HomeMy WebLinkAbout2012-07-24; City Council; Resolution 2012-1891 RESOLUTION NO. 2012-189
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 ("FICA")
taxes on the employee's wages; and
WHEREAS, OBRA '90 excludes from the requirement of Social Security
j5 coverage governmental employees who are covered by a compulsory retirement
16 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
25 under section 457 of the Internal Revenue Code of 1986 ("the Code"), for the hourly
26 part-time employees, council-appointed officials and elected officials in lieu of providing
27 coverage under Social Security, as permitted by OBRA '90; and
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1 WHEREAS, the City of Carlsbad currently provides a FICA 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 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
^ 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
21 Business Agreement referred to in the recitals above are incorporated in this
resolution by reference
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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 the current houriv part-time emplovees shall be given notice and a one-time
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opportunitv to elect to continue to participate in Social Security. The Human
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Resources Director shall be responsible to implement this provision.
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4. That the Council hereby designates the City as the Plan Administrator of the
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APPLE Plan,
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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
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
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to provide ongoing administrative consulting services in connection with the
Ij 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
of the Plan.
9. That Keenan & Associates will act as Broker for American United Life Insurance
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2^ Company's 3121 Alternative to Social Security program, and provide consultant
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and broker services for the APPLE Plan as outlined in the Keenan & Associates
2 Service Agreement.
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10. That the Council hereby removes Lincoln Financial Advisors as Trust
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Administrator and appoints MidAmerica as Third Party Administrator of the
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APPLE Plan
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^ 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
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 of Carlsbad in order for MidAmerica to process Plan distribution with minimal
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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 employee 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 Life Insurance Company (AUL) in furtherance
of the purpose and intent of this resolution.
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1 PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council
2 of the City of Carlsbad on the 24*^ day of July 2012, by the following vote to wit:
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AYES: Council Members Hall, Kulchin, Blackburn, Douglas.
NOES: Council Member Packard.
ABSENT: None.
11 MATT HALL, Mayor
12 ATTEST:
JNE M. WOOD, City Clerk
(SEAL) s<9-V?-?^^'c\