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HomeMy WebLinkAboutResolution 1998-057 RESOLUTION NO. 1998-057 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ATASCADERO ADOPTING AMENDMENT TO DEFERRED COMPENSATION PLAN WITH THE HARTFORD WHEREAS, the City of Atascadero, Deferred Compensation Board heretofore established a Deferred Compensation Plan(the "Plan"); and WHEREAS, the City of Atascadero, Deferred Compensation Board desires to amend the Plan to conform with changes in the federal law brought about by the Small Business Job Protection Act of 1996 (the "Act") requiring that, within the time prescribed by such Act, eligible deferred compensation plans established and maintained by governmental employers be amended to provide that all assets of the plan be held in trust, or under one or more appropriate annuity contracts or custodial accounts, for the exclusive benefit of plan participants and their beneficiaries; and WHEREAS, it is also the desire of the City of Atascadero, Deferred Compensation Board to amend the Plan in order to provide employees with certain other advantages brought about by the Act, including indexed limitation of deferred amounts and certain elections with respect to the commencement of distributions under the Plan. NOW THEREFORE, BE IT RESOLVED, that, effective December 8, 1998, except as otherwise provided, the City of Atascadero, Deferred Compensation Board hereby amends the Plan as follows: Article 11 of the Plan setting forth the rules governing the ownership of deferred amounts is deleted in its entirety and replaced with the following: "11.1 Effective December 8, 1998, all amounts of compensation deferred under the Plan, all property and rights purchased with such amounts, and all income attributable to such amounts, property or rights shall be held in trust or under one or more annuity contracts described in Section 401 (f) of the Code. Except as may otherwise be permitted or required by law, no assets or income of the Plan shall be used for, or diverted to purposes other than for the exclusive purpose of providing benefits for Participants and their Beneficiaries or defraying reasonable expenses of administration of the Plan." The following defined term is added to Article 2 of the Plan and each Section of Article 2 is renumbered appropriately: "2.2 "Adjusted"means adjusted for the cost of living at the time and in the manner as prescribed under section 457 (e)(15) of the Code." City of Atascadero Resolution No. 1998-057 Page 2 Paragraphs (a) and (b) of Section 3.5 providing for regular contributions are amended to read as follows: "3.5 Regular Contributions. The regular contribution is the amount of compensation which may be deferred by a Participant subject to the following limitations: (a) Calendar Year Maximum. The maximum amount a Participant may defer during a calendar year shall not exceed the lesser of (i) $7,500 (as Adjusted), or (ii) 33-1/3% of the Participant's Includible Compensation (typically 25% of the Participant's gross taxable income from the Employer). (b) Pay Period Maximum. The maximum amount a Participant may defer during a pay period, when combined with previous deferrals during the calendar year, shall not exceed the lesser of(i) $7,500 (as Adjusted) or (ii) 33-1/3% of the Participant's year to date Includible Compensation (typically 25% of the Participant's year-to-date gross taxable income from the Employer)." Section 5.2 of the Plan is amended to read as follows: "5.2 Distribution and Deferral. Distribution must follow the minimum distribution requirements of Sections 401 (a)(9) and 457 (d) of the Code and the regulations thereunder as they may be amended from time to time. There is a substantial penalty (federal excise tax) for not satisfying the minimum distribution requirements. Upon becoming eligible in accordance with Section 5.1 hereof, distribution is subject to the following guidelines: (a) A Participant may elect to commence distribution in accordance with the distribution schedules set forth at Section 5.3 hereof. Unless the Participant fails to make any election or if the Participant elects a postponed distribution commencement date pursuant to Section 5.2 (b) below, the Participant's Participation Account shall be, or shall commence to be, distributed not later than sixty (60) days after the close of the Plan Year in which the Participant's Participation Account becomes eligible for distribution. If a Participant fails to make any election, distribution shall commence in accordance with Section 5.5 hereof. (b) A Participant may elect to postpone the commencement date specified in the election made pursuant to Section 5.2 (a) to a later date if(i) such postponement election is made prior to the original commencement date specified in the election made pursuant to Section 5.2 (a), and (ii) no other postponement election has been made pursuant to this Section 5.2(b); provided further, that a Participant may change the form of payment elected at any time that is at least sixty (60) days prior to the date on which payments will commence. City of Atascadero Resolution No. 1998-057 Page 3 (c) A Participant may elect to postpone distribution, even after using the "catch-up"provision. (d) If eligibility for distribution is on account of the Participant's death, distribution shall commence in accordance with Section 5.8 hereof. (e) Notwithstanding any provision of the Plan to the contrary, distribution must commence no later than April 1st following the later of(i) the calendar year in which the Participant attains age 70-1/2 or (ii) the calendar year in which the Participant separates from service, and must be completed by the Participant's allowable life expectancy, defined as the single or joint (spousal) life expectancy as set forth in the life annuity actuarial tables (Code Section 72 and regulations thereunder)." Section 5.4 of the Plan is amended to read as follows: "5.4 Participation Accounts Not Exceeding $3,500. Notwithstanding any provision of the Plan to the contrary, if the total amount of the Participant's Participation Account under the Plan does not exceed $3,500, the Participant may elect to receive (or the Employer may elect to pay to the Participant without the Participant's consent) the total amount in a lump sum payable within 60 days of such election; provided, however, such amount may be distributed pursuant to this Section 5.4 only if. (a) no amount has been deferred under the Plan with respect to such Participant during the two-year period ending on the date of the distribution, and (b) there has been no prior distribution under the Plan to such Participant to which this Section 5.4 applied." Section 5.5 of the Plan is amended to read as follows: "5.5 Default Distribution Schedule. If the Participant fails to select a payment option for any event which causes amounts to become available under the Plan, the Participant shall be deemed to have elected, pursuant to Section 5.2 (b) hereof, to postpone distribution of his benefit until the year in which the Participant attains age 70-1/2. Upon such Participant's attainment of age 70-1/2, payments shall commence for a specified period of ten (10) years as provided for in Option 2. Notwithstanding the foregoing, Participation Accounts not exceeding $3,500 shall be subject to earlier distribution in accordance with Section 5.4 hereof." FURTHER RESOLVED, that the members of the City of Atascadero are hereby authorized to take any actions, including execution of a restated Plan document incorporating the provisions of said Amendment which are necessary and desirable to effect this Resolution. On motion by Council Member Luna and seconded by Council Member Clay, the foregoing resolution is hereby adopted in its entirety by the following roll-call vote: City of Atascadero Resolution No. 1998-057 Page 4 AYES: Council Members Arrambide, Clay, Lerno, Luna and Mayor Johnson NOES: None ABSENT: None ADOPTED: December 8, 1998 4RaJo AS ADERO, CA n ayor ATTEST: 6U4 Marcia McClure Torgerson, Ci Clerk APPROVED AS TO FORM: Roy Hanley, City Att ey