HomeMy WebLinkAbout2012-07-10; City Council; 20947; Approve APPLE Plan Retirement BenefitsCITY OF CARLSBAD - AGENDA BILL
AB#
MTG.
DEPT.
20.947
7/10/12
HR
Approve the City of Carlsbad APPLE Plan
to provide retirement benefits for hourly
part-time employees in lieu of Social
Security or the existing Lincoln Financial
Advisors Plan.
DEPT. HEi _
CITYATTY.
CITY MGR.
RECOMMENDED ACTION:
Adopt Resolution No. 2012-151 approving the City of Carlsbad Accumulation Program for
Part-Time and Limited-Service Employees (APPLE) Plan to provide retirement benefits for
hourly part-time employees in lieu of Social Security or the existing Lincoln Financial Advisors
Plan.
ITEM EXPLANATION:
As an employer, the City of Carlsbad is required to provide a retirement vehicle for all
employees. All full time employees are enrolled in the CalPERS retirement plan. Currently,
most hourly part-time employees are enrolled in Social Security. Until January 2005 the City
offered a 457 plan provided by Lincoln Financial Advisors ("Lincoln") to hourly part-time
employees as an alternative to Social Security. There are 65 hourly part-time employees who
were "grandfathered" in and are contributing to the Lincoln 457 plan.
Council can reduce retirement costs by establishing a new APPLE 457 plan to be used in lieu of
Social Security. The table below shows the difference in cost between these plans.
Social
Security
APPLE
457
City contribution (% of payroll) 6.20% 3.75%
Employee contribution* (% of payroll) 4.20% 3.75%
* In 2011 and 2012 there was a temporary reduction in ihe employee cost for social security. In
2013 it will return to 6.2%.
In order to streamline administration ofthe retirement plan for hourly part-time employees, all
Lincoln 457 plan participants would be transferred to the APPLE 457 plan. The City
contribution to the Lincoln and APPLE 457 plans are the same (i.e., 3.75% of payroll).
The APPLE 457 Plan would also be used in lieu of Social Security by council-appointed officials
(e.g.. Planning Commissioners) and by elected officials who are not contributing to the
CalPERS retirement plan.
DEPARTMENT CONTACT: Debbie Porter 760-602-2441 debbie.porter@carlsbadca.gov
FOR CITY CLERKS USE ONLY.
COUNCIL ACTION: APPROVED •
DENIED •
CONTINUED •
WITHDRAWN •
AMENDED •
CONTINUED TO DATE SPECIFIC
CONTINUED TO DATE UNKNOWN
RETURNED TO STAFF
OTHER-SEE MINUTES
COUNCIL RECEIVED THE
REPORT/PRESENTATON
Resolution Failed due to a lack of
maioritv. SAA MiniitAS for riafails
July 10. 2012
•
•
•
Page 2
In order to allow 457 plan contributions to be made on a pre-tax basis, Internal Revenue Code
section 414(h)(2) permits the City to "pick up" the employee contributions and to treat them as
employer contributions. "Employee contributions" means those contributions to the 457 plan
which are deducted from the salary of employees and are credited to individual employees'
accounts.
FISCAL IMPACT:
Based on calendar year 2011 payroll, the estimated annual savings to the General Fund due to
using the APPLE 457 plan in lieu of Social Security for hourly part-time employees is $60,000.
This savings is appropriated in the Fiscal Year 2012-13 proposed operating budget. There is no
fiscal impact related to replacing the Lincoln 457 plan with the APPLE 457 plan.
ENVIRONMENTAL IMPACT:
The proposed action does not qualify as a "project" under the California Environmental Quality
Act (CEQA) per State CEQA Guidelines Section 15378 as it does not result in a direct or
reasonably foreseeable indirect physical change in the environment.
EXHIBITS:
1. Resolution No. 2012-151
2. APPLE Participation Agreement
3. APPLE Plan Administrative Services Agreement
4. Unallocated Fixed Contract Application, Acceptance & New Business Agreement
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1 RESOLUTION NO. 2012-151
2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, ADOPTING THE CITY OF
^ CARLSBAD ACCUMULATION PROGRAM FOR PART-
TIME AND LIMITED-SERVICE EMPLOYEES (APPLE)
PLAN TO PROVIDE RETIREMENT BENEFITS IN LIEU OF
5 COVERAGE UNDER SOCIAL SECURITY OR THE
EXISTING LINCOLN FINANCIAL ADVISORS PLAN, AND
6 AUTHORIZING AND DIRECTING THE HUMAN
RESOURCES DIRECTOR TO EXECUTE ALL
7 NECESSARY DOCUMENTS
8 WHEREAS, Section 11332 of the Omnibus Budget Reconciliation ACT of 1990
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("OBRA '90") extends Social Security retirement benefit coverage to employees of state
and local governments who are not covered by a state or local retirement system and
subjects the employer and employee to Federal Insurance Contributions Act ("PICA")
taxes on the employee's wages; and
WHEREAS, OBRA '90 excludes from the requirement of Social Security
coverage governmental employees who are covered by a compulsory retirement
15 system of a state or local government; and
17 WHEREAS, California Government Code section 53216, et seq., authorizes a
18 governmental employer to establish and fund a pension Plan covering its employees on
a compulsory basis; and
WHEREAS, certain hourly part-time employees of the City of Carlsbad are not
currently covered under any other retirement program through the City or the State of
California in lieu of coverage under Social Security, as permitted by OBRA '90; and
WHEREAS, the Council desires to adopt a compulsory retirement Plan, qualified
under section 457 of the Internal Revenue Code of 1986 ("the Code"), for the hourly
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25 part-time employees, council-appointed officials and elected officials in lieu of providing
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1 WHEREAS, the City of Carlsbad currently provides a PICA alternative plan to
2 certain hourly part-time employees through the Lincoln Financial Advisors; and
^ WHEREAS, the Council desires to continue to provide a tax-qualified PICA
alternative plan for said employees, but to replace the existing Lincoln Financial
Advisors Trust with the Accumulation Program for Part-Time and Limited-Service
Employees ofthe City of Carlsbad ("APPLE Plan"); and
WHEREAS, Code section 414(h)(2) permits the City to pick up the employee
portion of contributions to a section 457 Plan and to treat them as employer
IQ contributions; and
11 WHEREAS, such "picked up" contributions are not taxable to the employee until
12 distributed; and
13 WHEREAS, the Council has reviewed the Accumulation Program for Part-time
and Limited-service Employees (the "APPLE Plan") provided by Keenan & Associates.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Carlsbad, California, as follows:
1. That the above recitations are true and correct.
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19 2. That the APPLE Participation Agreement, APPLE Plan Administrative Services
20 Agreement and Unallocated Fixed Contract Application, Acceptance & New
21 Business Agreement referred to in the recitals above are incorporated in this
22 resolution by reference.
3. That the Council hereby adopts the City of Carlsbad APPLE Plan to provide
retirement benefits to hourly part-time employees of the City in lieu of coverage
under Social Security and as an amendment to the existing Lincoln Financial
Advisors Plan replacing the Lincoln Financial Advisors Plan in full, to be effective
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1 as soon as administratively possible following adoption of this resolution except
2 that current hourly part time employees shall be given notice and a one-time
^ opportunity to elect to continue to participate in social security. The Human
Resources Director shall be responsible to implement this provision.
4. That the Council hereby designates the City as the Plan Administrator of the
APPLE Plan.
5. That the Council hereby designates the City as the Trustee of the APPLE Plan.
9 6. That the Council hereby authorizes MidAmerica Administrative Solutions
10 ("MidAmerica"), to execute, on behalf of the City, the APPLE Plan and any other
1 ^ documents necessary to carry out the provisions of the APPLE Plan.
7. That the Council hereby authorizes MidAmerica to execute, on behalf of the
Employer, the APPLE Plan and any other documents necessary to carry out the
provisions of the APPLE Plan; to enter into contracts with Keenan & Associates
to provide ongoing administrative consulting services in connection with the
operation of the Plan; to arrange funding of the Plan through American United
18 Life (AUL); to communicate the Plan to eligible employees of the City; and to
19 perform related services in connection with the APPLE Plan.
8. That the Council hereby terminates the City's participation in the Lincoln
Financial Advisors Plan and removes Lincoln Financial Advisors as the Trustee
ofthe Plan.
9. That Keenan & Associates will act as Broker for American United Life Insurance
Company's 3121 Alternative to Social Security program, and provide consultant
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1 and broker services for the APPLE Plan as outlined in the Keenan & Associates
2 Service Agreement.
10. That the Council hereby removes Lincoln Financial Advisors as Trust
Administrator and appoints MidAmerica as Third Party Administrator of the
APPLE Plan.
11. That the Council directs the transfer of the plan assets held by Lincoln Financial
Advisors under the Lincoln Financial Advisors Plan and Trust to AUL, as
9 custodian for the successor Trustee, the City of Carlsbad for the benefit of the
10 City of Carlsbad APPLE Plan, to occur within 30 days after July 1, 2012, or a
11 date mutually agreed upon by Lincoln Financial Advisors and the City of
Carlsbad. This will facilitate the ability of MidAmerica to process Plan
distributions with minimal delays to Plan Participants.
12. That the Council directs the transfer of plan participant's account information
from Lincoln Financial Advisors to MidAmerica, to occur within 30 days after July
1, 2012 or a date mutually agreed upon by Lincoln Financial Advisors and the
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Ig City of Carlsbad in order for MidAmerica to process Plan distribution with minimal
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20 13. That the Council has determined that it is appropriate for the City to "pick up" the
employee portion of contributions to the APPLE Plan so that each participant of
the Plan shall make contributions to the Plan on a pretax basis, as permitted
under IRS Section 414 (h) (2).
14.That the City will implement the "pick-up" provisions of IRC Code section
414(h)(2) by making employee contributions to the Plan on behalf of its
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2q employees who are participants in such Plan. "Employee contributions" shall
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1 mean those contributions to the APPLE Plan, which are deducted from the salary
2 of employees and are credited to individual employees' accounts.
15. That the contributions made by the City to the APPLE Plan, although designated
as employee contributions, will be paid by the Employer in lieu of contributions by
the employees who are participants in the APPLE Plan.
16. That employees shall not have the option of choosing to receive the contributed
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g amounts directly instead of having them paid by the City to the APPLE Plan.
9 17. That the City shall pay to the APPLE Plan the contributions designated as
10 employee contributions from the same source of funds that is used to pay
employees'salary.
18. That the amount of the contributions designated as employee contributions and
paid by the City to the APPLE Plan on behalf of an employee shall be the entire
contributions required ofthe employee under the Plan.
19. That the Human Resources Director is authorized to execute, on behalf of the
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17 City, any additional and required documents with MidAmerica, Keenan &
18 Associates and American United Life Insurance Company (AUL) in furtherance
19 of the purpose and intent of this resolution.
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1 NOT PASSED, APPROVED OR ADOPTED at a Regular Meeting of the City
2 Council of the City of Carlsbad on the 10*^ day of July 2012, by the following vote to wit:
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AYES: Council Members Kulchin, Douglas.
NOES: Council Members Hall, Packard.
ABSENT: Council Member Blackburn.
11 MATT HALL, Mayor
12 ATTEST:
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LORRAINE M. WOOD, City Clerk
(SEAL)
RESOLUTION FAILED DUE TO A LACK OF MAJORITY.
SEE MINUTES FOR DETAILS.
APPLE PARTICIPATION AGREEMENT
This Services Agreement ("Agreement") is made and entered into by and between City of
Carlsbad ("Employer") and Keenan & Associates ("Keenan"), as of July 1, 2012 ("Effective
Date").
RECITALS
WHEREAS, Keenan & Associates ("Keenan") has established the Accumulation Program for Part-
Time and Limited-Service Employees ("APPLE") which offers public entities a means of funding an
asset accumulation program for their part-time employees;
WHEREAS, MidAmerica Administrative Solutions, Inc. ("MidAmerica"), is the exclusive provider
of administrative services and technical support for the Social Security Altemative plans established
by APPLE participants in accordance with the provisions of Section 3121 of the Internal Revenue
Code (hereinafter referred to as the "APPLE Plan");
WHEREAS, Keenan provides certain services to APPLE participants and acts as broker of record
for annuities purchased by APPLE participants; and
WHEREAS, Employer desires to participate in APPLE, and desires to utilize the services of
Keenan.
THEREFORE, IN CONSIDERATION OF the mutual covenants herein contained and for
other good and valuable consideration the receipt and sufficiency is hereby acknowledged, it is
mutually agreed as follows:
AGREEMENT
1. TERM
A. This Agreement shall be for an initial term of one (1) year (the "Initial Term"), beginning
with the execution date of this Agreement, and shall continue from year to year
thereafter (each year a "Successive Term" and, collectively with the Initial Term, the
"Term"), unless and until terminated by either party hereto upon written notice to the
other in accordance herewith.
2. KEENAN SERVICES AND RELATIONSHIP OF THE PARTIES
A. Employer elects and Keenan shall provide the services indicated in Exhibit A attached
hereto and incorporated herein.
B. The relationship of Keenan and Employer shall be that of an independent contractor
and Keenan shall at all times remain responsible for its own operational and personnel
expenses. Under no circumstance shall any employee of one party look to the other
party for any payment or the provision of any benefit, including without exception,
workers' compensation coverage. Except as may be expressly set forth in or
Keenan & Associates - License #0451271
APPLE Participation Agreement
Confidential For Employer Use Oniy
(Rev. ()5/.31/12)
Page 1 of 9
K
contemplated by this Agreement, neither party shall have the right to act on behalf of the
other, or to bind the other to any contract or other obligation.
C. In providing the Services, Keenan shall act exclusively in an advisory and consultative
capacity. Employer shall at all times have the right to determine whether to act on or
implement the information, recommendations, and suggestions provided by Keenan,
and the manner by which any such action or implementation shall be undertaken.
Except for Keenan's responsibilities with respect to funds obtained from or on behalf of
Employer, Keenan shall not be a fiduciary of Employer.
D. Keenan shall not provide any legal, tax, or accounting service, advice, or opinion, and the
Services shall not be interpreted as representing any such service, advice or opinion.
Employer shall consult its own attorney on all legal issues and its own tax and
accounting experts on all tax, accounting, and financial matters relating to its operations,
including without limitation, the establishment, implementation and operation of the
APPLE Plan.
E. In providing its Services, Keenan shall comply with all applicable state and federal laws
and regulations, and obtain and maintain all necessary licenses, registrations, and/or
permits necessary for the performance of its duties under this Agreement.
F. The Services provided to Employer are non-exclusive and Keenan reserves the right to
provide the same or similar services to other Employers who may be in the same
industry, business, or service as Employer.
3. EMPLOYER'S DUTIES AND RESPONSIBILITIES
A. Employer shall retain decision-making authority for its APPLE Plan, and shall manage
the day-to-day activities of the APPLE Plan, except for those duties and/or functions
expressly assigned to Keenan under this Agreement or to Keenan under the APPLE
Administrative Services Agreement executed contemporaneously herewith.
B. Employer shall provide Keenan with timely access to such information and individuals,
including its outside advisors and consultants, as may be necessary for Keenan to
perform the Services. Keenan shall not be responsible for any delay in its performance
that results from the failure of Employer, or any person acting on behalf of Employer, to
make available any information or individual in a timely manner.
C. All information provided to Keenan, either in anticipation of or during the term of this
Agreement, shall be complete and accurate, and that Keenan may rely upon such
information.
D. Employer shall execute the Broker of Record Designation attached hereto as Exhibit B.
Keenan & Associates - License #0451271
APPLE Participation Agreement
Confidential For Employer Use Only
(Rev. 05/31/12)
Page 2 of 9
K MIS
4. COMPENSATION
A. As its sole compensation for its Services, Keenan shall receive commissions from the
annuit)^ carrier as provided in Exhibit C. Employer shall have no responsibility for the
payment of any such commission to Keenan. Keenan's annual commissions may be
increased from to year in accordance with the increase in the Consumer Price Index.
B. Keenan shall comply with aU applicable state and/or federal laws and regulations
regarding disclosure of compensation. We embrace industry efforts for transparency and
believe it is important that Employers have access to information that may be relevant to
their choice of insurance products, including the cost of such insurance and services,
and, the compensation that may be direcdy or indirecdy paid to Keenan in connection
with the products or services that are selected. If you have questions regarding any of
these items or desire additional information, you may contact your Keenan account
representative to discuss this matter in more detail.
5. INSURANCE
Keenan shall procure and maintain during the term of this Agreement the following
insurance coverages, and shall provide certificates of insurance to Client upon Client's
request.
A. Workers' Compensation: Coverage in conformance with the laws of the State of
California and applicable federal laws;
B. General Liability: Coverage (including motor vehicle operation) with a One Million
Dollar ($1,000,000) limit of liability for each occurrence and a Two Million Dollar
($2,000,000) aggregate limit of liability; and
C. Errors and Omissions: Coverage with a One Million Dollar ($1,000,000) limit of
liability for each occurrence and a Two Million DoUar ($2,000,000) aggregate limit of
liability.
D. Crime: Coverage with a One Million DoUar ($1,000,000) limit of liability for each
occurrence and a Two Million Dollar ($2,000,000) aggregate limit of liability.
6. INDEMNIFICATION
If either party breaches this Agreement, then the breaching party shall defend, indemnify and
hold harmless the non-breaching party, its officers, agents and employees against all claims,
losses, demands, actions, liabilities, and costs (including, without limitation, reasonable
attorneys' fees and expenses) arising from such breach. In addition, if Keenan (i) becomes
the subject of a subpoena or is otherwise compelled to testify or (ii) becomes the subject of a
claim, demand, action or liability brought or asserted by one of Client's employees. Plan
beneficiaries, or Plan vendors ("Third-Party Demand") relating to the Services and such
Keenan & Associates - License #0451271
APPLE Participation Agreement
Confidential For Employer Use Only
(Rev. 05/.M/12)
Page .3 of 9
K MES
Third-Party Demand is not a direct result of Keenan's negligence or willful misconduct, then
Client shall defend, indemnify and hold Keenan harmless from aU losses, payments, and
expenses incurred by Keenan in resolving such Third-Party Demand.
7. LIMITATION OF LIABILITY
Notwithstanding anything to the contrary in this Agreement, in no event shall either party be
liable for any punitive damages, fines, penalties, taxes or any indirect, incidental, or special
damages incurred by the other party, its officers, employees, agents, contractors or
consultants whether or not foreseeable and whether or not based in contract or tort claims
or otherwise, arising out of or in connection with this Agreement even if advised of the
possibility of such damage. Keenan's liability under this Agreement shall further be limited
to, and shall not exceed, the amount of its available insurance coverage, but not exceeding
the limits of coverage outlined in Section 5.
8. DISPUTE RESOLUTION
Disputes arising out of or relating to this Agreement shall first be resolved by good faith
negotiations by representatives from the parties with decision-making authority. If either
party determines that the dispute cannot be resolved through informal negotiation then the
dispute shall be submitted to non-binding mediation. The site of the mediation and the
selection of a mediator shall be determined by mutual agreement of the parties. The site of
the mediation shall be San Diego County, California. If the dispute is not resolved through
mediation within sixty^ (60) days foUowing the first notification of a request to mediate, then
either party shall have the right to pursue legal action in the State Courts of California.
Venue shall be in San Diego County.
9. TERMINATION
A. This Agreement may be terminated upon the occurrence of any of the following events:
i. By either party without cause or penalty upon ninety (90) days written notice to
the other party;
ii. By either party upon the dissolution or insolvency of a party to this Agreement;
iii. By either party following the filing of a bankruptcy petition by or against either
party (if the petition is not dismissed within sixty (60) days in the case of an
involuntary bankruptcy petition);
iv. If the application of any law, rule, regulation, or court or administrative decision
prohibits the continuation of this Agreement or would cause a penalty to either
party if the Agreement is continued, and if the Agreement cannot be amended to
conform to such law, rule, regulation, or court or administrative decision in a
Keenan & Associates - License #0451271
APPI,E Participation Agreement
Confidential For Employer Use Only
(Rev. 05/.M/12)
Page 4 of 9
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manner that would preserve the original intent of the parties with respect to their
rights and duties under this Agreement; or
V. By the non-breaching party if a breach of this Agreement is not cured within
thirty (30) days foUowing receipt of written notice of the breach from the non-
breaching party.
B. Termination of this Agreement shaU terminate Employer's participation in APPLE,
and shaU Hkewise terminate the Administrative Services Agreement entered into
between Employer and MidAmerica. Neither Keenan nor MidAmerica (except as
specificaUy provided for under the Administrative Services Agreement) shaU be
obligated to provide any further APPLE service as of the termination date of this
Agreement. It shaU be the sole responsibiUty of the Employer to provide, direcdy or
through an alternate service provider, the services provided by Keenan and/or
MidAmerica in conjunction with its 3121 Social Security Alternative Plan.
AdditionaUy, the termination of this Agreement and the subsequent termination of
MidAmerica Administrative Services Agreement may result in the termination of the
APPLE group annuity contract. In such event, APPLE Plan assets may be subject to
surrender charges if so stated in the carrier's group annuity contract.
10. GENERAL
A. This Agreement, its recitals and aU exhibits attached to the Agreement contain the entire
understanding of the parties related to the subject matter covered by this Agreement and
supersede aU prior and coUateral statements, presentations, communications, reports,
agreements or understandings, if any, related to such matter(s).
B. This Agreement is made for the benefit of the parties and is not intended to confer any
third party benefit or right. The enforcement of any remedy for a breach of this
Agreement or claim related to the Services may only be pursued by the parties to this
Agreement.
C. No modification or amendment to this Agreement shaU be binding unless it is in writing
and signed by authorized representatives from both parties. Any waiver or delay by a
party in enforcing this Agreement shaU not deprive that party of the right to take
appropriate action at a later time or due to another breach. This Agreement shaU be
interpreted as if written jointiy by the parties.
D. Any provision determined by a court of competent jurisdiction to be partiaUy or whoUy
invaUd or unenforceable shaU be severed from this Agreement and replaced by a vaHd
and enforceable provision that most closely expresses the intention of the invaUd or
unenforceable provision. The severance of any such provision shaU not affect the vaHdity
of the remaining provisions of this Agreement.
E. Neither party shaU be Uable or deemed to be in default for any delay or faUure in
performance under this Agreement resulting, directiy or indirecdy, from acts of God,
Keenan & Associates - License #0451271
.APPLE Participation Agreement
Confidential For F^mployer Use Only
(Rev. 05/31/12)
Page 5 of 9
civU or miUtary authority, acts of public enemy, war, accidents, fires, explosions,
earthquakes, floods, power outages, faUure of computer systems, machinery or suppHes,
vandaUsm, strikes, or other work interruptions, or any simUar or other cause that is
beyond the reasonable control of either party'. Each party shaU make good faith efforts
to perform under this Agreement in the event of any such circumstances, and shaU
resume fuU performance once the cause of the delay has abated.
F. AU notices hereunder shaU be in writing and sent to the parties at the addresses as set
forth below, or to such other individual or address as a party may later designate. Notices
shaU be sent via personal deUvery, courier service. United States maU (postage pre-paid,
return receipt requested), express maU service, electronic maU, or fax. Notice shaU be
effective when deUvered, or if refused, when deHvery is attempted. Notices deUvered
during non-working hours shaU be deemed to be effective as of the next business day.
If the notice relates to a legal matter or dispute, a copy shaU be sent to:
Keenan & Associates
2355 Crenshaw Blvd., Ste. 200
Torrance, CA 90501
Attn: Legal Department
Fax: (310) 533-0573
G. Neither this Agreement nor Keenan's duties hereunder may be assigned without the
prior written approval of Employer.
H. This Agreement may be executed in counterparts and by fax signatures and each shaU be
deemed to be an original.
I. Each person signing this Agreement on behalf of a party represents and warrants that he
or she has the necessary authority to bind such party and that this Agreement is binding
on and enforceable against such party.
Citv of Carlsbad Keenan & Associates
Signature: Signature:
mi Matt Hall By: J. Daniel Keenan
Title: Mayor Title: Senior Vice President
Address 1635 Faraday Avenue
Carlsbad, CA 92008 Address 2355 Crenshaw Blvd., Ste. 200
Torrance, CA 90501
Phone: 760-602-2441 Phone 310-212-0363
Fax 760-602-8554 Fax 310-533-1329
Attention Debbie Porter Attention J. Daniel Keenan
Keenan & Associates - License #0451271
APPLE Participation Agreement
Confidential For Employer Use Only
(Rev. 05/31/12)
Page 6 of 9
EXHIBIT A
KEENAN'S SERVICES
Keenan shaU:
1. Coordinate the ongoing activities of APPLE;
2. Select vendors to provide products and services to the APPLE program ("APPLE Vendors");
3. Evaluate and review the performance of the APPLE Vendors;
4. In its discretion, remove, replace or change APPLE Vendors;
5. Act as Uaison between Employer and the APPLE Vendors;
6. Act as Broker in securing one or more group annuity contracts for Employer's APPLE Plan(s);
7. Conduct periodic meetings with Employer to review the status of its APPLE Plan;
8. Inform Employer of any changes affecting the APPLE program, including, without limitation,
any change in APPLE Vendors;
9. Coordinate the services of the APPLE Vendors;
10. Assist Employer in the implementing of the APPLE Plan;
11. Provide ongoing consultation to APPLE participants;
12. Work with the APPLE Vendors to resolve any customer service issues;
13. Review communication, sales, marketing and customer service materials prepared by APPLE
Vendors;
14. Assist Employer in informing its employees about the avaUabiUty of the APPLE Plan; and
15. Assist Employer in providing educational programs about its APPLE Plan.
Keenan & Associates - License #0451271
APPLE Participation Agreement
Confidential For Employer Use Only
(Rev. 05/31/12)
Page 7 of 9
EXHIBIT B
BROKER OF RECORD DESIGNATION
This letter confirms that as of July 1, 2012, the organization Usted below ("Employer") has
appointed Keenan & Associates ("Keenan") as the Broker of Record in connection with the group
annuity contract(s) to be issued to Employer as a participant of APPLE.
It is understood and agreed that American United Life Insurance Company ("AUL") is the current
exclusive provider of group annuity products for APPLE Plans.
As long as Employer is a participant in APPLE, it shaU not seek to acquire annuity products directiy
from any insurance carrier or through any other broker for its APPLE Plan.
Keenan is authorized to provide a copy of this letter to AUL, and/or any subsequent APPLE group
annuity provider, to demonstrate Keenan's authority to obtain one or more annuities for Employer's
APPLE Plan. This appointment rescinds any and aU previous appointments Employer may have
made with respect to its APPLE Plan, and shaU remain in fuU force and effect untU Employer ceases
to be a participant in APPLE.
Employer authorizes Keenan to provide representatives of prospective insurers and other coverage
providers with aU information regarding Employer, its operations, employees (i.e., census data) and
financial status as may be necessary for AUL, and/or any subsequent APPLE group annuity^
provider, to issue the APPLE group annuity contract to Employer.
Acknowledged and agreed to by:
Citv of Carlsbad Keenan & Associates
Signature: Signature:
By: Matt Hall By: J. Daniel Keenan
Title: Mayor Title: Senior Vice President
Keenan & Associates - License #0451271
.'XPPLF'; Participation Agreement
Clonfidential For Employer Use Oniy
(Rev. 05/31/12)
Page 8 of 9
K MM.
EXHIBIT C
FEES AND COMMISSIONS*
During the first year of the Program, the group annuity carrier shaU pay a total commission of 3.0%.
Keenan and MidAmerica shaU each receive half of the total commission (1.5%) paid by the annuity
carrier. The commission shaU be calculated based upon the percentage of total plan deposits made
during the first year of the program.
Beginning with the second year of the program, the carrier shaU pay a "trailer" commission of 0.80%
on accumulated assets in the group annuity contract and a 3.0% commission on any assets that
transfer from any other contracts that the plan may hold. Keenan and MidAmerica shaU each
receive 0.40%. The TraUer commission shaU be calculated based upon the total plan assets
beginning in the 13th month and the Transfer commission wUl be based on assets from other plan
contracts as they transfer.
*The fees and commissions set forth above reflect the terms of the contracts currently in place between
Keenan and the annuity provider and administrative services provider ('^Vendors"). If, due to circumstances
beyond our control, there is a change in either of the Vendors, the fees and commissions set forth above may
be adjusted to reflect the terms of Keenan's agreements with successor vendors.
Keenan & Associates - License #0451271
APPLE Participation Agreement
Confidential For Employer Use Only
(Rev. 05/31/12)
Page 9 of 9
MidAmerica
AdwiinmtraUvc Solutions, Inc.
APPLE PLAN
ADMINISTRATIVE SERVICES AGREEMENT
THIS ADMINISTRATIVE SERVICES AGREEMENT ("Agreement") is made and entered into on July 1, 2012
by and between. City of Carlsbad, a municipal employer ("Employer"), and MidAmerica Administrative Solutions,
Inc. ("MidAmerica").
RECITALS
WHEREAS, Keenan & Associates ("Keenan") has estabhshed the Accumulation Program for Part-Time and
Limited-Service Employees ("APPLE") which offers pubHc entities a means of funding an asset accumulation
program for their part-time employees;
WHEREAS, MidAmerica, is the exclusive provider of administrative services and technical support for the Social
Security Alternative plans estabhshed by APPLE participants in accordance with the provisions of Section 3121 of the
Internal Revenue Code (hereinafter referred to as the "APPLE Plan");
WHEREAS, Employer desires to participate in APPLE and shaU estabHsh and sponsor an APPLE Plan for its part-
time employees; and
WHEREAS, Employer desires now to engage MidAmerica to provide technical support and administrative services
in conjunction with its APPLE Plan.
THEREFORE, IN CONSIDERATION OF the mutual covenants herein contained and for otiier good and
valuable consideration the receipt and sufficiency is hereby acknowledged, it is mutuaUy agreed as foUows:
LOO ENGAGEMENT OF MIDAMERICA
1.01 Engagement of MidAmerica. The Employer hereby engages MidAmerica to provide administrative services
and technical support for the APPLE Plan estabhshed by Employer.
1.02 MidAmerica not a Fiduciary or APPLE Plan Administrator. It is understood and agreed that MidAmerica is
not a fiduciary or APPLE Plan Administrator within the meaning of ERISA with respect to the APPLE Plan
covered by this Agreement. The services to be performed by MidAmerica shaU be ministerial in nature and
shaU be performed within the framework of poUcies, interpretations, rules, practices and procedures made or
estabhshed by the Employer. MidAmerica shaU not have discretionary authority or discretionary controls
respecting management or investment of the APPLE Plan or any trust fund, and shaU not have any authority
over, nor exercise any control respecting, management, investment or disposition of the assets of the APPLE
Plan or any trust fund, and shaU not render investment advice with respect to any funds or any other property
of any trust fund.
1.03 Independent Contractor. It is understood and agreed that MidAmerica wiU perform services under this
. Agreement as an independent contractor and not as an employee. Neither the Employer nor any of its officers
or employees shaU have any control over the manner by which MidAmerica performs this Agreement and shaU
only dictate the results of the performance. MidAmerica shaU use its best efforts to implement such written
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instructions, if any, as to poHcy and procedures which may be given by the Employer to MidAmerica, provided
that such instructions are consistent and compatible with the description of services to be performed by
MidAmerica and do not violate or contradict any appHcable state or federal laws or regulations, including, but
not Umited to, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). MidAmerica
shaU not represent that MidAmerica or its agents, employees or independent contractors are agents or
employees of the Employer. Except as the Employer may specif)^ in writing, MidAmerica shaU have no
authority, express or impHed, to act on behalf of the Employer in any capacity whatsoever as an agent.
MidAmerica shaU have no authority, express or impHed, pursuant to this Agreement, to bind the Employer to
any obUgation whatsoever.
2.00 SERVICES TO BE PERFORMED BY MIDAMERICA
2.01 Services to be Performed. MidAmerica shaU perform the foUowing technical support and administration
service functions in conjunction with the operation of Employer's APPLE Plan:
(a) APPLE Plan InstaUation and Maintenance Services;
(b) APPLE Plan Recordkeeping, Distributions, and Reporting Services;
(c) APPLE Plan Documentation Services, as required;
(d) Comphance Services, as required per APPLE Plan; and
(e) Notwithstanding the foregoing, each Valuation Period shaU conclude not later than 90 days after
MidAmerica's receipt of the APPLE Plan data from the Employer as provided for in the APPLE Plan.
2.02 Administration Offices. MidAmerica shaU maintain and operate administration offices and computer software
and systems necessary for data processing as part of the services required to be performed by it hereunder and
shaU pay aU normal costs and expenses for such maintenance and operation except as set forth herein.
MidAmerica shaU employ a sufficient staff of employees or others to provide the services to be performed by
MidAmerica hereunder. MidAmerica shaU provide a toU free number for customer services during normal
business hours, as defined by the Employers' geographic location and time zone, and a website for customer
and Employer inquiries, 24 hours a day, 7 days a week, (except for those brief periods when the system's data
are refreshed).
2.03 Records and Files. MidAmerica shaU maintain aU records deUvered to it by the Employer or produced by
MidAmerica in conjunction with the services required to be performed by it hereunder. The confidentiaUty of
such records shaU be maintained by MidAmerica and such records and the information therein shaU not be
disclosed or made available to persons other than the Employer unless so directed in writing by the Employer,
except:
(a) pursuant to an order of a court, arbitrator, or other tribunal;
(b) upon request of a state or federal governmental agency;
(c) upon the request of an individual participant and then only to the extent of his interest in the APPLE
Plan; or
(d) as necessary to enforce MidAmerica's rights hereunder.
AU records, documents and information coUected and/or maintained by MidAmerica in the course of its duties
hereunder shaU be made accessible to both the Employer and to the Employer's designates, the APPLE Plan's
consulting company, MidAmerica & Associates, for purposes of inspection, reproduction and audit, upon
reasonable notice. The cost of this activity wUl be at the Employer's expense only if the information is being
requested by the Employer and has previously been provided to the Employer. If any participant history is
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requested, which has been previously provided to the Employer, or if the request is not in a standard format
normaUy provided by MidAmerica, then the Employer shaU pay aU costs incurred by MidAmerica in providing
such history, including the cost of computer programming, computer charges, copying charges and mailing
costs. MidAmerica shaU be entitied to retain copies of any such records and information at its own expense.
In the event of the termination of this Agreement, upon written request, MidAmerica shaU deUver to the
Employer, at a time period mutuaUy agreeable but not to exceed 90 days from date of termination, the
information and records maintained by it on aU APPLE Plan participants. If, simultaneously with or foUowing
the termination of this Agreement, additional information is requested by the Employer that has previously
been provided to the Employer or is in a format that is not MidAmerica's standard reporting format, the
Employer shaU pay aU costs incurred by MidAmerica in providing such information, including the cost of
computer programming, computer charges, copying charges and mailing costs. MidAmerica shaU be entitied
to retain copies of any such records and information at its own expense.
2.04 Professional Services for Employer. Neither MidAmerica, nor any of its employees, agents or representatives
shaU provide legal or tax advice or provide any service which would be considered the practice of law. The
Employer hereby acknowledges that it wiU not rely on any information provided as if it were legal or tax
advice. MidAmerica wiU not provide or be responsible for the expense and cost of legal counsel, actuaries,
certified pubhc accountants, investment counselors, investment analysts or others providing similar t)^pes of
services performed expUcitiy for and on behalf of the Employer, and MidAmerica shaU not be authorized to
engage such services or incur any expense or cost therefore without the written consent of the Employer. In
the event that such services are engaged by MidAmerica upon written request of the Employer, the Employer
shaU be solely responsible for such services and the cost and expense thereof.
2.05 Comphance with Laws. In providing its services, MidAmerica shaU comply with aU appHcable state and federal
laws and regulations, and obtain and maintain aU necessary Hcenses, registrations, and/or permits necessary for
the performance of its duties under this Agreement.
3.00 SERVICE FEES
3.01 Payment MidAmerica shaU share in the commissions paid by the annuity carrier as set forth in Exhibit C of
the APPLE Participation Agreement, executed contemporaneously with this Agreement. In the event that the
CUent's APPLE Plan has 250 or more participants, MidAmerica's standard Administrative Fee wUl be waived.
In the event that CUent's APPLE Plan has fewer than 250 participants, MidAmerica shaU receive a monthly
Administrative Fee of $0.75/per participant to cover the services provided under the Agreement. The
administrative fee shaU be deducted by the group annuity carrier from the account of each participant.
MidAmerica shaU not look to Employer for the payment of the administrative fees.
3.02 Other Services. If Employer requests services beyond those described in this Agreement, MidAmerica shaU
consider the request and shaU inform Employer whether or not it can accommodate the request. If
MidAmerica agrees to perform such services, they shaU be biUed to the Employer in accordance with
MidAmerica's then-current fee schedule.
4.00 DUTIES OF THE EMPLOYER
4.01 Prior APPLE Plan Documentation. If appUcable, the Employer shaU provide MidAmerica with prior copies
of the APPLE Plan, executed APPLE Plan Document, Summary APPLE Plan Description, and aU
amendments thereto to enable MidAmerica to properly review the APPLE Plan document to comply with
federal regulations.
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4.02 APPLE Plan Data. The Employer shaU provide MidAmerica information and data on a timely basis as is
necessary to enable MidAmerica to carry out its duties and obUgations under this Agreement, and such
information and data wiU be provided in a format as is reasonably requested by MidAmerica. For this purpose,
"APPLE Plan Data" shaU mean aU data and records suppUed to MidAmerica, obtained by MidAmerica or
produced by MidAmerica in connection with performance of the services pursuant to this Agreement.
MidAmerica reserves the right to assess additional charges for unacceptable data format or missing or
inaccurate data for time and expenses incurred to correct the data. MidAmerica shaU not be Uable for any
error or action that is the result of its reUance on incomplete or inaccurate data provided by the Employer or
any of its agents or representatives.
4.03 Operational Changes. The Employer hereby agrees to consult with MidAmerica, and/or notify MidAmerica in
writing as to any benefits or operational changes or procedures in the APPLE Plan that may affect the
compliance of the APPLE Plan with appUcable laws and/or regulations or MidAmerica's internal processing
for the administration of the APPLE Plan. AU such changes shaU be reviewed by MidAmerica for IRS
compUance pursuant to the terms of this Agreement.
4.04 APPLE Plan Document Amendments. Employer further agrees to make changes in benefits or operations
only pursuant to the APPLE Plan Document, or as may be appropriately written by amendment to the
APPLE Plan Document upon consultation with MidAmerica.
4.05 Legal Counsel. The Employer shaU review with its legal and/or tax counsel aU documents provided to it by
MidAmerica. The Employer understands that it should consult tax and/or legal counsel on any questions
concerning the Employer's responsibUities under this Agreement, the APPLE Plan documents, and the legal
sufficiency of any documents so provided.
4.06 Review MidAmerica Materials and Documents. The Employer shaU review aU forms, poUcies and procedures
developed by MidAmerica for the APPLE Plan and approve such items or instruct MidAmerica as to required
changes.
5.00 AUTHORITY OF THE EMPLOYER
5.01 Sponsor. It is understood and agreed that the Employer is a fiduciary, APPLE Plan Sponsor, or APPLE Plan
Administrator under the APPLE Plan. The term "APPLE Plan Sponsor" shaU be defined to include and
mean the "APPLE Plan Sponsor" as defined in ERISA and tiie "APPLE Plan Administrator" as defined in
ERISA if an APPLE Plan Administrator is designated in the APPLE Plan documents, whether or not the
APPLE Plan is subject to ERISA. The APPLE Plan Sponsor, or APPLE Plan Administrator if designated,
shaU include, where appUcable, the Employer sponsoring the APPLE Plan or APPLE Plan Committee or
Trustees of the Trust sponsoring the APPLE Plan who serve at the time of execution of this Agreement, and
shaU also include committee members or trustees serving from time to time during the Term of this
Agreement. MidAmerica shaU be entitied to rely upon the actions, notice or instructions taken or given by the
APPLE Plan Sponsor.
5.02 Discretionary Authority. The Employer shaU estabUsh poUcies, rules, practices and procedures in conjunction
with the APPLE Plan and shaU have discretionary authority or discretionary controls respecting management
or investment of the APPLE Plan or any trust fund when appUcable, and shaU have authority to exercise any
control respecting management, investment or disposition of the assets of the APPLE Plan or any trust fund
when appUcable.
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5.03 Interpretation of the APPLE Plan. The Employer shaU have the exclusive and final authority to interpret the
terms of the APPLE Plan and shaU advise MidAmenca of any interpretations made by it.
5.04 Distribution Authority. The Employer shaU consider, to the extent it deems appropriate, any appeal from an
initial denial of account balances made by MidAmerica under the APPLE Plan. Any determination made by
the Employer shaU be final and conclusive on the participant involved and MidAmerica. To the extent that
any such determination involves the interpretation of the APPLE Plan, MidAmerica may rely on such
determination in implementing the terms of such provision thereof.
5.05 Right to Appoint Duties. The Employer may perform its duties hereunder either direcdy or through the
appointment of a person, firm or committee, provided, however, that the Employer shaU notify MidAmerica
in writing of the appointment of any person, firm or committee to fulfiU any of the foregoing obUgations and
of any change therein.
6.00 OBLIGATIONS OF MIDAMERICA
6.01 APPLE Plan Funding. MidAmerica shaU have no responsibiUty, risk, UabiUty or obUgation for the funding of
the APPLE Plan, which shaU be solely and totaUy the responsibiUty of the persons, entities, or participants so
provided in the APPLE Plan. MidAmerica shaU perform the services specificaUy set forth in this Agreement
and no others without the prior written consent of the Employer.
6.02 APPLE Plan Enforcement. MidAmerica shaU have no responsibiUty or obUgation to take action, legal or
otherwise, against any employer, employees, APPLE Plan participants or other person to enforce provisions of
the APPLE Plan. In the event the Employer desires to engage the services of MidAmerica for such purposes,
such services shaU be engaged and rendered only pursuant to a separate written agreement between the parties.
6.03 Investment of Assets.
6.04
(a) Investment Records. MidAmerica shaU not be responsible or obUgated for the investment of any assets
of the APPLE Plan; however, MidAmerica shaU prepare and maintain records of the investment of the assets
or funds of the APPLE Plan if the Employer requests MidAmerica to do so and provides the information and
documents necessary to prepare and maintain such records pursuant to paragraph 5.03.
(b) Investment Services. MidAmerica shaU provide ministerial investment aUocation services and shaU not be
responsible for or Uable for any loss or gains therefrom except as a result of MidAmerica's faUure to
implement written directions from the Employer or the APPLE Plan participants.
Participant Distributions. MidAmerica shaU process distributions in accordance with the APPLE Plan or
poUcies adopted by the Employer. MidAmerica shaU incorporate sound business practices and be responsible
for reasonable internal audits. Where an error is discovered, MidAmerica shaU use reasonable efforts for
recovery of any loss therefrom, but wiU not be required to initiate legal process for any such recovery.
Notwithstanding the above, MidAmerica may institute such proceedings as it deems necessary to recover any
obUgations owed to the APPLE Plan by a participant, former participant or any other person or entity, even if
the Agreement has been terminated, provided that such obUgations were incurred prior to the termination of
the Agreement. Any such recovery (after termination of the Agreement) shaU be the exclusive property of the
APPLE Plan and shaU be returned to the Employer at the time of receipt of such recovery by MidAmerica.
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(Rev 04/01/11) Page 5 oflO
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6.05 Participant EUgibUity. MidAmerica shaU not be responsible for determining the participants' eUgibUity to
participate in the APPLE Plan and shaU rely on the information suppUed by the Employer in determining
eUgibiUty.
6.06 Agent LiabiUty. MidAmerica may perform its services by or through independent contractors such as
attorneys, agents, or receivers and shaU be entitied to advice of counsel concerning aU legal questions and its
duties hereunder.
6.07 ReUance on Employer Directions. MidAmerica shaU use its best efforts to implement the written directions of
the Employer and participants, when appUcable, in administering the APPLE Plan, provided that such
directions do not violate or contradict the terms of the APPLE Plan, any laws or regulations, including, but
not Umited to, ERISA, inasmuch as tiie APPLE Plan is subject to ERISA. Notwitiistanding tiie foregoing,
upon advising the Employer of any such contradiction or violation, MidAmerica may accept and rely on the
Employer's provision of such directions as their representation that such directions comply with appUcable law
and the APPLE Plan's terms.
6.08 ReUance on Documentation. MidAmerica shaU incur no UabiUty in acting or proceeding in good faith upon
any resolution, request, consent, waiver, certificate, statement, salary reduction agreement, contribution
election form, maximum annual contribution form, participant investment directions, or any other paper or
document prepared and furnished to MidAmerica in accordance with the APPLE Plan(s) or this Agreement,
that it, in good faith, reasonably beUeves to be genuine. MidAmerica may accept and rely upon any such paper
or document as conclusive evidence of the truth and accuracy of such statements and shaU not be required to
investigate any matters contained in any such paper or document.
6.09 Good Faith Judgment. MidAmerica shaU not be Uable for any error or judgment made in good faith by it or
any of its agents or employees unless it is proved that MidAmerica was negUgent in ascertaining the pertinent
facts.
6.10 APPLE Plan CompUance. MidAmerica shaU provide supporting detaU for the APPLE Plan Administrator to
monitor compUance of the APPLE Plan and wiU endeavor to advise the Employer of any changes that may be
required by law, rule or regulation. The Employer shaU be responsible for implementing such advice, except to
the extent that such responsibiUty has been expressly undertaken herein by MidAmerica.
6.11 Financial LiabiUty. MidAmerica shaU have no responsibiUty, UabiUty or obUgation to pay any taxes, Ucenses, or
fees levied by any local, state or federal authority in connection with the operation of the APPLE Plan.
6.12 Conflict Between Agreement and APPLE Plan. No provision of this Agreement shaU require MidAmerica to
take any action that, in the judgment of MidAmerica, would confUct with any rule or law or with the provisions
of any APPLE Plan. If, based on changes in the appUcable regulatory structure or the interpretation of the
regulatory structure, there is a reasonable Ukelihood that any service to be provided by MidAmerica under this
Agreement shaU be deemed to confUct with the APPLE Plan or shaU be deemed to be unlawful, then
MidAmerica shaU, after providing express written notification to the Employer, decline thereafter to provide
that service, or shaU amend the Agreement to restructure the service upon reasonable notice to the Employer.
FaUure to provide any such service from and after such notice shaU not constitute a breach of MidAmerica's
obUgations under this Agreement pursuant to paragraph 6.12 herein.
6.13 ConfidentiaUty. ConfidentiaUty of aU APPLE Plan Data shaU be maintained by MidAmerica and such
information shaU not be disclosed except as provided in paragraph 2.03.
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7.00 INSURANCE
7.01 Procurement of Insurance. MidAmerica shaU procure and maintain during the term of this Agreement the
foUowing insurance coverages, and shaU provide certificates of insurance to CUent upon CUent's request.
a. Workers' Compensation: Coverage in conformance with the laws of the State of CaUfornia and
appUcable federal laws;
b. General LiabiUty: Coverage (including motor vehicle operation) with a One MilUon DoUar
($1,000,000) Umit of UabUity for each occurrence and a Two MUUon DoUar ($2,000,000) aggregate Umit
of UabiUty; and
c. Errors and Omissions: Coverage with a One MilUon DoUar ($1,000,000) limit of UabiUty for each
occurrence and a Two MUUon DoUar ($2,000,000) aggregate Umit of UabiUty.
d. FideUty Bond: Coverage with a One MilUon DoUar ($1,000,000) Umit of UabiUty for each occurrence
and a Two MUUon DoUar ($2,000,000) aggregate Umit of UabUity.
8.00 INDEMNIFICATION
8.01 ObUgation to Indemnify. If either party breaches this Agreement, then the breaching party shaU defend,
indemnify and hold harmless the non-breaching party, its officers, agents and employees against aU claims,
losses, demands, actions, UabiUties, and costs (including, without limitation, reasonable attorneys' fees and
expenses) arising from such breach. In addition, if MidAmerica (i) becomes the subject of a subpoena or is
otherwise compeUed to testify or (U) becomes the subject of a claim, demand, action or UabiUty brought or
asserted by one of CUent's employees. Plan beneficiaries, or Plan vendors ("Third-Party Demand") relating to
the Services and such Third-Party Demand is not a direct result of MidAmerica's negUgence or wiUful
misconduct, then CUent shaU defend, indemnify and hold MidAmerica harmless from aU losses, payments, and
expenses incurred by MidAmerica in resolving such Third-Party Demand.
9.00 LIMITATION OF LIABILITY
9.01 Limitation. Notwithstanding anything to the contrary in this Agreement, in no event shaU either party be Uable
for any punitive damages, fines, penalties, taxes or any indirect, incidental, or special damages incurred by the
other party, its officers, employees, agents, contractors or consultants whether or not foreseeable and whether
or not based in contract or tort claims or otherwise, arising out of or in connection with this Agreement even if
advised of the possibiUty of such damage. MidAmerica's UabiUty under this Agreement shaU further be Umited
to, and shaU not exceed, the amount of its avaUable insurance coverage, but not exceeding the Umits of
coverage outlined in Section 7.
10.00 DISPUTE RESOLUTION
Disputes arising out of or relating to this Agreement shaU first be resolved by good faith negotiations between
representatives of the parties with decision-making authority. If either party determines that the dispute
cannot be resolved through informal negotiation then the dispute shaU be submitted to non-binding
mediation. The site of the mediation and the selection of a mediator shaU be determined by mutual agreement
of the parties. The site of the mediation shaU be San Diego County, CaUfornia. If the dispute is not resolved
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through mediation within sixty (60) days foUowing the first notification of a request to mediate, then either
party shaU have the right to pursue legal action in the State Courts of CaUfornia. Venue shaU be in San Diego
County.
ILOO NOTICES
Any notice or other communication required or permitted hereunder shaU be in writing and shaU be deUvered
personaUy, sent by facsimUe, electronic transmission, by certified, registered or express maU. Any such notice
shaU be deemed given when deUvered personaUy, by facsimUe, or electronic transmission upon the recipient's
oral verification by telephone of receipt, or if maUed, five days after the date of deposit in the U.S. maU with
postage prepaid and duly addressed to the party to be notified, or by proof of receipt by certified, registered or
express maU.
Notice shaU be made to MidAmerica as foUows:
MidAmerica Administrative Solutions, Inc.
211 East Main Street, Suite 100
Lakeland, Florida 33801
Telephone: (863) 688-4500
Atto: J. Wesley Comp ton
With a copy to:
Keenan & Associates
2355 Crenshaw Blvd., Suite 200
Torrance, CA 90501
Attn: Dan Keenan
Fax: (310) 533-1329
12.00 TERM AND TERMINATION
Notice shaU be made to the Employer as foUows:
City of Carlsbad
1635 Faraday Avenue
Carlsbad, CA 92008
Attn: Debbie Porter
12.01 Term. This Agreement shaU be for an initial term of one (1) year(s) (the "Initial Term"), beginning with the
execution date of this Agreement, and shaU continue from year to year thereafter (each year a "Successive
Term" and, coUectively with the Initial Term, the "Term"), unless and untU terminated by either party hereto
upon written notice to the other in accordance herewith. Notwithstanding the foregoing, this Agreement shaU
not become effective unless and untU properly countersigned by an authorized officer of MidAmerica.
12.02 Right to Terminate. This Agreement may be terminated upon the occurrence of any of the foUowing events:
By either party upon ninety (90) days' prior written notice to the other party ("Termination Notice"); a.
b. By either party foUowing dissolution, insolvency, or the fUing of a bankruptcy petition by or against
either party (if the petition is not dismissed within sixty (60) days in the case of an involuntary
bankruptcy petition);
If the appUcation of any law, rule, regulation, or court or administrative decision prohibits the
continuation of this Agreement or would cause a penalty to either party if the Agreement is continued,
and if the Agreement cannot be amended to conform to such law, rule, regulation, or court or
administrative decision in a manner that would preserve the original intent of the parties with respect to
their rights and duties under this Agreement; or
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d. By the non-breaching party if a breach of this Agreement is not cured within thirty (30) days foUowing
receipt of written notice of the breach from the non-breaching party.
12.03 Account Valuations. Notwithstanding anything in this Agreement to the contrary, where Termination of this
Agreement occurs between Valuation Periods, MidAmerica shaU complete mid-period valuations of accounts
prior to the date of Termination and provide such mid-period valuations of accounts and copies of aU relevant
records to the successor or the Employer as the Employer shaU direct. Where Termination of this Agreement
occurs during either Valuation Period, MidAmerica shaU be obUgated to complete the valuation prior to
Termination and provide such valuation to the successor or the Employer as the Employer shaU direct.
12.04 Early Termination Fee. In the event that Employer terminates this Agreement pursuant to Section 12.02 (a),
MidAmerica reserves the right to charge an Early Termination Fee to cover administration expenses incurred
up to the date of termination. The Early Termination Fee shaU not include any fees for Termination Services,
such as mid-period valuations of accounts, copies of records, or any other termination services necessary to be
provided to a successor third party administrator. Fees for these services shaU be biUed as time and expenses
incurred in accordance with MidAmerica's then-current fee schedule. Early Termination Fees, if any, wiU be
the responsibiUty of the Employer.
12.05 Effect of Termination. Termination of this Agreement shaU terminate Employer's participation in APPLE,
and shaU likewise terminate the APPLE Participation Agreement entered into between Employer and Keenan.
Except as provided under Section 12.03, neither MidAmerica nor Keenan shaU be obUgated to provide any
further APPLE service as of the termination date of this Agreement. It shaU be the sole responsibihty of the
Employer to provide, directiy or through an alternate service provider, the services provided by Keenan
and/or MidAmerica in conjunction with its 3121 Social Security Altemative Plan. AdditionaUy, the
termination of this Agreement and the subsequent termination of MidAmerica Administrative Services
Agreement may result in the termination of the APPLE group annuity contract. In such event, APPLE Plan
assets may be subject to surrender charges if so stated in the carrier's group annuity contract.
13.00 MISCELLANEOUS
13.01 No Continuing Waiver. FaUure of either party to enforce at any time any of the provisions of this Agreement
shaU in no way be construed to be a waiver of such provision or in any way affect the vaUdity of this
Agreement or any part thereof, or the right of such party to thereafter enforce each and every provision of this
Agreement. No waiver of any breach of this Agreement shaU be held to be a waiver of any other or
subsequent breach.
13.02 Governing Law. The terms and conditions of this Agreement shaU be interpreted and controUed by the laws
of the State of CaUfornia appUcable to contracts executed and to be whoUy performed within said State, insofar
as state law is appUcable under the terms hereof.
13.03 Third Party Rights. Nothing contained in this Agreement, express or impUed, is intended to confer, or shaU
confer, upon any individual participant in or beneficiary under the APPLE Plan, or any other person or entity,
any rights or remedies under or by reason of this Agreement.
13.04 Binding Effect. This Agreement shaU be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and permitted assigns. Without Umiting the foregoing, if
the Employer is a trustee, board of trustees, or committee, this Agreement shaU be binding on such trustee or
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K MES
members of such board or committee serving at the time of execution or at any subsequent time during the
term of this Agreement.
13.05 Assignment. Neither this Agreement nor MidAmerica's duties hereunder may be assigned without the prior
written approval of Employer.
13.06 SeverabiUty. Should any part of this Agreement be declared invaUd, any remaining portion shaU remain in fuU
force and effect as if this Agreement had been executed with the invaUd portion eliminated.
13.07 Modification of Agreement. This Agreement, including any Exhibits references herein or attached hereto, may
not be modified, changed or additions made, without putting the modifications, changes or additions in writing
and having both parties to this Agreement sign such writing. This Agreement shaU supersede any existing
Administration Agreements between the parties below. This Agreement contains the entire agreement of the
parties hereto with respect to the subject matter hereof, and there are no other agreements or understandings
except as may be expressly stated herein.
13.08 Prohibited Interests. No officer or employee of the Employer shaU have any direct financial interest in this
Agreement. This Agreement shall be voidable at the option of the Employer if this provision is violated.
13.09 Signatures. This Agreement may be executed in counterparts and by fax signatures and each shaU be deemed
to be an original.
13.10 Authority. Each person signing this Agreement on behalf of a party represents and warrants that he or she has
the necessary authority to bind such party and that this Agreement is binding on and enforceable against such
party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written
above.
Citv of Carlsbad MidAmerica Administrative Solutions. Inc.
Signature: Signature:
By: Matt Hall By:
Title: Mayor Title: J. Wesley Compton
Address: 1635 Faraday Avenue Address: 211 East Main Street, Ste. 100
Carlsbad, CA 92008 Lakeland, Florida 33801
Telephone: (760) 602-2441 Telephone: (863) 688-4500
Fax: (760) 602-8554 Fax: (863) 686-9557
Attention: Debbie Porter Attention: Attn: J. Wesley Compton
MidAmerica Service Agreement
APPLE
Confidential for Client Use Only
(Rev 04/01/11) Page 10 of 10
K MES
5?
Unallocated Fixed Contract Application, Acceptance, & New Business Agreement
American United Life Insurance Company®
P. O. Box
Indianapolis, Indiana 46206-0368
Contract Number
Version 1.0 - 04/2008
Contract Effective Date ^'^'Y ' 2012
Contract Suffix Number Plan Sponsor's State of Domicile CA
The Proposed Contractholder identified below hereby applies to American United Life Insurance Company (AUL) for the Group
Annuity Contract Number identified above. This completed form must be approved by the AUL Corporate Office before a group
annuity contract will be issued.
Contract Type:
^ Unallocated Fixed-Only (15FP)
Select Governmental or Non-Governmental Plan Sponsor (select only one):
^ Govemmental (non-registered) • Private Sector (registered)
Select Plan Type (select only one):
• (I) 3121 or Special Pay 401(a) • (3) 3121or Special Pay or Employer-Sponsored 401(a)/403(b) M (7) 3121
457(b) • (R) HRA Trust/VEBA • (S) HSA • (T) GASB 45 OPEB Trust/VEBA
Select Product Type (select only one):
• EO DEI •R2 MEOB • ElB • R2B
Select Business Type (select only one):
• Start-up Takeover
General Information
Proposed Contractholder: City Of CaflsbaCl
Employer's Identification Number (BIN): 95-6004793
Executive Contact: DebblO POfter Phone #: 760-602-2441 Fax #: 760-602-8554
Executive Contacts Address: 1635 Faraday AvGnuG, Carlsbad, CA 92008
Executive Contact's Email Address debbie.porter(gcarlsbadca.gov
Administrative Contact: 760-602-2443 Phone #: 760-602-2443 Fax # : 760-602-8554
Administrative Contact's Address 1635 Faraday Avenue, Carlsbad, CA 92008
Administrative Contact's Email Address: Fernanda.hasse@carlsbadca.gov
Producer Information
Primary Producer: J. Daniel Keenan Primary B/D: |S|/A
Primary Producer Address: 2355 Crenshaw Blvd., Suite 200, Torrance, CA 90501
Primary Producer Email Address: (JloenanOkeenan .COm
Primary Phone: 310-212-0363 ext. 3600 Primary Fax: 310-533-1329
TPA Information
MidAmerica, Administrative & Retirement Solutions, Inc.
211 East Main Street, Suite 100
Lakeland, FL 33801
800.430.7999
Investment Option Selection
The AUL Fixed Interest Account(FIA) (12) will be the only annuity investment option made available.
Withdrawal Charge (presently approved in California only)
A Withdrawal Charge will not be applied under this contract, with one exception. A 5% Withdrawal Charge will be
applied at contract termination to any FIA monies that are paid out at the Contractholder's direction in a lump-sum rather
than in 5 equal annual installments.
Summary of Billable Expenses
Currently, there are none.
Contract Termination Provisions
Upon termination of the contract, the FIA Withdrawal Value must be taken in 5 equal annual installments. A cash lump-
sum payment of monies invested in the FIA is not an available option. This restriction applies to all Contribution sources.
AUL Recordkeeping/Administrative Services Agreement
The Proposed Contractholder hereby requests only investment recordkeeping for assets held in the applied-for Contract,
and does not request any other recordkeeping or administrative services. AUL will only maintain recordkeeping of assets
at a contract/plan-level. Furthermore, AUL will not be providing statements, confirmations, or any other reporting to the
Contractholder.
The Proposed Contractholder hereby acknowledges and agrees that, as Plan Fiduciary, it has the sole responsibility for
assuring that the Plan complies with all applicable state and federal law, including ERISA, the Intemal Revenue Code,
and securities laws, both in form and in operation.
The Proposed Contractholder hereby acknowledges and agrees that MidAmerica Administrative & Retirement Solutions,
Inc. is the Third Party Administrator (TPA) and Plan Administrator, and that, other than in this Unallocated Contract
Application, Acceptance, and Agreement form, AUL shall accept direction and instructions regarding both the Plan and
the Contract only from MidAmerica, and shall not accept direction and instructions directly from the Contractholder.
Facsimile/Electronic Media Acceptance Agreement
Instructions provided to AUL and its agents to execute, cancel, or otherwise proceed with transactions including those
related to, but not limited to, enrollments, loan applications, distributions, and correspondence will be accepted via
facsimile, copy, or via other electronic media. This agreement does not include retirement plan adoption agreements,
group annuity contracts, amendments thereto, the annual census, and Notice, Election & Release or Contract Settlement
Agreement documents.
This agreement includes Instructions from the TPA, Plan Sponsor, Plan Administrator, and/or Contractholder. The
Contractholder and TPA will indemnify and hold harmless AUL for all claims, losses, liabilities and expenses, including
legal fees and expenses, resulting from any action taken or not taken by AUL in good faith in accordance with this
agreement.
Preliminary Agreement for the Group Annuity Contract
(1) Upon the date a contribution is made to the Contract following the Proposed Contractholder's receipt ofthe Contract
(but no earlier than 60 days after the Contract Date of Issue), if AUL does not receive a signed acceptance ofthe
Contract at its Corporate Office by that date, the Proposed Contractholder shall be deemed to have accepted the
Contract and any accompanying amendment to the Contract by the making of such contribution. The Contract and
any accompanying amendment shall be effective as of the effective dates shown on the Contract and amendment.
(2) If the Contract is not accepted or deemed accepted, and if the Proposed Contractholder notifies AUL at its
Corporate Office in writing that it will not accept the Contract, the following amount shall be paid in a single sum to
the Proposed Contractholder on a mutually agreed-upon date: any contributions to the Contract which have been
allocated to AUL's general asset account, plus interest credited thereon as determined pursuant to the Contract, which
remain in AUL's general asset account as of such date of payment. AUL shall make such payment only upon receipt
at its Corporate Office of a proper form signed by the Proposed Contractholder and, if applicable, by the employer
sponsoring the retirement plan for which the Contract is to be a funding vehicle, releasing AUL, its agents, and its
employees from any and all liability arising out of such payment by AUL.
(3) This Preliminary Agreement shall terminate when:
(A) the signed Contract acceptance is received by AUL at its Corporate Office; or
(B) the Contract is deemed accepted under Section (I) above; or
(C) payment is made by AUL pursuant to Section (2) above.
Electronic Contribution Processing and Employee Data Gathering
The Employer/Plan Sponsor/TPA has elected to send contributions and employee information electronically using tools
provided by AUL. The Employer/Plan Sponsor agrees to allow AUL to debit its checking account for the allocable
contribution amount shown on each of its contribution listings submitted to AUL. Additionally, the Employer/Plan
Sponsor/TPA agrees that AUL can rely on information provided through the electronic data transmission vehicles. To
establish electronic data transmission accounts, you must first complete an Electronic Data Transmission Account
Profile available from AUL.
Fiduciary Acceptance
Any reference to Contractholder in this Application, Acceptance, and Agreement should be read as Proposed
Contractholder until the applied-for group annuity contract goes into effect.
I, the undersigned, as TPA/Plan Administrator ofthe City Of Carlsbad plan ('Plan"), hereby
appoints AUL as theTPA/Plan Administrator's agent for the sole purpose of executing the Plan's investment
instructions through the OneAmerica TeleServe® and Account Services systems. It is understood that AUL will
execute the Plan's investment instructions received through the OneAmerica TeleServe® and Account Services systems
effective as of the close of business on the valuation date, as referenced in your contract, in which AUL receives the
request. It is ftirther understood that AUL has no direction or authority to alter or decline to execute any Plan's
investment instructions received through the OneAmerica TeleServe® or Account Services systems, unless such
instructions are impossible to execute. If any such instructions are impossible to execute, AUL will so notify the
TP A/Plan Administrator before the instructions are accepted by OneAmerica TeleServe® or Account Services. All
investment instructions received and executed through the OneAmerica TeleServe® or Account Services system will be
confirmed in writing to the TP A/Plan Administrator within ten business days.
The Contractholder, TP A/Plan Administrator, and AUL hereby agree by signing below, that they will be bound by the
terms of this Application, Acceptance, and Agreement as of the date of AUL's acceptance. The terms ofthe
Preliminary Agreement are superseded by the terms of the applied-for Contract as issued by AUL, and the Contract is
accepted or is deemed accepted under the provisions of the Preliminary Agreement. If an amendment accompanies
the issued contract, the Contractholder must sign and date the amendment and return a copy to AUL.
Electronic acceptance of this Application, Acceptance, and Agreement by AUL, Indianapolis, Indiana indicates
that AUL has reviewed its contents along with all other required materials and has accepted its terms, and is equivalent
to AUL's written signature.
"•,0
NON-REGISTERED FIXED ANNUITY OFFERING REPRESENTATION
(For governmental applicants with an HRA or a GASB 45 OPEB Plan)
The undersigned Employer and Trustee(s) understand that American United Life Insurance Company (AUL), in
reliance on the following representations and warranties, will offer a non-registered fixed annuity contract to the
Employee Benefit Trust or the VEBA Trust entered into by and between the Employer and the Trustee, dated
, in connection with certain benefit plans offered by the Employer for the exclusive benefit
of its employees. Such offer is based upon the govemmental plan exception to securities registration under
Section 3(a)(2) ofthe Securities Act of 1933.
REPRESENTATIONS AND WARRANTIES
EMPLOYER
The Employer hereby represents and warrants that:
(1) the Employer is a State, or political subdivision of a State, or agency or instrumentality of a State or
political subdivision, within the meaning of Section 414(d) of the Intemal Revenue Code of 1986
("Code");
(2) the Employer has authority under applicable State laws and regulations to enter into, maintain, and
establish said Employee Benefit Trust or VEBA Trust (and benefit plan(s) thereunder);
(3) any contributions to the Trust shall be made exclusively by the Employer or its employees and be held for
the exclusive benefit of the employees;
(4) the Employee Benefit Trust is exempt from taxes under Code Section 115, or the VEBA Trust is exempt
from taxes under Code Section 501(c)(9); and
(5) the Employee Benefit Tmst or the VEBA Trust (and benefit plan(s) thereunder) is a govemmental plan as
defined in Code Section 414(d), established for the exclusive benefit of the employees of the Employer.
TRUSTEE
The Trustee hereby represents and warrants that:
(1) the Employee Benefit Tmst or the VEBA Trust was established to secure and hold funds to be contributed
by the Employer under certain benefit plans sponsored by the Employer;
(2) the Trust assets will be held for the exclusive benefit of the Employer's employees, and no portion of the
corpus or income of the Tmst will revert to the Employer or otherwise divert to third parties, except to
pay for reasonable administrative expenses incurred by the Trust;
(3) the Employee Benefit Trust is exempt from taxes under Code Section 115, or the VEBA Trust is exempt
from taxes under Code Section 501(c)(9); and
(4) the Employee Benefit Trust or the VEBA Trust (and benefit plan(s) thereunder) is a govemmental plan as
defined in Code Section 414(d), established for the exclusive benefit of the employees of the Employer.
IN WITNESS WHEREOF, the undersigned have executed this Representation on the signature page below, on
the date(s) set forth on the signature page below.
Application for, and Acceptance of, the Contract:
APPLICATION TO THE AMERICAN UNITED LIFE INSURANCE COMPANY FOR
A GROUP ANNUITY CONTRACT
City of Carlsbad (hereinafter called the Applicant) hereby applies for Group Annuity
Contract Number G . This application is made a part of said contract, which is hereby approved and
its provisions and conditions accepted. This application is executed in duplicate, one counterpart being attached to said
contract, and the other being returned to American United Life Insurance Company. It is agreed that this application
supersedes any previous application for said contract.
STATE NOTIFICATION
All states excluding those states listed below: Any person who knowingly presents a false or fraudulent claim for
payment of a loss or benefit or knowingly presents false information in an application for insurance is guilty of a crime
and may be subject to civil fines and criminal penalties.
In Colorado, any person who knowingly provides false, incomplete, or misleading facts or information to an insurance
company for the purpose of defrauding or attempting to defraud the company commits a crime. Penalties may include
imprisonment, fines, denial of insurance, and civil damages. Any insurance company or agent of an insurance company
who knowingly provides false, incomplete, or misleading facts or information to a policyholder or claimant for the
purpose of defrauding or attempting to defraud the policyholder or claimant with regard to a settlement or award payable
from insurance proceeds shall be reported to the Colorado division of insurance within the department of regulatory
agencies.
In Florida, any person who knowingly and with intent to injure, defraud, or deceive any insurer files a statement of claim
or an application containing any false, incomplete, or misleading information is guilty of a felony of the third degree.
In Louisiana, Pennsylvania, and Tennessee, any person who knowingly and with intent to defraud any insurance
company or other person files an application for insurance or statement of claim containing any materially false
information or conceals for the purpose of misleading, information conceming any fact material thereto commits a
fraudulent insurance act, which is a crime and subjects such person to criminal and civil penalties.
In Maine and Washington, any person who knowingly provides false, incomplete or misleading information to an
insurance company for the purpose of defrauding the company commits a crime. Penalties may include imprisonment,
fines or denial of insurance benefits.
In New Jersey and Virginia, any person who includes any false or misleading information on any application for an
insurance policy is subject to criminal and civil penalties.
In Florida: Does this group annuity contract replace any existing group annuity contract?
Yes No
If yes, submit any required replacement forms.
P-11104
By signing and completing the information below, the following parties hereby agree to this Unallocated Contract
Application, Acceptance, and New Business Agreement.
Dated at on
APPLICANT/PROPOSED CONTRACTHOLDER/PLAN FIDUCL\RY
Signature:
Printed Name: Matt Hall
Title: Mayor
Date:
AUL RETIREMENT SERVICES OFFICER
Signature:
Printed Name:
Title:
Date:
TPA/PLAN ADMINISTRATOR
Signature:
Printed Name: J- Wesley Compton
xitie: President
Date:
SOLICITING PRODUCER
Signature:
Printed Name: J. Daniel Keenan
xitie: Senior Vice President
Date:
Florida License ID No. (for Florida Applications)
ID No.
For govemmental employers applying for a fixed group annuity contract to be used with an HRA or a GASB 45 OPEB
Plan, by signing and completing the information below, the following parties hereby agree to the "Non-Registered Fixed
Annuity Offering Representation" above.
"EMPLOYER" (with respect to
Employer representations only)
Dated: By:
Dated:
Dated:
Dated:
TRUSTEE(S) (with respect to Tmstee
representations only)
By:
Name:
By:
Name:^
By:
Name:
33
Kira Linberg
From: Cindy Parkinson <cindyparkinson@hotmail.com>
Sent: Saturday, June 23, 2012 4:28 PM
To: Council Internet Email
Subject: RE: Social Security and hourly employees
Attachments: socialsecuritymadatorycoveragel.jpg; socialsecuritymandatorycoverage2.jpg;
image001.gif
Dear Mayor Matt Hall and Council members
Mark Packard, Keith Blackburn, and Farrah Golshan Douglas,
I found some information from the Congressional Research Service about Social Security and the current laws that
govern social security withholdings and public employees. I am Including the first couple of pages, which I think apply in
the case of the City of Carlsbad's plans to discontinue Social Security coverage for their hourly employees. Current hourly
employees who started after 12/19/04 have ail been enrolled In social security as have many of us who elected social
security instead of the 457 plan.
A 457 plan Is no replacement for social security which provides not only retiree benefits, but disability and survivors
insurance. Thank you again for your thoughtful consideration.
Sincerely,
Cynthia Parkinson
cindyparklnsQn@hotmail.com
4.. '•>.' '^""'•i-l
5i 3^
Kira Linberg
Agenda Item » li
For ^ memben ofthe:
CITY COUNCIL
From:
Sent:
To:
Subject:
Cindy Parkinson <cindyparkinson@hotmail.com>
Thursday, June 21, 2012 7:58 PM
Council Internet Email
Social Security and hourly employees
^1
ty t
Dear Coucil Members, Mark Packard, Keith Blackburn, and Farrah Golshan Douglas,
I am dismayed to learn that the City of Carlsbad Is considering discontinuing the employer contribution to social securitv
for their hourly employees. For me, this Is devastating news. When I started working at the library 11 years ago, we had
a choice between the Lincoln program and social security. Many chose Lincoln because they had social security credits
through their spouses, but for those of us who are earning our own credits, this Is very unwelcome news.
I believe that the city should continue to give us a choice. Many employees will probably choose the Apple plan, but for
those of us who really need the security of the insurance and safety net that social security provides, we should be given
that choice. ' »
Even though discontinuing social security contributions for hourly employees may be legal, it certainly is not ethical I
believe the citizens of Carlsbad would agree, especially since hourly employees receive no other benefits. I am asking you
respectfully to vote against this measure. Thank you for your thoughtful consideration
Sincerely,
Cynthia Parkinson
Date:_
Distributioh:
City Clerk
Asst. City Clerk
Deputy Clerk
Book
O "2,
Sf: >«i SccM, Ffy Mandatonj Covera^ of .VCT/J State and Ucal Govemment Employees
Introduction
.\cross the United States, about 27.5% of slate and local govermiient employees (about 6.6
mXn persons) work in positions that are not oovcrcd by S(x:ial Securtty. Coverage rales vary
considerably across states.
Congross made Social Security coverage mandatory, starting in July 1991, for .rjost stetc and
U^aC™t employees who were no. already covered by pubhc pen.,«n P a"S. Unto
currait law, public employees who have a pension plan, but who are not covered by Soual
4urity, tnay hold a referendum on whether to elect Social Security eomage. Once Soctal
tollrity coverage is provided, it generally camtot be terminated, and all hiture employees m
covered positions arc required to participate in Social Security.
Propo«.ls to mandate Social Security coverage for all state and local government employees hired
nXTutu«= have been part ofthe Social Security policy debate for many years, t. nder such a
proposal all state and local government positions eventually would be covered by Soc.ai
Cm tv This report describes current law. provides some historical background, and discusses
some of the potential advantages and disadvantages of mandating Social Security coverage tor
newly hired state and local govcmmciit employees from a variety of perspectives.
Current Law
Social Security coverage is extended to state and local government ^^i^h^^'f
218 Agreements" between a sUrte awl the Social Security Adnumslralion (SS A). AI .states, as ^
«lll a.fPuerto Rico and the Virgin Islands, have a voUinUiry Section 218 Agreeinenl w.th SS A_ A
Slate's Section 218 Agreement details which state and local government ixBitions are covered by
Social Security and Medicate. Rach state, as well as Puerto R.co and the Virgm Islands.
Sat« a Social Security Administrator who is responsible fo.- ad.nimsta.ng. preparing
moditlcations for. and monitoring coverage of, its sub<livis.ons under the states Scct.o. 218
A^c-eint-nt. The Mrainistrator, who is a slate employee, serves as a bndge between state and
local public einplo)^ and SSA.
Coverage under Section 2) 8 Agreements differs greatly from Mate to state. For example within a
stU Kiehers in one county may be coveied under Social Security, whereas teachers .u the
neio^boring county may nol be covered. The State Social Saurity Administrator is the umn
resource for infonnation about Social Security and Medicare coverage and reporting issues toi
state and local govcrn.ncnl employers and employees.
' Iht'scagrranc-Usacauthociffid by Scclion 218of tl.v Siicial Sacmty Aci.
A,K,«>v.maBiv 60 immtaic ins.irui.H.i.lal..ies also liave Section 218 A|ir>.-uner.« M,rtli SS.^. ;\a mtctslalc
i.,tSeI^ is >m imlopendcnt legal c«i.y by iw. or ..we S«„os »c.ny oul one or .nore gov., nmcmal
%»aier)S such as police power, taxing povvcrand'orpowiT 01 «.>n.e..l domain.
' A raster ol Slale Social Seeuritv Adminii.lra.ors c« be found a. bt.p:,V«v,-w,rK»ssa.org.'«aiessadn.mmamh<^ For Arostcroisiaii..i«"ai .,-„.,. ,„,,<. A„,,i;mcni'i indudini! mod ficat ons UJ such agra-menu, «»I .S.
dl0938.pdn
Convrtfssiowfl/ Research Sennce 33
Sertion 218 Agreement coxer poskicr,,. noi individuals, ifthe government position -'s covered
by Socia ISeairity and Medicare ur..ic.- a S.^uon ^ 18 Agrm, (hen any empbv^Vcur ^Tor
Uiluro) filling .hat posmon is subjcci ;a ScK-ial Security and .Medicare payrolE
Coverage is extended to groups of e.Tiployi:e positions known as "coverage groups;" coveraae
.my not be extended or an indiv idual basis. Various laws and regulations govern howrvcrtc
.nay be extended v,a employee rerercndums. All slates are authorised to use a majorfty vote
rerere..duin process, and 2.1 ..rates also are authori..cd to use a divided vote referendum ni^ess
created in 1956 (see below). .Most often, state governments allow their st.bS?"g T
school board) lo decide >vhether (o hold a referendum on coveiage.
Generally a Section 2 SR Agreement may be modified to i.u:rcase, but not reduce, the extent of
Sd md!in fi.n ""•"T• Security coverage is provided, i, cannot be
S™y employees in covered posifions are required to participate in Social
Legislative History
•fhe 1935 Social Security Act did not exiend Social Security coverage to stale imd local
government workers. In 19.50, Congress added Section 218 to the S^ial Security Act to allow all
-•-O s ates Piicno Rieo. and .he Virgin Ishmds to elect Social Security coverage for certain late
a..d local govenjntent employees.^ In 1954, Congress extended volunlai^ coteragc ,o a™Ws
who were already covered by pension plaas. effective starting in 1955, i fa m^i^ikZuZlL
who were members of a pension system voted in favor ofSocial Secu ity covtC ' ^
atnendments in 1956' pami.lcd certain states- to split slate or local retirement sSt^ Uo
'd.v.ded rebrement .systems" ba.sed on groups of employees that voted tor Soe^bl Securit
coverage and groups of employees that voted agiiinst Social Security coverage.' Ciirrentlv '3
stales arc aulhorized to operate a divided reliremenl syslcm."
i;ntil April 1983 public employers could opt in and oul ofthe Social Security prograiti. In 1983
et S 'tf'" "^^''"^ "^-^ program once
' StK-ial Security Act .AtnondinenUi of f 95(t, P.I. «l-734, (^106.
' St>cial Sccuriiy Ainenditionrs of 1954, IM.. 8.V76I. ;j lOKl^X^l.
Social Security Amcndmcms of 1956, IKl. 8'I^88U, .$ s04(c).
employee, who ch<.se to .^.^cc in ^^^^^^^^ .
SiK'm] Scctjrily nmy fcn,aii» outside Inc syi.lcti I lowcver Jn^urvJ^^Z • f <-hQv>.c not to particiivaic i n
wvtifcd hy Social Security. ''' ^"'J''»>*-'^'^ ^''^'''P^ :''>^"K"H arc wmi^^only
' Most r^:cniiy. Kcnluukyj^r^d l.ou'.ijuia vvcrc luklai u> ihc list of s!au:K :uirhori/i^d ti, ci-r 'k-» tii-r v .
system. Statutoryauthodty wa« provided under the Social Security IVoicc^on^t of (P toS ^S^'rf' r .
01 .ta.es auc ority to hold divided vote referendum., can he ln6 in SeSa 2^^^^^^^^^^
Act, imdat h«ps:/.'bccua\!«a.gov,'appslO/pom».nsf?Tn.x/193000I330^ ^
" Social Security Atnendments uf 1983, P.I.. 98-?l, f!03.
rimven v. Pub. ..\gencies OproRcd to Social .^ecuriiy Hntrapments, 477 l.i.S. A\ (i986j.
i-mgrtmsiouat Research Service
Lisa Hildabrand
Date:
PteWbuttom
Agenda Item (I
For the members ofthe:
cirycouNcii,
Subject: FW: Social Sec j^l^/^j^emc )loyees
From: Debbie Porter
Sent: Monday, June 25, 2012 6:42 PM
To: Lisa Hildabrand
Cc: Julie Clark
Subject: RE: Social Security and hourly employees
Deputy Clerk
Book
i ^CM DCM CA ^
1 )ate(Dfc(^ City Manager ^^^^
This is in response to Cynthia Parkinson's concerns regarding implementation of the APPLE 457 plan in lieu of
social security, specifically, the loss of the Old Age Survivor and Disability Insurance (OASDI) portions of Social
Security as well as the legality of opting out of social security.
It is our understanding that we are legally allowed to opt out of social security. The local State government
regulates an agencies' participation in Social Security and their 218 agreements for full-time emplovees. In
California they have allowed part-time emplovees to opt out of Social Security in light of OBRA 90 and IRC
3121 regulations.
The goals of the transition to APPLE 457 were 1) to save money (the cit/s cost reduces from 6.2% of payroll to
3.75% of payroll and the employee's cost reduces from 4.2% of payroll to 3.75% of payroll), 2) to provide a
better more predictable benefit for hourly employees and 3) to streamline the administration process by
having only one retirement vendor for hourly employees instead of two.
It is difficult to compare the benefits between Social Security (a defined benefit) and the APPLE 457 (a defined
contribution plan). Each employee's personal situation impacts how they define which is a better benefit for
them (e.g., number of years until they reach retirement eligibility age, whether or not they are "vested" in
social security, whether or not they have a spouse who is eligible for social security, availability of other
retirement savings/benefits from prior employers etc.).
Below are some points in response to concerns regarding the difference in benefits between the two plans:
• After five years of not contributing to social security, an employee is no longer eligible for the disability
insurance (OASDI) portion of Social Security (a monthly benefit equal to a portion of their earnings in
the case that they become disabled and can no longer work). However, there is no impact on the
Medicare (health insurance) portion ofSocial Security. Medicare contributions are separate and will
continue along with the Units earned towards Medicare.
• Social Security requires 40 Units (Quarters) to "vest" and be qualified to receive a benefit. We do not
have information regarding which city employees are vested in social security. However, it is our
understanding that if they earn at least $4,520 per year, they would be vested after 10 years of hourly
part time employment, either with the City of Carlsbad or another employer. If an employee is already
vested in social security and stops contributing, they will not lose their social security benefit, however,
the benefit amount won't grow. They would also have the APPLE 457 benefit to use as a retirement
savings account. If a city employee has not yet vested in social security, they would need to earn more
quarters via another employer in order to achieve vested status.
37
• Social Security may be earned through a spouse, provicfirf|«4 retirement benefit equal to 50% of their
spouse's benefit if that benefit is higher tbiafrJ^JfciJ^Wlififi^ have earned on their own.
. The death benefit frpm SDdal Security's a 9ne-time ca^h benefit paid only to a spouse or
dependent child. ln?most cases the p^rm'f/^Pi:^^?^^^ balance will exceed this one time
Social Security benefit. _ ...... 'll-iAO 0 i'^^-^«
• Social Security woul^:! proviJe a beneficiary some portion of the employee's retirement
benefit. Similarly, the APPLE 457 benefit (entire account balance, including interest) would be paid out
to a beneficiary.
In summary, staff believes that the best option for the majority of hourly city employees is the APPLE 457
plan. However, depending on their personal situation, some employees may have a strong desire to continue
to contribute to social security because they believe it will provide a better benefit for them. Council could
decide to allow current employees one chance to "opt out of APPLE 457" and remain in social security as a
"grandfathered group." If this were allowed, in order to streamline administration, we strongly recommend
that all current employees who choose APPLE and all new or re-hired employees would not have an option in
the future, but would remain/be enrolled In the APPLE plan. Besides the administrative cost of maintaining
two optiot^s, there is also the cost to the city of the additional 2.45% of payroll that the city would pay for
those employees who remain in social security.
Debbie Porter
S55? CITY Of
CARLSBAD
Human Resources
Debbie Porter
Senior Management Ar^lyst _ , - -
From: Cindy Parkinson [mailto:clndyparkinson@hotmail.coml
Sent: Saturday, June 23, 2012 4:28 PM
To: Council Internet Email
Subject: RE: Social Security and hourly employees
Dear Mayor Matt Hall and Council members
Mark Packard, Keith Blackburn, and Farrah Golshan Douglas,
I found some information from the Congressional Research Service about Social Security and the current laws that
govern social security withholdings and public employees. I am including the first couple of pages, which I think apply in
the case of the City of Carlsbad's plans to discontinue Social Security coverage for their hourly employees. Current hourly
employees who started after 12/19/04 have all been enrolled In social security as have many of us who elected social
security instead of the 457 plan.
A 457 plan is no replacement for social security which provides not only retiree benefits, but disability and survivors
insurance. Thank you again for your thoughtful consideration.
Sincerely,
Cynthia Parkinson
dndvparkinsoncahotmail.com
^ CARLSBAD
CITY OF
June 26, 2012
To: MAYOR AND CITY COUNCIL
From: CITY ATTORNEY
Re: AGENDA ITEM #11, APPROVAL OF THE CITY OF CARLSBAD APPLE PLAN TO
PROVIDE RETIREMENT BENEFITS FOR HOURLY PART-TIME EMPLOYEES IN
LIEU OF SOCIAL SECURITY OR THE EXISTING LINCOLN FINANCIAL
ADVISORS PLAN
In certain limited circumstances, it may be preferable for a part-time hourly employee
to remain in the Social Security system rather than participate in the proposed APPLE
Plan, to provide retirement benefits. In order to provide a one-time opportunity for
existing part-time hourly employees to elect to continue participating in Social Security,
it is recommended that the attached amended resolution be adopted. There would be
some minor fiscal impact as explained in the agenda bill Item of 2.45% per employee
depending on the individual employees earning.
Debbie Porter, Senior Management Analyst, will be in attendance to respond to any
questions that Council has in this regard.
RONALD R. BALL
City Attorney
/rn
c: City Manager
City Clerk
Human Resources Director
Senior Management Analyst, Debbie Porter
DateL
Distribution:
City Clerk
Asst. City Clerk
Deputy Clerk
Book
City Attorney
1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2891 I 760-434-8367 fax I www.carlsbadca.gov ^Cj
RESOLUTION NO.
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A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, ADOPTING THE CITY OF
CARLSBAD ACCUMULATION PROGRAM FOR PART-
TIME AND LIMITED-SERVICE EMPLOYEES (APPLE)
PLAN TO PROVIDE RETIREMENT BENEFITS IN LIEU OF
COVERAGE UNDER SOCIAL SECURITY OR THE
EXISTING LINCOLN FINANCIAL ADVISORS PLAN AND
AUTHORIZING AND DIRECTING THE HUMAN
RESOURCES DIRECTOR TO EXECUTE ALL
NECESSARY DOCUMENTS
WHEREAS, Section 11332 of the Omnibus Budget Reconciliation ACT of 1990
("OBRA '90") extends Social Security retirement benefit coverage to employees of state
and local governments who are not covered by a state or local retirement system and
subjects the employer and employee to Federal Insurance Contributions Act ("FICA")
taxes on the employee's wages; and
WHEREAS, OBRA '90 excludes from the requirement of Social Security
coverage governmental employees who are covered by a compulsory retirement
system of a state or local government; and
WHEREAS, California Government Code section 53216, et seq., authorizes a
governmental employer to establish and fund a pension Plan covering its employees on
a compulsory basis; and
WHEREAS, certain hourly part-time employees of the City of Carlsbad are not
currently covered under any other retirement program through the City or the State of
California in lieu of coverage under Social Security, as permitted by OBRA '90; and
WHEREAS, the Council desires to adopt a compulsory retirement Plan, qualified
under section 457 of the Internal Revenue Code of 1986 ("the Code"), for the hourly
part-time employees, council-appointed officials and elected officials in lieu of providing
coverage under Social Security, as permitted by OBRA '90; and
WHEREAS, the City of Carlsbad currently provides a FICA alternative plan to
certain hourly part-time employees through the Lincoln Financial Advisors; and
WHEREAS, the Council desires to continue to provide a tax-qualified FICA
alternative plan for said employees, but to replace the existing Lincoln Financial
Advisors Trust with the Accumulation Program for Part-Time and Limited-Service
Employees of the City of Carlsbad ("APPLE Plan"); and
WHEREAS, Code section 414(h)(2) permits the City to pick up the employee
g portion of contributions to a section 457 Plan and to treat them as employer
IQ contributions; and
11 WHEREAS, such "picked up" contributions are not taxable to the employee until
12 distributed; and
WHEREAS, the Council has reviewed the Accumulation Program for Part-time
and Limited-service Employees (the "APPLE Plan") provided by Keenan & Associates.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Carlsbad, California, as follows:
1. That the above recitations are true and correct.
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19 2. That the APPLE Participation Agreement, APPLE Plan Administrative Services
20 Agreement and Unallocated Fixed Contract Application, Acceptance & New
Business Agreement referred to in the recitals above are incorporated in this
resolution by reference.
3. That the Council hereby adopts the City of Carlsbad APPLE Plan to provide
retirement benefits to hourly part-time employees of the City in lieu of coverage
under Social Security and as an amendment to the existing Lincoln Financial
2^ Advisors Plan replacing the Lincoln Financial Advisors Plan in full, to be effective
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as soon as administratively possible following adoption of this resolution except
that the current hourly part-time emplovees shall be given notice and a one-time
opportunity to elect to continue to participate in Social Securitv. The Human
Resources Director shall be responsible to implement this provision.
4. That the Council hereby designates the City as the Plan Administrator of the
APPLE Plan.
5. That the Council hereby designates the City as the Trustee of the APPLE Plan.
6. That the Council hereby authorizes MidAmerica Administrative Solutions
("MidAmerica"), to execute, on behalf of the City, the APPLE Plan and any other
documents necessary to carry out the provisions of the APPLE Plan.
7. That the Council hereby authorizes MidAmerica to execute, on behalf of the
Employer, the APPLE Plan and any other documents necessary to carry out the
provisions of the APPLE Plan; to enter into contracts with Keenan & Associates
to provide ongoing administrative consulting services in connection with the
operation of the Plan; to arrange funding of the Plan through American United
Life (AUL); to communicate the Plan to eligible employees of the City; and to
perform related services in connection with the APPLE Plan.
8. That the Council hereby terminates the City's participation in the Lincoln
Financial Advisors Plan and removes Lincoln Financial Advisors as the Trustee
of the Plan.
9. That Keenan & Associates will act as Broker for American United Life Insurance
Company's 3121 Alternative to Social Security program, and provide consultant
and broker services for the APPLE Plan as outlined in the Keenan & Associates
2 Service Agreement
10. That the Council hereby removes Lincoln Financial Advisors as Trust
Administrator and appoints MidAmerica as Third Party Administrator of the
APPLE Plan
11. That the Council directs the transfer of the plan assets held by Lincoln Financial
g Advisors under the Lincoln Financial Advisors Plan and Trust to AUL, as
9 custodian for the successor Trustee, the City of Carlsbad for the benefit of the
10 City of Carlsbad APPLE Plan, to occur within 30 days after July 1, 2012, or a
date mutually agreed upon by Lincoln Financial Advisors and the City of
Carlsbad. This will facilitate the ability of MidAmerica to process Plan
distributions with minimal delays to Plan Participants.
12. That the Council directs the transfer of plan participant's account information
from Lincoln Financial Advisors to MidAmerica, to occur within 30 days after July
17 1, 2012 or a date mutually agreed upon by Lincoln Financial Advisors and the
18 ^'ty 0^ Carlsbad in order for MidAmerica to process Plan distribution with minimal
19 delays.
13. That the Council has determined that it is appropriate for the City to "pick up" the
employee portion of contributions to the APPLE Plan so that each participant of
the Plan shall make contributions to the Plan on a pretax basis, as permitted
under IRS Section 414 (h) (2)
14. That the City will implement the "pick-up" provisions of IRC Code section
26 414(h)(2) by making employee contributions to the Plan on behalf of its
27 employees who are participants in such Plan. "Employee contributions" shall
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mean those contributions to the APPLE Plan, which are deducted from the salary
of employees and are credited to individual employees' accounts.
15. That the contributions made by the City to the APPLE Plan, although designated
as employee contributions, will be paid by the Employer in lieu of contributions by
the employees who are participants in the APPLE Plan.
16. That employees shall not have the option of choosing to receive the contributed
amounts directly instead of having them paid by the City to the APPLE Plan.
17. That the City shall pay to the APPLE Plan the contributions designated as
employee contributions from the same source of funds that is used to pay
employees' salary.
18. That the amount of the contributions designated as employee contributions and
paid by the City to the APPLE Plan on behalf of an eniployee shall be the entire
contributions required of the employee under the Plan.
19. That the Human Resources Director is authorized to execute, on behalf of the
City, any additional and required documents with MidAmerica, Keenan &
Associates and American United Ufe Insurance Company (AUL) in furtherance
of the purpose and intent of this resolution.
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PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council
of the City of Carlsbad on the day of ,
2012, by the following vote:
AYES:
NOES:
ABSENT:
MATT HALL, Mayor
ATTEST:
LORRAINE M. WOOD, City Clerk
(SEAL)
Sherry Freisinger
From: Karen Kundtz
Sent: Tuesday June 26, 2012 8:27 AM
To: Sherry Freisinger; Donna Heraty
Subject: FW: Agenda item # 11: Social Security and hourly employees
Importance: High
Info for Agenda Item 11
From: Lisa Hildabrand
Sent: Tuesday, June 26, 2012 8:26 AM
To: Council Archive
Cc: Karen Kundtz; Lorraine Wood; Cynthia Haas
Subject: Agenda item # 11: Social Security and hourly employees
Importance: High
From: Debbie Porter
Sent: Monday, June 25, 2012 6:42 PM
To: Lisa Hildabrand
Cc: Julie Clark
Subject: RE: Social Security and hourly employees
This is in response to Cynthia Parkinson's concerns regarding implementation ofthe APPLE 457 plan in lieu of
social security, specifically, the loss ofthe Old Age Survivor and Disability Insurance (OASDI) portions ofSocial
Security as well as the legality of opting out of social security.
It is our understanding that we are legally allowed to opt out of social security. The local State government
regulates an agencies' participation in Social Security and their 218 agreements for full-time emplovees. In
California they have allowed part-time emplovees to opt out of Social Security in light of OBRA 90 and IRC
3121 regulations.
The goals ofthe transition to APPLE 457 were 1) to save money (the city's cost reduces from 6.2% of payroll to
3.75% of payroll and the employee's cost reduces from 4.2% of payroll to 3.75% of payroll), 2) to provide a
better more predictable benefit for hourly employees and 3) to streamline the administration process by
having only one retirement vendor for hourly employees instead of two.
It is difficult to compare the benefits between Social Security (a defined benefit) and the APPLE 457 (a defined
contribution plan). Each employee's personal situation impacts how they define which is a better benefit for
them (e.g., number of years until they reach retirement eligibility age, whether or not they are "vested" in
social security, whether or not they have a spouse who is eligible for social security, availability of other
retirement savings/benefits from prior employers etc.).
Below are some points in response to concerns regarding the difference in benefits between the two plans:
• After five years of not contributing to social security, an employee is no longer eligible for the disability
insurance (OASDI) portion ofSocial Security (a monthly benefit equal to a portion of their earnings in
1
the case that they become disabled and can no longer work). However, there is no impact on the
Medicare (health insurance) portion ofSocial Security. Medicare contributions are separate and will
continue along with the Units earned towards Medicare.
• Social Security requires 40 Units (Quarters) to "vest" and be qualified to receive a benefit. We do not
have information regarding which city employees are vested in social security. However, it is our
understanding that if they earn at least $4,520 per year, they would be vested after 10 years of hourly
part time employment, either with the City of Carlsbad or another employer. If an employee is already
vested in social security and stops contributing, they will not lose their social security benefit, however,
the benefit amount won't grow. They would also have the APPLE 457 benefit to use as a retirement
savings account. If a city employee has not yet vested in social security, they would need to earn more
quarters via another employer in order to achieve vested status.
• Social Security may be earned through a spouse, providing a retirement benefit equal to 50% of their
spouse's benefit if that benefit is higher than the benefit they have earned on their own.
• The death benefit from Social Security is a one-time $255 cash benefit paid only to a spouse or
dependent child. In most cases the person's APPLE 457 account balance will exceed this one time
Social Security benefit.
• Social Security would provide a beneficiary some portion of the employee's retirement
benefit. Similarly, the APPLE 457 benefit (entire account balance, including interest) would be paid out
to a beneficiary.
In summary, staff believes that the best option for the majority of hourly city employees is the APPLE 457
plan. However, depending on their personal situation, some employees may have a strong desire to continue
to contribute to social security because they believe it will provide a better benefit for them. Council could
decide to allow current employees one chance to "opt out of APPLE 457" and remain in social security as a
"grandfathered group." If this were allowed, in order to streamline administration, we strongly recommend
that all current employees who choose APPLE and all new or re-hired employees would not have an option in
the future, but would remain/be enrolled in the APPLE plan. Besides the administrative cost of maintaining
two options, there is also the cost to the city ofthe additional 2.45% of payroll that the city would pay for
those employees who remain in social security.
Debbie Porter
^ C > T V Of
CARLSBAD
Huffidn R€!iOurcc;5
Debbie Porter
Senior Management Analyst
City of Carlsbad
1635 Faraday Avenue
Carlsbad, CA 92008
www.ca risbadca .gov
/7
P: 760-602-2441
F: 760-602-8554
E: Debbie.Porter@carlsbadca.gov
From: Cindy Parkinson [mailto:cindyparkinson@hotmail.com1
Sent: Saturday, June 23, 2012 4:28 PM
To: Council Internet Email
Subject: RE: Social Security and hourly employees
Dear Mayor Matt Hall and Council members
Mark Packard, Keith Blackburn, and Farrah Golshan Douglas,
I found some information from the Congressional Research Service about Social Security and the current laws that
govern social security withholdings and public employees. I am including the first couple of pages, which I think apply in
the case of the City of Carlsbad's plans to discontinue Social Security coverage fbr their hourly employees. Current hourly
employees who started after 12/19/04 have all been enrolled In social security as have many of us who elected social
security instead of the 457 plan.
A 457 plan is no replacement for social security which provides not only retiree benefits, but disability and survivors
insurance. Thank you again for your thoughtful consideration.
Sincerely,
Cynthia Parkinson
cindyparkinson(g)hotmail.com