HomeMy WebLinkAbout2022-06-09; City of Carlsbad Amended and Restated Governmental 457 (b) Deferred Compensation Plan (Districts - All); Rocha, LauraTo the members of the:
CITY COUNCIL
Date "/1/::zicA ✓ cc ✓.
CM ~ACM v DCM (3) --~
June 9, 2022
Council Memorandum
To:
From:
Honorable Mayor Hall and Members of the City Council
Laura Rocha, Deputy City Manager, Administrative Services
Judy van Kalinowski, Human Resources Director
Via:
{city of
Carlsbad
Memo ID #2022069
Re:
Geoff Patnoe, Assistant City Manager ~
City of Carlsbad Amended and Restat~overnmental 457 (b) Deferred Compensation
Plan (Districts -All)
This memorandum provides information related to the City of Carlsbad Governmental 457 (b)
Deferred Compensation Plan.
Background
On Oct. 2, 1979, the City of Carlsbad adopted the City of Carlsbad Deferred Compensation Plan
(Plan) for its employees. The purpose of the Plan is to allow eligible employees to defer a portion
oft heir compensation as allowed by Section 457 of the Internal Revenue Code of 1986, as
amended. The city holds a contract with Mission Square Retirement, formerly ICMA Retirement
Corporation, and Nationwide Retirement Solutions to administer deferred compensation plans
for city employees and to provide investment vehicles from which employees may choose.
Benefit plan documents require periodic updates to reflect changes in legislation, regulations and
the administration of such plans. On Dec. 17, 2002, Resolution No. 2002-362 was adopted giving
authority to the City Manager or designee to make any future amendments to the Plan that have
been approved by the City Attorney in order to stay in compliance with future legislation. The
Plan document was last updated on Jan. 1, 2005, due to changes issued by the Internal Revenue
Service and to document administrative changes, such as a change in vendor.
Discussion
The updated Plan, effective Jan. 1, 2022, includes relevant provisions of the Setting Every
Community up for Retirement Enhancement Act of 2019 {Secure Act) and the Coronavirus Aid,
Relief and Economic Security Act of 2020 (Cares Act). It also updates annual contribution limits.
While the city's practices have changed to incorporate the requirements of new legislation, it is
necessary to amend and restate the Plan to formalize these practices and ensure the Plan's
accuracy and consistency with applicable law.
Next Steps
Human Resources staff will continue to monitor legislative changes that mandate Plan changes to
ensure the Plan remains current and retains its status as a tax-favored benefit. City Council
Administrative Services Branch
Human Resources Department
1635 Faraday Avenue I Carlsbad, CA 92008 I 442-339-2440 t
Council Memo-City of Carlsbad Amended and Restated Gov 457 (b) Deferred Comp Plan
June 9, 2022
Page 2
members will be advised of any Plan changes, consistent with the requirements set forth in
Resolution No. 2002-362. Discretionary Plan changes will be brought to the City Council for
consideration and approval. The City Manager or designee will continue to authorize
administrative decisions.
Attachment: A. City of Carlsbad Amended and Restated Governmental 457 (b) Deferred
Compensation Plan (Due to the size of Attachment A, a hardcopy is on file in the
Office of the City Council, as reference)
cc: Scott Chadwick, City Manager
Celia Brewer, City Attorney
60135.00041\34737304.2
CITY OF CARLSBAD
GOVERNMENTAL 457(b)
DEFERRED COMPENSATION PLAN
Amended And Restated
Effective As Of January 1, 2022
Attachment A
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CITY OF CARLSBAD
GOVERNMENTAL 457(b) DEFERRED COMPENSATION PLAN
Table Of Contents
Page
ARTICLE 1. GENERAL .................................................................................... 1
1.01. Plan Name. ................................................................................... 1
1.02. Effective Date................................................................................ 1
1.03. Exclusive Benefit. .......................................................................... 2
1.04. Income Tax And ERISA Status. .................................................... 2
1.05. Plan Administrator. ........................................................................ 2
1.06. Assets Held In Trust. ..................................................................... 3
1.07. Defined Terms. ............................................................................. 3
ARTICLE 2. GENERAL DEFINITIONS ............................................................. 3
2.01. Account. ........................................................................................ 3
2.02. Administrator. ................................................................................ 4
2.03. Beneficiary. ................................................................................... 4
2.04. City. ............................................................................................... 5
2.05. City Manager. ............................................................................... 5
2.06. Code. ............................................................................................ 5
2.07. Compensation And Includible Compensation. .............................. 5
2.08. Deferred Compensation. ............................................................... 7
2.09. Designated Beneficiary. ................................................................ 7
2.10. Distributee. .................................................................................... 7
2.11. Distribution Calendar Year. ........................................................... 8
2.12. Eligible Retirement Plan. ............................................................... 8
2.13. Eligible Rollover Distribution. ........................................................ 8
2.14. Employee. ..................................................................................... 9
2.15. ERISA. ........................................................................................ 10
2.16. Normal Retirement Age. ............................................................. 10
2.17. Participant. .................................................................................. 10
2.18. Plan. ............................................................................................ 10
2.19. Pre-Tax Deferred Compensation. ............................................... 10
2.20. Required Beginning Date. ........................................................... 10
2.21. Roth Deferred Compensation. .................................................... 10
2.22. Severance From Employment. ................................................... 11
2.23. Trust. ........................................................................................... 11
2.24. Trustee. ....................................................................................... 11
2.25. Trust Fund. ................................................................................. 11
2.26. USERRA. .................................................................................... 11
2.27. Valuation Calendar Year. ............................................................ 12
2.28. Valuation Date. ........................................................................... 12
ARTICLE 3. ELIGIBILITY AND PARTICIPATION ........................................... 12
3.01. Eligible Employees; Excluded Employees. ................................. 12
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3.02. Eligibility Requirements. .............................................................. 13
3.03. Commencement Of Participation. ............................................... 13
3.04. Participation. ............................................................................... 13
3.05. Beneficiary Designation. ............................................................. 13
3.06. Military Leaves. ........................................................................... 15
3.07. Eligibility Of Reemployed Employees. ........................................ 15
3.08. Eligibility Of Excluded Employees. .............................................. 15
3.09. Omission Of Eligible Employee. .................................................. 16
3.10. Inclusion Of Ineligible Individual. ................................................. 16
ARTICLE 4. CONTRIBUTIONS AND ALLOCATIONS ................................... 16
4.01. City Compensation – Deferred Compensation. ........................... 16
4.02. Rollover Contributions. ................................................................ 19
4.03. Transfers From Other Plans. ...................................................... 20
4.04. Time Of Contributions. ................................................................ 20
ARTICLE 5. ALLOCATIONS OF CONTRIBUTIONS AND VALUATION ........ 20
5.01. Valuation Of The Trust. ............................................................... 20
5.02. Allocation Of Investment Results And Plan Expenses. ............... 21
5.03. Allocation Of Deferred Compensation. ........................................ 21
5.04. Correction Of Allocation. ............................................................. 22
ARTICLE 6. LIMITATION ON CONTRIBUTIONS AND BENEFITS ................ 22
6.01. Limitations In General. ................................................................ 22
6.02. Limitations – Last Three Years Of Participation. ......................... 22
6.03. Limitations – Age Fifty Catch-Up Contributions. ......................... 23
6.04. Distribution Of Excess Deferred Compensation. ......................... 24
ARTICLE 7. PARTICIPANT-DIRECTED INDIVIDUAL ACCOUNT ................. 25
7.01. Directed Individual Accounts Permitted. ..................................... 25
7.02. Separate Account Established. ................................................... 25
7.03. Fiduciary Duty. ............................................................................ 26
ARTICLE 8. PARTICIPANT LOANS ............................................................... 26
8.01. Authorization For Participant Loans; Participant Loan Rules. ..... 26
8.02. Loan Funding And Repayments.................................................. 26
8.03. Loan Application, Note And Security. .......................................... 28
8.04. Default, Suspension And Call Feature. ....................................... 28
ARTICLE 9. VESTING .................................................................................... 29
9.01. Full Vesting. ................................................................................ 29
9.02. No Divestment For Cause. .......................................................... 29
9.03. Lost Participant Or Beneficiary.................................................... 29
ARTICLE 10. PAYMENT OF BENEFITS .......................................................... 30
10.01. Measure Of Benefits. .................................................................. 30
10.02. Method Of Payment Of Benefits. ................................................ 30
10.03. Commencement Of Payment Of Benefits. .................................. 33
10.04. Distributions To Rehired Employees. .......................................... 35
10.05. Distributions Upon An Unforeseeable Emergency. ..................... 36
10.06. In-Service Distributions. .............................................................. 38
10.07. Payment Of Death Benefits. ....................................................... 38
10.08. Distributions To Incapacitated Individuals. .................................. 42
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10.09 Repayment Of Overpayment Of Benefits. ................................... 42
10.10. Qualified Domestic Relations Order Payments. .......................... 43
10.11. Nonliability. ................................................................................. 44
10.12. Mechanics Of Payment. .............................................................. 44
10.13. Withholding. ................................................................................ 45
10.14. Distribution From Roth Accounts. ............................................... 45
10.15. In-Plan Roth Conversions. .......................................................... 45
ARTICLE 11. PLAN ADMINISTRATION ........................................................... 46
11.01. Employment Records. ................................................................. 46
11.02. Reports And Disclosure. ............................................................. 46
11.03. Retention Of Records. ................................................................ 46
11.04. Powers And Responsibilities. ...................................................... 47
11.05. Designation Of Administrative Authority. ..................................... 47
11.06. Allocation And Delegation Of Responsibilities. ........................... 48
11.07. Powers And Duties Of The Administrator. .................................. 48
11.08. Administrative Functions. ............................................................ 49
11.09. Interpretation Of Trust. ................................................................ 49
11.10. Settlement Of Disputes. .............................................................. 49
11.11. Appointment And Responsibility Of Representatives. ................. 50
11.12. Appointment Of Fiduciaries And Agents. .................................... 50
11.13. Compensation Of Administrator. ................................................. 50
11.14. Use Of Electronic Media. ............................................................ 51
ARTICLE 12. CLAIMS PROCEDURES ............................................................ 51
12.01. Request For Information. ............................................................ 51
12.02. Claims For Benefits. .................................................................... 51
12.03. Filing Claims. .............................................................................. 51
12.04. Initial Determination Of Claim. .................................................... 52
12.05. Claims Appeals. .......................................................................... 52
12.06. Resolution Of Disputes. .............................................................. 54
12.07. Administration Pending Resolution Of Disputes. ........................ 55
ARTICLE 13. AMENDMENT AND TERMINATION .......................................... 55
13.01. Amendments. .............................................................................. 55
13.02. No Amendment To Reduce Prior Earned Benefits...................... 56
13.03. Plan Termination. ........................................................................ 57
13.04. Reversions. ................................................................................. 57
13.05. Transfer To New Plan. ................................................................ 57
13.06. Plan Merger. ............................................................................... 57
ARTICLE 14. MISCELLANEOUS ..................................................................... 58
14.01. Nonalienation Of Benefits. .......................................................... 58
14.02. Employee Plans Compliance Resolution System. ...................... 59
14.03. Limitation Of Rights; Employment Relationship. ......................... 59
14.04. Limitation Of Rights Of Participants And Others. ........................ 59
14.05. Release From Liability. ............................................................... 60
14.06. Indemnity. ................................................................................... 60
14.07. Expenses. ................................................................................... 60
14.08. Construction. ............................................................................... 60
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14.09. Headings. .................................................................................... 61
14.10. Uniformity. ................................................................................... 61
14.11. Gender And Number. .................................................................. 61
14.12. Controlling Law. .......................................................................... 61
14.13. Amendment Of Laws. ................................................................. 61
14.14. Severability. ................................................................................ 61
14.15. Waiver. ........................................................................................ 62
14.16. Entire Document. ........................................................................ 62
ARTICLE 15 - CARES ACT PROVISIONS ......................................................... 62
15.01. CARES Act Definitions. ............................................................... 62
15.02. Coronavirus-Related Distributions. ............................................. 63
15.03. Participant Loan Relief. ............................................................... 64
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CITY OF CARLSBAD
GOVERNMENTAL 457(b) DEFERRED COMPENSATION PLAN
The City of Carlsbad (City) hereby amends and restates the City of Carlsbad
Governmental 457(b) Deferred Compensation Plan (Plan), effective as of
January 1, 2022 for the exclusive benefit of its eligible employees and their
beneficiaries.
RECITALS
Whereas:
A. The City is a governmental employer that is an eligible employer within
the meaning of section 457(e)(1)(A) of the Internal Revenue Code of
1986, as amended (Code).
B. The City has previously established a deferred compensation plan that is
an eligible deferred compensation plan pursuant to Code section 457(b),
under which its eligible Employees may defer a portion of their
compensation.
C. The City now wishes to amend and restate the Plan to include the relevant
provisions of The Setting Every Community up for Retirement
Enhancement Act of 2019 (Secure Act) and the Coronavirus Aid, Relief
and Economic Security Act of 2020 (CARES Act).
OPERATIVE PROVISIONS
Now, therefore, the City hereby amends and restates the Plan upon the following
terms and conditions:
ARTICLE 1. GENERAL
1.01. Plan Name.
The name of this Plan is the "City of Carlsbad Governmental 457(b)
Deferred Compensation Plan."
1.02. Effective Date.
Except as otherwise indicated, the effective date of this amended and
restated Plan is January 1, 2022.
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1.03. Exclusive Benefit.
It is the intention of the City that the Plan and Trust are created and
maintained for the exclusive benefit of the City's eligible Employees and
their Beneficiaries.
1.04. Income Tax And ERISA Status.
A. This Plan is intended to be an "eligible deferred compensation
plan" as that term is defined in Code section 457(b), such that the
Employees who participate in the Plan will have gross income,
except in the case of Roth Deferred Compensation, by virtue of the
operation of the Plan only in the taxable year in which amounts
deferred under the Plan are paid to the participating Employees or
their Beneficiaries.
B. The Plan is intended to qualify as a governmental plan that is
exempt from the provisions of the Employee Retirement Income
Security Act of 1974, as amended (ERISA). However, the Plan is
subject to the fiduciary standards set forth in Article 16 of the
California Constitution and in the California Government Code
applicable to Code section 457(b) plans.
C. The City believes this Plan to be in compliance with all applicable
sections of the Code. However, this Plan has not been submitted
to the Internal Revenue Service for approval and there is no
assurance that the intended tax benefits under this Plan will be
available. Neither the City, nor the Trustee, nor the Administrator,
nor its designated representative makes any commitment or
guarantee that any particular federal or State tax treatment will
apply to, or be available to, any Participant. Each Participant, by
accepting a benefit under this Plan, agrees to be liable for any
taxes, tax penalties and interest that may be imposed by the
Internal Revenue Service, or any other governmental agency, with
respect to these benefits.
1.05. Plan Administrator.
The City Council delegated the administration of the Plan to the City
Manager or the City Manager’s designee. The City Manager or the City
Manager’s designee shall be the Administrator of the Plan. The
Administrator may engage the services of one or more third parties to
assist the Administrator with the administration of the Plan.
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1.06. Assets Held In Trust.
In accordance with Code section 457(g), all amounts of compensation
deferred under this Plan, all property and rights purchased with such
amounts, and all income attributable to such amounts, property, or rights,
shall be held in trust, in a custodial account described in Code
section 401(f), or an annuity contract described in Code section 401(f).
1.07. Defined Terms.
All initially capitalized terms (other than headings) are defined terms and
will be defined in the General Definitions article.
ARTICLE 2. GENERAL DEFINITIONS
For purposes of this Plan, the following definitions shall apply:
2.01. Account.
“Account” means the following separate accounts maintained by the
Administrator on behalf of a Participant:
A. Deferred Compensation Account.
“Deferred Compensation Account” means the Participant’s Pre-
Tax Account, the Participant’s Roth Account, and the Participant’s
In-Plan Conversion Account as defined below:
1. Pre-Tax Account.
“Pre-Tax Account” means the account maintained by the
Administrator for each Participant representing Pre-Tax
Deferred Compensation, if any, adjusted for withdrawals,
income, expenses, and realized and unrealized gains and
losses attributable thereto.
2. Roth Account.
“Roth Account” means the account maintained by the
Administrator for each Participant representing Roth
Deferred Compensation by the Participant, if any, adjusted
for withdrawals, income, expenses, and realized and
unrealized gains and losses attributable thereto.
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3. In-Plan Roth Conversion Account.
“In-Plan Roth Conversion Account” means the account
maintained by the Administrator for each Participant
representing the amounts, if any, that the Participant has
converted to Roth contributions described in Code
section 402A pursuant to the In-Plan Roth Conversions
section below, adjusted for withdrawals, income, expenses,
and realized and unrealized gains and losses attributable
thereto.
B. Rollover Account.
“Rollover Account” means the account maintained by the
Administrator for each Participant representing the rollover of
distributions received by the Participant from another plan, if any,
or the direct transfer of an Eligible Rollover Distribution (excluding
rollover contributions from a Roth account described in Code
section 402A) from another plan, if any, adjusted for withdrawals,
income, expenses and realized and unrealized gains and losses
attributable thereto.
C. Roth Rollover Account.
“Roth Rollover Account” means the account maintained by the
Administrator for each Participant representing the direct transfer
of an Eligible Rollover Distribution that consists of Roth
contributions described in Code section 402A from another plan, if
any, adjusted for withdrawals, income, expenses, and realized and
unrealized gains and losses attributable thereto.
2.02. Administrator.
“Administrator” means the City Manager or the City Manager’s designee
appointed by the City Council with authority and responsibility to manage
and direct the operation and administration of the Plan. If the City Council
does not appoint an Administrator, the City Council shall be the
Administrator.
2.03. Beneficiary.
“Beneficiary” means any one or more person(s) entitled under the
provisions of this Plan to receive benefits after the death of a Participant.
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2.04. City.
“City” means the City of Carlsbad.
2.05. City Manager.
“City Manager” means the City's Manager.
2.06. Code.
“Code” means the Internal Revenue Code of 1986, as it may be amended
from time to time.
2.07. Compensation And Includible Compensation.
The terms “Compensation” and “Includible Compensation” are defined in
this section.
A. Compensation.
Except as otherwise provided, “Compensation” means:
1. Basic Compensation.
“Compensation” means Includible Compensation.
2. Exclusions To Compensation.
“Compensation” shall not include:
a. Noncash compensation, reimbursements or other
expense allowances, fringe benefits (cash and
noncash), moving expenses, deferred compensation,
and welfare benefits, even if includible in gross
income.
b. Any amount which is contributed by the City pursuant
to a salary reduction agreement and which is not
includible in the gross income of the Employee under
Code section 125, 132(f)(4), 402(e)(3), 402(h)(1)(B)
or 402(k).
c. Accumulated sick pay, accumulated vacation pay, or
back pay for a Participant who has not had a
Severance From Employment.
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3. Adjustments To Compensation.
For the purpose of determining contributions under the Plan,
Compensation shall include only amounts that were paid
while the Employee is a Participant.
B. Includible Compensation.
1. Includible Compensation In General.
“Includible Compensation” means the Employee's
“compensation” as determined under Code
section 415(c)(3), including any amount contributed or
deferred by the City at the election of the Employee that is
not includible in the gross income of the Employee under
Code section 125, 132(f)(4), 402(e)(3), 402(h)(1)(B), 402(k)
or 457(b). Compensation shall be determined without
regard to any community property laws.
2. Differential Wage Payments.
“Includible Compensation” shall include differential wage
payments to Participants on active duty to the extent
required by the provisions of Code section 414(u)(12)(A)(ii),
the Treasury regulations thereunder and any subsequent
guidance issued under Code section 414(u)(12)(A)(ii).
3. Payments After Severance From Employment.
"Includible Compensation" includes amounts paid after the
Employee's Severance From Employment if paid by the
later of (i) two and one-half (2-1/2) months after the
Employee's Severance From Employment, or (ii) the end of
the calendar year that includes the date of the Employee's
Severance From Employment subject to the following
requirements:
a. The payment is regular compensation for services
during the Employee's regular working hours, or
compensation for services outside the Employee's
regular working hours (such as overtime or shift
differential), commissions, bonuses, or other similar
payments and the payment would have been made
to the Employee prior to a Severance From
Employment if the Employee had continued in
employment with the City.
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b. The payment is for unused accrued bona fide sick,
vacation, or other leave, but only if the Employee
would have been able to use the leave if employment
with the City continued.
c. Amounts received by the Employee pursuant to a
nonqualified unfunded deferred compensation plan
shall be excluded.
Notwithstanding the provisions of this Payments After
Severance From Employment paragraph, Includible
Compensation shall include all payments to an individual
who does not currently perform services for the City by
reason of qualified military service (within the meaning of
Code section 414(u)(1)) to the extent these payments do not
exceed the amounts the individual would have received if
the individual had continued to perform services for the City
rather than entering qualified military service.
2.08. Deferred Compensation.
“Deferred Compensation” means the amount of the Participant's
Compensation, not yet earned by the Participant that the Participant
designates as the amount that shall be deferred in accordance with the
provisions of this Plan. Deferred Compensation may consist of Pre-Tax
Deferred Compensation or Roth Deferred Compensation.
2.09. Designated Beneficiary.
“Designated Beneficiary” means the individual who is designated as the
Participant's Beneficiary and is the designated beneficiary under Code
section 401(a)(9) and Treasury regulations section 1.401(a)(9)-4.
2.10. Distributee.
“Distributee” means an Employee or former Employee who receives a
distribution from the Plan. “Distributee” also means the Employee's or
former Employee's surviving spouse and the Employee's or former
Employee's spouse or former spouse who is the alternate payee under a
qualified domestic relations order, as defined in Code section 414(p), with
regard to the interest of the spouse or former spouse. “Distributee” also
means the Employee's designated Beneficiary who is not the Employee's
spouse.
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2.11. Distribution Calendar Year.
“Distribution Calendar Year” means a calendar year for which a minimum
distribution is required under Code section 401(a)(9), the Treasury
regulations promulgated thereunder, and the provisions of the Plan that
implement these requirements. For distributions beginning before the
Participant's death, the first Distribution Calendar Year is the calendar
year immediately preceding the calendar year that contains the
Participant's Required Beginning Date. For distributions beginning after
the Participant's death, the first Distribution Calendar Year is the calendar
year in which distributions are required to begin under the Payment Of
Death Benefits section, below.
2.12. Eligible Retirement Plan.
“Eligible Retirement Plan” means a qualified trust described in Code
section 401(a), an annuity plan described in Code section 403(a), an
annuity contract described in Code section 403(b), an individual
retirement account described in Code section 408(a), a Roth individual
retirement account described in Code section 408A, an individual
retirement annuity described in Code section 408(b) other than an
endowment contract, or an eligible deferred compensation plan described
in Code section 457(b) that is maintained by a State, political subdivision
of a State, or any agency or instrumentality of a State or political
subdivision of a State and that agrees to separately account for amounts
transferred into such plan from this Plan, that accepts the Distributee's
Eligible Rollover Distribution; provided, however, that in the case of an
Eligible Rollover Distribution to a designated Beneficiary who is not the
Employee's surviving spouse, (i) an Eligible Retirement Plan shall be
either an individual retirement account described in Code section 408(a),
a Roth individual retirement account described in Code section 408A, or
an individual retirement annuity described in Code section 408(b) other
than an endowment contract and (ii) a direct trustee-to-trustee transfer is
made to such an account or annuity.
2.13. Eligible Rollover Distribution.
“Eligible Rollover Distribution” means any distribution of all or any portion
of the balance to the credit of the Distributee; provided, however, that an
Eligible Rollover Distribution does not include:
A. Any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the
life (or life expectancy) of the Distributee or the joint lives (or joint
life expectancies) of the Distributee and the Distributee's
60135.00041\34737304.2
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designated Beneficiary, or for a specified period of ten (10) years
or more;
B. Any distribution to the extent such distribution is required under
Code section 401(a)(9);
C. The portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to the City securities); provided, however,
that:
1. A portion of a distribution shall not fail to be an Eligible
Rollover Distribution merely because the portion consists of
after-tax Employee or after-tax Board Member contributions
that are not includible in gross income; and
2. Notwithstanding the preceding clause, such portion may be
transferred in a direct trustee-to-trustee transfer only to:
a. An individual retirement account described in Code
section 408(a);
b. A Roth individual retirement account described in
Code section 408A;
c. An individual retirement annuity described in Code
section 408(b); or
d. A qualified plan described in Code section 401(a)
(whether or not a defined contribution plan) or an
annuity contract or custodial account described in
Code section 403(b) that agrees to separately
account for amounts so transferred (and earnings
thereon), including separately accounting for the
portion of such distribution that is includible in gross
income and the portion of such distribution that is not
so includible; or
D. Any distribution that is made upon hardship of the Employee.
2.14. Employee.
“Employee” means any individual who is employed by the City as
a common law employee of the City.
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2.15. ERISA.
“ERISA” means the Employee Retirement Income Security Act of 1974,
as it may be amended from time to time.
2.16. Normal Retirement Age.
“Normal Retirement Age” means the age designated by the Participant
between (i) the earliest retirement date under the City’s basic retirement
plan, and (ii) age seventy and one-half (70-1/2).
2.17. Participant.
“Participant” means any Employee or former Employee who has met the
Plan's eligibility requirements, commenced participation in the Plan, and
is or may become eligible to receive a benefit under the Plan, or whose
Beneficiary(ies) may be eligible to receive any such benefit.
2.18. Plan.
“Plan” means the Code section 457(b) eligible deferred compensation
plan as set forth herein and any amendments hereto.
2.19. Pre-Tax Deferred Compensation.
“Pre-Tax Deferred Compensation” means Deferred Compensation that
are not Roth Deferred Compensation and are made on a pre-tax basis
pursuant to the City Contributions – Deferred Compensation section,
below.
2.20. Required Beginning Date.
“Required Beginning Date” means April 1 of the calendar year following
the later of (i) the calendar year in which the Participant attains age
seventy and one-half (70-1/2) or (ii) the calendar year in which the
Participant retires. Effective as of January 1, 2020, for Participants who
did not reach age seventy and one-half (70-1/2) before that date
“Required Beginning Date” means April 1 of the calendar year following
the later of (i) the calendar year in which the Participant attains age
seventy-two (72) or (ii) the calendar year in which the Participant retires.
2.21. Roth Deferred Compensation.
Roth Deferred Compensation” means Deferred Compensation that are
Roth contributions described in Code section 402A made in accordance
with the City Contributions – Deferred Compensation section, below, and
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(i) designated irrevocably by the Participant at the time of the cash or
deferred election as Roth Deferred Compensation that is made in lieu of
all or a portion of the Pre-Tax Deferred Compensation the Participant is
otherwise eligible to make under the Plan, and (ii) treated by the City as
includible in the Participant’s income at the time the Participant would
have received that amount in cash if the Participant had not made a cash
or deferred election. Roth Deferred Compensation may be made
available by the City as an Employee deferral option for all or some eligible
vendors providing administrative services for the Plan.
2.22. Severance From Employment.
“Severance From Employment” means the Employee ceases to be an
Employee of the City within the meaning of Code section 457(d)(1)(A)(ii).
A Participant shall be deemed to have severed employment with the City
for purposes of this Plan when both parties consider the employment
relationship to have terminated and neither party anticipates any future
employment of the Participant by the City.
2.23. Trust.
“Trust” means the retirement trust created by the City, which trust shall be
a part of this Plan, as described in a separate trust agreement. “Trust”
shall include any custodial accounts and contracts established under
Code section 401(f) for the purpose of holding funds under the Plan.
2.24. Trustee.
“Trustee” means the trustee(s) signing the Trust and any duly appointed
successor trustee(s). “Trustee” shall also include any Trustee or
insurance company holding the Trust assets in a custodial account or
contract established under Code section 401(f).
2.25. Trust Fund.
“Trust Fund” means all property and income held by the Trustee pursuant
to the terms of the Trust and for the purpose of this Plan.
2.26. USERRA.
“USERRA” means the Uniformed Services Employment And
Reemployment Rights Act of 1994, as it may be amended from time to
time.
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2.27. Valuation Calendar Year.
“Valuation Calendar Year” means the calendar year immediately
preceding the Participant's Distribution Calendar year.
2.28. Valuation Date.
“Valuation Date” means:
A. With respect to each segregated Account, every day that the
Trustee, any transfer agent appointed by the Trustee or the City,
and any stock exchange used by such agent, are open for business
(daily valuation); or
B. With respect to each non-segregated Account, if any, the last day
of the calendar year and any such other date(s) selected by the
Trustee or the Administrator, in its sole and absolute discretion.
ARTICLE 3. ELIGIBILITY AND PARTICIPATION
3.01. Eligible Employees; Excluded Employees.
All Employees of the City, who are not otherwise excluded from
participation in the Plan are eligible to participate in the Plan in accordance
with the Participation section, below. The Plan excludes the following
Employees (even if they might otherwise satisfy the eligibility criteria
specified in the Plan):
A. Employees who receive no earned income (within the meaning of
Code section 911(d)(2)) from the City that constitutes income from
sources within the United States (within the meaning of Code
section 861(a)(3));
B. A worker whom the City did not treat as an Employee even if either
(i) the individual might otherwise satisfy certain legal tests or criteria
to be considered a common law employee of the City or (ii) the
individual is subsequently determined to be a common law
employee of the City by a local State or federal governmental entity
or by a court of competent jurisdiction;
C. Part-time Employees who are eligible to participate in the
Apple/MidAmerica Code section 457 plan.
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3.02. Eligibility Requirements.
There are no age or service requirements under the Plan and an
Employee not excluded under the Eligible Employees; Excluded
Employees section, above, shall be eligible to participate in the Plan as
described in the Commencement Of Participation section, below.
3.03. Commencement Of Participation.
Each Employee who is not otherwise excluded from participation in the
Plan may participate in the Plan by entering into a compensation reduction
agreement with the City in accordance with the requirements of the
Compensation Reduction Agreements Requirements subsection, below.
3.04. Participation.
The Administrator, using employment dates certified by the City, shall
determine which Employees are eligible to participate, and the
Administrator shall furnish such information and attendant data to the
Trustee. The Administrator shall notify each eligible Employee of the
Employee's eligibility and of any application or other requirements for
participation. By becoming a Participant, the Employee agrees to be
bound by all terms, conditions and covenants of this Plan as then in effect
or as thereafter amended.
3.05. Beneficiary Designation.
A. Each Participant shall have the right to designate, in writing, on
forms provided by the Administrator, or online a Beneficiary or
Beneficiaries to receive the Participant's death benefits, and shall
have the right, at any time, to revoke such designation or to
substitute another such Beneficiary or Beneficiaries without the
consent of any Beneficiary; provided, however, that a married
Participant and spouse shall both designate any non-spouse
Beneficiary or Beneficiaries, unless the spouse cannot be located
or unless otherwise permitted by law. Any designation by a married
Participant and spouse of a non-spouse Beneficiary must be made
by the Participant in writing and be consented to in writing by the
Participant's spouse. Such spouse's written consent must
designate a Beneficiary who may not be changed without spousal
consent (unless the spousal consent expressly permits
designations by the Participant without any requirement of further
spousal consent), acknowledge the effect of such election, and be
witnessed by a Plan representative or a notary public. Such
consent shall not be required if it is established to the satisfaction
of the Administrator that the required consent cannot be obtained
60135.00041\34737304.2
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because there is no spouse, the spouse cannot be located, or other
circumstances that may be prescribed by Treasury regulations.
The election made by the Participant and consented to by the
Participant's spouse may be revoked by the Participant in writing
without the consent of the spouse at any time prior to the
Participant's death. Any new election must comply with the
requirements of this subsection. A former spouse's waiver shall
not be binding on a new spouse.
B. If a Participant has designated the Participant's spouse as the
Participant's Beneficiary under this Plan, such designation shall be
deemed to have been revoked in the event of a judgment, decree,
order, or approval of a settlement agreement, issued either (i) by a
court of competent jurisdiction, or (ii) through the administrative
process established under State law having the force and effect of
law under applicable State law, dissolving such marriage, unless
the Participant designates the Participant's ex-spouse as the
Participant's Beneficiary by a new designation signed by the
Participant and delivered to the Administrator after the entry of such
judgment, decree, order or approval of a settlement agreement and
prior to the Participant's death.
C. If, upon the death of a Participant, there is no valid designation of
Beneficiary on file with the Administrator, or the Participant's
Beneficiary is not alive, the Administrator shall designate as the
Beneficiary, in order of priority:
1. The surviving spouse;
2. The surviving children, including adopted children, in equal
shares, or their issue by right of representation;
3. Surviving parents, in equal shares; or
4. The Participant's heirs at law.
The determination of the Administrator as to which persons, if any,
qualify within the aforementioned categories shall be final and
conclusive upon all persons, but the Administrator may seek a
declaratory judgment of a court of competent jurisdiction to
determine the identity of Beneficiaries and their respective shares
at the expense of the Participant's Account.
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3.06. Military Leaves.
A. Each period served by a person in the uniformed services shall,
upon reemployment under USERRA, be deemed to constitute
service with the City for the purpose of determining the accrual of
benefits under the Plan, all to the extent required by and as
provided under USERRA. Notwithstanding any provision in the
Plan to the contrary, contributions, benefits and service credit with
respect to qualified military service will be provided in accordance
with Code section 414(u).
B. The Plan specifically incorporates herein by reference the
requirements of Code section 401(a)(37), the Treasury regulations
thereunder and any subsequent guidance under Code
section 401(a)(37) requiring that if a Participant dies while
performing qualified military service (as defined in Code
section 414(u)), the Beneficiary(ies) of the Participant shall be
entitled to any additional benefits (other than benefit accruals
relating to the period of qualified military service) provided under
the Plan had the Participant resumed employment on the date
before the Participant's date of death and then had a Severance
From Employment on account of death.
C. For purposes of the Restrictions On Distributions subsection and
the Restrictions On Distributions To Board Members subsection of
the Commencement Of Payment Of Benefits section, below, a
Participant shall be treated as having a Severance From
Employment during any period the Participant is performing service
in the uniformed services described in Code section 3401(h)(2)(A).
If a Participant elects to receive a distribution from the Plan as
result of the application of this subsection, the Participant may not
make Deferred Compensation to the Plan during the six (6) month
period beginning on the date of the distribution.
3.07. Eligibility Of Reemployed Employees.
If a Participant who has had a Severance From Employment is
reemployed by the City within an eligible class, the Employee may again
become a Participant in the Plan on the first day of the calendar month
next following the execution of a new compensation reduction agreement.
3.08. Eligibility Of Excluded Employees.
If a Participant becomes ineligible to continue to participate because the
Participant is no longer a member of an eligible class of Employees such
Employee may again become a Participant in the Plan upon return to an
60135.00041\34737304.2
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eligible class of Employees on the first day of the calendar month next
following the execution of a new compensation reduction agreement. If
an Employee who is not a member of the eligible class of Employees
becomes a member of the eligible class, such Employee may become a
Participant in the Plan on the first day of the calendar month next following
the execution of a compensation reduction agreement.
3.09. Omission Of Eligible Employee.
If an Employee who should have been included as a Participant for a
calendar year is erroneously omitted and discovery of the omission is
made after the calendar year, the City and the Administrator may correct
the erroneous omission of the Employee in accordance with the
requirements of the Internal Revenue Service through standards that are
similar to those set forth in the Employee Plans Compliance Resolution
System as described in Rev. Proc. 2021-30 and any subsequent guidance
or standards similar to such requirements.
3.10. Inclusion Of Ineligible Individual.
If any person is erroneously included as a Participant in the Plan and
discovery of the erroneous inclusion is made after the calendar year, the
City and the Administrator may correct the erroneous inclusion of the
Employee in accordance with the requirements of the Internal Revenue
Service through standards that are similar to those set forth in the
Employee Plans Compliance Resolution System as described in Rev.
Proc. 2021-30 and any subsequent guidance or standards similar to such
requirements.
ARTICLE 4. CONTRIBUTIONS AND ALLOCATIONS
4.01. City Compensation – Deferred Compensation.
A. Deferred Compensation In General.
1. Each calendar year, the City shall make contributions to this
Plan and the Trust in an amount equal to the total
compensation deferred by all Participants pursuant to this
City Compensation – Deferred Compensation section.
Except as provided in paragraph 2, below, such deferred
compensation shall be allocated to the Participant’s Pre-Tax
Account.
2. If Roth Deferred Compensation is made available by the City
as an Employee deferral option for an eligible vendor
providing administrative services for the Plan, a Participant
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may specify that any portion of the Participant’s
compensation that the Participant elects to defer under this
City Compensation – Deferred Compensation section may
be classified as Roth Deferred Compensation. Roth
Deferred Compensation will be deposited in the
Participant’s Roth Account under the Plan. No contributions
other than Roth Contributions and earnings will be credited
to this account and gains, losses, and other credits or
charges will be allocated on a reasonable and consistent
basis to this account. The Plan will maintain a record of the
amount of Roth Deferred Compensation in each
Participant’s Roth Account. Roth Deferred Compensation
shall be taken into account for the provisions of this Plan
implementing the requirements of Code section 402(g) and
Code section 415.
B. Compensation Reduction Agreements In General.
A Participant may elect to enter into a written compensation
reduction agreement with the City whereby the Participant agrees
to accept a reduction in cash compensation from the City and to
have the City contribute such amount to this Plan and the Trust.
Such amount shall be equal to either (i) any percentage of such
Participant's compensation per payroll period or (ii) a fixed
dollar amount per payroll period as specified in the
Participant's compensation reduction agreement. In addition, if
any extraordinary compensation is payable to a Participant (such
as a year-end bonus), the Participant may elect to enter into a
separate written compensation reduction agreement with the City
whereby the Participant agrees to accept a reduction in cash
compensation from the City with respect to such extraordinary
compensation equal to either (i) any percentage of such
extraordinary compensation or (ii) a fixed dollar amount of such
extraordinary compensation.
C. Compensation Reduction Agreements Requirements.
Compensation reduction agreements shall be subject to the
following:
1. A compensation reduction agreement shall become
effective no earlier than the first day of the calendar month
next following the execution of the compensation reduction
agreement and the first day of the calendar month for which
the Employer can reasonably process the request. If the
compensation reduction agreement has been executed on
60135.00041\34737304.2
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or before the Employee's first day of employment, the
compensation reduction agreement shall become effective
no earlier than the Employee's first day of employment with
the Employer or the first day of the calendar month for which
the Employer can reasonably process the request.
2. Thereafter, the compensation reduction agreement shall
apply to each payroll period during which a compensation
reduction agreement is on file with the City; provided,
however, that a compensation reduction agreement with
respect to any extraordinary compensation shall apply only
to that extraordinary compensation and shall not affect the
Participant's compensation reduction agreement then in
effect with respect to each payroll period.
3. Except as provided below, a Participant's compensation
reduction agreement with respect to each payroll period
(i.e., not a compensation reduction agreement with respect
to any extraordinary compensation) may be entered into or
amended by a Participant at such times as the City shall
prescribe for the purpose of:
a. Decreasing the amount of such Participant's
compensation which is subject to compensation
reduction during the remainder of such calendar year;
or
b. Increasing the amount of such Participant's
compensation that is subject to compensation
reduction during the remainder of such calendar year.
Any such modified compensation reduction agreement shall
provide that the City shall provide the Employee with
modified Deferred Compensation effective no earlier than
the first day of the calendar month next following the
execution of the modified compensation reduction
agreement.
4. A Participant may revoke the Participant's compensation
reduction agreement then in effect with respect to each
payroll period at any time, thereby ceasing Deferred
Compensation as of first day of the next following payroll
period. A Participant who has revoked the Participant's
compensation reduction agreement may again become an
active Participant in accordance with rules established by
the City. Any subsequent compensation reduction
60135.00041\34737304.2
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agreement shall provide that the City shall provide the
Employee with Deferred Compensation effective no earlier
than the first day of the calendar month next following the
execution of the subsequent compensation reduction
agreement.
5. The aggregate amount of a Participant's Deferred
Compensation during a calendar year shall not exceed the
amount that would cause the Plan to violate the provisions
of the Limitation On Contributions And Benefits article,
below. The City may modify or revoke its compensation
reduction agreement with any Participant at any time if the
City determines that such revocation or amendment is
necessary to ensure that the Plan will not exceed this
limitation.
6. Except as provided above, a compensation reduction
agreement applicable to any given calendar year, once
made, may not be revoked or amended by the Participant or
the City.
4.02. Rollover Contributions.
A. There may be transferred to the Trustee, subject to the approval of
the Administrator and the Trustee, by means of an Eligible Rollover
Distribution, all or any of the assets held (whether by a trustee,
custodian or otherwise) on behalf of an Eligible Retirement Plan
that is maintained for the benefit of any person who is or is about
to become a Participant in this Plan. Prior to accepting any such
rollover contribution, the Administrator may require that the
Participant or Employee establish to the satisfaction of the
Administrator that the amount to be rolled over to the Plan is an
Eligible Rollover Distribution from an Eligible Retirement Plan.
Except as provided in subsection B, below, the Plan will not accept
a rollover from an after-tax account.
B. This Plan will accept a direct rollover from another Roth elective
deferral account under another plan as described in Code
section 402A(e)(1); provided, however, that:
1. The rollover is permitted under the rules of Code
section 402(c);
2. The other plan must provide to the Administrator either (i) a
statement indicating the first year of the five (5) taxable-year
60135.00041\34737304.2
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period described in Code section 402A(d)(2)(B) and the
portion of the distribution that is attributable to investment in
the contract under Code section 72 or (ii) a statement that
the distribution is a qualified distribution as described in
Code section 402A(d)(2); and
3. The direct rollover shall be held in the separate Roth
Rollover Account.
4.03. Transfers From Other Plans.
If (i) an Employee is entitled to benefits under this Plan, (ii) such Employee
was previously covered by a Code section 457(b) eligible deferred
compensation plan maintained by an employer that is an eligible employer
within the meaning of Code section 457(e)(1)(A), and (iii) such plan
provided for the transfer of such benefits pursuant to the provisions of
Code section 457(e)(10) and the Treasury regulations promulgated
thereunder, then this Plan will accept the transfer of such amounts if the
City is satisfied, in its sole and absolute discretion, that such transfer and
acceptance is permissible under Code section 457.
4.04. Time Of Contributions.
Deferred Compensation accumulated through payroll deductions shall be
paid to the Trustee as of the earliest date on which such contributions can
reasonably be segregated from the City's general assets, but in any event
within fifteen (15) business days following the end of the month in which
such amounts would otherwise have been payable to the Participant in
cash.
ARTICLE 5. ALLOCATIONS OF CONTRIBUTIONS AND VALUATION
5.01. Valuation Of The Trust.
The Trustee, as of the close of business on each Valuation Date, shall
determine the net worth of the assets of the Trust at their fair market value
(using criteria and sources of information that the Trustee, in the Trustee's
sole and absolute discretion, deems appropriate), and, except as provided
in the Allocation Of Investment Results And Plan Expenses section,
below, shall deduct all fees and expenses for which the Trustee has not
yet obtained reimbursement from the City or from the Trust. Such
valuation shall not include any segregated accounts (which shall be
valued separately) or subsequent contributions for the current calendar
year made by the City, the Employee as of such Valuation Date or
thereafter, which shall be valued separately.
60135.00041\34737304.2
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5.02. Allocation Of Investment Results And Plan Expenses.
A. Income or loss generated since the immediately-preceding
Valuation Date by a segregated account described in the
Participant-Directed Individual Accounts section, or the Participant
Loans article, less the portion of the Plan's investment-related cost
attributable thereto, shall be allocated solely to the account or
investment involved. As of any Valuation Date, the income or loss
attributable to the remaining assets of the Plan, reduced by
expenses as described below incurred since the preceding
Valuation Date, shall be allocated to the non-segregated Accounts
of the Participants and Beneficiaries who had unpaid balances in
their non-segregated Accounts as of such Valuation Date in
proportion to the balances in such non-segregated Accounts as of
the prior Valuation Date, taking into account amounts withdrawn or
distributed since such Valuation Date, if any.
B. Expenses incurred by the Administrator or the Trustee from the
services of third party vendors provided to the Plan may be paid by
the Plan. Fees incurred as a result of recordkeeping and
compliance reporting for the Plan may be assessed directly to
Participant Accounts on a pro rata basis based on Account
balances as of the Plan's most recent Valuation Date, or on a per
capita basis based on the number of Participant Account balances
in the Plan at the time the fees are paid. Expenses incurred by the
Plan as a result of Participant processing elections, or as a result
of legal judgments issued against the Plan on behalf of a
Participant's benefits, or as a result of a separated Participant's
failure to provide the Administrator or Trustee with current contact
information, shall be assessed directly against the Participant's
Account. These expenses shall include but not be limited to
distribution processing, fees incurred by the Plan as a result of a
domestic relations order involving the Participant, and fees
incurred by the Plan while conducting of a search for a lost
Participant. A Participant or Beneficiary shall be considered “lost”
when correspondence sent to such person via first-class mail is
returned as undeliverable. The City reserves the right to pay any
fees for Participants who are currently employed.
5.03. Allocation Of Deferred Compensation.
A. Pre-Tax Deferred Compensation, if any, shall be allocated to the
Pre-Tax Accounts of those Participants electing to make Pre-Tax
Deferred Compensation to this Plan under the City Contributions –
Deferred Compensation section, above, in the amount so elected
by each Participant.
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B. Roth Deferred Compensation, if any, shall be allocated to the Roth
Accounts of those Participants electing to make Roth Deferred
Compensation to this Plan under the City Contributions – Deferred
Compensation section, above, in the amount so elected by each
Participant.
5.04. Correction Of Allocation.
If a Participant's Account was improperly included or excluded in any Plan
Year from a Deferred Compensation allocation, the Administrator shall
correct the error in accordance with the requirements of the Employee
Plans Compliance Resolution System as described in Revenue
Procedure 2021-31, and any subsequent guidance issued by the Internal
Revenue Service.
ARTICLE 6. LIMITATION ON CONTRIBUTIONS AND BENEFITS
6.01. Limitations In General.
Except as provided in the Limitations – Last Three Years Of Participation
and Limitations – Age Fifty Catch-Up Contributions sections, below, the
maximum amount of Deferred Compensation under the Plan for any
Participant for any calendar year, taken into account at its present value,
shall not exceed the lesser of:
A. Twenty thousand five hundred dollars ($20,500) in 2022 or such
larger amount as may be permitted by the Secretary of the
Treasury pursuant to Code section 457(e)(15)(B); or
B. One hundred percent (100%) of the Participant's Includible
Compensation for such calendar year.
6.02. Limitations – Last Three Years Of Participation.
In any of the Participant's last three (3) years ending before the
Participant's Normal Retirement Age, instead of the amount set forth in
the Limitations In General section, above, the maximum amount of
Deferred Compensation under the Plan for the Participant for the calendar
year, taken into account at its present value, shall not exceed the lesser
of:
A. Two (2) times the dollar amount set forth in subsection A of the
Limitations In General section, above (e.g., forty-one thousand
dollars ($41,000) in 2022); or
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B. The sum of:
1. The limitation established for purposes of the Limitations In
General section, above, for the year, determined without
regard to this Limitations – Last Three Years Of Participation
section; plus
2. So much of the limitation established for purposes of the
Limitations In General section, above, for years before the
year that has not previously been used under the Limitations
In General section, above, or this Limitation – Last Three
Years Of Participation section; provided, however, that
taxable years commencing before January 1, 1979 and
taxable years when the Participant was not a Participant
shall not be taken into account.
6.03. Limitations – Age Fifty Catch-Up Contributions.
A. If a Participant (i) would be at least age fifty (50) by the end of a
calendar year and (ii) cannot make any other elective deferrals, as
defined in Code section 414(u)(2)(C), for the year by reason of any
limitation or restriction set forth in Code section 414(v)(3) or
comparable limitation or restriction contained in the Plan, the
Participant may defer additional Deferred Compensation in excess
of the limitation specified in the Limitations In General section,
above, not in excess of the lesser of:
1. Six thousand five hundred dollars ($6,500) for 2022 or such
larger amount as may be permitted by the Secretary of the
Treasury pursuant to Code section 414(v)(2)(C); or
2. The excess (if any) of (i) one hundred percent (100%) of the
Participant's Includible Compensation for the year over
(ii) any other elective deferrals, as defined in Code
section 414(u)(2)(C), for the year that are made without
regard to Code section 414(v).
B. Notwithstanding the above, the provisions of this section shall not
apply if (i) the limitations under the Limitations – Last Three Years
Of Participation section, above, apply to the Participant for the year
and (ii) the sum of the Participant's limitations under the Limitations
In General section, above, and this Limitations – Age Fifty Catch-
Up Contributions section do not exceed the limitation under the
Limitations – Last Three Years Of Participation section, above, for
the year.
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6.04. Distribution Of Excess Deferred Compensation.
A. The maximum amount of the Compensation that any individual
may defer under Code section 457(a) during any taxable year
under the Plan and any other eligible deferred compensation plans
shall not exceed the limitation set forth in this Limitation On
Contributions And Benefits article.
B. If a Participant's Deferred Compensation for the calendar year
would be more than the amount permitted (Excess Deferred
Compensation), the following provisions shall apply:
1. Any direction for such Excess Deferred Compensation shall
be invalid and directed deferral shall not be made.
2. Notwithstanding any other provision of the Plan, Excess
Deferred Compensation under the Plan and any other Code
section 457(b) eligible deferred compensation plan(s)
maintained by the City, computed without regard to any
other Code section 457(b) eligible deferred compensation
plan(s) maintained by any employer(s) other than the City,
and any income allocable to such amount shall be
distributed from the Plan or such other plan(s), as
determined by the Administrator in its sole and absolute
discretion, as soon as administratively practicable after the
Administrator determines that the amount is Excess
Deferred Compensation to the Participant to whose Account
Excess Deferred Compensation was assigned.
3. If Excess Deferred Compensation occurs solely because of
combined Deferred Compensation under (i) the Plan and
any other Code section 457(b) eligible deferred
compensation plan(s) maintained by the City and (ii) any
other Code section 457(b) eligible deferred compensation
plan(s) maintained by any employer(s) other than the City,
the Plan (or any other Code section 457(b) eligible deferred
compensation plan(s) maintained by the City, as determined
by the Administrator in its sole and absolute discretion) may
distribute the Excess Deferred Compensation and any
income allocable to such amount, as soon as
administratively practicable after the Administrator
determines that the amount is Excess Deferred
Compensation, to each Participant to whose Account
Excess Deferred Compensation was assigned for the
preceding calendar year. Each such Participant shall notify
the City or the Administrator of how much Excess Deferred
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Compensation the Administrator should distribute from the
Plan (or any other Code section 457(b) eligible deferred
compensation plan(s) maintained by the City) in accordance
with rules established by the Administrator.
4. A Participant may designate the extent to which the Excess
Deferred Compensation are composed of Pre-Tax Deferred
Compensation and/or Roth Deferred Compensation, but
only to the extent that both types of Deferred Compensation
were made during the calendar year. If the Participant does
not designate which type of Deferred Compensation are to
be distributed, the Participant’s Pre-Tax Deferred
Compensation shall be distributed first.
ARTICLE 7. PARTICIPANT-DIRECTED INDIVIDUAL ACCOUNT
7.01. Directed Individual Accounts Permitted.
The Administrator may, in its sole and absolute discretion, permit each
Participant or Beneficiary to direct the Trustee as to the investment of all
or a portion of the Participant's Accounts in any one or more of the
investment options made available under the Plan by the Administrator.
If such authorization is given by the Administrator, each Participant and
Beneficiary may, subject to a procedure established by the Administrator,
in a uniform, nondiscriminatory manner, direct the Trustee in writing to
invest all or any portion of the Participant's Accounts in the one or more
of the investment options made available by the Administrator.
7.02. Separate Account Established.
A separate participant-directed individual account shall be established for
each Participant (or Beneficiary) who has directed an investment.
Transfers between the Participant's other accounts and the Participant's
participant-directed individual account shall be charged and credited as
the case may be to each account. The participant-directed individual
account shall not share in the Trust Fund investment results, but it shall
be charged or credited as appropriate with the net earnings, gains, losses,
expenses, taxes and unrealized appreciation or depreciation in market
value, during each calendar year attributable to such account, and it shall
be subject to all of the other provisions of the Plan and the Trust. Neither
shall the investment results of the participant-directed individual accounts
be included in the calculation of the Trust investment results generally.
Participant Account values shall be maintained on a daily valuation basis
using the most recent values provided by the Trustee.
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7.03. Fiduciary Duty.
The Administrator, the Trustee and any other Plan fiduciary are relieved
of liability for any losses which are the direct and necessary result of the
investment instructions given by a Participant or Beneficiary. However,
such relief shall be conditioned upon the Administrator's or the Trustee's
compliance with communication and education requirements similar to
those prescribed in ERISA section 404(c), as well as any such
requirements under applicable State law. Neither the Trustee nor any
other person shall be under any duty to question any direction from any
Participant or Beneficiary or to review any investment or to make any
investment suggestion to any Participant or Beneficiary, except as
otherwise required by applicable State law.
ARTICLE 8. PARTICIPANT LOANS
Loans to Participants shall be permitted pursuant to the following provisions.
8.01. Authorization For Participant Loans; Participant Loan Rules.
Loans to Participants shall be permitted only pursuant to the terms and
conditions set forth in this article and any other nondiscriminatory rules
established by the Administrator. All loan limits are determined as of the
date the Trustee reserves funds for the loan. The funds will be disbursed
to the Participant as soon as is administratively feasible after all required
documents have been completed and sufficient Trust Fund assets have
been liquidated, if necessary.
8.02. Loan Funding And Repayments.
The loan amount must meet the following criteria:
A. Minimum Loan Amount.
The minimum amount for any loan is one thousand
dollars ($1,000).
B. Maximum Loan Amount.
No loan shall be made to a Participant that causes the aggregate
amount of all loans made to the Participant by the Plan or by any
other qualified plan, as defined in Code section 72(p)(4),
maintained by the City or another employer required to be
aggregated with the City, to exceed the lesser of:
60135.00041\34737304.2
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1. Fifty thousand dollars ($50,000), reduced by the excess of
the highest outstanding loan balance during the twelve (12)-
month period ending on the day before the date on which
the loan is made over the outstanding balance of the loans
on the date on which the loan is made; or
2. One-half (1/2) of the present value of the vested interest of
the Participant's accrued benefit under all qualified plans, as
defined in Code section 72(p)(4), maintained by the City or
any other employer required to be aggregated with the City.
C. Maximum Number Of Loans.
A Participant may have no more than one (1) loan outstanding from
the Plan at any given time.
D. Source Of Loan Funding.
A loan to a Participant shall be made solely from the assets of such
Participant’s own Account(s) and all interest paid shall be credited
to said Account(s). Any loan from the Participant’s Deferred
Compensation Account shall be treated as coming first from the
Participant’s Pre-Tax Account and then from the Participant’s Roth
Account and/or In-Plan Roth Conversion Account, to the extent that
funds are available.
E. Interest Rate.
Each loan shall bear a reasonable rate of interest. The interest rate
charged on each Participant loan shall bear interest at no more
than the Reuters Prime Rate as determined on the first day of the
calendar month preceding the date the loan is made, plus one
percent (1%) or (ii) the maximum legal rate.
F. Repayment.
1. The loan repayment period shall be as mutually agreed
upon by the Participant and the Administrator, not to exceed
five (5) years. However, the term may be for any period not
to exceed thirty (30) years if the purpose of the loan is to
acquire the Participant's principal residence.
2. Each loan shall require substantially level amortization over
the term of the loan with payments made at least monthly,
through payroll deduction or by Automated Clearing House
(ACH); provided, however, that payment can be made by
60135.00041\34737304.2
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check for advance loan payments. Loans may be prepaid
in full or in part at any time.
8.03. Loan Application, Note And Security.
A Participant shall apply for any loan in accordance with the procedures
established by the Administrator. The Administrator shall administer
Participant loans and shall specify the time frame for approving loan
applications. All loans shall be evidenced by a promissory note and
secured only by a Participant's Account balance. The Plan shall have a
lien on fifty percent (50%) of a Participant's Account to the extent of any
outstanding loan balance.
8.04. Default, Suspension And Call Feature.
A. A loan is treated as in default if any scheduled loan payment is not
made when due in accordance with the terms of the loan; provided,
however, that a Participant shall have a cure period in which to
make the loan payment, which cure period shall not extend beyond
the end of the calendar quarter following the calendar quarter that
includes the due date for such payment. The Administrator may
agree to a suspension of loan payments for up to twelve (12)
months for a Participant who is on a leave of absence. In the event
of default, the Administrator may direct the Trustee to execute upon
its security interest in the Participant's Account by deducting the
unpaid loan balance from the Participant's Account, including
interest to the date of default and report the default as a taxable
distribution; provided, however, that:
1. The Trustee shall neither act nor fail to act in such a manner
that would adversely affect the qualified status of the Plan;
and
2. The Trustee shall not execute upon its security interest in
the Participant's Account until such time as the Plan may
make a distribution to the Participant.
B. As soon as a Plan distribution to such Participant would otherwise
be permitted, the Administrator may instruct the Trustee to
distribute the note to the Participant.
C. The Administrator shall have the right to call any Participant loan
once the Participant's employment with the City terminates.
60135.00041\34737304.2
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ARTICLE 9. VESTING
9.01. Full Vesting.
A Participant shall at all times have an unconditional, nonforfeitable right
that is legally enforceable against the Plan in the Participant's Account.
9.02. No Divestment For Cause.
Except as provided in the Lost Participant Or Beneficiary section, below,
the Plan does not permit divestment for cause. No benefit provided
hereunder to a Participant or Beneficiary shall be forfeited or divested for
any reason or cause whatsoever.
9.03. Lost Participant Or Beneficiary.
A. If, according to the records of the Plan, a Participant who had a
Severance From Employment or the Beneficiary of a deceased
Participant has not made a claim for benefits, and the Participant
or Beneficiary cannot be located after (i) mailing a letter by certified
mail to the last known mailing address of the Participant or
Beneficiary according to the records of the Plan, and (ii) further
diligent efforts to locate the missing Participant or Beneficiary are
made, the Participant's Account balance shall be held in the Plan
until such time that the Participant or Beneficiary can be located or
the Plan is terminated, if later.
B. Upon Plan termination, prior to taking any action to distribute the
Account of a missing Participant or Beneficiary, the Administrator
shall take the following steps to locate the missing Participant or
Beneficiary:
1. Mail a letter by certified mail to the Participant or
Beneficiary's last known mailing address according to the
Plan's records;
2. Check related plan records to determine if one or more of
the related plans may have more up-to-date information with
respect to the Participant or Beneficiary;
3. Attempt to identify and contact the individual(s) who the
Participant has designated as a Beneficiary; and
4. Use any other search method or methods, including Internet
search tools, commercial locator services and credit
reporting agencies that the Administrator determines is a
60135.00041\34737304.2
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prudent method to use to locate the Participant or
Beneficiary based on the particular facts and circumstances.
C. If after Plan termination and use of the search methods specified
in the previous subsection the Administrator is still unable to locate
a missing Participant or Beneficiary, then the Administrator shall
transfer the portion of the Participant's Account that is an Eligible
Rollover Distribution to an individual retirement account described
in Code section 408(a) or an individual retirement annuity
described in Code section 408(b) designated by the Administrator.
If the City maintains another Code section 457(b) eligible deferred
contribution plan, then the Administrator shall transfer the Account
of the missing Participant or Beneficiary to the other Code
section 457(b) eligible deferred compensation plan.
ARTICLE 10. PAYMENT OF BENEFITS
10.01. Measure Of Benefits.
Except as otherwise indicated, the benefit distributable to a Participant
upon Severance From Employment, or to the Participant's Beneficiary or
Beneficiaries in the event of the Participant's death, shall be the
Participant's Account.
10.02. Method Of Payment Of Benefits.
The Administrator shall determine the amount of the Participant's Account
and the time when benefit payments commence. The Administrator shall
distribute the Participant's Account in accordance with the method of
payment of benefits selected by the Participant (or the Beneficiary of a
deceased Participant) in accordance with the provisions of the Plan from
among the following:
A. Form Of Distribution.
The Participant or the Participant's Beneficiary shall receive the
Participant's Account in the following form:
1. A single sum distribution, in whole or in part;
2. Installment payments (payable on a monthly, quarterly,
semi-annual, or annual basis);
3. Combination of lump sum and installment payments;
60135.00041\34737304.2
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4. Annuity payments (payable on a monthly, quarterly, or
annual basis) for the life of the Participant or for the life of
the Participant and the Participant's Beneficiary); or
5. Such other installment payments as may be approved by the
Administrator in accordance with the provisions of this
Payment Of Benefits Article.
B. Incidental Benefits.
Death and other nonretirement benefits payable under the Plan
shall be incidental to the primary purpose of the Plan. Thus,
distributions to the Participant under the Plan shall be in sufficient
amounts so that the relationship of a Participant's total benefits
under the Plan to the deferred compensation payable to the
Participant under the Plan is such that the primary purpose of the
Plan is to provide deferred compensation to the Participant, all as
required by Code section 401(a)(9)(G) and the Treasury
regulations promulgated thereunder.
C. Eligible Rollover Distributions.
1. Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a Distributee's election under this
Method Of Payment Of Benefits section, a Distributee may
elect, at the time and in the manner prescribed by the
Administrator, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement Plan
specified by the Distributee in a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
2. If the Participant or the Participant's Beneficiary elects, in
the manner set forth above, a distribution that constitutes an
Eligible Rollover Distribution, and if the Distributee of the
Eligible Rollover Distribution (i) elects to have such
distribution paid directly to an Eligible Retirement Plan and
(ii) specifies the Eligible Retirement Plan to which such
distribution is to be paid, in such form and at such time as
the Administrator may prescribe, then such distribution shall
be made in the form of a direct trustee-to-trustee transfer to
the Eligible Retirement Plan so specified.
3. A Beneficiary other than a Participant's surviving spouse or
a Participant's former spouse who is an “alternate payee”
under a qualified domestic relations order is a person
eligible to make a rollover with regard to the interest of the
60135.00041\34737304.2
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Participant or former Participant, subject to the limitation for
such a Beneficiary that an Eligible Retirement Plan is an
individual retirement account or individual retirement annuity
that will be treated as an inherited individual retirement
account or annuity under Code section 402(c)(11).
4. Each annuity contract purchased pursuant to the Plan shall
contain, and shall be subject to, requirements similar to the
requirements set forth in Code section 401(a)(31) pursuant
to regulations prescribed by the Secretary of the Treasury.
5. Notwithstanding any of the provisions of the Eligible Rollover
Distributions subsection, a direct rollover of a distribution
from a Roth Account or In-Plan Roth Conversion Account
under the Plan will be made only to another Roth elective
deferral account under an applicable retirement plan
described in Code section 402A(e)(1) or to a Roth IRA (as
defined below) and only to the extent the rollover is
permitted under the rules of Code section 402(c). For
purposes of this subsection, a “Roth IRA” is defined as an
individual retirement plan described in Code
section 7701(a)(37) which is designated as a Roth IRA at
the time of establishment in such manner as required by the
Code and other regulations.
D. Transfers To Other Code Section 457(b) Plans.
If (i) a Participant has a Severance From Employment, (ii) such
Participant is entitled to benefits under this Plan, (iii) such
Participant is subsequently employed by another employer that is
an eligible employer within the meaning of Code
section 457(e)(1)(A), and (iv) such employer maintains a Code
section 457(b) eligible deferred compensation plan, the Participant
may request (before the Participant's Account is paid) that the
Participant's Account under the Plan shall not be distributed to the
Participant, but shall be transferred to such employer’s plan;
provided that:
1. Such employer and such employer’s plan will accept the
transfer;
2. Such a transfer in no way reduces such employer’s
obligations to the Participant under such employer’s plan;
60135.00041\34737304.2
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3. Such transfer is accomplished in accordance with the
requirements of Code section 457(e)(10) and the Treasury
regulations promulgated thereunder; and
4. The City and the Participant have entered into such
agreements as the City deems necessary or appropriate, in
the City's sole and absolute discretion, to assure that the
City's obligations to pay benefits to the Participant under this
Plan have been fulfilled by virtue of such a transfer and that
the City shall have no further obligations to the Participant
under the Plan.
The City may require such documentation as it deems necessary
or appropriate, in its sole and absolute discretion, from the other
employer in order to ensure that the requirements set forth above
have been satisfied, and in order to effect the transfer.
E. Distribution Elections.
Elections under this Payment Of Benefits article shall be made in
such form and manner as the Administrator may specify from time
to time. Any prior irrevocable elections as to the form or timing of
distributions may be revoked by mutual agreement of the
Administrator and the affected Participant.
10.03. Commencement Of Payment Of Benefits.
A. Benefits Commencement In General.
Unless a Participant elects a later commencement date,
distribution of a terminated Participant's Account will be payable to
such terminated Participant as soon as is administratively feasible
after the Participant's Severance From Employment.
B. Required Minimum Distributions.
1. Notwithstanding anything contained in the Plan to the
contrary, the Participant's entire interest either (i) will be
distributed to the Participant not later than the Required
Beginning Date, or (ii) will begin to be distributed beginning
not later than the Required Beginning Date over the life of
the Participant or over the lives of the Participant and the
Participant's Designated Beneficiary (or over a period not
extending beyond the life expectancy of the Participant or
60135.00041\34737304.2
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the life expectancy of the Participant and the Participant's
Designated Beneficiary).
2. The required minimum distribution for the Participant's first
Distribution Calendar Year will be made on or before the
Participant's Required Beginning Date. The required
minimum distribution for other Distribution Calendar Years,
including the required minimum distribution for the
Distribution Calendar Year in which the Participant's
Required Beginning Date occurs, will be made on or before
December 31 of that Distribution Calendar Year.
3. Unless the Participant's interest is distributed in the form of
a single sum on or before the Required Beginning Date, as
of the first Distribution Calendar Year, distributions will be
made in accordance with this Required Minimum
Distributions subsection or the Payment Of Death Benefits
section, below, if applicable.
4. All minimum distributions under this subsection will be made
in accordance with the provisions of Code section 401(a)(9),
the Treasury regulations promulgated under Code
section 401(a)(9), and any other provisions reflecting Code
section 401(a)(9) that are prescribed by the Commissioner
of Internal Revenue in revenue rulings, notices and other
guidance published in the Internal Revenue Bulletin.
5. The provisions of the Required Minimum Distributions
subsection will override any distribution options in the Plan
inconsistent with Code section 401(a)(9).
6. This Required Minimum Distributions subsection and the
provisions under the Payment Of Death Benefits section set
forth the minimum required distributions pursuant to Code
section 401(a)(9) and the Treasury regulations promulgated
thereunder, and shall not be construed as creating any
payment method under the Plan not otherwise provided
under the Method Of Payment Of Benefits section, provided
that the method or methods of payment under the Method
Of Payment Of Benefits section meet or exceed the
requirements of this Required Minimum Distributions
subsection.
7. Each annuity contract purchased pursuant to the Plan shall
contain, and shall be subject to, requirements similar to
(i) the requirements set forth in Code section 401(a)(9), and
60135.00041\34737304.2
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(ii) the incidental death benefit requirements of Code
section 401(a), all as pursuant to regulations prescribed by
the Secretary of the Treasury.
C. Restrictions On Distributions.
Notwithstanding the foregoing provisions and except as provided
in the In-Service Distributions section, below, the payment of a
Participant's benefits under the Plan may not commence earlier
than the earliest of:
1. The calendar year in which the Participant attains age
seventy and one-half (70-1/2);
2. When the Participant has a Severance From Employment;
or
3. When the Participant is faced with an unforeseeable
emergency as provided in the Distributions Upon An
Unforeseeable Emergency section, below.
10.04. Distributions To Rehired Employees.
A. Distributions scheduled to be paid under this article based upon the
Participant's Severance From Employment shall not commence if
the Participant is reemployed by the City before distribution is
otherwise required to be paid pursuant to this article.
B. A Participant who is receiving benefit payments under this Plan or
who previously received a single sum distribution of the
Participant's benefits under this Plan, and who is subsequently
reemployed by the City, shall not have benefits suspended and
shall receive an additional benefit equal to the benefit that the
Participant accrues after the Participant's reemployment
commencement date. Such additional benefit shall commence
upon the Participant's subsequent Severance From Employment,
unless such additional benefit must commence at an earlier date
as required by the provisions of Code section 401(a)(9). There
shall be no duplication of benefits to such a Participant. Such
additional benefit shall be paid to the Participant in the same form
as the benefits that had already commenced.
60135.00041\34737304.2
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10.05. Distributions Upon An Unforeseeable Emergency.
A. At any time, a Participant may apply in writing to the Administrator
for a distribution upon an unforeseeable emergency in an amount
equal to all or a portion of the Participant's Account.
B. The Administrator shall determine, in its sole and absolute
discretion, the amount of the distribution that is necessary to
alleviate the unforeseeable emergency. The determination by the
Administrator of the existence of an unforeseeable emergency and
of the amount necessary to meet the need shall be made in a
nondiscriminatory and uniform manner. This determination by the
Administrator shall be final and binding.
C. A distribution is on account of an unforeseeable emergency only if
the distribution is made on account of a severe financial hardship
of the Participant resulting from an illness or accident of the
Participant, the Participant's spouse, or the Participant's dependent
(as defined in Code section 152 without regard to Code
sections 152(b)(1), (b)(2) and (d)(1)(B)), loss of the Participant's
property due to casualty (including the need to rebuild a home
following damage to a home not otherwise covered by
homeowner's insurance, such as damage that is the result of a
natural disaster), or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of
the Participant.
D. Except as otherwise specifically provided in the Treasury
regulations, the purchase of a home or the payment of college
tuition are not unforeseeable emergencies.
E. The following may constitute an unforeseeable emergency:
1. A need to rebuild the Participant's home following damage
to it not otherwise covered by insurance, such as damage
that is the result of a natural disaster;
2. The imminent foreclosure of or eviction from the
Participant's primary residence;
3. The need to pay for medical expenses, including
non-refundable deductibles and the cost of prescription drug
medication; or
4. The need to pay funeral expenses of the Participant's
spouse or a dependent (as defined in Code section 152
60135.00041\34737304.2
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without regard to Code sections 152(b)(1), (b)(2) and
(d)(1)(B)).
F. Whether a Participant is faced with an unforeseeable emergency
permitting a distribution is to be determined based on the relevant
facts and circumstances of each case, but a distribution on account
of an unforeseeable emergency of the Participant may not be made
if such emergency can be relieved by:
1. Reimbursement or compensation by insurance or
otherwise;
2. Liquidation of the assets of the Participant's assets, to the
extent that such liquidation of the Participant's assets would
not itself cause a severe financial hardship;
3. Cessation of deferrals under the Plan; or
4. If allowed, by taking out a loan under the Plan, provided that
the repayment of such loan does not in itself cause financial
hardship.
G. The amount of any financial hardship distribution shall not exceed
the lesser of:
1. The amount reasonably necessary, as determined by the
City, to satisfy the hardship (which may include any amounts
necessary to pay any federal, State, or local income taxes
or penalties reasonably anticipated to result from the
distribution); or
2. The amount of the Participant's Account.
H. Any distribution under this Distributions Upon An Unforeseeable
Emergency section shall be made in a single sum.
I. The Participant's compensation reduction contributions under this
Plan and all other plans maintained by the City are suspended for
six (6) months after the receipt of an unforeseeable emergency
distribution. For this purpose, the phrase “all other plans
maintained by the City” means all qualified and nonqualified plans
of deferred compensation maintained by the City. The phrase
includes a cash or deferred arrangement that is part of a cafeteria
plan within the meaning of Code section 125; provided, however
that such phrase does not include the mandatory Employee
60135.00041\34737304.2
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contribution portion of a defined benefit plan or a health or welfare
benefit plan (including one that is part of a cafeteria plan).
10.06. In-Service Distributions.
The Plan may distribute to a Participant, who has not had a Severance
From Employment with the City, the total amount payable to the
Participant under the Plan if all of the following requirements are satisfied:
A. The total amount payable to the Participant under the Plan that is
not attributable to rollover contributions as defined in Code
section 411(a)(11)(D), does not exceed the greater of (i) five
thousand dollars ($5,000) or (ii) the dollar limit then in effect under
Code section 411(a)(11)(A);
B. The Participant's total Account balance under the Plan, including
the Rollover Account, exceeds one thousand dollars ($1,000);
C. No amount has been deferred under the Plan with respect to the
Participant during the two (2)-year period ending on the date of the
in-service distribution;
D. There has been no prior distribution under the Plan to such
Participant under this In-Service Distributions section; and
E. The Participant elects to receive the distribution. If the Participant's
total Account balance under the Plan, including the Rollover
Account, does not exceed one thousand dollars ($1,000), the City,
in its sole and absolute discretion, can make a distribution without
the Participant's consent.
10.07. Payment Of Death Benefits.
A. Upon the death of a Participant the Participant's Account shall be
payable to the Participant's Beneficiary or Beneficiaries.
B. Notwithstanding anything contained in the Plan to the contrary:
1. If distribution has been commenced to the Participant and
the Participant dies before the Participant's entire interest
has been distributed, then the remaining portion of the
Participant's interest shall be distributed at least as rapidly
as under the method of distributions being utilized as of the
date of the Participant's death.
60135.00041\34737304.2
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a. If the Participant dies on or after the date distributions
begin and there is a Designated Beneficiary, the
minimum amount that will be distributed for each
Distribution Calendar Year after the year of the
Participant's death is the quotient obtained by
dividing the Participant's Account balance by the
longer of the remaining life expectancy of the
Participant or the remaining life expectancy of the
Participant's Designated Beneficiary, determined as
follows:
(1) The Participant's remaining life expectancy is
calculated using the age of the Participant in
the year of death, reduced by one for each
subsequent year.
(2) If the Participant's surviving spouse is the
Participant's sole Designated Beneficiary, the
remaining life expectancy of the surviving
spouse is calculated for each Distribution
Calendar Year after the year of the
Participant's death using the surviving
spouse's age as of the spouse's birthday in
that year. For Distribution Calendar Years
after the year of the surviving spouse's death,
the remaining life expectancy of the surviving
spouse is calculated using the age of the
surviving spouse as of the spouse's birthday in
the calendar year of the spouse's death,
reduced by one for each subsequent calendar
year.
(3) If the Participant's surviving spouse is not the
Participant's sole Designated Beneficiary, the
Designated Beneficiary's remaining life
expectancy is calculated using the age of the
Beneficiary in the year following the year of the
Participant's death, reduced by one for each
subsequent year.
b. If the Participant dies on or after the date distributions
begin and there is no Designated Beneficiary as of
September 30 of the year after the year of the
Participant's death, the minimum amount that will be
distributed for each Distribution Calendar Year after
the year of the Participant's death is the quotient
60135.00041\34737304.2
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obtained by dividing the Participant's Account
balance by the Participant's remaining life
expectancy calculated using the age of the
Participant in the year of death, reduced by one for
each subsequent year.
2. If the Participant dies before the distribution of the
Participant's interest has begun pursuant to the Required
Minimum Distributions subsection, above, the Participant's
entire interest will be distributed, or begin to be distributed,
no later than as follows:
a. If the Participant's surviving spouse is the
Participant's sole Designated Beneficiary, then
distributions to the surviving spouse will begin by
December 31 of the calendar year immediately
following the calendar year in which the Participant
died, or by December 31 of the calendar year in which
the Participant would have attained the Required
Beginning Date, if later. The minimum amount that
will be distributed for each Distribution Calendar Year
after the year of the Participant's death is the quotient
obtained by dividing the Participant's Account
balance by the remaining life expectancy of the
Participant's surviving spouse.
b. If the Participant's surviving spouse is not the
Participant's sole Designated Beneficiary, then
distributions to the Designated Beneficiary will begin
by December 31 of the calendar year immediately
following the calendar year in which the Participant
died. The minimum amount that will be distributed for
each Distribution Calendar Year after the year of the
Participant's death is the quotient obtained by
dividing the Participant's Account Balance by the
remaining life expectancy of the Participant's
Designated Beneficiary.
c. If there is no Designated Beneficiary as of September
30 of the year following the year of the Participant's
death, the Participant's entire interest will be
distributed by December 31 of the calendar year
containing the fifth (5th) anniversary of the
Participant's death.
60135.00041\34737304.2
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d. If the Participant's surviving spouse is the
Participant's sole Designated Beneficiary and the
surviving spouse dies after the Participant but before
distributions to the surviving spouse begin, this
subsection will apply as if the surviving spouse were
the Participant.
3. For purposes of this subsection, distributions are considered
to begin on the Participant's Required Beginning Date;
provided, however, that if the Participant's surviving spouse
is the Participant's sole Designated Beneficiary and the
surviving spouse dies after the Participant but before
distributions to the surviving spouse begin, distributions are
considered to begin on the date distributions are required to
begin to the surviving spouse under subparagraph a of
paragraph 2, above.
4. If the Participant dies before the distribution of the
Participant's interest has begun pursuant to the Required
Minimum Distributions subsection, above, and there is a
Designated Beneficiary, the Participant or the Participant's
Beneficiaries may elect, on an individual basis, whether the
five (5)-year rule or the life expectancy rule set forth above
applies to distributions after the death of a Participant who
has a Designated Beneficiary. The election must be made
no later than the earlier of (i) September 30 of the calendar
year in which distribution would be required to begin or
(ii) September 30 of the calendar year which contains the
fifth (5th) anniversary of the Participant's (or, if applicable,
surviving spouse's) death. If neither the Participant nor the
Participant's Beneficiary makes an election under this
section, distributions will be made in accordance with either
the five (5)-year rule or the life expectancy rule, as required
by the preceding provisions of the Plan.
5. For purposes of this section, any amount paid to a child shall
be treated as if it had been paid to the surviving spouse if
such amount will become payable to the surviving spouse
upon such child reaching majority or such other designated
event all as prescribed by the Secretary of the Treasury.
C. Notwithstanding the provisions of the Payment Of Death Benefits
section, if the Distributee of a deceased Participant’s Account is a
Designated Beneficiary who is not an “Eligible Designated
Beneficiary,” as defined below, then the Plan will distribute the
Account in full no later than December 31 of the tenth (10th) year
60135.00041\34737304.2
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following the Participant’s death. If an Eligible Designated
Beneficiary dies before receiving distribution of the Beneficiary’s
entire interest in the Participant’s Account, the Plan will distribute
that interest in full no later than December 31 of the tenth (10th)
year following the year of the Eligible Designated Beneficiary’s
death. An “Eligible Designated Beneficiary” of a Participant is a
Designated Beneficiary and is (i) the Participant’s spouse, (ii) the
Participant’s child who has not reach the age of majority, (iii) an
individual not more than ten (10) years younger than the
Participant, (iv) a disabled individual as defined in Code
section 72(m)(7), or (v) an individual who has been certified to be
chronically ill (as defined in Code section 7702B(c)(2)) for a
reasonably lengthy period, or indefinitely. Certain trusts may be
treated as Eligible Designated Beneficiaries pursuant to Code
section 401(a)(9)(H)(iv) and (v). When a child of the Participant
reaches the age of majority, the Plan will distribute the child’s
account in full not later than ten (10) years after that date.
10.08. Distributions To Incapacitated Individuals.
If the Administrator determines that a Participant or Beneficiary who is
entitled to a payment under the Plan is not able to care for his or her affairs
due to a mental condition, a physical condition, or by reason of age, the
Administrator may make all benefit distributions to the Participant's or
Beneficiary's parent, guardian, conservator, trustee, custodian (including
a custodian under the Uniform Transfers to Minors Act or the Uniform Gifts
to Minors Act) or to his or her attorney-in-fact or other legal representative
upon receiving evidence of such status satisfactory to the Administrator,
in its sole discretion. Payments made pursuant to the terms of this
Distributions To Incapacitated Individuals section shall constitute a
distribution to the Participant or Beneficiary entitled thereto, and shall
immediately discharge the City, Administrator, Trustee, the Plan and the
Trust of any further liability therefor. Neither the Administrator nor the
Trustee has a duty to inquire or investigate the competence of any
Participant or Beneficiary entitled to receive payments under the Plan.
10.09 Repayment Of Overpayment Of Benefits.
By accepting payment of benefits under this Plan, the Participant or
Beneficiary receiving the payment agrees that, in the event of
overpayment, the Participant or Beneficiary will promptly repay the
amount of overpayment, without interest, upon notice by the
Administrator; provided that, if the Participant or Beneficiary has not
repaid the overpayment within thirty (30) days after notice:
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A. The Participant or Beneficiary will also pay an amount equal to
simple interest at the rate of ten percent (10%) per annum (or the
highest rate allowable, if less) on the unpaid amount from the date
of overpayment to the date of repayment, and, in addition, will pay
all legal fees, court costs and the reasonable time value of the
Trustee, Administrator or the City, or any of their employees or
agents, related to the collection of such overpayment; and
B. The Administrator may deduct all or any portion of the
overpayment, with interest, that is not timely repaid, from any
amount that would otherwise then be payable or that may become
payable, to the Participant or Beneficiary under the Plan.
10.10. Qualified Domestic Relations Order Payments.
A. All rights and benefits, including elections, provided to a Participant
shall be subject to the rights afforded to any “alternate payee”
under a “qualified domestic relations order” as those terms are
defined in Code section 414(p). A domestic relations order will not
fail to be a qualified domestic relations order (i) because the order
is issued after, or revises another domestic relations order or
qualified domestic relations order, or (ii) because of the time at
which the order is issued, including the issuance after the
Participant's death.
B. The Administrator may segregate assets for an alternate payee in
accordance with a qualified domestic relations order. All rights and
benefits, including elections, provided to a Participant shall be
subject to the rights afforded to any alternate payee under a
qualified domestic relations order.
C. A distribution may be made to an alternate payee pursuant to a
qualified domestic relations order prior to the times otherwise
specified in this Plan, if the qualified domestic relations order
requires such a distribution, even if the Participant is not yet entitled
to receive a distribution; provided, however, that nothing contained
in this provision nor such qualified domestic relations order shall
entitle a Participant to a distribution prior to the time as otherwise
determined under the Plan.
D. The Administrator shall establish reasonable procedures to
determine whether a domestic relations order is a qualified
domestic relations order and to administer distributions under such
an order. If any domestic relations order is received by the Plan,
the Administrator shall:
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1. Promptly notify the Participant and any alternate payee that
the order has been received and of the Plan's procedures
for determining whether the order is a qualified domestic
relations order; and
2. Determine within a reasonable period after receipt of the
order whether it is a qualified domestic relations order and
notify the Participant and each alternate payee of the
Administrator's determination.
E. During any period when the issue of whether a domestic relations
order is a qualified domestic relations order is being determined by
the Administrator, a court of competent jurisdiction or otherwise,
the Administrator shall segregate the amounts which would have
been payable to the alternate payee during such period if the order
had been determined to be a qualified domestic relations order. If
the order, or a modification of the order, is determined within
eighteen (18) months to be a qualified domestic relations order, the
Administrator shall segregate the amounts (as adjusted by
attributable investment income or loss), in accordance with the
Plan's provisions, for the entitled individual(s). If, within
eighteen (18) months, the order is determined not to be a qualified
domestic relations order or its status as a qualified domestic
relations order is not resolved, the Administrator may pay the
segregated amounts (as adjusted by attributable investment
income or loss) to the individual(s) entitled to receive such amounts
absent such order. Any determination that an order is a qualified
domestic relations order made after the close of the eighteen (18)-
month period shall be applied prospectively only.
10.11. Nonliability.
The City does not guarantee the Trust, the Participants or their
Beneficiaries against loss of or depreciation in value of any right or benefit
that any of them may acquire under the terms of this Plan. All of the
benefits payable hereunder shall be paid or provided for solely from the
Trust.
10.12. Mechanics Of Payment.
The Trustee, with respect to any benefit, is authorized to pay benefits
directly from the Trust to such person and in such amounts as authorized
and specified by the Administrator.
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10.13. Withholding.
The Administrator hereby specifically delegates to the Trustee the
responsibility and liability for income tax withholding and to withhold the
appropriate amount from any payment made from the Trust to a
Participant or Beneficiary under the provisions of applicable law and
Treasury regulations. The Administrator shall furnish the Trustee with all
information necessary to accomplish such withholding function, as set
forth in the Treasury regulations, or, if such information is not provided to
the Trustee, the Administrator shall assume all relevant liability.
10.14. Distribution From Roth Accounts.
Any “qualified distribution” as defined below, from an Employee’s Roth
Account, In-Plan Roth Conversion Account, or Roth Rollover Account,
other than a distribution of any Excess Deferred Compensation under
Code section 402(g)(2) and any income on the Excess Deferred
Compensation, shall not be includible in such Participant’s gross income.
A “qualified distribution” is a distribution in accordance with Code
section 408A(d)(2)(A) (without regard to clause (iv) thereof).
Furthermore, a distribution from an Employee’s Roth Account, In-Plan
Roth Conversion Account, or Roth Rollover Account shall not be treated
as a qualified distribution if such distribution is made within the five (5)
taxable year period beginning with the earlier of:
A. The first taxable year for which the individual made Roth Deferred
Compensation to this Plan;
B. The first taxable year for which the Participant converted a portion
of the Participant’s Pre-Tax Account in an In-Plan Roth Conversion
as described in the In-Plan Roth Conversions section, below, or
C. If a rollover contribution was made to a Roth Rollover Account from
a designated Roth elective deferral account previously established
for such individual under another applicable retirement plan, the
first taxable year for which the individual made a designated Roth
elective deferral to such previously established account.
10.15. In-Plan Roth Conversions.
A Participant may convert, in an “In-Plan Roth Conversion,” any portion of
the Participant’s Account, other than a Roth Deferral Account or Roth
Rollover Account, to an In-Plan Roth Conversion Account pursuant to
Code section 402A(c)(4) and the following:
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A. This section shall apply to a deceased Participant’s Beneficiary if
the Beneficiary is the Participant’s surviving spouse and to an
alternate payee who is a spouse or a former spouse of the
Participant, as if such an individual were the Participant.
B. A Participant loan may not be distributed as part of an In-Plan Roth
Conversion.
C. A Participant must include in gross income the taxable amount of
an In-Plan Roth Conversion in the taxable year when the
conversion occurs.
D. Any distribution restrictions that otherwise apply with respect to a
specific contribution source will continue to apply if such
contribution source is converted as part of an In-Plan Roth
Conversion.
E. Any election to make an In-Plan Roth Conversion may not be
changed after the In-Plan Roth Conversion is completed.
ARTICLE 11. PLAN ADMINISTRATION
11.01. Employment Records.
The City shall maintain sufficient employment records to calculate benefits
under this Plan for each Employee. The City shall make such records
available to the Administrator, in a timely manner, and the City shall be
responsible for the accuracy of such information upon which the
Administrator is entitled to rely.
11.02. Reports And Disclosure.
The Administrator shall prepare, file and distribute, in a timely manner, all
reports and information to be disclosed to Participants as may be required
by the Code or California Law. The Administrator shall prepare such
reports from records kept by it and information furnished by the City and
the Trustee.
11.03. Retention Of Records.
Every person subject to a requirement to file any description or report or
to certify any information thereof, or who would be subject to such a
requirement but for an exemption or simplified reporting requirement
under the Code or California Law, shall maintain records on the matters
of which disclosure is required which will provide in sufficient detail the
necessary basic information and data from which the documents thus
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required may be verified, explained or clarified and checked for accuracy
and completeness, and shall include vouchers, worksheets, receipts and
applicable resolutions, and shall keep such records available for
examination for a period of not less than six (6) years after the filing date
of the documents based on the information which they contain, or six (6)
years after the date on which such documents would have been filed but
for an exemption or simplified reporting requirement under the Code or
California law.
11.04. Powers And Responsibilities.
A. The City shall be empowered to appoint and remove the
Administrator, from time to time, as it deems necessary for the
proper administration of the Plan and to assure that the Plan is
being operated for the exclusive benefit of the Participants and their
Beneficiaries in accordance with the terms of the Plan and the
Code.
B. The City or its delegate shall establish an investment policy or
guidelines to ensure the prudent selection and monitoring of Plan
investments or investment options. Such investment policy or
guidelines shall be consistent with the objectives of this Plan and
with the requirements of California law.
C. The City shall periodically review the performance of any fiduciary
or other person to whom duties have been delegated or allocated
by it under the provisions of this Plan, or pursuant to procedures
established hereunder, or under the provisions of the Custodial
Agreement. This requirement may be satisfied by formal periodic
review by the City or by a qualified person specifically designated
by the City, through day-to-day conduct and evaluation, or through
other appropriate means.
11.05. Designation Of Administrative Authority.
A. The City has delegated to the City Manager or the City Manager’s
designee as the Administrator the authority to exercise
administrative oversight, make decisions, and enter into
administrative service agreements for the Plan.
B. The City Manager or the City Manager’s designee shall serve as
the Administrator. An Administrator may resign by delivering a
written resignation to the City or may be removed by the City with
or without cause by delivery of written notice of removal, to take
effect at a date specified therein, or upon delivery to the City if no
date is specified.
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C. The City, upon the resignation or removal of an Administrator, shall
promptly designate, in writing, a successor to this position. If the
City does not appoint a successor Administrator, the City Council
will function as the Administrator.
11.06. Allocation And Delegation Of Responsibilities.
If more than one person is appointed as the Administrator, the
responsibilities of each appointed person may be specified by the City and
accepted in writing by each Administrator, with written notice to the
Trustee. In the event that the City makes no such delegation, the
Administrators may allocate the responsibilities among themselves, in
which event the Administrators shall notify the City and the Trustee in
writing of such action and specify the responsibilities of each
Administrator. The Trustee thereafter shall accept and rely upon any
documents executed by the appropriate Administrator, until such time as
the City or the Administrator files with the Trustee a written revocation of
such designation. Except where there has been an allocation and
delegation of administrative authority pursuant to this section, if there shall
be more than one Administrator, they shall act by a majority of their
number, but may authorize one or more of them to sign all papers on their
behalf. The Administrators may act with or without a meeting being called
or held and shall keep minutes of all meetings held and a record of all
actions taken by written consent. No Administrator may participate in any
decision that involves solely the Administrator's interest as a Participant
in the Plan.
11.07. Powers And Duties Of The Administrator.
The primary responsibility of the Administrator is to administer the Plan
for the exclusive benefit of the Participants and their Beneficiaries, subject
to the specific terms of the Plan. The Administrator shall administer the
Plan in accordance with its terms and shall have the power and discretion
to interpret and construe the terms of the Plan, to decide any disputes and
resolve any ambiguities which may arise relative to the rights of the
Employees, past and present, and their Beneficiaries, under the terms of
the Plan, and to determine all questions arising in connection with the
administration, interpretation and application of the Plan. Any such
determination by the Administrator shall be conclusive and binding upon
all persons. The Administrator may establish procedures, correct any
defect, supply any information, or reconcile any inconsistency in such
manner and to such extent as shall be deemed necessary or advisable to
carry out the purpose of the Plan; provided, however, that any such
procedure, discretionary act, interpretation or construction shall be done
in a nondiscriminatory manner based upon uniform principles consistently
60135.00041\34737304.2
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applied, and shall be consistent with the intent that the Plan shall continue
to meet the requirements of Code section 457(b) and all regulations
issued pursuant thereto. The Administrator shall have all powers
necessary or appropriate to accomplish its duties under this Plan.
11.08. Administrative Functions.
The Administrator shall:
A. Determine Participant eligibility;
B. Compute and allocate Plan contributions;
C. Compute and allocate Trust Fund gains and losses;
D. Calculate distributable benefits and instruct the Trustee as to the
amount and frequency of payments to the distributee;
E. Process claims and appeals from claims denied; and
F. Make recommendations to the City and the Trustee concerning any
phase of Plan management or administration.
11.09. Interpretation Of Trust.
The Administrator or its designee shall, in its discretion, interpret and
construe the provisions of the Trust, shall resolve any ambiguities in the
Trust, and shall resolve any conflicts between the Plan and the Trust. The
Administrator or its designee shall give instructions and directions to the
Trustee as necessary and, in general, shall direct the administration of the
Plan. The Administrator shall not, through interpretation of the Plan or the
Trust or action under the Plan, increase the burden imposed upon the
Trustee without the consent of the Trustee.
11.10. Settlement Of Disputes.
If any dispute arises between the Trustee and any other person, including,
without limitation, the Administrator, the City or any Participant or
Beneficiary under the Plan with respect to the interpretation of the Plan or
the Trust or the duties of the Trustee, the Administrator or any other
fiduciary, then neither the Trustee nor the Administrator shall be obligated
to take any other action in connection with the matter involved in the
controversy until such time as the controversy is resolved, unless this
would clearly be imprudent or not in the best interest of the Participants
and Beneficiaries. In addition, the Trustee may deposit (or the
Administrator may direct the deposit) of the affected assets of the Trust in
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an interpleader action with the court of jurisdiction under applicable State
law.
11.11. Appointment And Responsibility Of Representatives.
A. With the consent of the City or its designee, the Administrator shall
have the right and the power to appoint one or more
representatives, accountants, counsel, specialists, and other
advisory and clerical persons as it deems necessary or desirable
to assist the Administrator in the administration of the Plan. All
usual and reasonable expenses of such representatives,
accountants, counsel, specialists, and other advisory and clerical
persons may be paid in whole by the Plan, in whole by the City (if
the City agrees to do so in advance), or in part by the Plan and in
part by the City (if the City agrees to do so in advance).
B. The Administrator may designate any person as its agent for any
purpose. The designated representative of the Administrator shall
be responsible only for those specific powers, duties,
responsibilities and obligations specifically given to it by the
Administrator. The Administrator, the City and any person to whom
the Administrator may delegate any duty or power in connection
with the Plan's administration, may rely upon all tables, valuations,
certificates, reports and opinions furnished by any duly appointed
actuary, accountant (including employees who are actuaries or
accountants), legal counsel, or other specialist, and they shall be
fully protected whenever they take action based in good faith in
reliance thereon. All actions taken in good faith reliance on advice
from the advisors are conclusive upon all persons. Any benefits
not paid by the Plan shall not be the responsibility of the designated
representatives.
11.12. Appointment Of Fiduciaries And Agents.
The City or its designee shall have the right to hire and fire any fiduciary
or agent, including the Trustee, the Administrator, or any agent designated
pursuant to the Appointment And Responsibility Of Representatives
section, above.
11.13. Compensation Of Administrator.
The Administrator(s) shall receive no compensation from the Trust for
acting as such, but the Trust shall reimburse the Administrator(s) for all
necessary and proper expenses incurred in carrying out its duties under
the Plan.
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11.14. Use Of Electronic Media.
In accordance with Treasury regulation section 1.401(a)-21, the
Administrator may use telephonic or electronic media to satisfy the notice
requirements under this Plan and to make appropriate administrative
pronouncements.
ARTICLE 12. CLAIMS PROCEDURES
The Administrator shall have sole and absolute discretion to determine
Participants' and Beneficiaries' rights to benefits under the Plan. All benefit claim
decisions will be made in accordance with the terms of the Plan documents and
the Plan terms will be applied consistently to all claimants.
12.01. Request For Information.
A Participant or Beneficiary may request such information concerning the
Participant's or Beneficiary's rights or benefits under this Plan and the
Trust as is required to be disclosed under applicable State law. The
Administrator shall respond, in writing, within a reasonable time, not to
exceed thirty (30) days, unless the failure to respond results from matters
reasonably beyond the Administrator's control.
12.02. Claims For Benefits.
In order to receive benefits under this Plan, a Participant must submit
satisfactory proof of entitlement to such a benefit as set forth in this Claims
Procedures article.
12.03. Filing Claims.
A Participant, Beneficiary, or duly authorized representative of a
Participant or Beneficiary (Claimant) may file a claim for benefits to which
such Claimant believes he or she is entitled. Claims must be made in
writing and delivered to the Administrator in accordance with this Claims
Procedures article. Claimants shall provide the Administrator with such
information and evidence, and shall sign such documents as may
reasonably be requested from time to time for the purpose of
administration of the Plan. A Claimant can initiate the claim process by
submitting to the Administrator fully completed distribution election forms,
if needed, or a letter clearly stating that a claim is being filed. However, a
claim shall not be considered to be “filed” for the purposes of these claim
and appeals procedures until all necessary and applicable forms are
completed and submitted to the Administrator. A claim will be considered
submitted if delivered to the Administrator directly or in care of the office
of the City that handles personnel and human resources matters.
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12.04. Initial Determination Of Claim.
A. The Administrator shall have full discretion to grant or deny a claim
in whole or in part.
B. The Administrator will notify the Claimant, in writing, of the granting
or denying, in whole or in part, of such claim, within ninety (90) days
after receipt of such claim, unless special circumstances require an
extension of time for processing the claim. In no event may the
extension exceed ninety (90) days from the end of the initial
ninety (90)-day period.
C. If an extension of time is necessary, the Claimant must be given a
written notice to this effect prior to the expiration of the initial
ninety (90)-day period, and the notice must indicate the special
circumstances requiring the extension and the date by which
a decision will be made.
D. If a claim is denied in whole or in part, the Administrator's notice
denying such claim shall set forth, in a manner calculated to be
understood by the Claimant, the following:
1. The specific reason or reasons for the denial;
2. Specific reference to pertinent Plan provisions on which the
denial is based;
3. A description of any additional material or information
necessary for the Claimant to perfect the claim and an
explanation of why such material information is necessary;
and
4. An explanation of the Plan's claim review procedures.
E. If notice of the granting or denying of a claim is not furnished in
accordance with the preceding provisions, the claim shall be
deemed denied and the Claimant shall be permitted to exercise the
Claimant's right to review pursuant to the Claims Appeals section,
below.
12.05. Claims Appeals.
A. If a Claimant wishes to appeal a denial of a claim, the Claimant or
the Claimant's duly authorized representative:
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1. May request a review upon written application to the
Administrator;
2. May submit written comments, documents, records and
other information relating to the claim; and
3. May obtain, upon request and free of charge, reasonable
access to, and copies of, all documents, records, and other
information relevant (determined in accordance with
Department of Labor regulations section 2560.503-1(m)(8)
as if it applied to this Plan) to the Claimant's claim for
benefits.
B. The written request for review must be received by the
Administrator no later than sixty (60) days after the Claimant
receives notice that the Claimant's claim for Plan benefits has been
denied.
C. The decision on the review shall be made by the Administrator, who
may, in its discretion, hold a hearing on the denied claim.
D. The Administrator shall make its decision promptly, and not later
than sixty (60) days after the Administrator's receipt of the request
for a review, unless the Administrator determines that special
circumstances require an extension of time for processing the
claim. If the Administrator determines that an extension of time for
processing is required, this period may be extended no more than
sixty (60) days from the end of the initial sixty (60)-day period, in
which case the Administrator shall give the Claimant a written
notice to this effect prior to the expiration of the initial sixty (60)-day
period and the notice shall indicate the special circumstances
requiring the extension of time and the date by which a decision
will be made on review.
E. The decision on review must be written in a manner calculated to
be understood by the Claimant. In the case of an adverse benefit
determination, the notification to the Claimant shall set forth, in a
manner calculated to be understood by the Claimant, the following:
1. The specific reason or reasons for the denial;
2. Specific reference to pertinent Plan provisions on which the
denial is based; and
3. A statement that the Claimant is entitled to receive, upon
request and free of charge, reasonable access to, and
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copies of, all documents, records, and other information
relevant (determined in accordance with Department of
Labor regulations section 2560.503-1(m)(8) as if it applied
to this Plan) to the Claimant's claim for benefits.
F. If the decision on review is not furnished to the Claimant within the
time required in this section, the claim shall be deemed denied on
review and the Claimant shall be permitted to exercise the
Claimant's right to legal remedy pursuant to the remaining sections
of this Claims Procedures article.
12.06. Resolution Of Disputes.
Any claim under this Plan that has not been resolved under the preceding
provisions of this Plan shall be resolved pursuant to the provisions of this
Resolution Of Disputes section. A Claimant may not commence
resolution of a claim pursuant to this section more than three (3) years
after the final decision denying the claim. This section will not apply to
any claim for disability benefits if disability is not defined in the Plan in
accordance with the requirements of the federal Social Security Act.
A. Negotiation/Mediation.
To commence the dispute resolution process, any party may serve
written notice on the other parties specifically identifying the
dispute and requesting negotiation. For a period of thirty (30) days,
the parties shall use their best efforts to resolve the dispute by
negotiation. If the parties are unable to agree after reasonable
negotiations among them, any party may initiate mediation by
making a written request to the other parties. The parties shall
select a retired judge of the California Superior Court (or above) or
United States courts to conduct the mediation. The parties shall
select a mediator as soon as reasonably possible but in no event
later than thirty (30) days following service of the written request to
initiate mediation. If the parties are unable to agree upon a
mediator during this time period, the matter shall be submitted to
Judicial Arbitration and Mediation Services, Inc. (JAMS) for
selection of a JAMS panel mediator (Mediator). If practical, the
Mediator shall have expertise in employee benefits.
B. Binding Arbitration.
If the parties' good faith efforts at resolving the dispute pursuant to
the Negotiation/Mediation subsection are unsuccessful, such
dispute shall be submitted to, and conclusively determined by,
binding arbitration in accordance with this Binding Arbitration
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subsection. Any party may initiate arbitration by making a written
request to the other parties. The parties must request arbitration
within thirty (30) days of the completion of the
negotiation/mediation process.
1. An Arbitrator shall be selected by the parties from the list of
individuals affiliated with JAMS (Arbitrator). If practical, the
Arbitrator shall have expertise in employee benefits. If the
parties are unable to agree upon an Arbitrator, each party
shall select an Arbitrator and the Arbitrators so selected
shall select a third Arbitrator.
2. Any arbitration hearing shall be conducted in Sacramento
County. The law applicable to the arbitration of any dispute
shall be the applicable federal or California State law if this
matter was tried in Federal court in California. Except as
otherwise provided in this Plan, the arbitration shall be
governed by the applicable JAMS arbitration rules.
3. In no event shall the Arbitrator's award include any
component of punitive or exemplary damages. The parties
shall equally bear all costs of arbitration.
12.07. Administration Pending Resolution Of Disputes.
If a dispute arises with respect to any matter under this Plan, the
Administrator may refrain from taking any other or further action in
connection with the matter involved in the controversy until the dispute
has been resolved under the Plan. If a dispute arises as to the proper
amount or recipient of any payment of benefits, the Administrator, in the
Administrator's sole and absolute discretion, may withhold or cause to be
withheld such payment until the dispute has been settled by the parties
concerned, or the Administrator may deposit such funds or property with
the court in an interpleader action brought under the law of the State
having jurisdiction.
ARTICLE 13. AMENDMENT AND TERMINATION
13.01. Amendments.
A. The City reserves the right to amend this Plan and the Trust at any
time without the consent of the Administrator, any Trustee, any
fiduciary, or any Participant or Beneficiary; provided, however, that
except in accordance with the provisions of the Plan or as
otherwise specifically permitted by law, no such amendment shall:
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1. Cause any of the assets of the Trust Fund to be used for or
diverted to purposes other than for the exclusive benefit of
Participants and their Beneficiaries;
2. Have any retroactive effect so as to deprive any Participant
or Beneficiary of any nonforfeitable benefits, except that
such changes may be made as may be required to permit
the Plan and the Trust to meet the requirements of Code
section 457, or any similar statues enacted in lieu thereof;
or
3. Increase the duties or liabilities of the Trustee without the
Trustee's consent.
B. Any such Plan amendment shall be made by means of a written
instrument identified as an amendment of the Plan effective as of
a specified date.
C. Notwithstanding any other provision of the Plan to the contrary, if
there is a scrivener's error in properly transcribing the provisions of
this Plan, it shall not be a violation of the Plan terms to operate the
Plan in accordance with its proper provisions, rather than in
accordance with the term of the Plan, pending correction of the
Plan through amendment. In addition, any provisions of the Plan
improperly added as a result of scrivener's error shall be
considered null and void as of the date such error occurred.
D. The City may delegate to the City Manager the right to adopt future
amendments to the Plan, consistent with regulatory requirements
or by negotiations.
13.02. No Amendment To Reduce Prior Earned Benefits.
Except as otherwise specifically permitted by law, the City shall not have
the right to modify or amend the Plan retroactively in such manner as to
deprive any Participant or Beneficiary of any benefit to which such
Participant or Beneficiary was entitled under the Plan by reason of
contributions made prior thereto, unless such modification or amendment
is necessary to conform the Plan to, or to satisfy the conditions of, any
law, governmental regulations or rulings, and to permit the Plan and the
Trust to meet the requirements of Code section 457 or any similar statutes
enacted in lieu thereof.
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13.03. Plan Termination.
The City expects to continue the Plan indefinitely, but reserves the right
to terminate the Plan in part or in whole at any time by appropriate action.
The City shall thereupon give written directions to the Administrator and
the Trustee to either:
A. Terminate the Plan and the Trust and direct the Trustee to
distribute the Plan assets to the Participants; or
B. Cease future contributions under the Plan, with distributions to be
made to a Participant pursuant to the Plan upon the Participant's
Severance From Employment.
13.04. Reversions.
Except as provided below and as otherwise specifically permitted by law,
it shall be impossible by operation of the Plan or of the Trust, by
termination of either, by power of revocation or amendment, by the
happening of any contingency, by collateral arrangement or by any other
means, for any part of the corpus or income of the Trust Fund maintained
pursuant to the Plan or any funds contributed thereto to be used for, or
diverted to, purposes other than the exclusive benefit of the Participants
or their Beneficiaries; provided, however, in the case of a contribution that
is made by the City by a mistake of fact, the Trustee may return such
contribution to the City within one (1) year after the payment of the
contribution.
13.05. Transfer To New Plan.
If the City establishes another Code section 457 plan providing
comparable benefits to the Plan, and the City intends to discontinue
contributions under the Plan due to the liabilities created under the new
plan, then, subject to the prior approval of the City, the City may direct the
Trustee to cause the Trust Funds to be transferred to such newly-created
Plan. Thereafter, notwithstanding the provisions of the Plan Termination
section, above, all further obligations to Participants, their Beneficiaries or
the City under the Plan shall cease and shall instead be determined by
the terms of the new plan. Neither the City nor the Trustee shall be
required to ascertain the proper applicability of such fund after the transfer
is made.
13.06. Plan Merger.
In the event of any merger or consolidation with, or the transfer of assets
or liabilities to any other plan, each Participant in the Plan shall (if the Plan
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then terminated) receive a benefit immediately after the merger,
consolidation or transfer which is equal to or greater than the benefit that
the Participant would have been entitled to receive immediately before the
merger, consolidation or transfer (if the Plan then terminated). Any
Employee whose employment is continued by such successor employer
shall not be deemed to have had a Severance From Employment for any
Plan purposes.
ARTICLE 14. MISCELLANEOUS
14.01. Nonalienation Of Benefits.
A. Subject to the exceptions provided below and as otherwise
specifically permitted by law, no assets or benefits under the Plan
and the Trust shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or
charge. Any attempt to so anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge the same shall be void. Nor
shall any such benefits in any manner be liable for or subject to the
debts, contracts, liabilities or torts of the person entitled to such
benefits.
B. The prohibitions contained in this Nonalienation Of Benefits section
shall not apply to a “qualified domestic relations order” as defined
in Code section 414(p), and those other domestic relations orders
permitted to be so treated by the Administrator under the provisions
of the Retirement Equity Act of 1984. The Administrator shall
establish a written procedure to determine the qualified status of
domestic relations orders and to administer distributions under
such qualified orders.
C. The prohibitions contained in this Nonalienation Of Benefits section
shall not apply to any arrangement for the recovery by the Plan of
overpayments of benefits previously made to a Participant or
Beneficiary.
D. The prohibitions contained in this Nonalienation Of Benefits section
shall not apply to any offset of a Participant's benefits provided
under the Plan against the amount that the Participant is ordered
or required to pay to the Plan; provided, however, that the following
requirements are satisfied:
1. The order or requirement to pay arises under one of the
following circumstances:
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a. Under a judgment or conviction for a crime involving
the Plan;
b. Under a civil judgment, including a consent order or
decree, entered by a court; or
c. Pursuant to a settlement agreement between the
Plan and the Participant; and
2. The judgment, order, decree or settlement agreement
expressly provides for the offset of all or a part of the amount
ordered or required to be paid to the Plan against the
Participant's Plan benefits.
14.02. Employee Plans Compliance Resolution System.
In accordance with standards that are similar to those set forth in the
Employee Plans Compliance Resolution System as described in
Rev. Proc. 2021-30 and any subsequent guidance, the Administrator has
the authority to correct any Plan document, operational, demographic and
employer eligibility failures through self-correction (if applicable) or
voluntary correction with Internal Revenue Service approval.
14.03. Limitation Of Rights; Employment Relationship.
Nothing contained in this Plan shall be construed as a contract of
employment between the City and any Employee, or as a right of any
Employee to be continued in the employment of the City, or as creating or
modifying the terms of an Employee's position, or as a limitation on the
right of the City to discharge any Employee, with or without cause. Unless
the law or this Plan explicitly provides otherwise, rights under any other
employee benefit plan maintained by the City (for example, benefits upon
an Employee's death, retirement, or other termination) do not create any
rights under this Plan to benefits or continued participation. The fact that
an individual is eligible to receive benefits under this Plan does not create
any rights under any other employee benefit plan maintained by the City,
unless that plan or the law explicitly provides otherwise.
14.04. Limitation Of Rights Of Participants And Others.
Neither the establishment of the Plan or the Trust, nor any modifications
thereof, nor the creation of any fund or account, nor the payment of any
benefits, shall be construed as giving to any Participant or any other
person any legal or equitable right against the City, the Administrator, or
its designated representative, or the Trustee, except as expressly
provided herein or as provided by law.
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14.05. Release From Liability.
Any payment to any Participant, or to the Participant's legal guardian or
Beneficiary, in accordance with the provisions of the Plan, shall to the
extent thereof be in full satisfaction of all claims hereunder against the
Plan, the City, the Administrator, the Trustee and any Plan fiduciary, any
of whom may require such Participant, legal guardian or Beneficiary, as a
condition precedent to such payment, to execute a receipt and release
therefor in such form as shall be determined by the City, the Administrator
or the Trustee, as the case may be.
14.06. Indemnity.
The City hereby agrees to indemnify and hold harmless each present and
future Administrator and its Employees, and all duly authorized agents,
against all liabilities, costs and expenses, including, without limitation,
attorneys' fees reasonably incurred by, or imposed upon, such person in
connection with, or arising out of, any claims, demands, suits, actions or
proceedings in which such indemnified party may be involved (other than
in the capacity of Participant or Beneficiary), except in the case of the
willful misconduct of any such indemnified party. Expenses shall include
the cost of reasonable settlement made with the view to curtailment of
costs of litigation. The foregoing right of indemnification shall not be
exclusive of other rights to which such indemnified party may be entitled
as a matter of law.
14.07. Expenses.
Upon written instructions from the Administrator, the Trustee shall pay
from the Trust Fund the expenses necessary to carry out the
administration of the Plan that are not paid by the City.
14.08. Construction.
No provision of this Plan shall be construed to conflict with any Treasury
Department, Department of Labor or Internal Revenue Service regulation,
ruling, release or proposed regulation or other order which affects, or
could affect, the terms of this Plan. If any provision is susceptible of more
than one interpretation, such interpretation shall be given thereto as is
consistent with the Plan being in conformity with Code section 457 and
administered in conformity with other federal or State laws that apply to
the Plan.
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14.09. Headings.
The headings and subheadings of this Plan have been inserted for
convenience of reference and are to be ignored in any construction of the
provisions hereof.
14.10. Uniformity.
All provisions of this Plan shall be interpreted and applied in a uniform,
nondiscriminatory manner.
14.11. Gender And Number.
Any reference in the masculine gender herein shall be deemed to also
include the feminine gender, unless expressly provided otherwise.
Wherever appropriate, any reference in this document in the singular shall
include the plural and any reference in the plural shall include the singular.
14.12. Controlling Law.
Unless otherwise provided in this Plan, the Plan shall be construed and
enforced according to the laws of the United States of America to the
extent applicable, otherwise by the laws of California including California's
choice-of-law rules, except to the extent those laws would require
application of a State other than California.
14.13. Amendment Of Laws.
All references to sections of the Code, or any Treasury regulations or
rulings thereunder, shall be deemed to refer to such sections as they may
subsequently be modified, amended, replaced or amplified by any federal
statutes, regulations or rulings of similar application and importance.
14.14. Severability.
In the event that any provisions of this Plan shall be held illegal or invalid
for any reason by operation of law or a court of competent jurisdiction,
said illegality or invalidity shall not affect the remaining legal and valid
provisions of this document. This Plan shall continue as if said illegal or
invalid provisions had not been included herein either initially, or beyond
the date it is first held to be illegal or invalid, but only if the basic purposes
hereof can be effected through the remaining valid and legal provisions.
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14.15. Waiver.
Failure to insist upon strict compliance with any provision of the Plan shall
not be deemed to be a waiver of such provision or any other provision;
waiver of breach of any provision of this Plan shall not be deemed to be a
waiver of any other provision or subsequent breach of such provision.
No term, condition, or provision of the Plan shall be deemed waived
unless the purported waiver is in writing, signed by the party to be
charged. No written waiver shall be deemed a continuing waiver unless
so specifically stated in the writing, and such waiver shall operate only as
to the specific term, condition, or provision waived.
14.16. Entire Document.
This document and any appendices or supplements hereto shall
constitute the entire document and shall govern the rights, liabilities and
obligations of the parties under the Plan, except as it may be modified.
ARTICLE 15 - CARES ACT PROVISIONS
15.01. CARES Act Definitions.
For purposes of this Article, the following additional definitions shall apply:
A. Act.
“Act” means the Coronavirus Aid, Relief, and Economic Security
Act, also known as the CARES Act.
B. Coronavirus-Related Distribution.
“Coronavirus-Related Distribution” means any distributions from
the Plan made on or after January 1, 2020, and before
December 31, 2020 to a Qualified Individual, that do not in the
aggregate exceed the lesser of the Participant’s Account or one
hundred thousand dollars ($100,000).
C. Qualified Individual.
“Qualified Individual” means an individual:
1. Who is diagnosed with the virus SARS-CoV-2 or with
coronavirus disease 2019 (COVID-19) by a test approved
by the Centers for Disease Control and Prevention,
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2. Whose spouse or dependent as defined in Code
section 152 is diagnosed with such virus or disease by
such a test, or,
3. Who experiences adverse financial consequences as a
result of being quarantined, being furloughed or laid off or
having work hours reduced due to such virus or disease,
being unable to work due to lack of child care due to such
virus or disease, closing or reducing hours of a business
owned or operated by the individual due to such virus or
disease, or other factors as determined by the Secretary
of the Treasury or the Secretary’s delectate.
The Administrator of the Plan may rely on an Employee’s
certification that the Employee satisfies the conditions of this
subsection in determining whether any distribution is a
Coronavirus-Related Distribution.
15.02. Coronavirus-Related Distributions.
A. A Qualified Individual may request and receive a Coronavirus-
Related Distribution.
B. At any time during the three (3)-year period beginning on the day
after the receipt of the Coronavirus-Related Distribution, a
Participant may repay any portion of such distribution, in one (1) or
more installments to the Plan, which in the aggregate do not
exceed the amount of the Coronavirus-Related Distribution. The
repaid amounts shall be deposited in the Participant’s Rollover
Account or Roth Rollover Account, as applicable.
C. Code section 72(t) shall not apply to any Coronavirus-Related
Distribution.
D. Unless the Participant elects otherwise, any amount required to be
included in gross income for the taxable year of the Coronavirus-
Related Distribution shall be included ratably of the three (3)-year
taxable year period beginning with the taxable year of the
distribution.
E. A Coronavirus-Related Distribution shall not be treated as Eligible
Rollover Distribution for purposes of the federal twenty-(20)
percent tax withholding requirements.
F. A Coronavirus-Related Distribution shall be treated as meeting the
requirements of Code section 457(d)(1)(A).
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15.03. Participant Loan Relief.
A. In the case of a loan from the Plan to a Qualified Individual on or
after March 27, 2020 to September 23, 2020, the maximum loan
amount under Code section 72(p)(2)(A), shall be the lesser of one
hundred thousand dollars ($100,000) or the value of the
Participant’s Account.
B. Notwithstanding the provisions of the Plan or any loan policy
adopted by the Council, if a Qualified Individual has one (1)
outstanding loan on or after March 27, 2020 to September 23,
2020, the Qualified Individual may request a second (2nd) loan
during this period.
C. In the case of a Qualified Individual with an outstanding loan from
the Plan on or after March 27, 2020, the following shall apply:
1. If the due date for any repayment with respect to such loan
occurs from March 27, 2020 to December 31, 2020, such
due date shall be delayed by one (1) year, or such longer
period of time allowed by law;
2. Any subsequent repayments with respect to any such loan
shall be appropriately adjusted to reflect the delay in the
due date and any interest accruing during such delay; and
3. In determining the five (5)-year period and the terms of a
loan under Code section 72(p)(2)(B) or (C) of the Code,
the period described in paragraph 1, above shall be
disregarded.
Executed this day of , 2022.
CITY OF CARLSBAD
By:
Title: