HomeMy WebLinkAboutResolution - 98-23 RESOLUTION NO. = 3- 2 V
A RESOLUTION OF THE CITY OF SAN JACINTO
APPROVING AND ADOPTING A REVISED DEFERRED COMPENSATION PLAN
WHEREAS, by Resolution No. 1931 adopted on February 19, 1991, the City of San Jacinto established a
deferred compensation plan for it's employees and authorized execution of relevant Agreements with
Lincoln Life; and ICMA Retirement Corporation.
WHEREAS, federal legislation effective January 1, 1997, has necessitated changes to the City of San
Jacinto deferred compensation plan which changes are included in the revised Deferred Compensation Plan
and Trust document (the "Plan") attached hereto as Exhibit A.
NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCILICITY MANAGER OF THE
CITY OF SAN JACINTO AS HEREBY RESOLVED AS FOLLOWS:
SECTION 1. The CITY COUNCILICITY MANAGER hereby amend and restates the Plan as set
forth in Exhibit A.
SECTION 2. The assets of the Plan shall be held in trust, with the Finance Director serving as
trustee, for the exclusive benefit of the Plan participants and their beneficiaries, and the assets shall not be
diverted to any other purpose. The CITY OF SAN JACINTO beneficial ownership of Plan assets held in
the Lincoln Life and ICMA Retirement Corporation trusts shall be held for the further exclusive benefit of
the Plan participants and their beneficiaries. Notwithstanding the foregoing, all Plan provisions creating
trusts to hold all the assets of the pian for the cxclusive benefit of the Plan participants and Beneficiaries shall
become effective once the appropriate body makes the necessary amendments permitting the establishment
and maintenance of such trusts.
SECTION 3. The Finance Director agrees to serve as trustee under the Plan.
SECTION d. The Finance Director is authorized to execute all agreements necessary to effectuate
the Resolution.
SECTION 5. The City Councii/City Manager shall certify to the passage and adoption of this
resolution; shall cause the same to be entered in the book of Resolutions of said City and shall make a record
of the passage and adoption thereof in the records of the same was passed and adopted.
Passed, approved and adopted on the 7 t h day of M a_L_ , 1998.
AYES : Conner , Cornett , Good , Nilliams and Mayor Smedley
CITY OF SAN, CiNTQ,4. n i
�� ;` CA '
I Mayor City Manager
r
ATTEST:
City Clerk
Chapter 01
PLAN ESTABLISHED
01 Plan Established. As provided in Section 457 of the Internal Revenue Code of
1986, as amended (hereinafter referred to as the "Code"), City of San Jacinto
(hereinafter referred to as the "Plan Sponsor") hereby establishes the City of
San Jacinto Deferred Compensation Plan (hereinafter referred to as the "Plan") for the
employees of r i t v if San Jacinto . Nothing contained in this Plan shall be
deemed to constitute an employment agreement between the participant and the Plan
Sponsor and nothing contained herein shall be deemed to give a participant any right to be
retained in the emp'oy of the Plan Sponsor.
Chapter 02
DEFINITIONS
02-1 Plan Sponsor. "Plan Sponsor' means City Of San Jacinto-,
a governmentaf entity in the State of California as described in Section 1.457-2(c)(2) of the
Treasury Regulations.
02-2 Compensation. "Compensation" means ali payments inside to a public
employee by the Plan Sponsor as remuneration for services rendered.
02-3 Deferred Compensation. "Deferred Compensation" means the amount of the
Participant's Compensation which the Participant and the Plan Sponsor shall mutually agree
(prior to the date for which such Compensation is earned) will be deferred.
02-4 Accumulated Deferrals. "Accumulated Deferrals" mean Compensation
deferred under the Plan, adjusted until the date of payment by income received increases or
decreases in investment value, fees, and any prior distributions made.
02-5 Participant Agreement. "Participant Agreement" means the agreement
executed and filed by an Eligible Employee with the Plan Sponsor pursuant to Chapter 04 of
this Plan, in which the Eligible Employee elects to become a Participant in the Plan.
02-6 Separation from Service. "Separation (or Separates) from Service" means
"separation from service" as a term interpreted for purposes of Section 402(e)(4)(A)(iii) of the
Code and refers to the severance of the Participant's employment with the Plan Sponsor. A
Participant will be deemed to have severed his or her employment as the daEe of Iiis or her last
payroll.
02-7 Participant. "Participant" means any Eligible Employee of the Plan Sponsor
who executes a Participant Agreement with the Plan Sponsor assenting to the provisions of
this Plan, once the Participant Agreement has been approved.
02-8 Beneficiary. "beneficiary' means a beneficiary of a Participant, a Participant's
estate, or any other person whose interest in the Plan is derived from the Participant.
02-9 Committee. 'Committee' means the Committee for the Deferred Compensation
appointed by the Plan Sponsor.
02-10 Eligible Employee. "Eligible Employee" means any person who is employed by
and receives any type of Compensation from the Plan Sponsor for whom services are
rendered, and who is a full-time, regular part-time working half-time, or more, or career
seasonal employee of.he Plan Sponsor.
02-11 "Normal Retirement Age" as used in the Plan, means the range of ages:
(1) Ending not later than age seventy and one half (70 %). and
(2) Beginning not earlier than the earliest age at which the Participant has the
right to retire under a Plan Sponsor's pension plan for which the Participant is eligible with out
consent of the Plan Sponsor and under which the Participant will receive immediate retirement
benefits without actuarial adjustment due to retirement prior to some iater specified age in the
Plan Sponsor's pension plan.
Chapter 03
ADMINISTRATION
03-1 Administration By Committee. This Plan shail be administered by the
Committee which s:iall represent the Plan Sponsor in all matters concerning the administration
of the Plan_
03-2 Committee To Adopt Rules & Regulations. The Committee shall have full
power and authority to adopt rules and regulations for the administration of the Plan, and to
interpret, alter, amend. or revoke any rules and regulations so adopted.
03-3 Committee Action Fair & Reasonable. Every action taken by the Committee
shall be presumed to be fair and reasonable exercise of the authority vested in or the duties
imposed upon it. The Committee and its individual members shall be deemed to have
exercised reasonable care, diligence, and prudence and to have acted impartially as to all
persons interested, unless the contrary be proven by affirmative evidence
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03-4 Committee to Maintain Records of Accounts. To facilitate an orderly
administration of the Plan, the Committee shall maintain or cause to be maintained a deferred
compensation ledger account with respect to each Participant.
03-5 Deferred Compensation Revolving Fund. All deferred compensation
hereunder may be paid into a special fund created and maintained in accordance with Chapter
12 in the treasury of the Plan Sponsor called the"deferred compensation revolving fund". All
costs of administration and staffing of the Plan, expenses of the Committee, and such other
amounts determined of the Committee, as permitted by law, may be paid as necessary out of
the deferred compensation revolving fund. Amounts in the deferred compensation revolving
fund may be invested as directed by the Committee. All Accumulated Deferrals payable to
Participants or their respective Beneficiary or Beneficiaries shall be paid from the deferred
compensation revolving fund unless otherwise paid.
Chapter 04
PARTICIPATION IN THE PLAN
04-1 Enrollment. Enrollment in the Plan.
(1) An Eligible Employee may become a Participant by executing a
Participant Agreement. Compensation will be deferred for any calendar
month only if a Participant Agreement providing for such deferral is executed
by the Participant and approved by the Committee or its designee before the
beginning of the month.
(2) In signing the Participation Agreement, the Participant elects to
participate in this Plan and consents to the Plan Sponsor deferring the
amount specified in the Participation Agreement from the Participant's gross
Compensation for each pay period. The amount specified must equal to at
least ten dollars ($10) per pay period and shall continue until changed cr
revoked pursuant to Chapter 04-6 or 04-7 of this Plan
04-2 Plan to Plan Transfer.
(1) Transfer To The Pfan: If a Participant was formerly a participant in an eligible
state deferred compensation plan ( within the meaning of Section 457 of the Code and the
regulations thereunder), and if such plan permits the direct transfer of the Participant's interest
therein to the Plan, then the Plan shall accept assets representing the value of such interest
provided, however, the Committee may require in its sole discretion that some or all of such
interest be transferred in cash or its equivalent. Such amount shall be held, accounted for,
administered, and otherwise treated in that same manner as compensation deferred by the
Participant under the Plan except that:
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(a) Only the amount, if any, transferred to the Plan which was deferred
under the transferor plan in the taxable year when transfer occurs shall be
treated as Compensation deferred under the Plan in such year.
(b) No amount may be transferred to the Plan as of the time when such amount
is paid or made available under the Section 457 plan of the Participant's
prior employer.
(2) Transfers From the Plan: The amounts credited to the account of a former
Participant in the Plan may be transferred to another eligible deferred compensation plan
(within the meaning of Section 457 of the Code and the regulations thereunder) and in
which the former Participant currently participates, and if such plan provides for the
acceptance of such amounts. The only rollovers or transfers allowable under Section 457
plan. If a Participant, prior to pay-out beginning, accepts employment with an entity who
offers an eligible Section 457 plan, and the Participant becomes a participant in that plan,
then Accumulated Deferrals may, at the election of the Participant and after written notice
to the Committee, be transferred to the other plan, provided that plan provides for tha
acceptance of such transfers,
(3) Application for Transfer: If the conditions in subchapters f1) and (2) of this
chapter are met and the Participant wishes to transfer his/her account, he/she shall
complete any application form and/or other documents as may be required by the
Committee
(4) Administrative Rules: The Committee shall prescribe such rules consistent
with the provisions of subchapters (1) and (2) of the Chanter concerning plan-to-plan
transfers as in its sole judgment it deems desirable for the administration of the Plan.
04-3 Deferral Limitation.
(1) Except as provided in Chapter 04-4, relating to catch-up, the maximum that may be
deferred under the Plan for any taxable year of a Participant shall not exceed the lesser of
seven thousand five hundred dollars ($7,500), as such amount is adjusted from time to
time by the Secretary of Treasury pursuant to Code Section 457 (e)(15), or thirty-three and
one-third percent (33 1/3 %) of -he Participant's includible compensation, each reduced,
(a) By any amount excludable from the Participant's gross income for that
taxable year under Section 403(b) of the Code. and
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(b) Effective for taxable years beginning after December 31, 1988, by any l
amount:
(i) Excluded from gross income under Section 402(a)(8) or 402(h)(1)(8)
of the Code (relating to a Participant's elective deferrals to simplified
employee pensions) for that taxable year;
(ii) For which a deduction is allowable for that taxable year by reason of
a contribution to an organization described in Section 501( c)(18) of
the Code (relating to pension trusts created before June 25, 1959,
forming part of a plan for payment of benefits under a pension plan
funded only by contributions of employees); or
(iii) Which is deferred by a Participant under Section 401(k) of the Code
(relating to qualified cash or deferred arrangement) during that
taxable year; and
(c } By any amount the Participant contributes to any other plan covered by
Section 457 of the Code (relating to deferred compensation plan{s}) during the
taxable year.
(2) "Includible compensation" for purposes of the Chapter means includible
compensation as defined in Section 457(e)(5) of the Code and as further defined by
Treasury Regulation 1.457-2(e)(2) interpreting that section, and is determined (
without regard to community property laws. Includible compensation for a taxable 1.
year includes only compensation from the Plan Sponsor that is attributable to
services performed for the Plan Sponsor and that is includible in the Participant's
gross income for the taxable year for federal income tax purposes. Accordingly, a
Participant's includible compensation for a taxable year does not include an amount
payable by the Plan Sponsor that is excludable from the Participant's gross income
under:
(a) Section 457 of the Code;
(b) Section 403(b) of the Code (relating to annuity contracts purchase by non-
profit organizations described in Section 501(c)(3) of the Code or public
schools);
(c) Section 105(d) of the Code (relating to wage continuation plans);
(d) Section 911 of the Code (relating to citizens or residents of the United
States living abroad);
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(e) Section 402(a)(8) or 402(1 of the Code (relating to simplified
employee pensions);
(f) Section 501(c )(18) of the Code (relating to certain pension trusts),
(g) Section 401(k) of the Code (relating to qualified cash or deferred
arrangements): or
(h) Section 408(p) of the Code (relating to SIMPLE Retirement Accounts).
(3) In computing includible compensation, total gross compensation as shown on the
entity's earnings statements must be reduced by:
(a) Pre-tax contributions to retirement plans under Section 414(h) of the Cade;
and
(b) Any contributions to cafeteria plans under Section 125 of the Code
(including those associated with such items as dependent care salary
reduction plans),
before excluding the items listed in subchapters (2)(a) through (h) of this Chapter.
04-4 Catch-up Provision. For one or more of the Participant's last three (3) taxable years
ending before attaining Normal Retirement Age under the Plan, the maximum deferral shall be
the lesser of:
(1) Fifteen thousand dollars ($15,000) for the taxable year, reduced in the same
manner as the seven thousand five hundred dollars ($7.500) limitation is
reduced in Chapter 04-3, or
(2) the sum of:
(a) The limitations established for purposes of Chapter 04-3 of the Plan
for the taxable year (determined without regard to this Chapter), plus
(b) So much of the limitation established under Chapter 04-3 for taxable
years before the taxable years has not theretofore been used under
Chapter 04-3 or Chapter 04-4. A prior taxable year shall be taken
into account only if:
(i) It begins after December 31, 1978;
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(ii) The Participant was eligible to participate in the Plan during
all or any portion of the taxable year; and, r
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(iii) Compensation deferred (if any) under the Plan during the
taxable year was subject to a maximum limitation (as
established under Chapter 04-3).
A prior taxable year included a taxable year in which the Participant was eligible to participate
in an eligible plan sponsored by another employer. In no event can the Participant elect to
have the catch-up provision apply more than once whether or not the full catch-up had been
utilized. This catch-up provision may not be used in the year in which the Participant attains
age seventy and one-half, and may not be used in any year thereafter.
04-5 Committee May Disallow Deferral. The Participant acknowledges the right of the
Committee to disallow deferral of Compensation under the Plan in excess of the limitations in
Chapter 04-3 and 04-4. However, the Committee shall have no duty to assure that amounts
deferred are in compliance with such limitations.
04-6 Modification Of Deferral Or Funding Option(s). A Participant may change his/her
deferral or funding option(s) during an open enrollment period. Funding option(s) may not be
changed more than four (4) times in any calendar year, or a fee may be charged. Changes in
the amount of deferral must equal at least ten dollars (W) or more per funding option per
month. (Beneficiaries entitled to receive Accumulated Deferrals may also change funding
options not more than four (4) times per year.) Any combination of a decrease, a transfer, or a
change in funding cption(s) effective the same date, shall be considered one change. A
change (whether counted as such or not) shall be effective for any calendar month only if the
Participant signs a new Participant Agreement and it is approved by the Committee or its
designee before the beginning of that calendar month. All Participation Agreements indicating
changes in funding option(s) must be filed with the Committee no later than fifteen (15) days
prior to the established pay date for which the change will occur. The Committee reserves the
right to defer the effective date of any change.
04-7 Suspension And Reinstatement Of Deferral.
SUSPENSION. A Participant may at any time direct that deferrals under the Participant's
Participation Agreement cease by completing the proper form and filing it with the Committee
no later than the last day of the payroll period prior to the payroll period during which the
deferrals are to cease; however, Accumulated Deferrals shall only be paid as provided in
Chapter 04-9 through 04-14.
REINSTATEMENT. .A Participant who has directed the cessation of deferrals may resume
deferrals for any calendar month commencing no sooner than the month following the close of
the next enrollment period by executing a new Participation Agreement to defer
Compensation. The waiting period shall not apply to Participants who are on leave without pay
as discussed in Chapter 07.
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04-8 Investment Options Election. Each Participant shall designate on his/her
Participation Agreement the investment options) in which he/she wishes to have deferrals
�. invested. Such designation shall continue unless changed pursuant to Chapter 04-6 The
investment option(s) shall be selected from those options made available for this purpose from
time to time by the Plan Administrator, in its sole discretion The Plan Administrator may make
available as investment options:
(1) A fixed rate investment or pool of investments including deposits with a credit union
savings and loan association, mutual savings bank and fixed annuities;
(2) Specified mutual fund shares, shares of an investment company, or variable
annuities, or,
(3) Fixed cr variable life insurance, or other options permitted by law and selected by
the Plan Administrator
In the event that a selected option experiences a loss, the Participant's Accumulated
Deferrals payable hereunder shall likewise reflect a loss for the period.
04-9 Designation Of Beneficiaries. Each Participant shall have the right to designate a
Beneficiary cr Beneficiaries to receive Accumulated Deferrals in the event of Participant's
death. If no such designation is in effect upon the death of a Participant, the Beneficiary shall
be the surviving spouse, or if none, then the Beneficiary shall be the Participant's estate- A
Participant may change his/her Beneficiary designation at any time by filing a change of
beneficiary form with the Committee. A Participant may also change his/her Beneficiary
designation by completing the beneficiary portion of a Participant Agreement form. The
w.. Participant may name:
(1) A designated organization or person (including without limitation his/her unborn or
later adopted children.) If unborn or later adopted children are to be included, the
designation must so indicate. The date of birth must be furnished for any living
person who is named and who is under the age of eighteen.
(2) His or her estate.
(3) A trust which is in existence, or which is to be established under the Participant's
last will. For an existing trust, the Participant must provide the name of the trust
and the date it was established
The Participant may name contingent Beneficiaries in addition to primary Beneficiaries Any
named Beneficiary must have a tax LD. number or a social security number.
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04-10 Distribution To Participate After Separation From Service. After Separation from
Service, Accumulated Deferrals shall be paid to the Participant in one or more installments as /
elected by the Participant pursuant to Chapter 04-12 through 04-14,
04-11 Distribution In The Event Of Death Of Participant Or Beneficiary.
(1) Should the Participant die at any time, Accumulated Deferrals shall be paid to the
Beneficiary or Beneficiaries designated by the Participant pursuant to Chapter 04-9
The Accumulated Deferrals shall be paid out as provided in Chapter 04-9 through
04-15. If no Beneficiary is designated as provided in the Participation Agreement,
or if the Designated Beneficiary does not survive by a period of thirty (30) days,
then a lump sum or series of payments shall be paid, in accordance with Chapter
04-9 through 04-13, to the surviving spouse, or if none, a lump sum shall be paid to
the estate of the Participant.
(2) In the event a Beneficiary becomes entitled to receive Accumulated Deferrals but
dies prior to the distribution of the total Accumulated Deferrals, Accumulated
Deferrals shall become payable to the Beneficiary's estate on the first day of the
third month following the Beneficiary's death, unless Accumulated Deferrals are
being paid in the form of an annuity, in which case the disposition of the remaining
amount shall be determined by the annuity contract. Such annuity contracts shalt
be issued pursuant to the rules set forth in Chapter 04-14.
04-12 Elections Regarding Distribution. Each Participant (or in the event of death, each
Beneficiary other than an organization, estate, or trust) shall elect when his/her pay-out will
begin and the pay-out period. {
(1) Election Regarding Time of Payment. The election regarding the time when
payment will begin shaJI be made when a Participant Separates from Service (or
dies having Separated from Service and having previously elected when payment
will begin.)
Once made, the election regarding when pay-out will begin is irrevocable as to
the Participant or Beneficiary making the election; provided, however, that after payments
under the Plan have been made available to a Participant, but prior to any actual distribution to
the Participant, the Participant may make a one-time only election to defer the commencement
of payments.
(2) Election Regarding When Payment Will Begin:
(a) By a Participant who Separates from Service other than by reason of death,
must be made not later than sixty (fi0) days after Separation from Service.
Payment may begin on the date nearest the first day of the month in which
an election is filed with the Committee on form(s) provided for that purpose,
and payment must begin within the time prescribed by Chapter 04-13.
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(b) By a Beneficiary, other than an organization estate. or trust where the
Participant was not already receiving payments, payments must be made
not later than sixty (60) days after the Participant's death_ Payment may
begin on the dale nearest the first day of the month in which the election is
filed with the Committee on forms provided for that purpose, and payment
must begin within within the time prescribed by Chapter 04-13.
(3) Election Regarding Method of Payment. The Participant (or Beneficiary other
than an organization, estate, or trust) who makes an election regarding the date
payment will begin, may also elect the period over which payments will be made.
The pay-out period election may be made either at the time he,'she elects a
beginning date for pay-out or at any time not later than sixty (60) days prior to the
date pay-out is to begin. Once having made this election, the Participant (or
Beneficiary, other than an organization, estate, or trust) may change the pay-out
period election not later than sixty (60) days prior to the date pay-out is to begin.
Such a Beneficiary may also make this election where the Participant was already
receiving payments but, as provided in Chapter 04-13(3)(a), must receive
distribution at least as rapidly as it was being distributed to the Participant. Such a
Beneficiary must make the pay-out period election not later than sixty (60) days
after the death of the Participant and pay-out will be suspended following the
Participant's death until the Beneficiary either makes a pay-out period election or
begins receiving payment as provided in subchapter (4) of this chapter. Provided, if
the Participant was receiving pay-out in the form of an annuity contract, then the
successor's right shall be limited by the terms of that contract
(4) How Elections Are Made. A Participant or Beneficiary make elections allowed
under this Chapter by completing and filing applicable payment request forms with
the Committee.
(5) Consequences In The Absence Of A Timely Election Regarding Time Of
Payment. ,Absent a timely election regarding when pay-out is to begin, pay-out will
begin on the fifteenth day of the month following the month in which the election
period ends. and will be made, in a lump sum if the Accumulated Deferrals as of the
end of the election period are less than twenty-five thousand dollars ($25,000) or, if
the Accumulated Deferrals are twenty-five thousand dollars (525,000) or more, in
the form of a lifetime annuity within a fifteen (15) year period or:
(a) As may be necessary under the minimum pay-out requirements of Section
457 (d)(2)(B)( ) (1) of the Code, requiring amounts to be paid not later than
as determined under Section 401(a)(9)(G) of the Code: or
(b) As may be necessary under Section 457(d)(2)(B)( )(II) of the Code. requiring
amounts not distributed to the Participant during his/her life to be distributed
1%W 10
at least as rapidly as they were being distributed as of the Participant's death. /
(6) Effects Of Certain Employment Changes. Transfers from the Plan are allowed in
the circumstances described in Chapter 04-2 (2).
(7) Consequences In Absence Of A Timely Election Regarding Method Of
Payment. In the absence of a timely election regarding the period of time over
which payment will be made, payment will be made in the manner described in
subchapter(5) of this Chapter.
(8) Payment To An Organization, Estate, Or Trust. Any amount payable to an
organization, estate, or trust shall be paid in a lump sum as prescribed in Chapter
04-13 (3)
04-13 Distribution Of Deferrals.
(1) General Rule, Payment of Accumulated Deferrals will be made in at feast annual,
substantially nonincreasing amounts. Payments are also sub}ect to the limitations
in subchapters (2) through (5) of this Chapter.
(2) Distribution To Participant. A Participant must either:
(a) Receive his/her entire interest prior to the latest of:
(i) The April I" immediately following the close of the Plan year in which
the Participant attains age seventy and one-half; or
(ii) The April 15' immediately following the close of the Plan year in which
the Participant Separates from Service with the Plan Sponsor; or
(b) Begin receiving his/her interest not later than the time specified in (a) of the
Subchapter and receive it over a period not longer then either
(i) The life of the Participant;
(ii) The life of the Participant and a Beneficiary designated by the
Participant;
(iii) The life expectancy of the Participant; or
(iv) The life expectancy of the Participant and a designated Beneficiary.
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Payment must be sufficiently rapid to satisfy the requirements of Section 457 (d)(2)(B)(I)(I) and
Section 401 (a)(9;(G) of the Code. Provided, that until tables are issued by the Secretary of
the Treasury, if provision is made for the payment of a portion of the Accumulated Deferrals to
low a Beneficiary, tre amount payable to the Participant actuarially must exceed two-thirds (213) of
the maximum amount payable to the Participant had no provision been made for payments to
the Beneficiary (determined as of the commencement of the distribution). Once payments to a
Participant begin, the Participant may accelerate the payment schedule only in the event of an
unforeseeable emergency (and subject to the provisions of Chapter 05 regarding such
emergencies).
(3) Distribution To Beneficiaries.
(a) When distribution begins prior to the Participant's death, then pay-out must
be made at least as rapidly as it was being made to the Participant. When
the Beneficiary is an organization, estate, or trust, then payment will be
payable in a lump sum.
(b) When distribution does not begin prior to the Participant's death, and is to
be made:
(i) To an organization, estate, or trust, then payment will be payable in a
lump sum on the first day of the third month following the
Participant's death;
(ii) To a iiving Beneficiary designated be the Participant other than the
Participant's surviving spouse, and, by election, not to begin within
rr. one (1) year of the Participant's death, then the payment must be
made withiri five (5) years of the Participant's death,
(iii) To a living Beneficiary designated by the Participant other than the
Participant's surviving spouse, and, by election, beginning within one
year of the Participant's death, then payment must be made within
fifteen (15) years of the Participant's death;
(iv) To the Participant's surviving spouse, whether as designated
Beneficiary, or by default, then payment must begin prior to the April
15' immediately following the later of the close of the Plan year in
which the Participant would have attained age seventy and one-half
or, if later, the year in which the Participant Separated from Services
and payment may be made over the lifetime of the surviving spouse
or over a period not longer than the life expectancy of the surviving
spouse.
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(4) For purposes of this chapter, life expectancies will be computed by use of the
expected return multiples in Treasury Regulation 1.72-9. When payment is being i
made over the joint lives of the Participant and the Participant's surviving spouse,
the life expectancy of the Participant and the Participant's surviving spouse may be
calculated annually.
(5) Notwithstanding anything in this Plan to the contrary, distributions from the Plan will
be made in compliance with the minimum distribution rules of Section 457(d)(2) of
the Code, and in compliance with Treasury Regulations issued under Section
401(a)(9) and 457 (d)(2) of the Code as applicable.
04-14 De Minimis Accounts (In-Service Distribution). Notwithstanding any other provision in
the Plan, if (a) the total amount payable to a Participant under the Plan does not exceed
$5,000, and (b) such Participant has not made any deferrals under the Plan during the
preceding two-year period, such Participant's Accumulated Deferrals may be distributed to
him, provided that no amounts have been previously distributed to him under this Chapter 04-
14.
Chapter 05
UNFORESEEABLE EMERGENCY
05-1 Unforeseeable Emergency. Notwithstanding any other provisions in the Plan, in the
event of ar. unforeseeable emergency, a Participant or a Beneficiary entitled to Accumulated
Deferrals may request the Committee to pay out a portion of Accumulated Deferrals. If the
Application for payment is approved by the Committee, payment will be made within sixty (60)
days following such an approval. The amount paid shall be limited strictly to that amount
reasonably necessary to satisfy the emergency need. For purposes of this Plan, an
unforeseeable emergency shall be severe Lnanciai hardship to the Participant resulting from:
(1) A sudden and unexpected illness or accident of the Participant or of a dependent
(as defined in Section 152 (a) of the Code) of the Participant,
(2) Loss of the Paribpant's property due to casualty, or
(3) Other similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant.
The circumstance that will constitute as unforeseeable emergency will depend upon the facts
of each case, but in any case, payment shall not be made to the extent that such hardship is
or may be relieved (a) through reimbursement or compensation by insurance or otherwise; (b)
by liquidation of the Participant's assets, to the extent liquidation of such assets would not
itself cause severe financial hardship; or(c )by cessation of deferrals under the Plan
Examples of what shall not be considered to the unforeseeable emergencies include the need
to send a Participant's child to college or the desire to purchase a home.
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Chapter 06
PARTICIPANT LOANS
06-1 Authorization of Loans. To the extent allowed by applicable law, the Plan Sponsor
may authorize the Committee to make loans to Participants pursuant to the terms of this
Chapter. Such loans shall be made on the written application of the Participant and on such
terms and conditions as are set forth in this Chapter or by the Committee. In making such
loans, the Committee shall follow uniform policies and shall not discriminate in favor of or
against any Participant or group of Participants.
06-2 Maximum Loan Amount. In no event shall any loan made to a Participant pursuant to
this Chapter be in an amount which shall cause the outstanding aggregate balance of all loans
made to such Participant under this Plan exceed the lesser of:
(1) $50,000, reduced by the excess (if any) of: (1) highest outstanding balance of loans
from the Plan to the Participant during the one-year period ending on the day
before the date on which the loan is made; over (J) the outstanding balance of
loans frorn the Plan to the Participant or the Beneficiary on the dale on which the
loan is made; or
(2) One-half of the Participant's Accumulated Deferrals
06-3 Repayment of Loan. Each loan made under this Chapter shall mature and be
payable, in full and with interest, within five years from the date such loan is made, unless the
loan is used to acquire any dwelling unit that within a reasonable time (determined at the time
the loan is made) will be used as the principal residence of the Participant.
06-4 Loan terms and Conditions. In addition to such rules and regulations as the
Committee may adopt, all loans to Participants shall comply with the following terms and
conditions:
(1) Loans shall be available to all Participants on a reasonable equivalent basis
(2) Loans shall bear interest at a reasonable rate to be fixed by the Committee based
on interes, rates currently being charged by commercial lenders for similar loans.
Tne Committee shall not discriminate among Participants in the manner of interest
rates, but loans granted at different times may bear different interest rates based on
prevailing rates at the time
(3) Each loan shall be made against collateral, including the assignment of no more
than one-half of the present value of the Participant's Accumulated Deferrals as
security for the aggregate amount of all loans made to such Participal supported
by the Participant's collateral promissory note for the amount of the loan, including
interest.
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(4) Payments of principal and interest must be made at least quarterly and such
payments shall be sufficient to amortize the principal and interest payable pursuant
to the loan on a substantially level basis. The Committee will require that loan
repayments be made by payroll deduction.
(5) A loan to a Participant or Beneficiary shall be considered an earmarked funding
option for such Participant's Accumulated Deferrals.
(6) No distribution shall be made to any Participant, or to a Beneficiary of any such
Participant, unless and until all unpaid loans, including accrued interest thereon,
have been satisfied. If a Participant terminates employment with the Plan Sponsor
for any reason, the outstanding balance of all loans made to him shall become fully
payable and, if not paid within thirty days, any unpaid balance shall be deducted
from any benefit payable to the Participant of his Beneficiary. In the event of
default in repayment of a loan or the bankruptcy of a Participant who has received a
loan, the note will become immediately due and payable, foreclosure on the note
and attachment of security will occur, the amount of the outstanding balance of the
loan will be treated as a distribution to the Participant, and the defaulting
Participant's Accumulated Deferrals will be reduced by the amount of the
outstanding balance of the loan (or so much thereof as may be treated as may be
treated as a distribution without violating the requirements of the Code).
(7) The loan program under the Plan shall be administered by the Committee in a
uniform and nondiscriminatory manner. The Committee shall establish procedures
for loans, including procedures for applying for loans, guidelines governing the
basis on which loans shall be approved, procedures for determining the appropriate
interest rate, the types of collateral which will be accepted as security, any
limitations on the types and amount of loans offered, and the events which will
constitute and actions to be taken to collect loans in default.
Chapter 47
LEAVE OF ABSENCE
07 Leave of Absence. If a Participant is on an approved leave of absence from the Plan
Sponsor, participation in this Plan shall continue.
Chapter08
AMENDMENT OR TERMINATION OF PLAN
08-1 Termination Of Plan. The Plan Sponsor or the Committee may at any time terminate
the Plan. Upon such termination, Accumulated Deferrals will be paid pursuant to Chapter 04
of the Plan. All Participant's deferrals will cease.
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08-2 Amendment Of Plan. The Committee may also amend the p•ovisions of this
Plan at any time, provided, however, that no amendment shalt affect the rights of Participants
or their Beneficiaries regarding Accumulated Deferrals at the time of the amendment,
08-3 Reasons For Amendment. The Plan Sponsor, as may be caused by treasury
Regulations, Federal statue, State law or regulations, or operational experience, may from time
to time find it necessary to change or amend this Plan.
08-4 Procedure For Amendment. If and when an amendment to the Plan is
proposed, the Committee shall notify all Participants, in writing prior to any actual amendment
to the Plan, that an amendment will be made, what the proposed amendment will be, why It is
being done, and what the likely impact, if any, there will be on the Participants as a result of
the proposed amendment. If the proposed Plan amendment will have any adverse affect or
impact on any or all Participants, each Participant adversely affected shall have the right to
modify hislher Participation Agreement as necessary to reduce or eliminate any foreseen
adverse impact on his/her Accumulated Deferrals. No amendments to the Plan shall affect the
amount of Accumulated Deferrals which at the time of such amendment shall have accrued for
Participants or Beneficiaries. to the extent of any Compensation deferred before the time of
amendment and net income thereon accrued to the date of amendment.
Chapter 09
RELATIONSHIP TO OTHER PLANS
09 Retirement And Social Security Not Reduced. It is intended that, pursuant to Section
457 of the Code, the amount of Deferred Compensation will not be considered as current
compensation for purposes of federal income taxation. Such amounts will, however, be
included as compensation in determining benefits or rights under the Plan Sponsor's group
insurance, other retirement plans and FICA. Payments under this Plan will supplement
retirement and death benefits payable under the Plan Sponsor's groilp insurance and other
retirement plans
Chapter 10
TRANSFER IN LIEU OF CASH
10 Assets In Lieu Of Cash. Upon the occurrence of any event requiring the payment of
Accumulated Deferrals under this plan, the Committee may, in its sole discretion, elect to
honor a request from the Participant to substitute the transfer in kind and assignment of any
asset which the Plan Sponsor has acquired, at fair market value.
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Chapter 11
NON-ASSIGNABLITY CLAUSE
11 Accumulated Deferrals Not Assignable. It is agreed that neither the Participant, nor
the Participant's Beneficiary or Beneficiaries, nor any other designee, shall have any right to
commute, sell, assign, transfer, or otherwise convey the right to receive any payments
hereunder , which payments and right thereto are expressly declared to be nonassignable and
nontransferable; and in the event of attempt to assign or transfer, the Plan Sponsor shall have
no further liability hereunder, nor shall any unpaid Accumulated Deferrals be subject to
attachment, garnishment or execution, or be transferable by operation of law in event of
bankruptcy, dissolution of marriage, or insolvency, except to the extent otherwise required by
law,
Chapter 12
ASSETS
12 Plan Assets. All amounts of Compensation deferred under the Plan, all property and
rights to property (including rights as a Beneficiary of a contract providing life insurance
protection) purchased with such amounts, and all income attributed to such amounts, property
or rights to property, including the deferred compensation revolving fund provided for in
Chapter 03-5, shall be held in one or more trusts, and/or custodial accounts or insurance
contracts described in section 401(f) of the Code, for exclusive benefit of Participants and their
Beneficiaries.
Chapter 13
PARTICIPATION BY COMMITTEE MEMBERS
13 Participation By Committee Members. Members of the Committee, who are
otherwise eligible, may participate in the Plan under the same terms and conditions as apply to
other Participants but an individual member shall not participate in any Committee action taken
with respect to that members participation.
Chapter 14
PLAN SPONSOR PARTICIPATION
14 Plan Sponsor Contributions. The Plan Sponsor may, pursuant to a changed or new
Participation Agreement filed by a Participant as specified in Chapters 04-6 or 04-7, add
additional Deferred Compensation for services to be rendered by the Participant to the Plan
Sponsor during any calendar month, provided:
(1) The Participant has elected to have such additional Compensation deferred,
invested, and distributed, pursuant to this Plan, prior to the calendar month in which
the Compensation is earned; and
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(2) Such aad.tionai Deferred Compensation, when added to all ether Deferred
Compensation under the Plan, does not exceed the maximum deferral permitted by
' Chapter 04
Chapter 15
INVESTMENT RESPONSIBILITY
15 Investment Responsibility. The Plan Sponsor may , but is not required to; invest
funds held pursuant to Participation Agreements between Participant and the Plan Sponsor in
accordance with requests made by each Participant. The Committee shall retain the right to
approve or disapprove such investment requests. Any action by the Committee in investing
funds, or approving of any such investment of funds, shall not be considered to be either an
endorsement or guarantee of any investment, nor shall it be considered to attest to the
financial soundness or the suitability of any funding option for the purpose of meeting future
obligations.
Chapter 16
COMMITTEE POWERS
16-1 Plan Prevails. In the event any form or other document used in administering this
Plan, including but not limited to enrollment forms and marketing materials, conflict with the
terms of the Plan, the terms of the Plan shall prevail.
16-2 Decision Binding. The Committee is authorized t determine any matters concerning
the rights of any Participant or any other person under this Plan and such determination shall
+ow be binding on all interested persons.
16-3 Committee To Interpret. The Committee is authorized to construe this Plan and
resolve any ambiguity in the Plan. The Plan and any form or other document used in
administering the Plan shall be interpreted, and this Plan shall be administered, so as to
comply with Sections 457 of the Code and the Treasury Regulations promulgated thereunder.
16-4 Tax Status Not Guaranteed. The Committee does not represent or guarantee that
any particular federal or state income, payroll, personal property, or other tax consequences
will occur because of the Participant's participation in this Plan. The Participation should
consul*.with the Participant's own representative regarding all questions of federal or state
income, payroll. personal property or other tax consequences arising from participation in this
Plan.
16-5 Committee May Require Court Order. The Committee or the Plan Sponsor, if in
doubt concerning tine correctness of their action in making a payment of Accumulated
Deferrals, may suspend payment until satisfied as to the correction of the payment or the
person to receive the payment or to allow the filing in any state court of competent jurisdiction
of a civil action seeking a determination of the amounts to be paid and the person to receive
them. The Committee and
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fir.
the Plan Sponsor shall comply with the final orders in any such suit and the Participant, for the
Participant and the Participant's Beneficiary or Beneficiaries, consents to be bound thereby
Whenever payment of Accumulated Deferrals is suspended pursuant to this chapter, the time
for a Participant or Beneficiary making any election under Chapter 04-12 shall not begin until
amount(s) and person(s) entitled are determined either by written agreement of all parties
concerned or by a court judgement that has become final.
16-6 Delegation of Authority. The Committee may delegate its functions to be performed
under this Plan to any designee with legal authority to perform such functions.
Chapter 17
APPLICABLE LAW
17 Plan to Conform to Federal and State Laws. The Plan is intended to be an eligible
state deferred compensation plan within the meaning of Section 457 of the Code, and
Treasury Regulation 1.457-2(a), and to comply with applicable state law, and shall be
interpreted accordingly.
Chapter 18
TRUST AGREEMENT
18-01 Acceptance. The F i n a n c e D i re c t o r, (the "Trustee"), or any successor or
successors which accept appointment under this Chapter 18, accepts the Trust hereby created
under the Plan and agrees to perform the obligations imposed. The Trustee's duties and r
responsibilities stated hereunder shalt be performed in accordance with, and as necessary t
limited to comply with, applicable law.
18-02 Receipt of Contributions. The Trustee shall be accountable to the Plan Sponsor for
the funds contributed to it by the Plan Sponsor, but shall have no duty to see that the
contributions received comply with provisions of the Plan. The trustee shall be neither obliged
to collect any contributions from the Plan Sponsor, nor to see funds deposited with it are
deposited according to the provisions of the Pfan.
18-03 Full Investment Powers. The Trustee shall have full discretion and authority with
regard to the investment of any portion of the Trust fund that is not subject to direction of
investment by the Plan Sponsor, Committee, or a Participant. The Trustee is authorized and
empowered, but not by way of imitation, with following powers, rights, and dut es.
(1) To invest any part or all of the Trust fund in any common or preferred stocks, open-
end, or closed-end mutual funds, shares of an investment company, variable
annuities, put and call options traded on a national exchange, United States
retirement bonds, corporate bonds, debentures, convertible debentures,
commercial paper, U.S. Treasury bills, U.S. Treasury notes, and other direct or
indirect obligations of the United States Government or its agencies, improved or
unimproved real estate situates in the
19 �-
United States, limited partnerships, insurance contracts, mortgages, notes or other
property of any kind, real or personal, and to buy or sell options on common stock
on a nationally recognized options exchange with or without holding the underlying
common stock, as a prudent man would do under like circumstances with due
regard for the purposes of this Plan.
(2) To retain in cash so much of the Trust fund as it may deem advisable to satisfy I
liquidity needs of the Plan and to deposit any cash held in the Trust Fund in a bank
account at reasonable interest;
(3) To manage, sell, contract to sell, grant options to purchase, convey, exchange,
transfer, abandon, improve, repair, insure, lease for any term even though
commencing in the future or extending beyond the term of the Trust, and otherwise
deal with all property, real or personal, in such manner, for such considerations and
on such terms and conditions as the Trustee shall decide;
(4) To credit and distribute the Trust as directed by the Committee. The Trustee shall
not be obliged to inquire as to whether any payee or distributee is entitled to any
payment or whether the distribution is proper or within the terms of the Plan, or as
to the manner of making any payment or distribution The Trustee shall be
accountable only to the Committee for any payment or distribution. The trustee
shall be accountable only to the Committee for any payment or distribution made by
it in good faith on the order or direction of the Committee;
(5) To borrow money, to assume indebtedness, extend mortgages and encumber by
mortgage or pledge; to invest in loans to a Participant in accordance with the loan
policy established by the Committee (if such loans are to be permitted), provided
any loan is adequately secured, bears a reasonable rate of interest, and provides
for repayment within a specified time;
(6) To compromise, contest, arbitrate or abandon claims and demands, in its discretion,
(7) To have with respect to the Trust all rights of an individual owner, including the
power to give proxies, to participate in any voting Trusts, mergers, consolidations or
liquidations, and to exercise or sell stock subscriptions or conversion rights,
(8) To hold any securities or other property in the name of Trustee or nominee, or in
another form as it may deem best, with or without disclosing the Trust relationship,
(9) To perform any and all other acts in its judgment necessary or appropriate for the
proper advantages management, investment, and distribution of the Trust;
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(10) To retain any `unds or Property subject to any dispute without liability of the
payment of interest, and to decline, when reasonable to do so, to make payment or
delivery of the funds or property until final adjudication is made by a court of
competent jurisdiction;
(11) To furnish any tax returns or portions thereof required to the Trustee;
(12) To furnish to the Plan Sponsor and the Committee statements of accounts at least
annually showing the condition of the Trust fund and all investments, receipts,
disbursements and other transactions effected by the Trustee during the Plan Year
covered by the statement and also stating the assets of the Trust held at the end of
the Plan Year, The Committee may approve an account by written notice of
approval delivered to the Trustee in writing within ninety (90) days from the date
upon which the account statement was mailed or otherwise delivered to the
Committee. The Committee agrees to use its best efforts to review account
statements provided by the Trustee within ninety (90) days from the date the
account statement was mailed or delivered to the Committee. Any matters objected
to by the Committee shall be communicated to the Trustee in a writing signed by a
member of the Committee, and the Trustee shall be given a reasonable opportunity
to explain or adjust such matters. In no event shall the Trustee be liable for losses
to the extent that the same could have been prevented by a prompt review (within
90 days) of the Trustee's written account by the Committee; and
(13)To begin, maintain, or defend any litigation necessary in connection with the
administration of the Plan, except that the Trustee shall not be obliged or required
to do so unless indemnified to its satisfaction.
18-04 Records and Statements. The records of the Trustee pertaining to the Plan shall be l
open to the inspection of the Plan Sponsor and the Committee at all reasonable times and
may be audited from time to time by any person or persons as the Plan Sponsor or Committee
may specify in writing. The Trustee shall furnish the Committee or the Plan Sponsor with
whatever information relating to the Trust fund the Committee or the Plan Sponsor considers
necessary.
18-05 Fees and Expenses from Fund. The Trustee shall receive reasonable annual
compensation as may be agreed upon from time to time between the Plan Sponsor and the
Trustee. The Trustee shall pay all expenses reasonably incurred by it or by the Plan Sponsor,
the Committee, or other professional advisors or administrators in the administration of the
Plan from the Trust fund unless the Plan Sponsor pays the expenses. The Committee shall
not treat any fee or expense paid, directly or indirectly, by the Plan Sponsor as a Plan Sponsor
contribution.
18-06 Distribution of Cash or Property. The Trustee may make distribution under the Plan
in cash or property, or partly in each, at its fair market value as determined by the Trustee.
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18-07 Resignation. The trustee may resign at any time as Trustee of the Plan by giving thirty
(30) days written notice in advance to the Plan Sponsor and to the Committee.
18-08 Removal. The Plan Si by giving thirty (30) days written notice in advance to the
Trustee, may remove any Trustee.
18-09 Interim Duties and Successor Trustee. In the event of the resignation or removal of a
Trustee, the Plan sponsor shall appoint a successor Trustee if it intends to continue the Plan.
During any period of the selection of a Trustee is pending, or during any period a Trustee is
unable to serve for any reason, the remaining Trustee or Trustee(s), if any shall act as the sole
Trustee cr as the only Trustee(s) of the Trust created under this Agreement If no Trustee
remains during any paid period the selection of a Trustee is pending, the Plan Sponsor shall
act as Trustee until a successor Trustee is selected.
Each successor Trustee shall succeed to the title to the Trust vested in his predecessor
by accepting in writing 6ils appointment as successor Trustee and filing the acceptance with
the former Trustee and the Committee without the signing or filing of any further statement.
The resigning or removed Trustee, upon receipt of acceptance in writing of the Trust by the
successor Trustee, shall execute all documents and do all acts necessary to vest the title of
record in any successor Trustee. Each successor Trustee shall have and enjoy all of the
powers. both discretionary and ministerial, conferred under this Agreement upon his
predecessor. No successor Trustee shall be personally liable for any act or failure to act of
any predecessor Trustee. With the approval of the Plan Sponsor and the Committee, a
successor Trustee, with respect to the Plan, may accept the account rendered and the
property delivered to it by a predecessor Trustee without incurring any liability or responsibility
for so doing-
18-10 Valuation of Trust. The Trustee shall value the Trust Fund as of the last day of each
calendar year and at such other times as the Committee may direct to determine the fair
market value of each Participant's Accumulated Deferrals, and the Trustee shall value the
Trust fund on such other date(s) as directed by the Committee.
12
18-11 Exclusive Benefit. The Trust fund will be held for the exclusive benefit of Participants
and their Beneficiaries. Except as otherwise provided in the Plan, it shall be impossible under
any circumstances at any time for any part of the corpus or income of the Trust fund to be
used for, or diverted to, purposes other than for the exclusive benefit of Participants and their
Beneficiaries
San Jacinto , CA May 7 , 1998
SIGNED AT DATE
Jim Smedley , Mayor
r
RUSTEE
I
ATTEST ;
Pamela L . Lee , City Clerk
C
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