferred Compensation Plan to comply with EGTRRA and to permit an alternate payee pursuant to a valid domestic relations order. FISCAL IMPACT: NONE BACKGROUND AND DISCUSSION: The City of Tustin has two 457 (b) Deferred Compensation Plans that are available to City employees. One is with Nationwide Retirement Systems and the other is with Great West Retirement Services. All eligible governmental 457 plans were required to begin complying with the new rules effective January 1, 2002. However, the Internal Revenue Service (IRS) provided an employer until December 31, 2005 to restate or amend their plan documents. In October 2003 the Council adopted revised and related plan documents for our Nationwide 457(b) plan so that it was compliant with EGTRRA. The City also enabled loan provisions and the ability to comply with a valid domestic relations order for the Nationwide plan. Adoption of the attached model plan document for our 457(b) plan with Great West will make this plan compliant with EGTRRA and will enable compliance with a valid domestic relations order. Staff is not recommending enabling loans from the Great West plan. S:\City Council Agenda Items\2005\Great Westdoc City Council Agenda September 19, 2005 Page 2 While we have enabled loans with the Nationwide 457(b) plan we have done so because Nationwide is the administrator and staff is not involved. To enable loans with Great West it would require the City to essentially become the "banker" and administer a loan program, create loan documents and collect loan payments. Adoption of these revised plan documents will provide compliance with a valid domestic relations order to enable our employees with a way to separate their vested account balance in the even of divorce and further authorizes the City Manager, or his designee, to take all steps necessary to implement the amendments to the Plan documents. The amendments to the Plan meet all of the various federal regulatory compliance requirements. C~14¿ ~ I )1~ Arlene Gibbs, SPHR Director of Human Resources Attachment: Resolution 05-102 Great West 457(b) Model Plan Document for Governmental Employer S:\City Council Agenda Items\2005\Great Westdoc RESOLUTION NO. 05-102 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, TO ADOPT REVISED 457 GOVERNMENTAL PLAN DOCUMENTS WITH GREAT WEST RETIREMENT SERVICES WHEREAS, the City's Great West Retirement Services 457(b) Deferred Compensation Plan permits amendments to the plan documents to include compliance with valid domestic relations orders; and WHEREAS, Great West Retirement Services acts as third party administrator of the Great West Retirement Services Deferred Compensation program and administers one of the City's Deferred Compensation Plans; and WHEREAS, the final regulations of the Internal Revenue Code require the City to restate and/or amend its plan documents no later than December 31,2005 to comply with the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA); and WHEREAS, adoption of this Resolution will enable plan compliance with EGTRRA; and WHEREAS, the Domestic Relation Orders amendment contained in the restated plan documents will provide for a means of separating the vested account balance according to a valid domestic relations order when divorce occurs; NOW, THEREFORE, The City Council of the City of Tustin, California does hereby resolve as follows: The City Council hereby adopts the amendments to the Great West Retirement Services Deferred Compensation plan documents to comply with EGTRRA and allow compliance with valid domestic relations orders. Great West Retirement Services is authorized to act as the third party administrator for this deferred compensation plan. The City Manager, or his designee, is authorized to act as the "Plan Sponsor" representing the City, and to execute such agreements and contracts as are necessary to implement the amendments to the plan documents. PASSED AND ADOPTED at a regular meeting of the City Council of the City of Tustin on the 19th day of September, 2005. LOU BONE Mayor ATTEST: PAMELA STOKER City Clerk STATE OF CALIFORNIA) COUNTY OF ORANGE) CITY OF TUSTIN ) SS I, Pamela Stoker, City Clerk and ex-officio Clerk of the City Council of the City of Tustin, California, do hereby certify that the whole number of the members of the City Council of the City of Tustin is five; that the above and foregoing Resolution No. 05-102 was duly passed and adopted at a regular meeting of the Tustin City Council, held on the 19th day of September, 2005, by the following vote: COUNCILMEMBER AYES: COUNCILMEMBER NOES: COUNCILMEMBER ABSTAINED: COUNCILMEMBER ABSENT: PAMELA STOKER CITY CLERK GREAT-WEST RETIREMENT SERVICESsM SECTION 457!b) ELIGIBLE DEFERRED COMPENSATION PLAN FOR GOVERNMENTAL EMPLOYERS Adopted By: Employer Name of Plan Effective Date 2005 Model 457(b) Plan Document for Governmental Employers INTRODUCTION TO GREAT-WEST SECTION 457(b) ELIGIBLE DEFERRED COMPENSATION PLAN FOR GOVERNMENTAL EMPLOYERS The attached Plan may be used by eligible governmental employers as a model in preparing deferred compensation plans intended to satisfy §457 of the Internal Revenue Code of 1986, as amended. In general, under a §457(b) plan, which is also referred to as an "eligible deferred compensation plan," a participant may defer amounts of compensation (and income earned on those deferrals) and avoid federal income taxation until those amounts are paid to the participant. The following types of governmental entities may establish eligible §457(b) plans: 1. 2. 3. The 50 states of the United States and the District of Columbia; A political subdivision of a state (for example, a county or municipality); and Any agency or instrumentality of a state or a political subdivision of a state. This Plan contains provisions that may be included in an eligible governmental deferred compensation plan. It was prepared for your convenience, and incorporates many of the provisions set forth in the Model Amendments issued by the Internal Revenue Service on August 30, 2004 with respect to the final Treasury Regulations under §457. You should review and, where appropriate, draft an amendment to meet your particular needs. Alterations to the Adoption Agreement are permissible, but any and all modifications to the Plan document itself should be set forth in a separate amendment attached to the front of the Plan document. Do not modify the Plan document itself. In designing your plan, you should take into account the investment options to be used and the terms of any trust or custodial agreements entered into with respect to the Plan. You should also ascertain the federal income tax reporting and withholding obligations, FICA and FUT A obligations (to the extent applicable), and any comparable state obligations with respect to your Plan. Generally, deferred amounts under a §457 plan are not reported as income, and federal income tax is not withheld until the amounts are paid to the participant. Deferred amounts generally are included in the FICA and FUTA wage base when deferred. This Plan is not intended to provide you with legal advice, nor should it be implemented without regard to your particular needs or any applicable state laws. No state or federal government has passed on the legal sufficiency (including the conformity with §457) of this Plan. Neither Great- West, nor any of its affiliated companies, assumes any liability to any person or entity with respect to the adequacy of this document for any purpose, or with respect to any tax or legal ramifications arising from its use. Great-West is not a party to any plan which you may adopt and Great-West has no responsibility, accountability, or liability to you, any employer, any participant or any beneficiary with regard to the operation or adequacy of this Plan, any §457 plan prepared from this Plan, or any future amendments made to this Plan. You should consult with your legal counsel prior to adopting any plan. 2005 Model 457(b) Plan Document for Governmental Employers TABLE OF CONTENTS SECTION 457(b) ELIGIBLE DEFERRED COMPENSATION PLAN ~ Introduction...........................................""""""""""""""""""""""""""""........................................i SECTION 457(b) ELIGIBLE DEFERRED COMPENSATION PLAN INTRODUCTION ..............................................................................."""""""""""""""""""""""" I I. DEFINITIONS.........................................................................................................................1 1.01 "Account Balance" ...................................................................................................................1 1.02 "Administrator" """""""""""""""""""""""""""""""""""""""""'"................................... I 1.03 "Alternate Payee".......... ........ ... .......... ...... ........................... ........... ...............I 1.04 "Annual Deferral" ....................................................................................................................1 1.05 "Beneficiary" """"""""""""""""""""""""""""""""""""""""""'"....................................1 1.06 "Code" ...................................................................................................................................... I 1.07 "Compensation" """"""""""""""""""".................................................................................2 1.08 "Custodian" """""""""""""'...................................................................................................2 1.09 "Employee"..............................................................................................................................2 1.10 "Employer" "............................................................................................................................2 1.11 "Includible Compensation" """""""""""""""""""................................................................2 1.12 "Nonelective Employer Contribution" ....................................................................................2 1.13 "Normal Retirement Age" """"""""""""""""""".................................................................2 1.14 "Participant" """""""""""""...................................................................................................3 1.15 "Participation Agreement"....................................................................................................... 3 1.16 "Plan".......................................................................................................................................3 1.17 "Plan Year" """"""""""""......................................................................................................3 1.18 "Severance from Employment" """""""""""'........................................................................3 1.19 "Trust or Custodial Agreement" """""""""'...........................................................................3 1.20 "Trust Fund".. ..3 1.21 "Trustee"... . ... """"'......... """.............. ........4 1.22 "Valuation Date".... ..... ........... .......... ......... ........................4 II. PARTICIPATION AND CONTRIBUTIONS.........................................................................4 2.01 Eligibility. ................................................................................................................................4 2.02 Election Required for Participation ........................................................................................4 2.03 Commencement of Participation............... ......... ... ""......................... 5 2.04 Information Provided by the Participant.................................................................................. 5 2.05 Contributions Made Promptly .................................................................................................6 2.06 Amendment of Annual Deferrals Election... .....................................................................6 2.07 Leave of Absence.....................................................................................................................6 2.08 Disability......................................... """.... """....................... ...........6 2.09 Revocation of Deferrals """"""""'..........................................................................................6 2.10 Re-Enrollment..........................................................................................................................6 Ill. LIMITATIONS ON AMOUNTS DEFERRED....................................................................... 7 3.01 Basic Annual Limitation Effective for Calendar Years on and after January I, 2002............7 3.02 Age 50 Catch-Up Annual Deferral Contributions ................................................................... 7 2005 Model 457(b) Plan Document for Governmental Employers 3.03 3.04 3.05 3.06 3.07 IV. 4.01 4.02 4.03 4.04 4.05 V. 5.01 5.02 5.03 5.04 5.05 5.06 5.07 5.08 5.09 5.10 5.11 5.12 5.13 VI. 6.01 6.02 6.03 6.04 VII. 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10 TABLE OF CONTENTS (Continued) SECTION 457 ELIGIBLE DEFERRED COMPENSATION PLAN ~ Special §457 Catch-up Limitations for Calendar Years Beginning On and After January I, 2002..........................................................................................................................................7 Coordination of Age 50 Catch-up with Special §457 Catch-up .............................................. 8 Special Rules............................................................................................................................8 Correction of Excess Deferrals ................................................................................................9 Protection of Persons Who Serve in a Uniformed Service...................................................... 9 LOANS .........................................................................................."""""""""""""""""""" 10 Loans......................................................................................................................................10 Maximum Loan Amount........................................................................................................10 Loan Provisions """""""""""""""""""""""""""""""""""""""""""".............................10 Security for Loan; Default """""""""""""""""""""""""""""""""""""""""""""........... II Repayment ............................................................................................................................. II BENEFIT DISTRIBUTIONS................................................................................................12 Distributions from the Trust ..................................................................................................12 Conditions for Distributions ..................................................................................................12 Severance from Employment for any Reason, Including Retirement ................................... 13 In-Service Distributions.........................................................................................................13 Unforeseeable Emergency Distributions ............................................................................... 14 Death Benefit Distributions. ..................................................................................................15 Participant's Payment Options............................................................................................... 19 Default Distribution Option................................................................................................... 20 Limitations on Distribution Options "".................................................................................. 20 Eligible Rollover Distributions.............................................................................................. 20 Elections............................................."""""""""""""""""""""""""""..............................21 Practices and Procedures ....................................................................................................... 21 Taxation of Distributions ....................................................................................................... 21 ROLLOVERS AND TRANSFERS.......................................................................................21 Eligible Rollover Contributions to Plan.................................................................................2I Plan-to-Plan Transfers to the Plan ......................................................................................... 22 Plan-to-Plan Transfers from the Plan.....................................................................................22 Permissive Service Credit Transfers...................................................................................... 23 CREATION OF TRUST AND TRUST FUND ....................................................................23 Trust Fund..............................................................................................................................23 Establishment of Trust ...........................................................................................................24 Appointment and Termination of Trustee......................................................................... .....24 Acceptance.......................................................................,.....................................................25 Control of Plan Assets ........................................................................................................... 25 General Duties of the Trustee """'.........................................................................................25 Investment Powers of the Trustee..........................................................................................26 Trustee Fees and Expenses ....................................................................................................27 Exclusive Benefit Rules......................................................................................................... 27 Trustee Actions ...................................................................................................................... 27 2005 Model 457(b) Plan Document for Governmental Employers ii TABLE OF CONTENTS (Continued) SECTION 457 ELIGIBLE DEFERRED COMPENSATION PLAN ~ 7.11 Delegation ..............................................................................................................................27 7.12 Division of Duties and Indemnification.................................................................................27 VIII. INVESTMENTS....................................................................................................................29 8.01 Investment Options ................................................................................................................ 28 8.02 Participant Investment Direction ...........................................................................................28 8.03 Employer Investment Direction.............................................................................................29 8.04 Participant Accounts """"""..........................,.......................................................................30 Ix. ADMINISTRATION """""""""""""""""""""""""""""""""""""""'"............................ 30 9.01 Administrator ......................................................................................................................... 30 9.02 Appointment and Termination of Administrator ................................................................... 30 9.03 Duties of Administrator ......................................................................................................... 30 9.04 Administrative Fees and Expenses ........................................................................................ 31 9.05 Actions of Administrator """"""""""".................................................................................31 9.06 Delegation..............................................................................................................................31 9.07 Investment and Service Providers..........................................................................................32 X. LEAVE OF ABSENCE """"""""""""""""""""""""""""""""""""""""""""""""'"...... 32 10.01 Paid Leave of Absence...........................................................................................................32 10.02 Unpaid Leave of Absence...................................................................................................... 32 XL AMENDMENT OR TERMINATION OF PLAN................................................................. 32 11.01 Termination............................................................................................................................32 11.02 Amendment............................................................................................................................ 32 11.03 Copies of Amendments..........................................................................................................33 XII. TAX TREATMENT OF AMOUNTS CONTRIBUTED ...................................................... 33 XIII. NON-ASSIGNABILITY .......................................................................................................33 13.01 Non-Assignability .................................................................................................................. 33 13.02 Qualified Domestic Relations Orders .................................................................................... 33 13.03 IRS Levy... ..... ""'.................................... ................... ...............................................35 13.04 Mistaken Contributions.................................. ..35 13.05 Payments to Minors and Incompetents................................... "................... ...35 13.06 Procedures When Distributee Cannot Be Located........................ .................35 XIV DISCLAIMER........................................................................................................................35 XV EMPLOYER PARTICIPATION...........................................................................................36 XVI INTERPRETATION..............................................................................................................36 16.01 Governing Law ......................................................................................................................36 16.02 Internal Revenue Code §457.................................................................................................. 36 16.03 Word Usage ...........................................................................................................................36 16.04 Headings """"""""""""""""""""""""""""""""""""""""""............................................36 16.05 Entire Agreement................................................................................................................... 36 2005 Model 457(b) Plan Docurnent for Governmental Employers iii 1.01 1.02 1.03 1.04 1.05 1.06 SECTION 457(b) ELIGIBLE DEFERRED COMPENSATION PLAN INTRODUCTION In accordance with the provisions of §457 of the Internal Revenue Code of 1986, as amended, the Employer named in section A. of the Adoption Agreement hereby establishes this §457(b) Eligible Deferred Compensation Plan, hereinafter referred to as the "Plan." Nothing contained in this Plan shall be deemed to constitute an employment agreement between any Participant and Ernployer and nothing contained herein shall be deemed to give a Participant any right to be retained in the employ of Employer. I. DEFINITIONS "Account Balance." The bookkeeping account maintained with respect to each Participant which reflects the value of the deferred Compensation credited to the Participant, including the Participant's Annual Deferrals, the earnings or loss of the Fund (net of Fund expenses) allocable to the Participant, any transfers for the Participant's benefit, and any distribution made to the Participant or the Participant's Beneficiary. If a Participant has more than one Beneficiary at the time of the Participant's death, then each beneficiary's share of the Account Balance shaH be treated as a separate account for each Beneficiary. The Account Balance includes any account established under Article VI for rollover contributions and plan-to-plan transfers made for a Participant, the account established for a Beneficiary after a Participant's death, and any account or accounts established for an alternate payee (as defined in Code §4l4(p)(8)). "Administrator." Administrator means the person, persons or entity appointed by the Employer to administer the Plan as set forth in section A. of the Adoption Agreement. Administrator shaH not include the recordkeeper or any company which issues policies, contracts, or investment media to the Plan in respect of a Participant. "Alternate Payee." Alternate Payee means the spouse, former spouse, child or other dependent of a Participant who has acquired an interest in the Participant's account pursuant to a Qualified Domestic Relations Order (QDRO) pursuant to section 13.02. Alternate Payees shall be treated as Beneficiaries for all purposes under the Plan except that Alternate Payees shaH be aHowed to request a distribution of all or a portion of their account balance at any time, subject to the terms of the QDRO. "Annual DeferraL" The amount of Compensation deferred in any taxable year. "Beneficiarv." The designated person (or, if none, the Participant's surviving spouse, if any, and then the Participant's estate) who is entitled to receive benefits under the Plan after the death of a Participant. "Code." The Internal Revenue Code of 1986, as now in effect or as hereafter amended. All citations to sections of the Code are to such sections as they may from time to time be arnended or renumbered. 2005 Model 457(b) Plan Document for Governrnental Employers 1.07 1.08 1.09 1.10 1.11 1.12 1.13 "Compensation." All cash compensation for services to the Employer, including salary, wages, fees, commissions, bonuses, and overtime pay, that is includible in the Employee's gross income for the calendar year, plus amounts that would be cash compensation for services to the Employer includible in the Employee's gross income for the calendar year but for a compensation reduction election under Code §§ 125, 132(f), 40 I (k), 403(b), or 457(b) (including an election to defer compensation under Article III. To the extent permitted by Treasury regulations or other similar guidance, accrued bona fide sick, vacation or other leave pay paid within two and one-half (2 Yz) months of Participant's severance from employment so long as the employee would have been able to use the leave if employment had continued. "Custodian." The bank, trust company or other person, if any, selected by the Employer in section C. and named on page 6 of the Adoption Agreement and who is authorized to hold Plan assets in a custodial account in accordance with regulations issued by the Secretary of the Treasury pursuant to Code §401(f). "Emplovee." Each natural person (individual) who is employed by the Employer, either as a common law employee or an independent contractor, including elected or appointed individuals, as selected in section D. of the Adoption Agreement. Any employee who is included in a unit of employees covered by a collective bargaining agreement that does not specifically provide for participation in the Plan shall be excluded. "Emplover." An eligible entity that is a State as defined below, and who is the sponsor of the Plan named in the section A. of the Adoption Agreement. "Includible Compensation." An employee's actual wages in box I of Form W-2 for a year for services to the Employer, but subject to a maximum of $200,000 (or such higher maximum as may apply under Code §40l(a)(17» and increased (up to the dollar maximum) by any compensation reduction election under Code §§ 125, I 32(f), 40I(k), 403(b), or 457(b) (including an election to defer Compensation under Article III. "Nonelective Emplover Contribution." Nonelective Employer Contribution is a contribution made by an Employer for the Participant with respect to which the Participant does not have the choice to receive the contribution in cash or property. Such term may also include an employer matching contribution. "Normal Retirement Age." Normal Retirement Age means age 70Y2, unless the Participant has elected an alternate Normal Retirement Age and delivered such election to the Administrator prior to beginning special §457 Catch-up contributions as described in section 3.03 of the Plan. Once a Participant has begun making special §457 Catch-up contributions, his Normal Retirement Age may not be changed. For Participants eligible to receive benefits under the Employer's basic defined benefit pension plan or a money purchase pension plan (herein collectively referred to as "pension plan"), a Participant's alternate Normal Retirement Age may not be earlier than the earliest date the Participant has the right to retire and receive immediate retirement benefits under such pension plan, without actuarial or similar reduction because of retirement before some later specified age, and the date selected may not be later than age 70 yz. 2005 Model 457(b) Plan Document for Governmental Employers 2 1.14 1.15 1.16 1.17 1.18 1.19 1.20 If the Participant is not eligible to receive benefits under a basic defined benefit pension plan or money purchase pension plan, the Participant's alternate Normal Retirement Age may not be earlier than age 65 nor later than age 70 1,. A special rule shall apply to qualified police or firefighters under the Plan, if any. Any qualified police or firefighter, as defined under §415(b)(2)(H)(ii)(I), who is participating in the Plan may choose a Normal Retirement Age that is not earlier than age 40 nor later than age 70 y,. If any Participant continues to be employed by Employer after attaining age 70Yz, not having previously elected an alternate Normal Retirement Age, the Participant's alternate Normal Retirement Age shall not be later than the age at which the Participant actually severs employment with the Employer. "Participant." An individual who is currently deferring Compensation, or who has previously deferred Compensation under the Plan by salary reduction or received aN onelective Employer Contribution and who has not received a distribution of his or her entire benefit under the Plan. Only individuals who perform services for the Employer as an Employee may defer Compensation under the Plan. The Administrator, ifhe or she is otherwise eligible, may participate in the Plan. "Participation Agreement." The agreement entered into and filed by an Employee with the Employer pursuant to Article II, in which the Employee elects to become a Plan Participant. "Plan." The Plan named in section A. of the Adoption Agreement. "Plan Year." The calendar year. "Severance from Emplovment" The date the Employee dies, retires, or otherwise has a severance from employment with the Employer, as determined by the Administrator (and taking into account guidance issued under the Code). An Employee whose employment is interrupted by qualified military service under Code §414(u) shall be deemed severed from employment until such time as he or she is reemployed following the term of duty. All other Participants shall be deemed to have severed his employment with the Employer for purposes of this Plan when both parties consider the employment relationship to have terminated and neither party anticipates any future employment of the Participant by the Employer. In the case of a Participant who is an independent contractor, Severance from Employment shall be deemed to have occurred when the Participant's contract for services has completely expired and terminated, there is no foreseeable possibility that the Employer shall renew the contract or enter into a new contract for services to be performed by the Participant, and it is not anticipated that the Participant shall become an Employee of the Employer. "Trust or Custodial Agreement." The written agreement (or declaration) made by and between the Employer and the Trustee under which the Trust Fund is maintained. Custodial accounts and annuity contracts described in §40l(f) are treated as trusts under the rules described in Treasury Reg. §1.457-9(a)(2). "Trust Fund." The trust fund created under and subject to the Trust Agreement or Custodial Agreement, as selected in section C. and named on page 7 of the Adoption Agreement. 2005 Model 457(b) Plan Document for Governmental Employers 1.21 1.22 2.01 2.02 "Trustee." The Trustee duly appointed and currently serving under the Trust Agreement if selected in the Adoption Agreement. "Valuation Date." Each business day. II. PARTICIPATION AND CONTRIBUTIONS Eligibilitv. Individuals performing services for the Employer, as selected in section D. of the Adoption Agreement, shall be eligible to participate in the Plan upon becoming employed by the Employer unless specifically restricted in the Adoption Agreement Election Required for Participation. An Employee may elect to become a Participant by executing a Participation Agreement to defer a portion of his or her Compensation (and have that amount contributed as an Annual Deferral on his or her behalf) and filing it in good order with the Administrator. In entering into the Participation Agreement, the Participant elects to participate in this Plan and consents to the deferral by the Employer of the amount specified in the Participation Agreement from the Participant's gross compensation for each payroll period, and agrees to be bound by all the terms and conditions of the Plan. Such deferral shall continue in effect until modified, disallowed or revoked in accordance with the terms of this Plan, or until the Participant ceases employment with the Employer. Any prior Employee who was a Participant in the Plan and is rehired by Employer may resume participation in the Plan by entering into a Participation Agreement so long as any distributions being taken from this Plan are terminated prior to the resumption of deferrals under the Plan. Additionally, if distributions had not begun pursuant to a prior Severance from Employment, any deferred commencement date elected by such employee with respect to distribution of those prior Plan assets shall be null and void. The Employer retains the right to establish minimum deferral amounts per payroll period, and to change such minimums from time to time and to limit the number and/or timing of enrollments into the Plan in the Participation Agreement No adjustment in future deferrals shall be made if a periodic deferral is missed or is less than the amount elected. The Employer or Administrator shall have the right to modifY or disallow the periodic deferral of Compensation elected by the Participant: (a) in excess of the limitations stated in Article III; (b) in excess of the Participant's net Compensation for any payroll period; (c) upon any change in the length of payroll period utilized by Employer. In such case the periodic deferral shall be adjusted so that approximately the same percentage of pay shall be deferred on an annual basis; (d) in order to round periodic deferrals to the nearest whole dollar amount; 2005 Model 457(b) Plan Document for Governmental Employers 4 2.03 2.04 (e) to reduce the future deferrals in the event that the amount actually deferred for any payroll period exceeds, for any reason whatsoever, the amount elected by the Participant. In the alternative, such amount of excess deferral may be refunded to the Participant; or (f) if the deferral elected for any payroll period is less than the minimum amount specified by the Employer or Administrator. The participation election, or such other form as approved by the Administrator, shall include the Employee's designation of investment funds. Any such election shall remain in effect until a new election is filed. A change in the investment direction shall take effect as of the date provided by the Administrator on a uniform basis for all Employees. The Participant may also designate a Beneficiary(ies) to receive any amounts that may be distributed in the event of death of the Participant prior to the complete distribution of benefits. A Participant may change the designated Beneficiary(ies) at any time by filing such change with the Administrator in a manner approved by the Administrator. A change in the Beneficiary designation shall take effect when the election is accepted by the Administrator. If no such designation is in effect on the Participant's death, or to the extent that there is no beneficiary who is treated as surviving the Participant by 30 days, the Beneficiary shall be the Participant's surviving spouse, if any, or ifnone, the Participant's estate. Commencement of Participation. (a) Voluntary Enrollment. An Employee shall become a Participant as soon as administratively practicable following the date the Employee files a participation election pursuant to section 2.02. Such election shall become effective no earlier than the calendar month following the month in which the election is made. A new Employee may defer compensation payable in the calendar month during which the Participant first becomes an Employee if an agreement providing for the deferral is entered into on or before the first day on which the Participant performs services for the Employer. (b) Automatic Enrollment. Notwithstanding section 2.01 and section 2.02, to the extent permitted by applicable law, the Administrator may establish procedures whereby, as a term or condition of employment, each employee automatically elects to participate in the Plan and consents to the deferral by the Employer of a specified amount for any payroll period for which a Participation Agreement is not in effect. If such procedures are in place, a Participant may elect a different deferral amount per payroll period, including zero, by entering into a Participation Agreement. Information Provided by the Participant. Each Employee enrolling in the Plan should provide to the Administrator at the time of initial enrollment, and later if there are any changes, any information necessary or advisable, in the sole discretion of the Administrator, 2005 Model 457(b) Plan Document for Governmental Employers 2.05 2.06 2.07 2.08 2.09 2.10 for the Administrator to administer the plan, including, without limitation, whether the Employee is a participant in any other eligible plan under Code §457(b). Contributions Made Promptlv. Annual Deferrals by the Participant under the Plan shall be transferred to the Trust Fund within a period that is not longer than is reasonable for the proper administration of the Participant's Account Balance. For this purpose, Annual Deferrals shall be treated as contributed within a period that is not longer than is reasonable for the proper administration if the contribution is made to the Trust Fund within 15 business days following the end of the month in which the amount would otherwise have been paid to the Participant. Amendment of Annual Deferrals Election. Subject to other provisions of the Plan, a Participant may at any time revise his or her participation election, including a change of the amount of his or her Annual Deferrals. Unless the election specifies a later effective date, a change in the amount of the Annual Deferrals shall take effect as of the first day of the next following month or as soon as administratively practicable if later. Notwithstanding the above, if a negative election procedure has been implemented pursuant to section 2.03(b), a Participant may enter into or modify a Participation Agreement at any time to provide for no deferral. Leave of Absence. Unless an election is otherwise revised, if a Participant is absent from work by leave of absence, Annual Deferrals under the Plan shall continue to the extent that Compensation continues. Disabilitv. A disabled Participant may elect Annual Deferrals during any portion of the period of his or her disability to the extent that he or she has actual Compensation (not imputed Compensation and not disability benefits) from which to make contributions to the Plan and has not had a Severance from Employment. Revocation of Deferrals. In addition to a Participant's ability to change or revoke an election as described in section 2.06, a Participant's request for a distribution in the event of an Unforeseeable Emergency as defined in section 5.05(b) shall in addition be treated as a request for revocation of deferrals as of a date determined by the Administrator for the period of time determined under section 5.05(f). Revocation of deferrals is not a distributable event, however, and the Participant's Account may only be distributed as provided in Article V. Re-Enrollment. A Participant who revokes the Participation Agreement may again become a Participant at the times and in the manner authorized by the Administrator, by entering into a new Participation Agreement to defer Compensation payable no earlier than the first payroll period after the first day of the month after such new Participation Agreement is entered into by the Participant and accepted by the Administrator. 2005 Model 457(b) Plan Docurnent for Governmental Employers 6 3.01 3.02 III. LIMITATIONS ON AMOUNTS DEFERRED Basic Annual Limitation Effective for Calendar Years on and after Januarv 1.2002. The maximum amount of the Annual Deferral under the Plan for any calendar year shall not exceed the lesser of (i) the Applicable Dollar Amount or (ii) the Participant's Includible Compensation for the calendar year. The Applicable Dollar Amount is the amount established under Code §457(e)(l5) applicable as follows: $11,000 for 2002; $12,000 for 2003; $13,000 for 2004; $14,000 for 2005; and $15,000 for 2006 and thereafter. After 2006, the $15,000 amount is adjusted for cost-of- living under Code §4l5(d). The annual deferral amount does not include any rollover amounts received by the Plan under Treasury Reg. §1.457-1O(e). Age 50 Catch-up Annual Deferral Contributions. A Participant who will attain age 50 or more by the end of the calendar year is permitted to elect an additional amount of Annual Deferrals, up to the maximum age 50 catch-up Annual Deferrals for the year. The maximum dollar amount of the age 50 catch-up Annual Deferrals for a year is as follows: $1,000 for 2002; $2,000 for 2003; $3,000 for 2004; $4,000 for 2005; $5,000 for 2006 and thereafter. After 2006, the $5,000 amount is adjusted for cost-of-living. Age 50 catch-up contributions are subject to the requirements of Code §4l4(v). 3.03 Special &457 Catch-up Limitations for Calendar Years Beginning On and After January I. 2002. If the applicable year is one of a Participant's last three (3) calendar years ending before the year in which the participant attains Normal Retirement Age and the amount detennined under this section exceeds the amount computed under sections 3.01 and 3.02, then the Annual Deferral limit under this section shall be the lesser of: (a) an amount equal to two (2) times the section 3.01 applicable dollar limit for such year; or the sum of: (b) I. An amount equal to the aggregate section 3.01 limit for the current year plus each prior calendar year beginning after December 31, 200 I, during which the Participant was an Employee under the Plan, minus the aggregate amount of Compensation that the Participant deferred under the Plan during such years, plus 2005 Model 457(b) Plan Docurnent for Governmental Employers 2. An amount equal to the aggregate lin1Ìt referred to in Code §457(b)(2) for each prior calendar year beginning after December 31, 1978, and before January I, 2002, during which the Participant was an Employee (determined without regard to sections 3.02 and 3.03), minus the aggregate contributions to Pre- 2002 Coordination Plans for such years. However, in no event can the deferred amount be more than the Participant's Compensation for such years unless the Employer is making non-elective Employer contributions. 3.04 Coordination of Age 50 Catch-up with Special &457 Catch-up. The Age 50 Catch-up does not apply for any taxable year for which a higher limitation applies under the Special §457 Catch-up described in section 3.03. A Participant who is eligible for the Age 50 Catch-up for a Plan Year and for whom the Plan Year is also one of the Participant's last three (3) taxable years ending before the Participant attains Normal Retirement Age is eligible for the larger of: (a) The basic annual limitation described in 3.01 and the Age 50 Catch-up described in section 3.02, or The basic annual limitation described in section 3.01 and the Special §457 Catch-up described in section 3.03. Special Rules. For purposes of this Article III, the following rules shall apply: 3.05 (a) . (b) (c) (b) Participant Covered Bv More Than One Eligible Plan. If the Participant is or has been a participant in one or more other eligible plans within the meaning of Code §457(b), then this Plan and all such other plans shall be considered as one plan for purposes of applying the foregoing limitations of this Article III. For this purpose, the Adrninistrator shall take into account any other such eligible plan maintained by the Employer and shall also take into account any other such eligible plan for which the Administrator receives from the Participant sufficient information concerning his or her participation in such other plan. Pre-Participation Years. In applying section 3.03, a year shall be taken into account only if the Participant was eligible to participate in the Plan during all or a portion of the year and Compensation deferred, if any, under the Plan during the year was subject to the Basic Annual Limitation described in section 3.01 or any other plan ceiling required by Code §457(b). Pre-2002 Coordination Years. For purposes of section 3.03(b)(2)(B), "contributions to Pre-2002 Coordination Plans" means any employer contribution, salary reduction or elective contribution under any other eligible Code §457(b) plan, or a salary reduction or elective contribution under any Code §40l(k) qualified cash or deferred arrangement, Code §402(h)(I)(B) simplified employee pension (SARSEP), Code §403(b) annuity contract, and Code §408(P) simple retirement account, or under any plan for which a deduction is allowed because of a contribution to an organization described in Code §50l(c)(18), including plans, arrangements or accounts maintained 2005 Model 457(b) Plan Document for Governmental Employers 3.06 3.07 by the Employer or any employer for whom the Participant performed services. However, the contributions for any calendar year are only taken into account for purposes of section 3.03(b )(2)(B) to the extent that the total of such contributions does not exceed the aggregate limit referred to in Code §457(b )(2) for that year. (d) Disregard Excess Deferral. For purposes of sections 3.0 I, 3.02 and 3.03, an individual is treated as not having deferred compensation under a plan for a prior taxable year to the extent Excess Deferrals under the plan are distributed, as described in section 3.06. To the extent that the combined deferrals for pre-2002 years exceeded the maximum deferral limitations, the amount is treated as an Excess Deferral for those prior years. Correction of Excess Deferrals. If the Annual Deferral on behalf of a Participant for any calendar year exceeds the limitations described above, or the Annual Deferral on behalf of a Participant for any calendar year exceeds the limitations described above when cornbined with other amounts deferred by the Participant under another eligible deferred compensation plan under Code §457(b) for which the Participant provides information that is accepted by the Administrator, then the Annual Deferral, to the extent in excess of the applicable limitation (adjusted for any income or loss in value, if any, allocable thereto), shall be distributed to the Participant. Protection of Persons Who Serve in a Uniformed Service. An Employee whose employment is interrupted by qualified military service under Code §4l4(u) may elect to make additional Annual Deferrals upon resumption of employment with the Employer equal to the maximum Annual Deferrals that the Employee could have elected during that period if the Employee's employment with the Employer had continued (at the same level of Compensation) without the interruption or leave, reduced by the Annual Deferrals, if any, actually made for the Employee during the period of the interruption or leave. This right applies for five (5) years following the resumption of employment (or, if sooner, for a period equal to three times the period of the interruption or leave). 2005 Model 457(b) Plan Document for Governrnental Employers 4.01 4.02 4.03 (c) IV. LOANS Loans. If so specified in section E. of the Adoption Agreement, a Participant 0 is an Employee may apply for and receive a loan from his or her Account Balance provided in this Article IV or pursuant to a loan policy executed by the Plan Administrat . Any such loan may not be for an amount less than the minimum amount specified by the inistrator. If not specified by the Administrator, the minimum loan amount shall be $1 00. Maximum Loan Amount. Except as modified by the loan policy adopted by the Plan Administra the following rules shall apply to loans under the Plan. No loan to a Participant hereunder (a) $50,000, reduced by the greater of (i) the outstanding ba ce on any loan from the Plan to the Participant on the date the loan is made or C the highest outstanding balance on loans from the Plan to the Participant duri the one-year period ending on the day before the date the loan is approved by the ministrator (not taking into account any payments made during such one-year riod), or one-half of the value of the Participant's vested (b) For purposes of this section 4.02, any loan fro any other plan maintained by a participating employer shall be treated as if' were a loan made from this Plan, and the Participant's vested interest under any suc ther plan shall be considered a vested interest under tills Plan; provided, howev ,that the provisions oftbis paragraph shall not be applied so as to allow the amoun f a loan under this section 4.02 to exceed the amount that would otherwise be perm' ed in the absence of this paragraph. Loan Provisions. (a) require level amortization with p ents not less frequently than quarterly throughout the repayment period, except th alternative arrangements for repayment may apply in the event that the borrower' on a bona fide unpaid leave of absence for a period not to exceed one (I) year fo eaves other than a qualified military leave within the meaning of Code §414(u) 0 or the duration of an interruption of employment which is due to qualified militaf)¡ ervice; (b) require that the loan be epaid within five (5)years unless the Participant certifies in writing to the Admini ator that the loan is to be used to acquire any dwelling unit wbich within a reas able time is to be used (determined at the time the loan is made) as a principal resi ce of the Participant; and provide for a re onable rate of interest to be fixed by the Administrator from time to time. The A mistrator shall not discriminate among Participants in the matter of interest rates ut loans granted at different times may bear different interest rates based upo revailing rates at the time. 10 4.04 4.05 Security for Loan: Default A loan to a Participant shall be considered a directed investment option for such Parti account balance. (a) Security. Any loan to a Participant under the Plan shall be secur by the pledge of the portion of the Participant's interest in the Plan invested in suc loan. (b) Default. In the event that a Participant fails to make a 10 Article IV by the end of the calendar quarter following the cal such payment was due, a default on the loan shall occur. In all remaining payments on the loan shall be imm lately due and payable; interest will continue to accrue on the unpaid b nce until the loan is repaid in full; and (iii) the Participant shall be permanently ineligi for any future loans from the Plan unless, in the Administrator's sole di retion, the Participant is deemed to be credit worthy and agrees to repay the an through payroll deduction. In the case of any default on a loan to a Participant, Administrator shall apply the portion of the Participant's interest in the Plan held as secu for the loan in satisfaction of the loan on the date of Severance from Employment. In a ition, the Administrator shall take any legal action it shall consider necessary or appro 'ate to enforce collection of the unpaid loan, with the costs of any legal proceeding or coli tion to be charged to the Account Balance of the Participant. Notwithstanding anything elsewhere in t Plan to the contrary, in the event a loan is outstanding hereunder on the date of a articipant's death, his or her estate shall be his or her Beneficiary as to the portion of his 0 er interest in the Plan invested in such loan (with the Beneficiary or Beneficiaries as to t remainder of his or her interest in the Plan to be determined in accordance with 0 rwise applicable provisions of the Plan). (i) (ii) Revavment The Participan all be required, as a condition to receiving a loan, to enter into an irrevocable agreeme authorizing the Employer to make payroll deductions from his or her Compensation as 10 as the Participant is an Employee and to transfer such payroll deduction amounts to th rustee in payment of such loan plus interest. Repayments of a loan shall be made by payr deduction of equal amounts (comprised of both principal and interest) from each p check, with the flfSt such deduction to be made as soon as practicable after the loan fund re disbursed; provided, however, a Participant may prepay the entire outstanding bala e of his loan at any time; and provided, further, that if any payroll deductions c t be made in full because a Participant is on an unpaid leave of absence or is no longer em oyed by a participating employer (that has consented to make payroll deductions r this purpose) or the Participant's paycheck is insufficient for any other reason, the Partic' ant shall pay directly to the Plan the full amount that would have been deducted from th articipant's paycheck, with such payment to be made by the last business day of the calen month in which the amount would have been deducted. II 5.01 5.02 V. BENEFIT DISTRIBUTIONS Distributions from the Trust The payment of benefits from the Trust in accordance with the terms of the Plan may be made by the Trustee, or by any custodian or other person so authorized by the Employer to make such distribution. Neither the Administrator, the Trustee, the Custodian nor any other person shall be liable with respect to any distribution from the Trust made at the direction of the Employer or a person authorized by the Employer to give disbursement direction. Conditions for Distributions. (a) &457 Deferred Compensation. Payments from a Participant's §457 Deferred Compensation account shall not be made to the Participant or Beneficiary earlier than: (1) the Participant's Severance from Employment or death pursuant to sections 5.03 and 5.06; (2) the Participant's account meets all of the requirements for an in-service de minimis distribution pursuant to section 5.04(a) and/or (b); (3) the Participant incurs an approved Unforeseeable Emergency pursuant to section 5.05; (4) The calendar year in which an in-service Participant attains age 70 Y2, but only if such participant revokes all deferrals of Compensation into the Plan prior to beginning distributions; or (5) Plan termination under section 11.01. (b) Latest Distribution Date. In no event shall any distribution to a Participant under this Article V begin later than the April I of the year following the calendar year in which the participant attains age 70 Y2 or April I of the year following the year in which the Participant retires or otherwise has a Severance from Employment, whichever is later. If the Participant delays the distribution due in the calendar year he turns age 70 Y2 or severs employment, as applicable, to the following calendar year, a second required minimum distribution must be taken by the end of that calendar year. (c) Rollovers. If a Participant has a separate account attributable to rollover contributions to the Plan, the Participant may at any time elect to receive a distribution of all or any portion of the amount held in the rollover account(s). 2005 Model 457(b) Plan Document for Governmental Ernployers 12 5.03 Severance from Emplovment for anv Reason, Including Retirement. (a) Subject to section 5.03(b), distributions to a Participant shall commence following Severance from Employment, on the regular distribution commencement date (as the Employer or Administrator may establish from time-to-time) elected by the Participant, in a form and manner determined pursuant to sections 5.07,5.08 and 5.09. If the Participant does not elect otherwise, the distribution shall be paid commencing on the Participant's Required Beginning Date under a payment method meeting the requirements of Code §40l(a)(9) and the regulations thereunder. (b) If, in section F. of the Adoption Agreement, the Plan elected mandatory distributions of Account Balances of$I,OOO or less, and if the Participant does not elect to have such distribution paid directly to an eligible retirement plan specified by the Participant in a direct rollover or to receive the distribution directly, then the Administrator will pay the distribution in a lump sum to the Participant at the Participant's last known mailing address. If, in section F. of the Adoption Agreement, the Plan elected mandatory distributions of amounts greater than $1,000 but not greater than $5,000, and if the Participant does not elect to have such distribution paid directly to an eligible retirement plan specified by the Participant in a direct rollover or to receive the distribution directly, then the Administrator will pay the distribution amount in excess of$I,OOO in a direct rollover to an individual retirement plan designated by the plan administrator. 5.04 In-Service Distributions. (a) Voluntarv In-Service Distribution of De Minimis Accounts. A Participant who is an active Employee rnay elect to receive a distribution of the total amount payable to the Participant under the Plan if the following requirements are met: (I) the portion of the total amount payable to the Participant under the Plan does not exceed an amount specified from time to time by the Administrator (not in excess of$5,000 or other applicable limit under the Code); (2) the Participant has not previously received an in-service distribution of the total amount payable to the Participant under the Plan; and (3) no amount has been deferred under the Plan with respect to the Participant during the two-year period ending on the date of the in-service distribution. (b) Involuntarv In-Service Distribution of De Mi1Úmis Accounts. If so elected in section G. of the Adoption Agreement, the Administrator shall distribute the total amount payable under the Plan to a Participant who is an active Employee if the following requirements are met: 2005 Model 457(b) Plan Document for Governrnental Employers 13 (I) the Participant has not previously received an in-service distribution of the total amount payable to the Participant under the Plan; (2) no amount has been deferred under the Plan with respect to the Participant during the two-year period ending on the date of the in-service distribution; and (3) the total Account Balance amount payable to the Participant under the Plan, does not exceed the amount selected in section G. of the Adoption Agreement. If, in section G. of the Adoption Agreement, the Plan elected mandatory distributions of $1,000 or less, and if the Participant does not elect to have such distribution paid directly to an eligible retirement plan specified by the Participant in a direct rollover or to receive the distribution directly, then the Administrator will pay the distribution in a lump sum to the Participant at the Participant's last known mailing address. If, in section G. of the Adoption Agreement, the Plan elected mandatory distributions greater than $1,000 but not greater than $5,000, and if the Participant does not elect to have such distribution paid directly to an eligible retirement plan specified by the Participant in a direct rollover or to receive the distribution directly, then the Administrator will pay the distribution in a direct rollover to an individual retirement plan designated by the plan administrator. As indicated in section 1. of the Adoption Agreement, participants in a plan that is a retirement system providing FICA replacement retirement benefits pursuant to regulations under Code §3l2l (b )(7)(F) are not eligible for In-Service De Minimis distributions. Unforeseeable Emergency Distributions. (c) 5.05 (a) Distribution. If the Participant has an unforeseeable emergency before retirement or other Severance from Employment, the Participant may elect to receive a lump sum distribution equal to the amount requested or, if less, the maximurn amount determined by the Administrator to be permitted to be distributed under this section 5.05. (b) Unforeseeable emergencv defined. An unforeseeable emergency is defined as a severe financial hardship of the Participant resulting from: an illness or accident of the Participant, the Participant's spouse, or the Participant's dependent (as defined in Code § 152(a»; loss of the Participant's property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by homeowner's insurance, e.g., as a result of a natural disaster); the need to pay for the funeral expenses of the Participant's spouse or dependent (as defined in Code §152(a»; or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. For example, the imminent foreclosure of or eviction from the Participant's primary residence may constitute an unforeseeable 2005 Model 457(b) Plan Document for Governmental Employers ]4 5.06 emergency. In addition, the need to pay for medical expenses, including non- refundable deductibles, as well as for the cost of prescription drug medication, may constitute an unforeseeable emergency. Except as otherwise specifically provided in this section 5.05, neither the purchase of a home nor the payment of college tuition is an unforeseeable emergency. (c) Unforeseeable emergency distribution standard. A distribution on account of unforeseeable emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or by cessation of deferrals under the Plan. (d) Distribution necessarv to satisfy emergency need. Distributions because of an unforeseeable emergency may not exceed the amount reasonably necessary to satisfy the emergency need (which may include any amounts necessary to pay any federal, state, or local income taxes or penalties reasonably anticipated to result frorn the distribution). The Administrator shall have the right to request and review all pertinent information necessary to assure that Unforeseeable Emergency withdrawal requests are consistent with the provisions of Code §457. (e) (f) The Employer or Administrator may suspend the Participant's salary deferral election during the pendency of the Participant's request for an Unforeseeable Emergency distribution. Payment of an Unforeseeable Emergency distribution shall result in mandatory suspension of deferrals for a minimum of six (6) months from the date of payment (or such other period as mandated in applicable Treasury regulations). (g) As indicated in section J. of the Adoption Agreement, participants in a plan that is a retirement system providing FICA replacement retirement benefits pursuant to regulations under Code §312l(b)(7)(F) are not eligible for unforeseeable ernergency distributions. Death Benefit Distributions. Upon receipt of satisfactory proof of the Participant's death, the Participant's remaining Account Balance shall be paid under a method satisfying the required minimum distribution rule of Code §40l(a)(9) and the regulations thereunder. (a) Participant's Required Beginning Date. The Participant's entire interest will be distributed, or begin to be distributed, to the Participant no later than the Participant's required beginning date as defined in Section 5.06(1). (b) Death of Participant Before Participant's Required Beginning: Date. If the Participant dies before the required beginning date, the Participant's entire interest will be distributed, or begin to be distributed, no later than as follows: 2005 Model 457(b) Plan Document for Governrnental Employers 15 (c) (d) (I) If the Participant's surviving spouse is the Participant's sole designated beneficiary, then, except as provided in Section 5.06(f), distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died, or by December 31 of the calendar year in which the Participant would have attained age 70Y" if later. (2) If the Participant's surviving spouse is not the Participant's sole designated beneficiary, then, unless the Beneficiary elects the five-year rule, distributions to the designated beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died. (3) If there is no designated beneficiary as of September 30 of the year following the year of the Participant's death, the Participant's entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the Participant's death. (4) If the Participant's surviving spouse is the Participant's sole designated beneficiary and the surviving spouse dies after the Participant but before distributions to the surviving spouse begin, this Section 5.06(b), other than Section 5.06(b)(I), will apply as if the surviving spouse were the Participant. For purposes of this Section 5.06(b) and Section 5.06(f) unless Section 5.06(b)(4) applies, distributions are considered to begin on the Participant's required beginning date. If Section 5.06(b)(4) applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under Section 5.06(b)(I). If distributions under an annuity purchased from an insurance company irrevocably commence to the Participant before the Participant's required beginning date (or to the Participant's surviving spouse before the date distributions are required to begin to the surviving spouse under Section 5.06(b)(I», the date distributions are considered to begin is the date distributions actually commence. Forms of Distribution. Unless the Participant's interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the required beginning date, as of the rust distribution calendar year distributions will be made in accordance with Section 5.06. If the Participant's interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Code §401(a)(9) and the Treasury regulations. Amount of Required Minimum Distribution For Each Distribution Calendar Year During the Participant's Lifetime. During the Participant's lifetime, the minimum amount that will be distributed for each distribution calendar year is the lesser of: 2005 Model 457(b) Plan Document for Governrnental Employers 16 (e) (I) (2) the quotient obtained by dividing the Participant's account balance by the distribution period in the Uniform Lifetime Table set forth in Section IAOI(a)(9)-9 of the Treasury regulations, using the Participant's age as of the Participant's birthday in the distribution calendar year; or if the Participant's sole designated beneficiary for the distribution calendar year is the Participant's spouse, the quotient obtained by dividing the Participant's account balance by the number in the Joint and Last Survivor Table set forth in Section I AO I (a)(9)-9 of the Treasury regulations, using the Participant's and spouse's attained ages as of the Participant's and spouse's birthdays in the distribution calendar year. Lifetime Required Minimum Distributions Continue Throu!!h Year of Participant's Death. Required minimum distributions will be determined under Sections 5.06(d) and (e) beginning with the first distribution calendar year and up to and including the distribution calendar year that includes the Participant's date of death. (I) Death On or After Participant's Required Be!!inning Date. (I) Participant Survived bv Desi!!nated Beneficiary. If the Participant dies on or after the Participant's required beginning date and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of the Participant's death is the quotient obtained by dividing the Participant's account balance by the longer of the remaining life expectancy of the Participant or the remaining life expectancy of the Participant's designated beneficiary, determined as follows: (a) The Participant's remaining life expectancy is calculated using the age of the Participant in the year of death, reduced by one for each subsequent year. (b) Ifthe Participant's surviving spouse is the Participant's sole designated beneficiary, the remaining life expectancy of the surviving spouse is calculated for each distribution calendar year after the year of the Participant's death using the surviving spouse's age as of the spouse's birthday in that year. For distribution calendar years after the year of the surviving spouse's death, the remaining life expectancy of the surviving spouse is calculated using the age of the surviving spouse as of the spouse's birthday in the calendar year of the spouse's death, reduced by one for each subsequent calendar year. (c) Ifthe Participant's surviving spouse is not the Participant's sole designated beneficiary, the designated beneficiary's remaining life expectancy is calculated using the age of the beneficiary in the year 2005 Model 457(b) Plan Document for Governmental Employers 17 (2) (g) (h) (i) following the year of the Participant's death, reduced by one for each subsequent year. No Designated Beneficiarv. If the Participant dies on or after the date distributions begin and there is no designated beneficiary as of September 30 of the year after the year of the Participant's death, the minimum amount that will be distributed for each distribution calendar year after the year of the Participant's death is the quotient obtained by dividing the Participant's account balance by the Participant's remaining life expectancy calculated using the age of the Participant in the year of death, reduced by one for each subsequent year. Death Before Participant's Required Beginning Date. (I) Participant Survived bv Designated Beneficiarv. If the Participant dies before the required beginning date and there is a designated beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of the Participant's death is the quotient obtained by dividing the Participant's account balance by the remaining life expectancy of the Participant's designated beneficiary, determined as provided in Section 5.06(f). (2) No Designated Beneficiarv. If the Participant dies before the required beginning date and there is no designated beneficiary as of September 30 of the year following the year of the Participant's death, distribution of the Participant's entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death. (3) Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required to Begin. If the Participant dies before the required beginning date, the Participant's surviving spouse is the Participant's sole designated beneficiary, and the surviving spouse dies before distributions are required to begin to the surviving spouse under Section 5.06(b)(I), this Section 5.06(g)(3) will apply as if the surviving spouse were the Participant. Designated beneficiarv. The individual who is designated as the Beneficiary under the Plan and is the designated beneficiary under Section 401(a)(9) of the Internal Revenue Code and Section I AOI(a)(9)-I, Q&A-4, of the Treasury regulations. Distribution calendar veaL A calendar year for which a minimum distribution is required. For distributions beginning before the Participant's death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the Participant's required beginning date. For distributions beginning after the Participant's death, the first distribution calendar year is the calendar year in which distributions are required to begin under Section 5.06(b). The required minimum distribution for the Participant's first distribution calendar year will be made on or before the Participant's required beginning date. The required minimum 2005 Model 457(b) Plan Document for Govemrnental Ernployers 18 5.07 distribution for other distribution calendar years, including the required minimum distribution for the distribution calendar year in which the Participant's required beginning date occurs, will be made on or before December 31 of that distribution calendar year. U) Life expectancy. Life expectancy as computed by use of the Single Life Table in Section 1.40l(a)(9)-9 of the Treasury regulations. (k) Participant's account balance. The account balance as of the last valuation date in the calendar year immediately preceding the distribution calendar year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. The account balance for the valuation calendar year includes any amounts rolled over or transferred to the Plan either in the valuation calendar year or in the distribution calendar year if distributed or transferred in the valuation calendar year. (I) Required beginning date. The date specified under Section 40 I (a)(9) of the Internal Revenue Code when distributions are required to begin, which, for a Participant, is currently the April I following the year the Participant attains age 70 1, or retires, whichever is later. Participant's Pavment Options. A Participant's election of a payment option must be made at least thirty (30) days prior to the date that the payment of benefits is to cornmence or such earlier date as may be permitted by the plan. If a timely election of a payment option is not made, benefits shall be paid in accordance with section 5.08. Subject to applicable law and the other provisions of this Plan, distributions may be made in accordance with one of the following payment options. (a) (b) (c) A single lump-sum payment of the entire Account Balance; Installment payments for a period of years (payable on a monthly, quarterly, semi- annual, or annual basis) which extends no longer than the life expectancy of the Participant as permitted under Code §40l(a)(9) using the Uniform Lifetime Table at Reg. §1.04I(a)(9)-9, A-2 for the Participant's age on the Participant's birthday for that year. If the Participant's age is less than age 70, the distribution period is 27.4 plus the number of years that the Participant's age is less than age 70. The Account Balance for this calculation (other than the final installment payment) is the Account Balance as of the end of the year prior to the year for which the distribution is being calculated; Partial lump-sum payment of a designated amount, with the balance payable in installment payments for a period of years, as described in subsection (b); 2005 Model 457(b) Plan Document for Governmental Ernployers 19 (d) (e) Annuity payments (payable on a monthly, quarterly, or annual basis) for the lifetime of the Participant or for the lifetimes of the Participant and Beneficiary in compliance with Code §401(a)(9); or Such other forms of installment payments as may be approved by the Employer consistent with the requirements of Code §40l(a)(9). Default Distribution Option. In the absence of an effective election by the Participant as to the commencement and/or form of benefits, distributions shall be made in accordance with the applicable requirements of Code §§ 40l(a)(9) and 457(d), and final Treasury regulations thereunder. In the absence of an effective election by the Beneficiary or Alternate Payee as to the commencement and/or form of benefits, distribution shall be made in a lump sum. 5.08 Limitations on Distribution Options. Notwithstanding any other provision of this Article V, Plan distributions shall satisfy the requirements of this section 5.09. (a) No distribution option may be selected by a payee under this Article V unless it satisfies the applicable requirements of Code §§40l(a)(9) and 457(d), and final Treasury regulations thereunder. 5.09 5.10 (b) The terms of this Article V shall be construed in accordance with all applicable Code sections. Eligible Rollover Distributions. (a) General. Notwithstanding any provision of the Plan to the contrary that would otherwise limit an election under this section, a Participant, the surviving spouse of a Participant (or a Participant's former spouse who is the alternate payee under a qualified domestic relations order as defined in Code §414(p) (herein collectively called "distributee") may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan in a direct rollover. (b) Definitions. For purposes of this section, the following definitions shall apply. (I) Eligible Rollover Distribution. An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten (10) years or more; any distribution to the extent such distribution is required under Code §401(a)(9); any deemed distribution under the provisions of Code §72(p); the portion of any distribution that is not includable in gross income; 2005 Model 457(b) Plan Docurnent for Governrnental Employers 20 5.11 5.12 5.13 6.01 any distribution of excess deferrals; and any distribution on account of an Unforeseeable Emergency. (2) Eligible Retirement Plan. An eligible retirement plan is an individual retirement account described in Code §408(a), an individual retirement annuity described in Code §408(b), an annuity plan described in Code §403(a) that accepts the distributee's eligible rollover distribution, a qualified trust described in Code §40I(a) (including §40l(k» that accepts the distributee's eligible rollover distribution, a tax-sheltered annuity described in Code §403(b) that accepts the distributee's eligible rollover distribution, or another eligible deferred compensation plan described in Code §457(b) that accepts the distributee's eligible rollover distribution. (3) Distributee. A distributee includes an Employee or former Employee, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse who is the alternate payee under a Qualified Domestic Relations Order, as defined in Code §414(p), are distributees with regard to the interest of the spouse or former spouse. (4) Direct Rollover. A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee. Elections. Elections under this section shall be made in such form and manner as the Administrator may specify from time to time. To the extent permitted by and in accordance with the Code, any irrevocable elections as to the form or timing of distributions executed prior to January I, 2002, are hereby revoked. Practices and Procedures. The Employer or Plan Administrator may adopt practices and procedures applicable to existing and new distribution elections. Taxation of Distributions. To the extent required by law, income and other taxes shall be withheld from each benefit payment and payments shall be reported to the appropriate governmental agency or agencies. VI. ROLLOVERS AND TRANSFERS Eligible Rollover Contributions to Plan. (a) If so specified in section H. of the Adoption Agreement, and only to the extent so specified, a Participant who is an Employee and who is entitled to receive an eligible rollover distribution from another eligible retirement plan may request to have all or a portion of the eligible rollover distribution paid to the Plan. The Administrator may require such documentation from the distributing plan as it deems necessary to 2005 Model 457(b) Plan Document for Governmental Employers 21 (b) 6.02 6.03 effectuate the rollover in accordance with Code §402 and to confirm that such plan is an eligible retirement plan within the meaning of Code §402(c)(8)(B). For purposes of section 6.01(a), an eligible rollover distribution means any distribution of all or any portion of a Participant's benefit under another eligible retirement plan, except that an eligible rollover distribution does not include (I) any installment payment for a period of 10 years or more, (2) any distribution rnade as a result of an unforeseeable emergency or other distribution which is made upon hardship of the employee, (3) any deemed distribution under the provisions of Code § 72(p), (4) the portion of any distribution that is not includable in gross income, (5) any distribution of excess deferrals or (6) for any other distribution, the portion, if any, of the distribution that is a required minimum distribution under Code §40l(a)(9). In addition, an eligible retirement plan means an individual retirement account described in Code §408(a), an individual retirement annuity described in Code §408(b), a qualified trust described in Code §40I(a), an annuity plan described in Code §§403(a) or 403(b), or an eligible governmental plan described in Code §457(b), that accepts the eligible rollover distribution. The Plan shall establish and maintain for the Participant a separate account for any eligible rollover distribution paid to the Plan from any eligible retirement plan that is not an eligible governmental plan under Code §457(b). In addition, the Plan shall establish and maintain for the Participant a separate account for any eligible rollover distribution paid to the Plan from any eligible governmental plan under Code §457(b). Plan-to-Plan Transfers to the Plan. At the direction of the Employer, the Administrator may permit a class of Participants who are participants in another eligible governmental plan under Code §457(b) to transfer assets to the Plan as provided in this section 6.02. Such a transfer is permitted only if the other plan provides for the direct transfer of each Participant's interest therein to the Plan. The Administrator may require in its sole discretion that the transfer be in cash or other property acceptable to the Administrator. The Administrator may require such documentation from the other plan as it deems necessary to effectuate the transfer in accordance with Code §457(e)(10) and Treasury Reg. §1,457-10(b) and to confirm that the other plan is an eligible governmental plan as defined in Reg. § 1,457-2(f). The amount so transferred shall be credited to the Participant's Account Balance and shall be held, accounted for, administered and otherwise treated in the same manner as an Annual Deferral by the Participant under the Plan, except that the transferred amount shall not be considered an Annual Deferral under the Plan in determining the maximum deferral under Article III. Plan-to-Plan Transfers from the Plan. (c) (a) At the direction of the Employer, the Administrator may permit a class of Participants and Beneficiaries to elect to have all or any portion of their Account Balance transferred to another eligible governmental plan within the meaning of Code §457(b) and Reg. § 1,457-2(f). An in-service transfer is permitted under this section only if the Participant is transferring to another eligible governmental plan maintained by Employer. In all other circumstances, a transfer is permitted under this section 6.03(a) for a Participant only if the Participant has had a Severance from Employment with 2005 Model 457(b) Plan Document for Governmental Employers 22 6.04 7.01 the Employer and is an employee of the entity that maintains the other eligible governmental plan. Further, a transfer is permitted under this section 6.03(a) only if the other eligible governmental plan provides for the acceptance of plan-to-plan transfers with respect to the Participants and Beneficiaries and for each Participant and Beneficiary to have an amount deferred under the other plan immediately after the transfer at least equal to the amount transferred. (b) Upon the transfer of assets under this section 6.03, the Plan's liability to pay benefits to the Participant or Beneficiary under this Plan shall be discharged to the extent of the amount so transferred for the Participant or Beneficiary. The Administrator may require such documentation from the receiving plan as it deems appropriate or necessary to comply with this section 6.03 (for example, to confirm that the receiving plan is an eligible governmental plan under paragraph (a) of this section 6.03, and to assure that the transfer is permitted under the receiving plan) or to effectuate the transfer pursuant to Reg. §L457-IO(b). Permissive Service Credit Transfers. (a) If a Participant is also a participant in a tax-qualified defined benefit goverrunental plan (as deemed in Code §4l4(d» that provides for the acceptance of plan- to -plan transfers with respect to the Participant, then the Participant may elect to have any portion of the Participant's Account Balance transferred to the defined benefit governmental plan. A transfer under this section 6.04(a) may be made before the Participant has had a Severance from Employment. (b) A transfer may be made under section 6.04(a) if the transfer is either for the purchase of permissive service credit (as defined in Code§415(n)(3)(A) under the receiving defined benefit governmental plan or a repayment to which Code §4l5 does not apply by reason of Code §4l5(k)(3), or as otherwise allowed by the Internal Revenue Service. VII. CREATION OF TRUST AND TRUST FUND Trust Fund. All amounts of Annual Deferrals, all property and rights purchased with such amounts, and all income attributable to such amounts, property, or rights shall be held and invested in the Trust Fund in accordance with this Plan and the Trust Agreement. The Trust Fund, and any sub trust established under the Plan, shall be established pursuant to a written agreement that constitutes a valid trust under applicable state law. The Trustee shall ensure that all investments, amounts, property, and rights held under the Trust Fund are held for the exclusive benefit of Participants and their Beneficiaries. The Trust Fund shall be held in trust pursuant to the Trust Agreement for the exclusive benefit of Participants and their Beneficiaries and defraying reasonable expenses of the Plan and of the Trust Fund. It shall be impossible, prior to the satisfaction of ail liabilities with respect to Participants and their Beneficiaries, for any part of the assets and income of the Trust Fund to be used for, or 2005 Model 457(b) Plan Document for Governmental Employers 23 diverted to, purposes other than for the exclusive benefit of Participants and their Beneficiaries. The trust requirement of Code §457(g) may be satisfied by a trust agreement, a custodial agreement or the annuity contract, if any. The trust requirement shall be satisfied in the manner specified in the Adoption Agreement. If so elected in the Adoption Agreement, the Employer or certain employees of (or holders of certain positions with) the Employer shall be named as Trustee in the Adoption Agreement and Plan assets shall be set aside in trust pursuant to this Article VII. If the Employer does not elect to self-trustee the Plan, the Employer must elect one of the following options in the Adoption Agreement (a) Plan assets will be set aside in trust pursuant to a separate written trust agreement entered into between the Employer and the bank or trust company named as Trustee named in the Adoption Agreement. The Employer shall enter into a separate written trust agreement with the Trustee. (b) Plan assets shall be set aside in one or more annuity contracts issued by an insurance company qualified to do business in the state where the contract is issued. The owner of the annuity contract is the "deemed trustee" of the assets invested under the contract for purposes of Code §457(g). (c) Plan assets shall be set aside in one or more custodial accounts described in Code §40l(f) with the bank or trust company named in the Adoption Agreement as Custodian and "deemed trustee" for purposes of Code §457(g). The Employer shall enter into a separate written custodial agreement with the Custodian. Establishment of Trust. The Employer or named Employees of Employer (or certain holders of positions with the Employer) named in the Adoption Agreement shall serve as under a Trust hereby created to hold all of the assets of the Plan for the exclusive benefit of Participants and Beneficiaries. The Trust shall consist of all contributions made under the Plan and the investment earnings thereon. All contributions and the earnings thereon less payments made under the terms of the Plan, including fees and expenses, shall constitute the Trust. Except to the extent that the Employer enters into a separate written trust agreement with a bank or trust company Trustee, the assets in Trust shall be administered as provided in this document. 7.02 7.03 Aooointment and Termination of Trustee. A Trustee may be named by the Employer and may be a Participant. The Trustee shall remain in office at the will of the Employer and may be removed from office at any time by the Employer, with or without cause. Such removal shall be effective upon delivery of written notice to the Trustee or at such later time as may be designated in such notice; provided that any such notice of removal shall take effect no sooner than thirty (30) days and no later than sixty (60) days after the delivery thereof, unless such thirty (30) or sixty (60) day period shall be waived. The Trustee may resign at any time upon giving written notice to the Employer or at such later time as may be designated in the notice 2005 Model 457(b) Plan Document for Governmental Ernployers 24 7.05 7.06 of resignation; provided that (a) any such notice of resignation shall take effect no sooner than thirty (30) days and no later than sixty (60) days after the delivery thereof, unless such thirty (30) day or sixty (60) day period shall be waived and (b) upon such resignation or removal the Employer shall have the power and the duty to designate and appoint a successor Trustee, and the actual appointment of a successor Trustee is a condition that must be fulfilled before the resignation or removal of the Trustee shall become effective. Upon appointment, the successor Trustee shall have all the rights, powers, privileges, liabilities and duties of the predecessor Trustee. The Trustee so resigned or removed shall take any and all action necessary to vest the rights, powers, privileges, liabilities and duties of the Administrator in his, her or its successor. 7.04 Acceptance. By signing the Adoption Agreement the Trustee accepts the Trust created under the Plan and agrees to perform the obligations imposed. Control of Plan Assets. The assets of the Trust or evidence of ownership shall be held by the Trustee, under the terms of the Plan and under either this Article VII or under the separate written trust agreement with a bank or trust company. If the assets represent amounts transferred from a former plan, the Trustee shall not be responsible for the propriety of any investment under the former plan. General Duties of the Trustee. The Employer or named individuals in the ernploy of the Employer named as Trustee(s) in the Adoption Agreement shall be responsible for the administration of investments held in the Plan. The Trustee's duties shall include: (a) receiving contributions under the terms of the Plan; (b) making distributions from Plan assets held in Trust in accordance with written instructions received from an authorized representative of the Employer; (c) keeping accurate records reflecting its administration of the Trust assets and making such records available to the Employer for review and audit. Within ninety (90) days after each Plan Year, and within ninety (90) days after its removal or resignation, the Trustee shall file with the Employer an accounting of its administration of the Trust assets during such year or from the end of the preceding Plan Year to the date of removal or resignation. Such accounting shall include a statement of cash receipts and disbursements since the date of its last accounting and shall contain an asset list showing the fair market value of investments held in the Trust as of the end of the Plan Year. The value of marketable investments shall be determined using the most recent price quoted on a national securities exchange or over the counter market. The value of non-marketable investments shall be determined in the sole judgment of the Trustee which determination shall be binding and conclusive. The value of investments in securities or obligations of the Employer in which there is no market shall be determined in the sole judgment of the Employer and the Trustee shall have no responsibility with respect to the valuation of such 2005 Model 457(b) Plan Document for Governmental Ernployers 25 7.07 (h) assets. The Employer shall review the Trustee's accounting and notifY the Trustee in the event of its disapproval of the report within ninety (90) days, providing the Trustee with a written description of the items in question. The Trustee shall have sixty (60) days to provide the Employer with a written explanation of the items in question; and (d) employing such agents, attorneys or other professionals as the Trustee may deem necessary or advisable in the performance of its duties. The Trustee's duties shall be limited to those described above. The Employer shall be responsible for any other administrative duties required under the Plan or by applicable law. Investment Powers of the Trustee. The Trustee shall implement an investment program based on the Employer's investment objectives. If either the Employer or the Employee fails to issue investment directions as provided in sections 6.01 and 6.02, the Trustee shall have authority to invest the Trust assets in its sole discretion. In addition to powers given by law, the Trustee may: (a) invest the Trust assets in any form of property, including common and preferred stocks, exchange and trade put and call options, bonds, money market instruments, mutual funds (including Trust assets for which the Trustee or its affiliates serve as investment advisor), Treasury bills, deposits at reasonable rates of interest at banking institutions including but not limited to savings accounts and certificates of deposit, and other forms of securities or investment of any kind, class, or character whatsoever, or in any other property, real or personal, having a ready market; (b) invest and reinvest all or any part of the Trust assets in any insurance policies or other contracts with insurance companies including but not limited to individual or group annuity, deposit administration, and guaranteed interest contracts. Such contracts shall be held in the name of the Trustee; transfer any assets of the Trust to any group or common, collective or commingled fund that is maintained by a bank or other institution that is established to permit the pooling of assets of separate Trusts so long as such fund is available to §457 plans; hold cash uninvested and deposit same with any banking or savings institution at reasonable interest; (c) (d) (e) join in or oppose the reorganization, recapitalization, consolidation, sale or merger of corporations or properties, including those in which it is interested as a Trustee, upon such terms as it deems wise; hold investments in nominee or bearer form; (f) (g) to vote or refrain from voting any stocks, bonds, or other securities held in the Trust, to exercise any other right appurtenant to any securities or other property held in the Trust, to vote or refrain from voting proxies; exercise all ownership rights with respect to assets held in the Trust; and 2005 Model 457(b) Plan Document for Governmental Employers 26 7.08 7.09 7.10 7.11 7.12 do any and all other acts that may be deemed necessary in the performance of the Trustee's duties hereunder. Trustee Fees and Expenses. All reasonable costs, charges and expenses incurred by the Trustee in connection with the administration of the Trust assets (including fees for legal services rendered to the Trustee) may be paid by the Employer, but if not paid by the Employer when due, shall be paid from the Trust. Such reasonable compensation to a bank or trust company Trustee as may be agreed upon from time to time between the Employer and the Trustee may be paid by the Employer, but if not paid by the Employer when due shall be paid by the Trust. The Trustee shall have the right to liquidate Trust assets to cover its fees. Notwithstanding the foregoing, no compensation other than reimbursement for expenses shall be paid to a Trustee who is the Ernployer or a full-time Employee. In the event any part of the Trust assets become subject to tax, all taxes incurred shall be paid from the Trust unless the Administrator advises the Trustee not to pay such tax. (i) Exclusive Benefit Rules. No part of the Trust assets shall be used for, or diverted to, purposes other than for the exclusive benefit of Participants, former Participants with a interest in the Plan, and the Beneficiary or Beneficiaries of a deceased Participant having an interest in the Trust assets at the death of the Participant. Trustee Actions. Every action taken by the Trustee shall be presumed to be a fair and reasonable exercise of the authority vested in or the duties imposed upon him, her, or it. The Trustee shall be deemed to have exercised reasonable care, diligence and prudence and to have acted impartially as to all persons interested, unless the contrary be proven by affirmative evidence. The Trustee shall not be liable for amounts of Compensation deferred by Participants or for other amounts payable under the Plan. Delegation. Subject to any applicable laws and any approvals required by the Ernployer, the Trustee may delegate any or all powers and duties hereunder to another person, persons, or entity, and may pay reasonable compensation for such services as an administrative expense of the Plan, to the extent such compensation is not otherwise paid. Division of Duties and Indemnification. (a) The Trustee shall have the authority and discretion to manage and govern the Trust assets to the extent provided in this instrument, but does not guarantee the Trust in any manner against investment loss or depreciation in asset value, or guarantee the adequacy of the Trust assets to meet and discharge all or any liabilities of the Plan. The Trustee shall not be liable for the making, retention or sale of any investment or reinvestment made by it, as herein provided, or for any loss to, or diminution of the Trust assets or for any other loss or damage which may result from the discharge of its duties hereunder except to the extent it is judicially determined that the Trustee has failed to exercise the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character with like aims. (b) 2005 Model 457(b) Plan Document for Governmental Employers 27 8.01 8.02 (c) The Employer warrants that all directions issued to the Trustee by it or the Administrator shall be in accordance with the terms of the Plan and not contrary to the provisions of the Code. The Trustee shall not be answerable for any action taken pursuant to any direction, consent, certificate, or other paper or document on the belief that the same is genuine and signed by the proper person. All directions by the Employer or the Adrninistrator shall be in writing from the authorized individual or individuals named in the Adoption Agreement. The duties and obligations of the Trustee shall be limited to those expressly imposed upon it by this instrument or subsequently agreed upon by the parties. Responsibility for administrative duties required under the Plan or applicable law not expressly imposed upon or agreed to by the Trustee shall rest solely with the Employer. The Trustee shall be indemnified and held harmless by the Employer from and against any and all liability to which the Trustee may be subjected, including all expenses reasonably incurred in its defense, for any action or failure to act resulting from compliance with the instructions of the Employer, the employees or agents of the Employer, the Administrator, or any other fiduciary to the Plan, and for any liability arising from the actions or inactions of any predecessor Trustee, custodian or other fiduciaries of the Plan. (d) (e) (f) (g) The Trustee shall not be responsible in any way for the application of any payments it is directed to make or for the adequacy of the Trust assets to meet and discharge any and all liabilities under the Plan. VIII. INVESTMENTS Investment Options. Employer shall have the sole discretion to select one or more investment options to be offered under the Plan. These investment options may include specified life insurance policies, annuity contracts, or investment media issued by an insurance company. It shall be the sole responsibility of the Employer to ensure that all investment options offered under the Plan are appropriate and in compliance with any and all state laws pertaining to such investments. Participant Investment Direction. If the Employer chooses to designate one or rnore investment options in which Participants may direct investment of their Account(s), Participants shall have the option to direct the investment of their Account(s) from among the investment options designated by the Employer. The Participant's right to transfer among or out of any such investment options shall be subject to any timing or other restrictions imposed upon Participants by the providers of the investment options chosen by the Participant, including, but not limited to market-timing restrictions, excessive trading restrictions and redemption fees. The Trustee or Custodian, as applicable, shall hold title to such investment options. A Participant's right to direct the investment of Account balances shall apply only to making selections among the options made available under the Plan and only to the extent 2005 Model 457(b) Plan Document for Governrnental Ernployers 28 specified by the Employer pursuant to uniform rules. The terms of this paragraph, including any trading restrictions or fees, shall also apply to Beneficiary and Alternate Payee accounts. (a) Each Participant shall designate on the form prescribed by the Administrator the one or more investment options in which he or she wishes to have his Account invested and may change such investment directions in accordance with and at the tirne or times specified under uniform rules established by the Administrator or the investment provider, as applicable. The Participant's Account shall be debited or credited as appropriate to reflect all gains or losses on such investments. If a Participant has the right to direct the investment of his Account but does not provide such direction pursuant to uniform rules established by Employer, the Participant's Account shall be invested in the investment option selected by the Plan. (b) Neither the Employer, the Administrator, the Trustee, the Custodian nor any other person shall be liable for any loss incurred by virtue of following the Participant's directions or by reason of any reasonable administrative delay in implementing such directions. The Employer may from time to time change the investment options made available under the Plan pursuant to uniform rules established by the Administrator. If the Employer eliminates an investment option, all Participants who had chosen that investment option shall select another option. If the Participant does not select a new option, money remaining in the eliminated investment option shall be reinvested at the direction of the Employer. The Participants shall have no right to require the Employer to select or retain any investment option. Any change with respect to investment options made by the Employer or a Participant, however, shall be subject to the terms and conditions (including any rules or procedural requirements) of the affected investment options. Emplover Investment Direction. 8.03 (a) (c) To the extent the Employer chooses not to allow Participant direction of the investment of his or her Account, the Employer shall have the right to direct the Trustee or Custodian with respect to investments of the Trust assets, may appoint an investment manager to direct investments or may give the Trustee sole investment management responsibility. The Employer or investment manager shall make any investment directive in writing. Such instructions regarding the delegation of investment responsibility shall remain in force until revoked or amended in writing. The Trustee shall not be responsible for the propriety of any investment made at the direction of the Employer or an investment manager and shall not be required to consult with or advise the Employer regarding the investment quality of any directed investment held hereunder. In the absence of such written directive, the Trustee shall automatically invest the available cash in its discretion in an appropriate interim investment until specific investment directions are received. 2005 Model 457(b) Plan Docurnent for Governrnental Ernployers 29 8.04 9.01 9.02 9.03 (b) If the Employer fails to direct the investment of Trust assets or name an investment manager, and the Trustee or Custodian do not have investment authority, the Administrator shall have full investment authority. Participant Accounts. The Administrator shall maintain or cause to be maintained one or more individual accounts for each Participant. Such accounts shall include separate accounts, as necessary, for Code §457 Deferred Compensation, Code §457 rollovers, IRA rollovers, other qualified plan and Code §403(b) plan rollovers, and such other accounts as may be appropriate from time-to-time for plan administration. At regular intervals established by the Administrator, each Participant's account(s) shall be credited with the amount of any Deferred Compensation paid into the Trust; debited with any applicable administrative or investment expense, including, but not limited to, fees charged to Participants, allocated on a reasonable and consistent basis; credited or debited with investment gain or loss, as appropriate; and debited with the amount of any distribution. Each Participant shall be notified in writing of the balance in his Account at least once a year. IX. ADMINISTRA nON Administrator. Employer shall be the Administrator unless another person or persons is appointed by the Employer in section A. of the Adoption Agreement pursuant to section 1.02. Appointment and Termination of Administrator. An Administrator may be named in section A. of the Adoption Agreement by the Employer and may be a Participant. The Administrator shall remain in office at the will of the Employer and may be removed from office at any time by the Employer, with or without cause. Such removal shall be effective upon delivery of written notice to the Administrator or at such later time as may be designated in such notice; provided that any such notice of removal shall take effect no later than sixty (60) days after the delivery thereof, unless such sixty (60) day period shall be waived. The Administrator may resign at any time upon giving written notice to the Employer or at such later time as may be designated in the notice of resignation provided that; (a) any such notice of resignation shall take effect no later than sixty (60) days after the delivery thereof, unless such sixty (60) day period shall be waived; and (b) upon such resignation or removal the Employer shall have the power and the duty to designate and appoint a successor Administrator, and the actual appointment of a successor Administrator is a condition that must be fulfilled before the resignation or removal of the Administrator shall becorne effective. Upon appointment, the successor Administrator shall have all the rights, powers, privileges, liabilities and duties of the predecessor Administrator. The Administrator so resigned or removed shall take any and all action necessary to vest the rights, powers, privileges, liabilities and duties of the Administrator in the successor. Duties of Administrator. Subject to any applicable laws and any approvals required by the Employer, the Administrator shall have full power and authority to adopt rules, regulations and procedures for the administration of the Plan, and to interpret, alter, amend, or revoke any rules, regulations or procedures so adopted. The Administrator's duties shall include: 2005 Model 457(b) Plan Docurnent for Governmental Ernployers 30 9.04 9.05 9.06 (a) appointing the Plan's attorney, accountant, actuary, custodian or any other party needed to administer the Plan or the Plan assets; (b) directing the Trustee or Custodian with respect to payments from the Plan assets held in Trust; (c) communicating with Employees regarding their participation and benefits under the Plan, including the administration of all claims procedures; (d) filing any returns and reports with the Internal Revenue Service or any other governmental agency; (e) reviewing and approving any financial reports, investment reviews, or other reports prepared by any party appointed under paragraph (a); (f) establishing a funding policy and investment objectives consistent with the purposes of the Plan; and (g) construing and resolving any question of Plan interpretation. The Administrator's interpretation of Plan provisions including eligibility and benefits under the Plan is finaL Administrative Fees and Expenses. All reasonable costs, charges and expenses incurred by the Administrator in connection with the administration of the Plan (including fees for legal services rendered to the Administrator) may be paid by the Employer, but if not paid by the Employer when due, shall be paid from Plan assets. Such reasonable compensation to the Administrator as may be agreed upon from time to tirne between the Employer and Administrator may be paid by the Employer, but if not paid by the Employer when due shall be paid from Plan assets. Notwithstanding the foregoing, no compensation other than reimbursement for expenses shall be paid to an administrator who is the Employer or a full- time Employee of the Employer. In the event any part of the assets in the Plan become subject to tax, all taxes incurred shall be paid from the Plan assets unless the Administrator instructs the Trustee or Custodian not to pay such tax. Actions of Administrator. Every action taken by the Administrator shall be presumed to be a fair and reasonable exercise of the authority vested in or the duties imposed upon him, her, or it. The Administrator shall be deemed to have exercised reasonable care, diligence and prudence and to have acted impartially as to all persons interested, unless the contrary be proven by affirmative evidence. The Administrator shall not be liable for amounts of Compensation deferred by Participants or for other amounts payable under the Plan. Dele¡¡:ation. Subject to any applicable laws and any approvals required by the Ernployer, the Administrator may delegate any or all powers and duties hereunder to another person, persons, or entity, and may pay reasonable compensation for such services as an administrative expense of the Plan, to the extent such compensation is not otherwise paid. 2005 Model 457(b) Plan Document for Governrnental Ernployers 31 9.07 Investment and Service Providers. Any company which issues policies, contracts, or investment media to the Employer or in respect of a Participant is not a party to this Plan and such company shall have no responsibility, accountability, or liability to the Employer, the Administrator, any Participant, or any Beneficiary with regard to the operation or adequacy of this Plan, including any future amendments made thereto. X. LEAVE OF ABSENCE 10.0 I Paid Leave of Absence. If a Participant is on an approved leave of absence from the Employer with Compensation, or on approved leave of absence without Compensation that does not constitute a Severance from Employment, which under the Employer's current practices is generally a leave of absence without Compensation for a period of one year or less, said Participant's participation in the Plan may continue. 10.02 Unpaid Leave of Absence. If a Participant is on an approved leave of absence without Compensation and such leave of absence continues to such an extent that it becomes a Severance from Employment, said Participant shall have separated from service with the Employer for purposes of this Plan. Upon termination of leave without pay and return to active status, the Participant may enter into a new Participation Agreement to be effective when permitted by section 2.10. XI. AMENDMENT OR TERMINATION OF PLAN 11.01 Termination. The Employer may at any time terminate this Plan; provided, however, that no termination shall affect the amount of benefits, which at the time of such termination shall have accrued for Participants or Beneficiaries. Such accrued benefit shall include any Compensation deferred before the time of the termination and income thereon accrued to the date of the termination. Such amount shall be calculated in accordance with section 8.04 and the terms and conditions of the affected investment option. Upon such termination, each Participant in the Plan shall be deemed to have revoked his agreement to defer future Compensation as provided in section 2.09 as of the date of such termination and section 2.03(b) shall no longer be in effect. Each Participant's full Compensation on a nondeferred basis shall be restored. Upon plan termination, all amounts deferred will be distributed to Participants or Beneficiaries as soon as administratively practicable after the termination date. 11.02 Amendment. The Employer may amend the provisions of this Plan at any time; provided, however, that no amendment shall affect the amount of benefits which at the time of such amendment shall have accrued for Participants or Beneficiaries, to the extent of Compensation deferred before the time of the amendment and income thereon accrued to the date of the amendment, calculated in accordance with section 8.04 and the terms and conditions of the investment options hereunder; and provided further, that no amendment shall affect the duties and responsibilities of the Trustee or Custodian unless executed by the Trustee or Custodian. 2005 Model 457(b) Plan Document for Governmental Ernployers 32 To the extent permitted by applicable law, the Employer delegates to the Administrator the authority to adopt rules, regulations or procedures from time to time as may be necessary or desirable to conform Plan provisions to, or to elaborate Plan provisions in light of, technical amendments to the Code, Treasury regulations or other guidance issued under the Code, and such rules, regulations or procedures are hereby ratified by the Employer as having the force and effect of Plan amendments. 11.03 Copies of Amendments. The Administrator shall provide a copy of any Plan amendment to any Trustee or custodian and to the issuers of any investment options selected pursuant to section 8.01. XII. TAX TREATMENT OF AMOUNTS CONTRIBUTED It is intended that pursuant to Code §457, the Amount Deferred shall not be considered current compensation for purposes of federal income taxation. This rule shall also apply to state income taxation unless applicable state laws provide otherwise. Such amounts shall, however, be included as compensation to the extent required under the Federal Insurance Contributions Act (FICA). Payments under this Plan shall supplement retirement and death benefits payable under the Employer's group insurance and retirement plans, if any. XIII. NON-ASSIGNABILITY 13.01 Non-Assignability. Except as provided in sections 13.02 and 13,03, the interests of each Participant or Beneficiary under the plan are not subject to the claims of the Participant's or Beneficiary's creditors, and neither the Participant nor any Beneficiary shall have any right to sell, assign, transfer, or otherwise convey the right to receive any payments hereunder or any interest under the Plan, which payments and interest are expressly declared to be non- assignable and non-transferable. 13.02 Oualified Domestic Relations Orders. If so specified in the Adoption Agreernent, domestic relations orders approved by the Administrator shall be administered as follows. (a) Notwithstanding section 13.01, if a final judgment, decree, or order (including approval of a property settlement) that is related to the provision of child support, alimony payments, or the marital property rights of a spouse or former spouse, child, or øther dependent of a Participant (herein called an Alternate Payee) is made pursuant to the domestic relations law of any State and meets the requirements of Code §414(p), then such order shall be referred to as a Qualified Domestic Relations Order ("QDRO"). If a QDRO is duly filed upon the Employer, then the amount of the Participant's Account Balance shall be paid to or set aside in a separate account for Alternate Payee(s) as elected by the Alternate Payee. Payments to the Alternate Payee shall be made without regard to whether the Participant is eligible for a distribution of benefits under the Plan. The Administrator shall establish reasonable procedures for 2005 Model 457(b) Plan Docurnent for Governmental Employers 33 determining the status of any such decree or order and for effectuating distribution pursuant to the QDRO and may charge the Participant and Alternate Payee a fee as established from time to time. Where necessary to carry out the terms of such a QDRO, a separate account shall be established with respect to the Alternate Payee(s) and such person shall be entitled to make investment selections with respect thereto in the same manner as the Participant, except to the extent restricted by the employer or a specific investment option under the plan. All costs and charges incurred in carrying out the investment selection shall be deducted from the account created for the spouse, former spouse, or child making the investment selection. The Alternate Payee may select from among the forms of payment available to Participants except a joint and survivor annuity naming the Alternate Payee and a subsequent spouse. Withholding and income tax reporting shall be done with respect to the alternate payee under the terms of the Code as amended from time to time. (b) The Employer's liability to pay benefits to a Participant shall be reduced to the extent that amounts have been paid or set aside for payment to a spouse, former spouse or child pursuant to this section. No amount shall be paid or set aside unless the Employer, or its agents or assigns, has been provided with satisfactory evidence releasing them from any further claim by the Participant with respect to these amounts. The Participant shall be deemed to have released the Employer from any claim with respect to such amounts in any case in which the Employer has been notified of or otherwise joined in a proceeding relating to a QDRO which sets aside a portion of the Participant's account for a spouse, former spouse or child, and the Participant fails to obtain an order of the court in the proceeding relieving the Employer from the obligation to comply with the QDRO. (c) The Employer shall not be obligated to comply with any judgment, decree or order that attempts to require the Plan to violate any Plan provision or any provision of Code §457. Neither the Employer nor its agents or assigns shall be obligated to defend against or set aside any judgment, decree, or order described herein or any legal order relating to the division of a Participant's benefits under the Plan 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, its agents or assigns to incur such expense, the amount of the expense may be charged against the Participant's account and thereby reduce Employer's obligation to pay benefits to the Participant. In the course of any proceeding relating to divorce, separation, or child support, the Employer, its agents and assigns shall be authorized to disclose information relating to Participant's individual 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. 2005 Model 457(b) Plan Document for Governrnental Employers 34 13.03 IRS Levy. Notwithstanding section 13.01, the Administrator may pay from a Participant's or Beneficiary's Account Balance the amount that the Administrator finds is lawfully demanded under a levy issued by the Internal Revenue Service with respect to that participant or Beneficiary or is sought to be collected by the United States Government under ajudgment resulting from an unpaid tax assessment against the Participant or Beneficiary. 13.04 Mistaken Contributions. If any contribution (or any portion of a contribution) is made to the Plan by a good faith mistake of fact, then within one year after the payment of the contribution, and upon receipt in good order of a proper request approved by the Administrator, the amount of the mistaken contributions (adjusted for any income or loss in value, if any, allocable thereto) shall be returned directly to the Participant or, to the extent required or permitted by the Administrator, to the Employer. 13.05 Pavments to Minors and Incomoetents. To the extent the Employer or Administrator determines that the following procedure meets applicable state or local law, if a Participant or Beneficiary entitled to receive any benefits hereunder is a minor or is adjudged to be legally incapable of giving valid receipt and discharge for such benefits, benefits will be paid to such person as the Administrator may designate for the benefit of such Participant or Beneficiary. Such payments shall be considered a payment to such Participant or Beneficiary and shall, to the extent made, be deemed a complete discharge of any liability for such payments under the Plan. 13.06 Procedure When Distributee Cannot Be Located. The Administrator shall make all reasonable attempts to determine the identity and address of a participant or a Participant's Beneficiary entitled to benefits under the Plan. For this purpose, a reasonable atternpt means (a) the mailing by certified mail of a notice to the last known address shown on the Employer's or Administrator's records, (b) notification sent to the Social Security Administration, Internal Revenue Service or the Pension Benefit Guaranty Corporation (under their program to identify payees under retirement plans), and (c) the payee has not responded within six (6) months. If the Administrator is unable to locate such a person entitled to benefits hereunder, or if there has been no claim made for such benefits, the trust fund shall continue to hold the benefits due such person until in the Employer's or Administrator's sole discretion, the Plan is required to take other action under applicable law except that if, in the Adoption Agreement, the Plan elected mandatory distributions greater than $1,000, then the Administrator will pay the distribution for such person in a direct rollover to an individual retirement plan designated by the plan administrator. XIV. DISCLAIMER The Employer and the Administrator make no endorsement, guarantee or any other representation and shall not be liable to the Plan or to any Participant, Beneficiary, or any other person with respect to (a) the financial soundness, investment performance, fitness, or suitability (for meeting a Participant's objectives, future obligations under the Plan, or any other purpose) of any investment option offered pursuant to section 8.01 or any investment vehicle in which amounts deferred under 2005 Model 457(b) Plan Document for Governrnental Ernployers 35 the Plan are actually invested, or (b) the tax consequences of the Plan to any Participant, Beneficiary or any other person. XV. EMPLOYER PARTICIPATION Notwithstanding any other provisions of this Plan, the Employer may contribute additional amounts into the Plan on behalf of any Participant, so long as the total amount contributed by the Employer when added to the Annual Deferral made by the Participant does not exceed the maximum deferral permitted by Article III for the calendar year. The amount of such Employer contribution and the Employees or independent contractors eligible to receive such contributions shall be detailed in an amendment attached to this Plan document. Such Employer contributions shall be wages for services rendered by the Participant to the Employer during the payroll period contributed. XVI. INTERPRETATION 16.01 Governing Law. This Plan shall be construed under the laws of the state in which the Employer's headquarters are located. 16.02 &457. This Plan is intended to be an eligible deferred compensation plan within the meaning of Code §457, and shall be interpreted so as to be consistent with such section and all regulations promulgated thereunder. 16.03 Word Usage. Words used herein in the singular shall include the plural and the plural the singular where applicable, and one gender shall include the other genders where appropriate. 16.04 Headings. The headings of sections, sections or other subdivisions hereof are included solely for convenience of reference, and if there is any conflict between such headings and the text of the Plan, the text shall control. 16.05 Entire Agreement. This Plan, the executed Adoption Agreement and any properly adopted amendment thereof, shall constitute the total agreement or contract between the Employer and the Participant regarding the Plan. No oral statement regarding the Plan may be relied upon by the Participant. This Plan and any properly adopted amendment, shall be binding on the parties hereto and their respective heirs, administrators, Trustees, successors, and assigns and on all designated Beneficiaries of the Participant. 2005 Model 457(b) Plan Document for Governmental Employers 36