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HomeMy WebLinkAbout1979-10-02; City Council; 6011; Deferred CompensationCITY OF CARi,SBAD ._ AGENDA BILL NO. to U I / Initial: fi�L Dept . Fid . DATE:_ October 2, 1979 C. Atty.V P-A DEPAP1214ENT: City Manager C. Mgr. Subject: DEFERRED COMP2_IIS?1TION Statement of the Matter The City agreed to make available a Deferred Compensation Plan in the Memorandum of Understanding signed with the Carlsbad City Employees' Association. The Executive Compensation Plan also indicates such a plan will be made available. If the City adopts a Deferred Compensation Plan, all City employees would be eligible to participate. In accordance with the Internal Revenue Code, an employee may defer the receipt of income in the amount of $7500 or 25% of compensation, whichever is less. The City will retain the money so deferred. The deferred income will be invested and the deferred income and any investment earnings will be paid to employees upon retirement, termination or death. The employee does not pay any taxes on the deferred compensation until the money is paid to the employee. Technically, the funds remain an asset of the City and may be used for any City purpose. The proposed deferred compensation plan provides for the investment of deferred funds and the crediting of any earnings to individual deferred compensation accounts. Staff is recommending the deferred compensation funds be invested in saving accounts and certificates of deposits in a savings and loan institution. In light of today's high interest earnings and based on past performance of other investment media, this appears to be the optimum investment choice at this time. If, in the future other investment media appear to be more beneficial, alternative investments may be considered: Exhibit Memo to City Manager dated 9-5-79 Resolution No. Deferred Compensation Investment Agreement, Participant Agreement Recommendation If Council desires to adopt a Deferred Compensation Plan, adopt Resolution No. 5 f A/( AGENDA BILL NO. 6001 Page 2 Council Action: 10-2-79 Council adopted Resolution 5948, adopting an Employee's Deferred Compensation Plan and authorizing the execution of agreements related to said Plan by the Mayor. t V ji DATE: SEPTEMBER 5, 1979 TO: CITY MANAGER FROM: Assistant to the City Manager SUBJECT: DEFERRED COMPENSATION The City agreed to make available a deferred compensation plan in the Memorandum of Understanding signed with CCEA. The executive compensation plan also indicates such a plan will be made available. What is a deferred compensation? A deferred compensation plan provides that an employee may set aside a portion of his income, which will be retained by the employer and paid to the employee upon the employee's retirement, termination, or death. The money technically belongs to the City, and the City has a contractual obligation to pay the money to the em- ployee upon the happening of certain events. As long as the money is not constructively received by the employee, the money is not subject to income taxes. Upon payment of the money to the employee, the employee then becomes liable for the taxes. The theory is that the employee will receive these funds after retirement, and will likely be in a lower income tax bracket and, therefore, will pay less income tax on the funds at that time. A major benefit to a public employee in a deferred com- pensation plan is that pretax dollars are set aside, and due to the immunity of the public agency from Federal Income Tax, investment earnings on deferred funds are not subject to taxation and an employee may accumulate funds at a greater rate than if the taxes were currently levied against such earnings. A number of cities, counties, and special districts in Califor- nia have established deferred compensation plans. The State of California has a deferred compensation plan which is one of the largest, if not the largest in the nation. A deferred compensation plan is not a substitute for the retirement system, but could be used to supplement retirement income. Not all employees'may be interested in participating in a deferred compensation plan. An employee must have adequate discretionary income which he desires to set aside for use at a later period of time. The money set aside is not liquid and is not available to the employee except under very stringent hardship exceptions. As mentioned previously, technically the money remains the City's and may be used for any City purpose. The City may invest the money for the benefit of the employee, however, the City is under no obligation to do so and makes no guarantee as to investment earnings which may accrue from the investment of deferred compensation funds. September 5, 1979 Deferred Compensation Page 2 There are a variety of ways in which a deferred compensation plan may operate. In some cities the city hires a deferred compensation plan coordinator or administrator to operate the city's Deferred compensation plan. Such a plan may offer a variety of investment vehicles, such as mutual funds, stocks, certificates of deposit, savings accounts, insurance policies, or annuity contracts. Under such a procedure, the plan admin- istrator receives compensation for his services, either by means of a fee levied against the deferred compensation funds that the employee sets aside, or through sales or service charges which may be charged by various investment vehicles. In other cities a plan such as the International City Manage- ment Association Retirement Corporation's Deferred Compensation Plan is used. Under this program there is an administrative charge on all money invested and a periodic service charge by the investment manager to cover the cost of operating the program. In still other cities, a much simpler approach is used where the deferred compensation plan provides that money will be invested in a savings and loan institution and no direct service or administrative fees are charged. However, interest earnings may be slightly less than in other similar investments in the savings and loan institution. A number of cities have been contacted in regard to their deferred compensation plans and sample plans have been obtained. In most instances there is little or no direct expense to the city in administrating the plan, however, the Finance Department of the City must modify its own procedures slightly to accom- modate the deduction of the deferred compensation funds before in-ome taxes are levied, and deferred compensation funds in the aggregate must be kept tract of and accounted for by the City since they technically remain as City funds. Although deferred compensation funds technically remain the property of the City, a number of the deferred compensation plans provide alternative investment vehicles in which an individ- ual employee may request the City to place his deferred com- pensation. Although this appears to be a reasonable approach that would allow an employee to choose the investment vehicle that would best meet his objectives, the performance of various investment vehicles over the past few years may indicate that the alternate investment vehicles approach is not as useful or desirable as it once appeared. Information was solicited from firms that provide investment vehicles for deferred compensation funds. The previously mentioned International City Management Association Retirement Corporation submitted information about their deferred com- pensation program. A firm called National Plan Coordinators of Long Beach provided information about its services. September 5, 1979 Deferred Compensation Page 3 In addition, two savings and loan associations, Glendale Federal, and Great Western Savings provided information about their services. All companies which would serve as investment vehicles or plan coordinators offered basically the same sort of accounting and reporting services which would be necessary for the administration of the City's plan. However, the cost of the services varied from one company to another. The programs offered by the various investment vehicles were investigated in light of complete administrative and accounting services offered, security of investment, investment performance, and reputation of the company. Based on the above criteria, it appears that Glendale Federal Savings offers a package of services which would be most useful to the :ity of Carlsbad at this point. Although only one invest- ment medium would be available for deferred compensation funds, in light of the performance of investment media other than savings accounts, or certificates of deposits, this does not, at this time, appear to be a true disadvantage. If the City Council desires to create a deferred compensation plan at this time and concurs that Glendale Federal be selected as the investment medium for de- ferred compensation plans, the documents necessary to implement such a program are attached. 'i FRANK N. MANNEN Assistant to the Manager FNM:gb Attachments I RESOLUTION NO. 5948 A RESOLUTION OF THE CITY COUNCIL OF TILE CITY OF CARLSBAD, CALIFORNIA ADOPTING AN EMPLOYEE'S DEFERRED COMPENSATION PLAN AND AUTHORIZING THE EXECUTION OF AGREEMENTS RELATED TO SAID PLAN BY THE MANAGER OF THE CITY OF CARLSBAD. BE IT RESOLVED by the City Council of the City of Carlsbad as follows: WHEREAS, the City of Carlsbad has in its employ employees who are and will be rendering valuable services to the City; and WIiEREAS, said employees may desire to defEr income until retirement for the purpose of deferring Federal and State Income Taxes on said income; and WHEREAS, the City Council of the City of Carlsbad has con- sidered the establishment of a Deferred Compensation Plan for the said employees and believes that the adoption of said Plan will enhance the efficiency and morale of the employees and will be in the best interests of the City; and WHEREAS, it is intended that said Plan shall be in accordance with Federal and State law and regulations; and WHEREAS, the City Council finds that it would be for the benefit and in the best interests of the City to approve the proposed Deferred Compensation Plan this day submitted to the City Council. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California that the City Council establish said Deferred Compensation Plan for said employees of the City and that said Deferred Compensation Plan this day submitted to the City Council, which is attached hereto as Exhibit "A" be, and the same is hereby approved and adopted, to be effective this dale and to • II 1 remain in effect until terminated by further resolution of the 2 City Council. 3 BE IT FURTHER RESOLVED THAT City Manager of the City of Carls- 4 bad is hereby appointed to administer the Plan on behalf of the 5 City and is authorized to execute Participation Agreements with 6 eligible officers, officials and employees, and all other Documents 7 and Agreements necessary to implement and administer the Plan. 8 PASSED, APPROVED AND ADOPTED at a regular meeting of the City 9 Council on the — 2nd day of October , 1979 by the following 10 vote, to wit: 11 AYES: Councilmen Packard, Anear, Lewis and Councilwoman Casler 12 NOES: None 13 ABSENT: Councilman Skotnicki 14�i� -dEALD C. PACKARD, Mayor 15 ,L6 ATTEST: 17 ALETHA L. 18 (SBAL) 19 ' 20 r 21 i 22 24 25 26 27 28 l "* , City I ~� Exhibit A to Resolution No.JJ40 CITY OF CARLSBAD v DEFERRED COMPENSATION PLAN SECTION 1. NAME: The name of this Plan is the City of Carlsbad Deferred Compensation Plan (hereinafte-r referred to as the "Plan"). SECTION 2. PURPOSE: The purpose of this Plan is to enable Employees of the City of Carlsbad to defter portions of their compensation and to provide retirement, disability and death benefits. SECTION 3. i DEFINITIONS: For the purpose of this Plan, certain words or phrases used'herein will have the following meanings. Y 3.1 "Employer" means the City of Carlsbad. 3-.2 "Employee" means any officer or employee of the City of Carlsbad. } 3.3 "Participant" means any eligible Employee who elects, pursuant to the Plan, to defer a portion of his/her compensation, and who fulfills the requirements for participation in the Plan. 3.4 "Participation Agreement" shall mean the written agreement by which an Employee elects to become a Participant under the Plan. • 1 3.5 "Beneficiary" may be any person, trust, corporation or firm, or the estate of the Participant, or any combination of the foregoing designated by a Participant to receive benefits under the Plan. Designation shall be by written instrument executed by the Participant unless otherwise provided. Beneficiary may be singular or plural, primary or contingent. 3.6 "Administrator" means the Employer and/or other parties appointed by the Employer to administer the Plan. 3.7 "Compensation" means the total of all amounts which would be paid by the Employer, to or for the benefit of an Employee (if he were not a participant in the Plan) for actual services for the period that he is a Participant. 3.8 "Payroll'•Period" means the work period for which a pay 'check is issued. 3.9 "Includible Compensation" means compensation for services A performed for Employer which is currently includible in gross income, but less any amounts deferred pursuant to a plan described in IRC Section 457 (including but not limited to this Plan) or IRC Section 403(b). 3.10 "Retirement" means retirement from service with the Employer which becomes effective on the first day of the calendar month after Participant meets the age and service requirements for retirement (including "early" or "late" retirement) specified in the applicable retirement policies of the Employer. SECTION 4. PARTTCIPATION IN THE PLAN 4.1 Any Employee designated by the Employer to be eligible may elect to become a Participant in the Plan by executing and filing a Participation Agreement with the Administrator. An election to Participate in the Plan shall become effective with respect to Compensation earned by the Participant during the pay period next following the date of the Participant's election. Such election shall continue thereafter in full force and effect unless revoked by.the Participant. 4.2 Each Participation Agreement shall specify the dollar amount, which is to be deferred pursuant to the Plan and to be withheld out of the Compensation otherwise payable to the Participant for each payroll period. The amount deferred each year may not exceed the lesser of $7,500 or 25$ of Participant's gross Compensation. Such deferred amounts shall be reasonable equal installments totaling not less than ten dollars ($10.00) per payroll period. 4.3 Notwithstanding the provisions of 4.2 herein, during any or all of the last 3 tax years ending before a Participant's normal retirement age the maximum amount deferred annually shall be the lesser of $15,000 or the sum of the maximum amount which can be deferred pursuant tb paragraph 4.2 plus the difference between the amount which could have been deferred in prior years and the amount actually deferred pur- suant to the Plan. 4.4 A Participant may revoke his election to participate in the Plan, and thereby terminate further deferral of his Compen- sation, by executing and filing with the Administrator a notice of revocation at least fourtecn(14) days prior to the effective date of revocation. A former Participant may not rejoin the Plan during the calendar month in which revocation occurred; however, he may elect to become a Participant for subsequent calendar months after a lapse of not less than three (3) months. Nc, amounts shall be payable to an Employee upon revocation of 11%s participation in the Plan unless otherwise provided for in Section 7. 4,5 'A Participant may change the amount of compensation filing be deferred in subsequent: pay periods by executing notice with the Administrator at least 14 days porior•to the -2- DEFERRED COMPENSAT-- . PLAN beginning of such pay period, provided however, that such change may be made not more than four times in a calendar year. 4.6 A Participant may designate in writing a Beneficiary to receive any benefits which may be payable under the Plan upon the death of such Participant. Designation of Beneficiary may be changed by notice in approved form executed and filed with the Administrator. SECTION 5. DEFERRAL OF COMPENSATION 5.1 During the period of participation, the Employer shall not pay the Participant his full compensation, but shall defer payment of such part of his Compensation as the Participant has specified in his Participation Agreement. The Employer shall establish in its records an Individual Deferred Compensation Account ("IDC Account") for each Participant, and a summary of such IDC Accounts, to be identified as a General Deferred Compensation Account ("GDC Account"), to provide a convenient method of measuring its obligations to each and all Participants under the Plan. 5.2 Neither the existence of the Plan nor the IDC Accounts shall be deemed to create a trust, and the Employer shall at all times be the legal and beneficial owner of all assets of said IDC Accounts. 5.3 Neither the existence of the Flail or the IDC Accounts shall entitle any Participant, a beneficiary of any Participant, or a creditor of any Participant to a claim or lien against the assets of the IDC Accounts. The Participant and his beneficiary shall have only the right to receive benefits pursuant to the Plan. SECTION 6. ADMINISTRATION OF THE PLA14 •6.1 The Plan shall be administered by the Administrator under the direction of the Employer. Acting for and in behalf of the Employer, the Administrator may transmit amounts in the IDC ,Accounts to such investment plans as hereafter may be approved by the Employer. In regard to such investments, written agreeients between employer and the institutions accepting funds for investment shall contain at least the following provisions: 6.1(a) Any investment of amounts in the IDC Accounts, including earninos on such amounts, shall be made according to written instructions of the Administrator. 6.1(b) The Employer shall be the. legal and beneficial owner of all amounts invested (as between Employer and Participant). The �-�1��oyer shall hold all certificates, policies and other documents evidencing ownership of the amounts invested, and shall maintain records, -3- DIXERRED COMPENSA'i'' PLAN ^" including records of the IDC Account of each Participant and the GDC Account. 6.1(c) No less frequently than quarterly, the Employer shall be furnished with written reports showing the fair market value and/or the current balance of the amount invested (including interest and dividends accrued, if any), and amounts shown in such reports shall be reflected in each Participant's IDC Account by the Employer. 6.1(d) No less frequently than quarterly, each Participant shall be furnished with a statement showing transactions, earnings and the current balance of the amounts invested fuom his IDC Account. 6.1(e) The Employer shall have the sole right to vote any shares of stock or proxies which it may acquire or be entitled to by investment of IDC Account funds. 6.2 The Administrator shall record promptly and accurately all transactions pertaining to Participants' Deferred Compensation in their IDC Accounts•, and Participant shall be entitled to know the balance in his IDC Account at least quarterly. 6.3 The Employer shall have the sole authority to enforce the Plan and shall be responsible for its operation in accordance with its terms. 6.4 The Employer shall determine all questions arising out of the administration, interpretation and application of the Plan. All determinations shall be conclusive and binding. 6.5 Prior to the time specified in the Plan for payment to Partici- pant each Participant shall elect the time, manner and (if applicable) the amount of benefits to be paid to him, or in the ovent of nis death to his Beneficiary, under the Plan. If no election is made, payment may be made as a lump sum distribution. 6.6 In the event that the Employer should purchase an annuity as a means of investment and distribution of funds in a Partici- pant's IDC Account, the Employer shall be both the owner and the named Beneficiary of such annuity contract. 6.7 If the Plan provides for more than one type of investment objective, a Participant may request a change in preference of investment (as provided in Section 4.4). Such request may be made only with respect to compensation not yet earned and deferred. The Employer may, but is not required to, honor such request. The minimum investment in each type of investment shall be ten dollars($10.00)per Payroll Period. Nothing contained in thie Plan shall be construed as requiring the Employer to invest deferred amounts or as limiting the Employer's discret'-on with respect to *Waking investments. -4- DEFERRED COMPENSIVrION PLAN SECTION 7. BENEFITS The Employer shall pay to the Participant, or to his Beneficiary if applicable, the amount in such Participant's IDC Account as of the month -end following the Participant's termination, retirement, total disability or death. Distribution of Benefits under the Plan will be made, or if in installments shall commence, not later than sixty (60) days after notice to the Administrator of the occurrence of the events or birthday described in Section 7 unless otherwise specifically provided in the Participation Agreement. All distributions shall be subject to any State or Federal taxes required to be withheld. Payment shall be made in accordance with the election made in the Participation Agreement, except in the event of Hardship described in Section 7.4. Installment distributions shall be approximately equal installments which shall be intended to exhaust the balance due Participant or Beneficiary at the expiration of the term over which they will be made. Such installment amounts may be adjusted from time to time to 'take into consideration gains or losses, if -any, from funds invested. Notwithstanding the foregoing if any method elected by the Participant shall result in installment payments of less than $50, the Employer shall make payments on an annual basis aggregating installments other- wise due; or if the balance due Participant or Beneficiary is less than $1,000, Employer shall discharge its obligation by a lump sum payment. 7.1 RETIREMENT: Upon retirement, the full benefits credited to the Participant's IDC Account, plus or minus investment gains or losses, but less any Federal or State taxes required to be withheld, shall be distributed to a Parti- cipant in any one or more of the following ways, as pre - elected at time of enrollment: 7.1(a) In a lump sum. 7.1(b) In monthly, quarterly, or annual payments for a designed period of not less th&,, one year and not more than the remaining years of the Parti- cipant's life expectancy, determined by the Administrator in accordance with standard mortality tables recognized for that purpose. 7.1(c) In payments, under 7.1(a) or 7.1(b) above, postponed by pre -election at time of enrollment until Partici- pant reaches age 55. -5- DEFERRED COMPENSATION PLA14 7.2 OTHER TER14INATION: In the event of termination of employment before retirement for reasons other than those specified in Section 7.3 and Section 7.4, then the full benefits credited to Participant's IDC Account, plus or minus subsequent gains or losses, shall be distributed to him in any one or more of the following ways, pre -elected at the time of enrollment: 7.2(a) In a lump sum. 7.2(b) In monthly payments over a period not to exceed ten (10) years from date distribution begins. 7.2(c) In payments, under 7.2(a) or 7.2(b) above, postponed by pre -election at time of enrollment until Participant reaches age 55. 7.3 TOTAL PERMANENT DISABILITY: In the event of the total permanent disability of a Participant while he is an Employee of the Employer, the employer shall pay to the Participant an amount equal to the balance of the Participant's IDC Account as of the month -end following the Employer's determination of such dis- ability, such amount to be paid in the manner pre -elected by the Participant at the time of enrollment pursuant to the options in Section 7.1, above. ' { 7.4 HARDSHIP: In the event of occurrence to the Participant of an unforseeable emergency event to be determined by the Employer in his sole discretion, the Employer may pay to the Participant ; .all or any portion of the amount in'such Participant's IDC Account as of the month -end following the date when such deter- mination is made. As used herein, emergency event shall mean only a real emergency which has occurred, which is or was beyond control of the Participant, and the occurrence of which has or would cause the Participant great financial hardship. The amount that will be paid out shall be limited.to the amount necessary to alleviate that hardship, Any distribution under this section shall be deemed a .revocation under Section 4.4 and no further deferral of Compensation will be made unless Participant subsequently ra-elects to participate as provided in 4.4. +; 7.5 DEATH: In the event of death of any Participant, either before ! or after termination of employment, then the full benefits j ,credited to his IDC Account shall be distributed to his Bene- ficiary in a manner described in Sections 7.1,(a), 7.1(b) and 7.1(c) as pre -elected at time of enrollment. -6- — ---A a DEFERRED COMPENSATION PLAN SECTION 8. MISCELLANEOUS a 8.1 The contractual obligation of the Employer to the Participant established by the Plan shall not be assignable in whole or part, voluntarily or by operation of law, and no right or interest of a Participant pursuant to the Plan shall be subject to any obligation or liability of such Participant or his Beneficiary, except as provided in the next paragraph hereinbelow. 8.2 'No Participant or other person shall have any legal or equitable right against the Employer except as provided in the Plan, and in no event shall the terms of employment of any Employee or Participant be modified or in any way affected thereby. 8.3 Each Participant herein expressly agrees for himself and his Beneficiary that he shall look solely to the general assets of the Employer for the payment of any such benefit to which he may become entitled under the Plan, and acknowledges that all amounts deferred hereunder shall be available to satisfy the general obligations of the Employer. 8.4 The Plan has been adopted in the State of California and shall be construed and governed and administered in compliance with all applicable State law. 8.5 Captions used in the Plan are for the purpose of convenience only, and shall not limit, restrict or enlarge the provisions of the Plan. 8.6 The Plan shall be binding upon and sh-_1 inure to the benefit of the Employer, its successors and assigns, all Participants and Beneficiaries, and their heirs, and legal representatives. 8.7 As used in the Plan, the masculine or feminine or neuter gender, and the singular or plural number shall each be deemed to include the cthers unless the context clearly indicates other- wise. 8.8 Any notice or other communication required or permitted under the Plan shall be in writing and, if directed to the Employer., shall be sent to the Administrator at his principal office; and, if directed to a Participant or a Beneficiary, shall be sent to such Participant or Beneficiary at his last known address as it appears on the Employer's records. Such notice shall be deemed given when mailed. 8_9 Deductions for Participant's contributions to retirement shall be made without reference to amounts deferred pursuant to the Plan. 8.10 An approved leave of absence with pay shall not affect agree- ments to participate in the Plan. ! -7- DT-;FL••RMU COMPENSATION PLAN 8.11 An approved leave of absence without: pay sh-ll be considered to be a temporary suspension of participation in the Plan. Participation shall be automatically reinstated as of the first day of the next Pay Period subsequent to the termination of such leave of absence status. 8.12 The Employer shall make no 'loans or advances to the Participant or Beneficiary based upon IDC Accounts, described herein, or upon any other obligations under the Plan. SECTION 9. TERMINATION OF PLAN BY B14PLOYER The Plan may be amended or terminated by the Employer at any time, or the Employer may, without amending or terminating the Plan, cease to set aside assets under the Plan. No amendment or termination of the Plan, and no cessation of the setting aside of assets by the Employer shall reduce or impair the rights of any Participant or Beneficiary which may already have accrued. 9.1 If the Plan is terminated by the Employer, the Employer may, elect to distribute, in the same manner to all Participants, amounts equal to the balance of their•IDC Accounts as of the month -end following such termination. 9.2 If Employer does not elect to pay accrued benefits on termination of the Plan, he shall cease all deferrals of Compensation, but payments of benefits shall be made pursuant to the applicable provisions of Section 7 of the Plan and the irrevocable election of, the various Participation Agreements then in effect. 1 DEFERRED COMPENSATION INVESTMENT AGREEMENT E i t 3 1 ` GLENDALE FEDERAL SAVINGS & LOAN ASSOCIATION ` i 4 • i DEFERRED COMPENSATION INVESTMENT AGREEMENT, The City of Carlsbad (employer") has established the City of Carlsbad Deferred Compensation Plan ("Plan"'), a copy of which is attached hereto as Exhibit "A" and has designated the City Manager of the City of Carlsbad ("Administrator") to administer the Plan and thin Agreement on be- half of the Employer. Glendale Federal Savings and Loan Association ("Glendale Federal") is a Federal Savings and Loan Association, a corporation duly organized and existing under the laws of the United States, and is authorized by California law for the.investment by local public agencies of deferred compensation funds. „ The Agreement sets forth the manner by which Plan funds will be invested with Glendale Federal, and Glendale Federal in Accordance with the applicable Laws and Regulations, will accept such funds for investment and will account for such funds on a regular basis. 1. Glendale Federal agrees to accept for investment the funds sent to Glendale Federal in accordance with the Plan, and to estab- lish and maintain savings accounts in accordance with the•instructions of the Administrator and the provisions of this Agreement. All earnings on such accounts will be credited to such accounts in accord- ance with prevailing practice at Glendale Federal, unless otherwise instructed by the Administrator. i • - 1 - 2. Glendale Federal shall establish, from time to time, savings accounts at a branch or branches of Glendale Federal upon• instruction of the Administrator for investment of Plan funds sent to,it on behalf of the Employer. The accounts will be titled: City of Carlsbad Deferred Compensation The Administrator shall have the sole custody of all passbooks or other indices of ownership, of said accounts and no investments or withdrawal of funds shall be made in such accounts except in accord- ance with the instructions of the administrator and pursuant to this Agreement. 3. On either a bi-weekly, semi-monthly, or monthly basis, funds shall be forwarded to Glendale Federal to be invested pursuant to this t Agreement for Participants in the Plan, together with a list indicating to which Employer accounts these deductions should be credited. Promptly upon receipt of said funds, Glendale Federal shall make the apprppriate credits to the applicable accounts. The legal and beneficial ownership of all such funds shall at all times be vested in the Employer. 4. The Employer shall have the same rights and obligations in connection with any of such invested funds as any other investor having the same type of savings accounts with Glendale Federal. Nothing contained herein shall be construed as requiring any Plan funds to be invested with Glendale Federal or to remain invested for any specified period of time except as may be required by applicable L;r%q or Regulation or the terms of the applicable savings account Agreement. .. 2 _ I S he funds shall be dcposited in 30 The parties intend that t (or 31) day certificates of deposit as currently permitted by FHLBB regulation, which shallmature on the da Y of each month • and shall automatically,be renewed until the same day of the next succeeding month. ?additions to or distributions from said account shall be made on the monthly maturity date upon instruction of the Administrator. 5. The initial interest rate to be paid by Glendale Federal on this account is compounded daily - paid quarterly, however, it is understood such rate is subject to change from time to time as required by Federal Law or Regulation or by action of the Board of Directors of Glendale Federal. Funds received between maturity dates shall be de- posited in an interest bearing passbook account and shall automatically ` be added to the 30 (or 31) day certificate account on the monthly s maturity date. Glendale Federal shall notify the Administrator quarterly ing the next ensuing calendar quarter. of the rate which will be paid dur 6, On a calendar quarterly basis, Glendale Federal will pre- pare a statement of activity in duplicate for each Participant's deferral and earnings amount. Such statements will recap.al7, activity - on the accounts during the period. Statements will be sent to the attention of the Administrator. 7. Glendale Federal shall, from time to time, disburse.funds from the applicable account or accounts as instructed by the Admin- istrator in accordance with this Agreement. - 3 -- 8. The services to be made available by Glendale Federal under this Agreement will be performed by Glendale Federal without any charge to the Administrator, the, Employer, or the Participants under the Plan. inated at any time by either party 9. This Agreement may be term hereto 'upon six (6) months' advance notice in writing to the other party. r 10. All notices given pursuant to this Agreement shall be in writing and may be sent by regular or certified mail, postage prepaid, addressed as follows: Employer: City Manager, City of Carlsbad 1200 Elm Avenue' Carlsbad, California 92008 , - 1 V.O�nt`1c Administrator: f�i #,L�n r t. or 1 Glendale Federal Savings and Loan Association, Business Development Division, 401 North Brand Boulevard, Glendale, California 91209. 11. Glendale Federal shall be entitled to rely on the written instruction of the Administrator designated by the Employer and shall not be required to act upon any oral instructions. 12. This Agreement may be modified by a writing executed by both parties. 13. This Agreement shall be interpreted at all times by the laws of the State of California. . - 4 - Administrator: Employer: ' City Manager of the City •of Carlsbad City of Carlsbad 1200 Elm Avenue, Carlsbad, CA 92008 1200 Elm Avenue, Carlsbad, CA By , it Mana r (Interim) Mayor By ..1j"O'c . Ci ty Cl erk GLENDALE FEDERAL'SAVxNGS AND LOAN ASSOCIATION By ' Title: By Title: Approved as to Form: Employer's Attorney Dated:' At: • CALIFORNIA ��. G_ CITY OF CARLSEi.AL` DEFERRED COMPENSATION PLAN PARTICIPATION AGREEMENT THIS AGREEMENT, made by and between the City of Carlsbad, hereinafter referred to as "City" and hereinafter referred to as "Employee." WHEREAS, the City has established the "City of Carlsbad Deferred Compensation Plan," hereinafter referred to as "Plan" for the benefit of its employees; and WHEREAS, the Plan provides that any Employee, subject to the limitations established in the Plan of the City, may elect to join and become a Participant in the Plan upon executing and filing with the City a Participation Agreement, and WHEREAS, the 7--uployee desires to join and become a Partici- pant in the Plan, NOW, THEREFORE, the City and the Employee agree as follows: 1. City has provided the Employee with a current copy of the Plan. 2. Employee hereby elects to become a Participant in the Plan and to defer payments pursuant to the Plan as follows: a. Amount of, Compensation per Payroll Period $ (not less than $260 per year). The maximum amount deferred annually may not exceed the lesser of $7,500 or 25% of gross Compensation. See Plan for further description. 3. Employee agrees that his rights to the Deferred Compen- sation shall be governed by all terms and conditions of the Plan. 4. The'Employee designates his investment objective to be Savings Accounts and Certificates of Deposit. City may recognize this objective but is not required to do SO. -1- Under Section 7 of the Plan, the Employee elects the following distribution of benefits: At Retirement (1) (_) Lump Sum (2) (,_) Installments payable over years ( no t gto exceed (^) Monthly (, _) Quarterly (. _) Annually (3) (�) Installments payable for years of Life -` Expectancy . (Number of years determined by Standard American mortality tables) (�) Monthly Quarterly (^) Annually — t (4) (`) Postpone distribution election to age 55. At Other Termination (except total disability (1) (_) Lump Sum (2) (_) installments payable monthly over ______years (not to exceed 10 years) (3) (`-) Postpone distribution election to age 55. At Death to Beneficiary (1) (_) Lump Sum (2) (�} Installments payable over years (not to exceed 10 yaara) (_) Monthly (_) Quarterly (_) Annually I -2- ■�- r'- _ . C-- The Employee designates the following persons as his beneficiaries to receive, in the event of his death, any benefits to which he is entitled under the Plan: Name of Beneficiary a. b. C. Address of Beneficiary d. If more than one person is named as Beneficiary, any payments to which they may be entitled shall be paid as follows (choose one): ( ) Wholly to the person designated as the first Beneficiary above, provided (she) - (he) survives me, and if (she) -(he) does not survive me, in equal shares to the remaining Beneficiaries who survive me. ( ) In equal shares, to such of the designated Beriifioiari:es as shall then be living. I hereby reserve the right to change or revoke this Beneficiary designation without notice to any Beneficiary. Dated: - 19 CITY OF CARLSB_U EMPLOYER By Its City r anager EMPLOYEE I hereby agree to the designation of Beneficiary as shown above. (Spouse to sign only if not named above as sole first beneficiary. SPOUSE OF EMPLOYEE -3-