HomeMy WebLinkAbout21-Human Resources
ORiG1NAl
CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
From:
Linn Livingston
Subject: Resolution of the City of
San Bernardino to Provide an
Accumulated Leave Conversion Plan
Through Membership in the Public
Agency Retirement (PARS) Trust
MICC Meeting Date: Dec. 15,2003
Dept:
Human Resources
Date:
November 25, 2003
Synopsis of Previous Council Action:
No previous Council action.
Recommended Motion:
Adopt resolution.
vfvx~ ~~
Signature
Contact person:
Linn Livinaston
Phone:
384-5161
Supporting data attached:
Yes
Ward:
FUNDING REQUIREMENTS: Amount:
Source: (Acct. No.)
(Acct. Description)
Finance:
Council Notes:
12-C:06'~ 2C~\3- 3 i'J
Agenda Item NO.~
J'-j 15/03
.
CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
Staff Report
Subiect:
Resolution of the City of San Bernardino to provide an accumulated leave conversion plan
through membership in the Public Agency Retirement System (PARS) Trust.
Backl!:round:
On September 2, 2003, the Mayor and Common Council approved a new Memorandum of
Understanding between the City of San Bernardino and employees in the Police Safety
Employees' bargaining unit represented by the San Bemardino Police Officers' Association
(SBPOA), which provided for the establishment of an Accumulated Leave Conversion Plan
which will require employees upon retirement to contribute unused sick leave, vacation, holiday,
and compensatory time to an Internal Revenue Code Section 401 (a) Defined Benefit Plan. All
fees associated with such plan will be paid by plan participants.
On October 6, 2003, the Mayor and Common Council approved a resolution of the City of San
Bernardino approving a side letter to Resolution No. 2001-94, establishing a Compensation and
Benefits Plan, amending Section I, PERS, Safety Employees, Subsection 5, for Police Safety
Management, to provide an Accumulated Leave Conversion Plan which will allow employees
upon retirement to contribute unused sick leave, vacation, holiday, and compensatory time to an
Internal Revenue Code Section 401 (a) Defined Benefit Plan. All fees associated with such plan
will be paid by plan participants.
The Public Agency Retirement System (PARS) is a local govemment IRC 401(a) qualified
multiple-employer retirement system. The retirement benefits offered by the PARS Trust are
401 (a) tax qualified, and thus, receive favorable tax treatment from the IRS.
PARS has designed a retirement program that allows employees to convert unused sick leave,
vacation, holiday, and compensatory time to pension benefits. This program offers a valuable
benefit to the employee by providing a source for additional retirement benefits to supplement
their CalPERS retirement benefit. In addition, employees have the added advantage of avoiding
immediate taxation of the entire accrued value of unused time in the year of retirement.
This plan will also be offered to all Management/Confidential and Unclassified employees.
Financial Impact:
There is no financial impact for this action.
Recommendations:
Adopt Resolution.
Attachment: A Copy of Plan Document
e
e
e
R~OI"ti~(Q) ~y
2
RESOLUTION OF THE CITY OF SAN BERNARDINO TO PROVIDE AN
ACCUMULATED LEAVE CONVERSION PLAN THROUGH MEMBERSHIP IN THE
PUBLIC AGENCY RETIREMENT SYSTEM (PARS) TRUST.
3
4
WHEREAS, it is to be determined to be in the best interest of the City of San Bernardino
and its employees to provide an Accumulated Leave Conversion Program to eligible employees;
5
6
WHEREAS, the City of San Bernardino is eligible to be a member of the Public Agency
Retirement System (PARS) Trust, which has made available an Accumulated Leave Conversion
Plan (the "Plan") supplementing CalPERS and qualifying under the relevant sections of the
Internal Revenue Code and the California Government Code.
7
8
9
WHEREAS, the City wishes to provide for certain mandatory employee contributions by
employees who irrevocably elect to participate in the Plan;
10
WHEREAS, the City wishes to provide that the mandatory employee contributions will
be picked up by the City and paid directly by the City to the Plan, as set forth in Section 414(h)
of the Internal Revenue Code of 1986, as amended.
II
12
NOW THEREFORE, be it resolved that:
13
SECTION I. The Mayor and Common Council hereby adopts the PARS Trust, includin
14
the PARS Accumulated Leave Conversion Plan, as part of the City Retirement Program,
15
16
effective January 1,2004, which Plan allows for employees to irrevocably elect to participate in
I7
the Plan that would require them to have a portion of their accrued leave at the time of
18
termination contributed to the Plan as a mandatory employee contribution ("Mandatory
19
Contributions"); and
20
SECTION 2. The Mayor and Common Council hereby agree to pick up such Mandatory
21
Contributions and pay them directly to the Plan. Such contributions shall satisfy the requirements
22
of 414(h) of the Internal Revenue Code of 1986, as amended, and therefore are not intended to
23
be includable in the employee's income until distributed from the Plan; and
24
25
't( 0' LI
. 12-/ I~
e
e
e
2
RESOLUTION OF THE CITY OF SAN BERNARDINO TO PROVIDE AN
ACCUMULATED LEAVE CONVERSION PLAN THROUGH MEMBERSHIP IN THE
PUBLIC AGENCY RETIREMENT SYSTEM (PARS) TRUST.
3
4
SECTION 3. The Mayor and Common Council hereby appoints the Human Resources
5
Director or his/her designee as the City's Plan Administrator for the Public Agency Retirement
6
System; and
7
SECTION 4. The City's PARS Administrator is hereby authorized to execute the PARS
8
legal and administrative service documents on behalf of the City to implement a PARS
9
supplemental plan to CaIPERS. In addition, if the City's PARS Administrator finds that the
10
PARS supplemental plan benefit must be limited under Section 415 of Intemal Revenue Code,
11
then the Plan Administrator will implement replacement benefit programs at no additional cost to
12
the City.
13
III
14
III
15
16 III
17 III
18 III
19 III
20 III
21 III
22 III
23
III
24
III
25
e
e
2
RESOLUTION OF THE CITY OF SAN BERNARDINO TO PROVIDE AN
ACCUMULATED LEAVE CONVERSION PLAN THROUGH MEMBERSHIP IN THE
PUBLIC AGENCY RETIREMENT SYSTEM (PARS) TRUST.
3
4
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor ane
5 Common Council of the City of San Bernardino at a
meeting thereof, held on th(
6
day of
, 2003, by the following vote, to wit:
AYES
NAYS
ABSTAIN ABSENT
Rachel G. Clark, City Clerk
18
The foregoing resolution is hereby approved this
day of
19 2003.
20
21
Judith Valles, Mayor
City of San Bernardino
22
Approved as to
Form and legal content:
23
JAMES F. PENMAN,
City Attorn y
24
25
By:
r .
e
e
e
THE CITY OF SAN BERNARDINO
PUBLIC AGENCY RETIREMENT SYSTEM (PARS)
ACCUMULATED LEAVE CONVERSION PLAN
EFFECTIVE JANUARY 1,2004
DEFINED BENEFIT PLAN
1
NBl:595129.2
e
e
e
TABLE OF CONTENTS
Page
INTRODUCTION........................................................................................................................4
ARTICLE I - PARTICIPATION
1.1 Eligibility for Benefits .......................................................................................................5
1.2. Commencement of Benefits.. ........ ..... ...... ......... ........ ........ ... .... ............. ... .......... ......... ....... 6
1.3 Participation ... ... ....... ............. ......... .... ............ ...... .......... ...... .... ..... ........ ............. ....... ... ...... 6
ARTICLE II - CONTRIBUTIONS
2.1 Amount of Employee Contribution ...................................................................................7
2.2 Amount of Employer Contribution. ...................................................................................7
2.3 Pick Up of Mandatory Contributions.................................................................................8
2.4 Administrative Expenses ..... ......... .... ...... ........... ... ... ..... ..... ...... ... ...... ............. ........... ......... 8
ARTICLE III - BENEFITS
3.1
3.2
3.3
Retirement Benefits .............. ...... ... ...... .... ...... ...... ....... ... ...... ...... ... ........ ........... .................. 9
Pre-Retirement Death Benefits. ..... ....... .... ........... ........ ............ ... ................. ......... ...... ....... 9
Designation of Beneficiary. ........ .......... ............. ... ..... ... ... ........... ......................... .......... .... 9
ARTICLE IV - VESTING
4.1 Vesting .......... ..... ....... ..... ........ ......... .... .... ......... ..... ... ........ .... ..... ...... ........... ... ............. ...... 11
4.2 Full or Partial Termination............................................................................................... 11
4.3 Attainment of Normal Retirement Age............................................................................ 11
4.4 Effect of Vesting ...... .......... ..... ...... .... ........... ........... ....... ....... ............. .................. ....... ..... 11
ARTICLE V - DISTRIBUTIONS
5.1 Normal Form ofBenefit................................................................................................... 12
5.2 Optional Form of Benefit...... .... ..... .... ....... ...... ......... ..... ........ ....................... .... ............ .... 12
5.3 Actuarial Equivalence. ..... ... ........... ....... ..................... ............ ..... ... ...................... ............ 13
5.4 Direct Rollovers .......... ..... ............... ... ....... ....... ........ ..... ..... ....... ........ ........ ... ............... ..... 13
ARTICLE VI - ADMINISTRATION AND AMENDMENT OF PLAN
6.1
6.2
6.3
6.4
Participant's Rights not Subject to Execution ................................................................. 16
Rules and Regulations...................................... ........ ... ... ... ....... .... ...... .......... ... ..... ............ 16
Amendment and Termination .......................................................................................... 17
Military Service " ..... ....... ... .... ......... ................. ........ ..... ............... ...... ...... ...... ...... ....... ..... 18
2
NB1:595129.2
.
.
.
ARTICLE VII - DEFINITIONS
7.1 Definitions.... ...... ............................................... .......... ........................ ....... ...... ......... ....... 19
APPENDIX A - ANNUAL ADDITIONAL LIMITS
APPENDIX B - GOOD FAITH EGTRRA COMPLIANCE
APPENDIX C - MINIMUM DISTRIBUTION REQUIREMENTS
SCHEDULE A
3
NBI:595129.2
e
e
e
INTRODUCTION
The City of San Bernardino ("Employer") has adopted this tax-qualified governmental
defined benefit plan for the benefit of its eligible employees to provide supplemental retirement
benefits to eligible employees of the Employer in addition to the benefits employees will receive
from the Public Employees' Retirement System ("PERS").
It is intended that this plan and the trust established to hold the assets of the plan shall be
qualified under Section 401(a) and tax-exempt under Section 501 (a) of the Internal Revenue
Code of 1986, together with any amendments thereto ("Code"). It is further intended that this
plan and the trust established hereunder shall meet the requirements of a pension trust under
California Government Code ("Act") Sections 53215 - 53224, or their successor sections (the
"Act"). At any time prior to the satisfaction of all liabilities with respect to Participants and their
beneficiaries under the trust created pursuant to the this plan, the trust assets shall not be used
for, or diverted to, purposes other than the exclusive benefit of Participants or their beneficiaries,
as prescribed in Section 40 1 (a)(2) of the Code.
It is intended that the plan satisfy the requirement of the applicable provisions of the
Uruguay Round Agreements Act, the Small Business Job Protection Act, the Taxpayer Relief
Act of 1997 and the Uniformed Services Employment and Reemployment Rights Act of 1994
(cornmonly referred to as the "GUST" amendments), and that the provisions of this plan
reflecting the GUST amendments are hereby made effective as of the dates required by the
legislation referred to in this sentence.
4
NBJ:595129.2
e
e
e
ARTICLE I
PARTICIPATION
1.1 Elh!ibilitv for Benefits.
An Employee shall be eligible to receive Retirement Benefits under this Plan ifhe or she
meets the requirements under one of the following tiers:
Tier I
(a) is a Police Safety Employee or Police Safety Management Employee of the
Employer on or after January I, 2004;
(b) has irrevocably elected to participate in the Plan by completing and submitting to
the Employer an Election Form at least ninety (90) days prior to termination with
the Employer;
(c) has an Elected Percentage of accumulated leave conversIOn of greater than
$5000.00 at the time of termination with the Employer;
(d) has terminated employment with the Employer and concurrently retired under
CalPERS under a regular service retirement; and
(e) has applied for benefits under this Plan.
Tier II
(a) is a Management/Confidential and Unclassified Employee of the Employer on or
after January I, 2004;
(b) has irrevocable elected to participate in the Plan by completing and submitting to
the Employer an Election Form at least ninety (90) days prior to termination with
the Employer;
(c) has an Elected Percentage of accumulated leave conversion of greater than
$5000.00 at the time of termination with the Employer;
5
NB1:59S129.2
tit
tit
tit
(d) has tenninated employment with the Employer and concurrently retired under
CaIPERS under a regular service retirement; and
(e) has applied for benefits under this Plan.
Tier III
(a) has been designated by the Plan Administrator as an Eligible Employee for this
Plan as set forth in Schedule A;
(b) has tenninated employment with the Employer; and
(c) has applied for benefits under this Plan.
1.2 Commencement of Benefits.
Benefits shall commence as of the first day of the month after an Employee meets the
eligibility requirements of Section 1.1.
1.3 Participation.
An Employee will be credited with one (I) Year of Participation for any year during
which the Employee is employed by the Employer.
6
NBI :595129.2
.
ARTICLE II
CONTRIBUTIONS
2.1
Amount of Emplovee Coptribution
Tier I, Tier II
Each Employee eligible under Section 1.1, Tier I or Tier II, and irrevocably electing to
participate in the Plan by submitting an Election Form at least 90 days prior to termination of
employment shaH contribute as a mandatory Employee contribution a percentage of hislher
accumulated unused compensatory time, holiday pay, vacation leave, and sick leave accrual at
the time of termination as specified in Section 3.1. Such mandatory Employee contribution shall
be withheld from the Employee's pay upon termination of employment and paid to the Plan by
the Employer. The Plan shall not accept payment directly from the Employee.
e Tier III
Each Employee eligible under Section 1.1, Tier III, shaH contribute as a mandatory
Employee contribution one hundred percent (100%) of his/her accumulated unused
compensatory time, holiday pay, vacation leave, and sick leave accrual at the time of termination
as specified in Section 3.1. Such mandatory Employee contribution shall be considered the
Elected Percentage and shall be withheld from the Employee's pay upon termination of
employment and paid to the Plan by the Employer. The Plan shaH not accept payment directly
from the Employee.
2.2 Amount of Emplover Contribution
Benefits not funded by mandatory Employee contributions shall be funded by Employer
contributions.
.
7
NB15951292
.
.
.
2.3
Pick Up of Mandatory Contributions
In accordance with Section 414(h) of the Code, the mandatory Employee contributions
required under Section 2.1 shall be picked up by the Employer.
2.4 Administrative Expenses
In accordance with Section 53217 of the Act, the Employer may make contributions to
the Trust, in addition to the Employer Contribution set forth in Section 2.2 above, sufficient to
defray all or part of the expenses of administering the Plan or may pay such expenses directly.
8
NB1595129.2
e
e
e
ARTICLE III
BENEFITS
3.1
Retirement Benefits.
The benefit shall be paid in the Normal Form of Benefit and shall be equal to a lump sum
amount, less administrative expenses, calculated on the date of the Participant's termination from
employment as follows:
Employees who meet the requirements of Section 1.1 shall receive a lump sum amount
equal to a percentage (the "Elected Percentage") multiplied by the sum of compensatory time,
holiday pay, vacation leave, and sick leave accrual, accumulated by the Participant at termination
of employment, multiplied by the Participant's Hourly Pay Rate at the time of termination.
Elected Percentage shall be that percentage irrevocably specified in the Employee's
completed and submitted Election Form.
3.2 Pre-Retirement Death Benefits.
No Pre-Retirement Death Benefits shall be provided.
3.3 Desi!!nation of Beneficiarv.
(a) Each Participant shall have the right to designate a Beneficiary to receive the death
benefits, if any, that are payable to a Beneficiary from this Plan. Such designation does not
permit the Participant to change a person identified under another provision of the Plan as being
eligible to receive a benefit. Such designation must be evidenced by a written instrument filed
with the Employer, on a form prescribed by the Employer, and signed by the Participant.
(b) The Beneficiary for a married Participant shall be the Participant's spouse at the date
of death, unless the written consent of such spouse is provided upon a form acceptable to the
Employer. Each such designation for death benefits must be evidenced by a written instrument
filed with the Employer, on a form prescribed by the Employer, and signed by the Participant. If
9
NB1595129.2
e
e
e
no such designation is on file with the Employer at the time of the death of the Participant, or if
for any reason at the sole discretion of the Employer, such designation is defective, then the
spouse of such Participant shall be conclusively deemed to be the Beneficiary designated to
receive such benefit.
(c) The signature of the Participant's spouse shall be required on a designation of
beneficiary form or an application for a benefit under the Plan if the spouse is not the
beneficiary, unless the Participant declares in writing that one of the following conditions exists:
(1) The Participant is not married;
(2) The Participant does not know, and has taken all reasonable steps to
determine, the whereabouts of the spouse;
(3) The spouse is incapable of executing the acknowledgment because of an
incapacitating mental or physical condition;
(4) The Participant and spouse have executed a marriage settlement agreement
that makes the community property laws inapplicable to the marriage; or
(5) The current spouse has no identifiable community property interest in the
benefits.
10
NBl:595129.2
e
e
e
ARTICLE IV
VESTING
Vestinl!.
A Participant will be fully vested 10 his Retirement Benefit upon meeting the
requirements of Section 1.1.
4.]
4.2 Full or Partial Termination.
Notwithstanding the vesting schedule, upon the complete discontinuance of Employer
contributions to the Plan or upon any full or partial termination of the Plan, the Participant's
Retirement Benefit shall become one hundred percent (100%) Vested.
4.3 Attainment of Normal Retirement Al!e.
A Participant shall be fully vested in his Retirement Benefit upon attainment of Normal
Retirement Age and fulfilling all requirements established in Section 1.1.
4.4 Effect of Vestinl!.
Vesting shall entitle a Participant to payment during his lifetime of the Retirement
Benefit at the times and upon the conditions specified herein, and shall entitle the Participant's
survivor or Beneficiary to any death benefits provided herein. Any unpaid Retirement Benefits
are forfeited upon the Participant's death under the Lifetime Benefit.
II
NBI :595129.2
e
ARTICLE V
DISTRIBUTIONS
Normal Form of Benefit.
Unless the Participant elects an optional form of benefit under Section 5.2, payments to a
Participant of a Retirement Benefit shall be made in the form of a one time lump sum payment
commencing pursuant to Section 1.2 and in the amount specified in Section 3.1. This form of
5.1
e
payment shall be the "Normal Form of Benefit."
5.2 Optional Form of Benefit.
In lieu of the Lump Sum Benefit and Normal Form of Benefit, a Participant may elect a
form of benefit payment of Actuarial Equivalent value to the Lump Sum Benefit as follows:
(a) Lifetime Benefit Under this form of payment the Participant receives monthly
payments commencing pursuant to Section 1.2 and ending on the first day of the
month in which the Participant's death occurs.
Survivor Continuance. Under this form of payment:
(b)
e
(1) The Participant receives a reduced monthly benefit, and if the Participant
predeceases the Beneficiary, the Beneficiary will receive a monthly payment for
the life of the Beneficiary equal to 100% of such reduced monthly benefit.
(2) If the beneficiary predeceases the Participant, the Participant's reduced monthly
payment will not increase.
(3) The Participant's designation of a Beneficiary shall become irrevocable upon the
Participant's retirement if electing this form of payment.
(c) Fixed-Term Pavout (5-15 vears). Under this form of payment:
(I) The Participant receives a benefit paid over a designated period of time (not to
exceed the Participant's life expectancy) ranging from five (5) to fifteen (15)
12
NBL595129.2
e
e
e
years. The benefit amount shall be actuarially equivalent to the Lump-Sum
Payment.
(2) Any remaining payments in the fixed-term payout schedule shall continue
to the Beneficiary or subsequent Beneficiaries in the event of the Participant's death.
(d) Limitations. In all cases, distributions shall be made in amounts determined in
accordance with Code Section 401(a)(9) and the regulations thereunder, which are
incorporated by reference herein.
If the Participant designates anyone other than the Participant's spouse as
Beneficiary under any optional form of benefit, the optional form of benefit elected by
the Participant must provide for distributions to the Participant which, as of the
Participant's required beginning date as defined above, will provide for payments that
satisfy the minimum distribution incidental benefit requirements of Section 401 (a)(9) of
the Code and the regulations thereunder.
Actuarial Equivalence.
Actuarial Equivalence between the Normal Form of Benefit and any Optional Form of
Benefit shall be determined using the 1994 GAR (Group Annuity Reserve) and an interest
assumption based on the current annuity rates issued by a life insurance company selected by the
Employer at termination.
5.3
5.4 Direct Rollovers.
This section applies to all distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would otherwise limit a
distributee's election under this plan, a distributee may elect, at the time and in the manner
13
NB I :595129.2
.
.
.
prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a direct rollover.
(a) Definitions
(\) Eligible rollover distribution
An eligible rollover distribution is any distribution of all or any portion of the balance to
the credit of the distributee, except that an eligible rollover distribution does not include: 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 designated beneficiary, or for a specified
period of ten years or more; any distribution to the extent such distribution is required under
Section 401(a)(9) of the Internal Revenue Code, any hardship distribution, and 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 employer securities).
(2) Eligible retirement plan
An eligible retirement plan is an individual retirement account described in
Section 408(a) of the Code, an individual retirement annuity described in Section 408 (b) of the
Code, or a qualified trust described in Section 401(a) of the Code that accepts the distributee's
eligible rollover distribution. However, in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an individual retirement plan, individual
retirement account, or an individual retirement annuity.
A distributee includes an Employee or former Employee in addition, 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
14
NBI:595129.2
e
e
e
Section 414 (P) of the Code, are distributees with regard to the interest of the spouse or former
spouse.
(3) Direct Rollover
A direct rollover is a payment by the Plan to the eligible retirement plan specified by the
distributee.
15
NBL595129.2
e
e
e
ARTICLE VI
ADMINISTRATION AND AMENDMENT OF PLAN
6.1 Participant's Ril!bts Not Subiect To Execution.
The right of a Participant to a benefit under this Plan is not assignable and is not subject
to execution or any other process whatsoever, except to the extent permitted by the Code of Civil
Procedure and the Family Code of the State of California. Any payment hereunder required
under the California Family Code to a person other than the Participant must not alter the form or
amount of benefits hereunder, except that to the extent provided in a valid court order, an
Actuarial Equivalent payment may be made to the spouse or child of a beneficiary pursuant to a
qualified domestic relations order (as defined in Code Section 414(p)) prior to the Participant's
retirement.
6.2 Rules and Rel!ulations.
The Employer has full discretionary authority to supervise and control the operation of
this Plan in accordance with its terms and may make rules and regulations for the administration
of this Plan that are not inconsistent with the terms and provisions hereof. The Employer shall
determine any questions arising in connection with the interpretation, application or
administration of the Plan (including any question of fact relating to age, employment,
compensation or eligibility of Employees) and its decisions or actions in respect thereof shall be
conclusive and binding upon any and all persons and parties.
The Employer shall have all powers necessary to accomplish its purposes, including, but
not by way of limitation, the following:
(a)
To determine all questions relating to the eligibility of Employees to participate;
16
NBlo595129.2
e
e
e
(b) To construe and interpret the terms and provisions of the Plan;
(c) To compute, certify to, and direct the Trustee with regard to the amount and kind
of benefits payable to the Participants and their Beneficiaries;
(d) To authorize all disbursements by the Trustee from the Trust;
(e ) To maintain all records that may be necessary for the administration of the Plan
other than those maintained by the Trustee; and
(I) To appoint a plan administrator or, any other agent, and to delegate to them or to
the Trustee such powers and duties in connection with the administration of the Plan as it may
from time to time prescribe, and to designate each such administrator or agent as a fiduciary with
regard to matters delegated to him.
With respect to management and control of investments, the Employer shall have the
power to direct the Trustee in writing with respect to the investment of the Trust assets or any
part thereof. Where investment authority, management and control of Trust assets have been
delegated to the Trustee by the Employer, the Trustee shall be a fiduciary with respect to the
investment, management and control of the Trust assets contributed by the Company and
Participants with full discretion in the exercise of such investment, management and control.
Where investment authority, management and control of Trust assets is not specifically delegated
to the Trustee, the Trustee shall be subject to the direction of the Employer.
Expenses and fees in connection with the administration of the Plan and the Trust shall be
paid from the Trust assets to the fullest extent permitted by law, unless the Employer determines
otherwise.
6.3 Amendment and Termination.
The Employer shall have the right to amend, modifY or terminate this Plan at any time.
In the event of the complete discontinuance of this Plan, the entire interest of each Participant
17
NB1,595129.2
.
.
e
affected thereby shall immediately become 100% vested. The Employer shall not be liable for
the payment of any benefits under this Plan and all benefits hereunder shall be payable solely
from the assets of the Trust. After all liabilities of this Plan to Participants and their
Beneficiaries have been satisfied, any residual assets of this Plan shall be used for such purposes
as determined by the Employer, including a distribution of the assets to the general funds of the
Employer.
6.4 Militarv Service.
Effective December 12, 1994 and notwithstanding any provision of this Plan to the
contrary, contributions, benefits, and service credit with respect to qualified military service will
be provided in accordance with Section 414(u) of the Code.
18
NB L595129.2
e
e
e
ARTICLE VII
DEFINITIONS
7.1 Definitions.
Whenever the following terms are used in the Plan, with the first letter capitalized, they
shall have the meanings specified below.
"Act" means California Government Code.
"Anniversary Date" means July I.
"Beneficiary" means the person, persons, trust or trusts designated by a Participant, or, in
the absence of a designation, entitled by will or the laws of descent and distribution, to receive
the benefit specified under this Plan if the Participant dies and means the Participant's executor
or administrator if no other beneficiary is designated and able to act under the circumstances.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
"Compensation" means, for Plan Years beginning after December 31, 1995 or 90 days
after the opening of the final legislature session or after January 1, 1996, all compensation
subject to CalPERS withholding for that portion of the Plan Year during which the Employee
was a Participant, paid in cash by the Employer to the Participant for personal services.
Compensation in excess of $205,000 shall be disregarded. Such amount shall be adjusted for
increases in the cost ofliving in accordance with Code Section 401 (a)(1 7), except that the dollar
increase in effect on January I of any calendar year shall be effective for the Plan Year
beginning with or within such calendar year. For any short Plan Year the Compensation limit
shall be an amount equal to the Compensation limit for the calendar year in which the Plan Year
begins multiplied by a ratio obtained by dividing the number of full months in the short Plan
Year by twelve (12).
"Effective Date" means January 1,2004.
19
NBI :595129.2
1_
_
_
"Elected Percentage" has the meaning set forth in Section 3.1.
"Election Form" means the form which must be completed and submitted at least 90
days prior to termination of employment as a condition of participation in the Plan for
Employees otherwise eligible to participate in the Plan. Only the first election form completed
and submitted by an Employee is valid, and an Employee otherwise eligible to participate in the
Plan who does not complete and submit an Election Form at least ninety (90) days prior to
termination of employment shall not participate in the Plan. Any attempt to submit an Election
Form after the Employee's first Election Form and any attempt to submit an Election Form less
than 90 days prior to termination of employment shall be void. An Election Form may not be
changed after it is submitted. By completing and submitting an Election Form, an Employee
otherwise eligible to participate in the Plan (1) is irrevocably electing to make the mandatory
Employee contributions specified in Article 11, (2) is irrevocably authorizing the Employer to
withhold such mandatory Employee contributions from the Employee's pay at termination of
employment, and (3) will not have the option of choosing to receive the contributed amounts
directly rather than having them paid by the Employer to the Plan.
"Eligible Employee" means an Employee who meets the requirements as described in
Section 1.1.
"Eligible Class of Employees" means the eligible class of employees as provided herein
and in the applicable governing board policies and regulations promulgated thereunder by the
Employer.
"Employee" means an employee of the Employer.
"Employer" means The City of San Bernardino that has adopted this Plan.
20
NBI :595129.2
.
.
.
"Hourly Pay Rate" means a Participant's hourly rate for compensatory time, holiday
pay, vacation leave and sick leave as defined by Federal and State law, as well as any applicable
Charter Sections, Ordinances, Resolutions or Memoranda of Understanding of the Employer.
"Ineligible Employee" means an ineligible employee as provided herein and in the
applicable governing board policies and regulations promulgated thereunder by the Employer.
"Lump Sum Benefit" is the form of benefit described in Section 2.1.
"Normal Form of Benefit" is the form of benefit described in Section 5.1.
"Normal Retirement Age" under Tier I means fifty (50) years of age. Under Tier II,
Normal Retirement Age means fifty-five (55) years of age.
"Participant" means an Employee eligible to receive benefits under this Plan.
"PERS" means the California Public Employees' Retirement System.
"Pick Up Contributions" means Participant contributions made by the Employer on
behalf of the Participant pursuant to section 414(h) of the Internal Revenue Code. Pick Up
Contributions shall not under any circumstances be paid to the Participant or be directed by the
Participant for any purpose except as Pick Up Contributions to this Plan.
"Plan" means The City of San Bernardino PARS Accumulated Leave Conversion Plan.
"Plan Year" means the consecutive twelve-month period beginning on July I and ending
on June 30.
"Plan Administrator" means the individual or position designated by the Employer to
act on behalf of the Em~loyer in matters relating to this Plan. If no designation is made, the
Employer shall be the Plan Administrator. If a Plan Administrator has been appointed the word
"Employer" as used in this Plan shall mean Plan Administrator unless the context indicates a
different meaning is intended.
21
NBl:5951292
e
e
e
"Public Agency" means an employer authorized under California Government Code
Article 1.5, Sections 53215 through 53224 to establish a pension trust.
"Retirement Benefits" means the benefits payable to the Participant following
retirement, as described in Article II.
"Regulations" means the regulations adopted or proposed by the Department of Treasury
from time to time pursuant to the Code.
"Trust" means the trust established as part of the Public Agency Retirement Trust to hold
the assets of the Plan.
"Trustee" means the trustee of the Trust.
"Vested" means the nonforfeitable portion of any account maintained on behalf of a
Participant.
22
NBU95129.2
e
e
e
APPENDIX A
ANNlJAL ADDITIONAL LIMITS
Definitions.
As used in this Appendix A, the following terms shall have the meanings
specified below.
"Affiliated Company" means a company required to be aggregated with
the Employer for Purposes of Code Sections 4l4(b) and (c), provided, however, the
determination under Section 4l4(b) and (c) of the Code shall be made as if the phrase
"more than 50 percent" were substituted for the phrase "at least 80 percent" each place it
is incorporated into Section 4l4(b) and (c) ofthe Code.
"Annual Benefit" means a benefit payable annually in the form of a
straight life annuity (with no ancillary benefits) under a plan' to which Employees do not
contribute and under which no rollover contributions are made, or to which assets have
been transferred from a qualified plan that was not maintained by the Employer. If the
benefit is payable in a form other than a straight life annuity, such form must be adjusted
actuarially to the equivalent of a straight life annuity before applying the limitations of
Section A.2(a). The actuarial adjustment to the equivalent of a straight life annuity will
apply to all Plan benefits, including any benefits accrued before the RPA'94 Freeze Date
(the Plan is electing to apply the new Section 4l5(b)(2)(E) requirements (as provided in
the Uruguay Round Agreements Act) to all benefits accrued under the Plan, including
any benefits accrued before the RPA'94 Freeze Date). The Plan is not making the
election provided in Section E on page 19 ofLRM 40 and will not provide any Old Law
Benefits. The actuarial adjustment shall be equal to the greater of (x) an adjustment
based on 5% and the mortality table specified in Section 4l5(b )(2)(E) of the Code or (y)
an adjustment based on the factors specified in the Plan to adjust the applicable form of
benefits. No actuarial adjustment is required for the following: qualified joint and
survivor annuity benefits, pre-retirement disability benefits, preretirement death benefits,
post-retirement medical benefits, and the value of post-retirement cost-of-living increases
made in accordance with the Code and Treas. Reg. Section 1.4l5-3(c)(2)(iii).
"Average 415 Compensation" means the average Section 415
Compensation during a Member's high three years of service, which period is the actual
number of consecutive calendar years (or, the actual number of consecutive years of
employment for those Employees who are employed for less than three consecutive years
with the Employer) during which the Employee had the greatest aggregate Section 415
Compensation from the Employer.
"Defined Contribution Fraction" means for any Limitation Year: (a)
the sum of the annual additions to the Member's account under the defined contribution
plans maintained by the Employer as of the close of the Limitation Year, divided by: (b)
the sum of the lesser of the following amounts determined for the Limitation Year and for
each prior year of his service for the Employer: (i) the product of 1.25, multiplied by the
23
NBl:595129.2
.
.
.
dollar limitation determined under Sections 4IS(b) and (d) of the Code in effect under'
Section 4IS(c)(l)(A) of the Code for the Limitation Year (determined without regard to
Section 4IS(c)(6) of the Code), or (ii) the product of 1.4, multiplied by an amount equal
to 2S% of the Member's Section 41S Compensation for the Limitation Year.
Notwithstanding the foregoing, the numerator of the Defined Contribution
Plan Fraction shall be adjusted pursuant to Treas. Reg. Section 1.4IS-7( d)(I), Questions
T-6 and T"7 of Internal Revenue Service Notice 83-10, and Questions Q-3 and Q-14 of
Internal Revenue Service Notice 87-21.
"Defined Benefit Fraction" means for any Limitation Year:
The Projected Annual Benefit of the Member under this Plan and any
Related Plan determined as of the close of the Limitation Year, divided by the lesser of:
(a) the product of 1.2S, multiplied by the dollar limitation determined for the Limitation
Year under Sections 4IS(b) and (d) of the Code and in accordance with Section A.2(b) in
effect under Section 4IS(b)(I)(A) of the Code for the Limitation Year, or (b) the product
of 1.4, multiplied by 100% of the Member's Average Section 41S Compensation,
including any adjustments under Section 4IS(b) of the Code.
If the Employee was a Member as of the first day of the first Limitation
Year beginning after December 31, 1986, in one or more defined benefit plans
maintained by the Employer which were in existence on May 6, 1986, the denominator of
this fraction will not be less than 12S% of the sum of the Annual Benefits under such
plans which the Member had accrued as of the close of the last Limitation Year
beginning before January I, 1987, disregarding any changes in the term and conditions of
the Plan after May S, 1986. The preceding sentence applies only if the defined benefit
plans individually and in the aggregate satisfied the requirements of Section 41S of the
Code for all Limitation Years beginning before January I, 1987.
"Employer" means the Employer and any Affiliated Company that adopts
this Plan.
"Limitation Year" means a twelve-consecutive month period ending on
the Anniversary Date. If the Limitation Year is amended to a different 12-consecutive
month period, the new Limitation Year must begin on a date within the Limitation Year
in which the amendment is made.
"Old Law Benefits" means benefits to which the new Section
4IS(b)(2)(E) changes are not applied.
"Related Plan" means any other defined benefit plan (as defined III
Section 4IS(k) of the Code) maintained by the Employer.
"RPA'94 Freeze Date" means the earlier of (i) the later of the date a plan
amendment adopting the Section 4IS(b)(2)(E) changes is adopted or made effective; or
(ii) the first day of the first limitation year beginning after December 31, 1999.
24
NBU95 129.2
e
e
e
"Section 415 Compensation" means a Member's earned income, wages,
salaries, fees for professional service and other amounts received (without regard to
whether an amount is paid in cash) for personal services actually rendered in the course
of employment with an Employer maintaining the Plan to the extent that the amounts are
includable in gross income (including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of profits, commissions on
insurance premiums, tips, bonuses, fringe benefits, reimbursements, and expense
allowances) and excluding the following: (a) Employer contributions to a plan of
deferred compensation to the extent contributions are not included in gross income of the
Employee for the taxable year in which contributed, or on behalf of an Employee to a
simplified employee pension plan to the extent such contributions are deductible under
Section 219(b )(2) of the Code, and any distributions from a plan of deferred
compensation whether or not includable in the gross income of the Employee when
distributed; (b) amounts realized from the exercise of a nonqualified stock option, or
when restricted stock (or property) held by an Employee becomes freely transferable or is
no longer subject to a substantial risk of forfeiture; (c) amounts realized from the sale,
exchange or other disposition of stock acquired under a qualified stock option; and (d)
other amounts which receive special tax benefits, or contributions made by the Employer
(whether or not under a salary reduction agreement) towards the purchase of a 403(b)
annuity contract under Section 403(b) of the Code (whether or not the contributions are
excludable from the gross income of the Employee), contributions made by the Employer
for medical benefits (within the meaning of Section 401(h) or 419A(I)(2) of the Code)
which is otherwise treated as an annual addition, or any amount otherwise treated as an
annual addition under Section 415(1)(1) or 419A(d)(2) of the Code. Effective January 1,
1998, "Section 415 Compensation" shall include elective deferrals as defined in Section
402(g)(3) of the Code and any amount which is contributed or deferred by the Employer
at the election of the Employee and which is not includable in the gross income of the
Employee by reason of Code Section 125, 132(1)(4) or 457. Section 415 Compensation
for any Limitation Year is the Section 415 Compensation actually paid or includable in
gross income during such Limitation Year.
"Social Security Retirement Age" shall mean the age used as the
retirement age for the Member under Section 216(1) of the Social Security Act, except
that such section shall be applied without regard to the age increase factor and as if the
early retirement age under Section 216(1 )(2) of such Act were 62.
"Year of Participation" means the employee shall be credited with a
Year of Participation for each year in which the employee has met the requirements of
Section 1.1(a). An employee who is permanently and totally disabled within the meaning
of Section 415(c)(3)(C)(i) of the Code for an accrual computation period shall receive a
Year of Participation with respect to that period. In addition, for an employee to receive
a Year of Participation for an accrual computation period, the Plan must be established no
later than the last day of such accrual computation period. In no event will more than one
Year of Participation be credited for any 12-month period.
25
NBL595129.2
.
.
.
A.2 Limitation on Benefits.
Notwithstanding any other provision of the Plan:
(a) the Annual Benefit payable with respect to a Member under the
Plan for any Limitation Year shall not exceed an amount equal to the lesser of: (i)
$90,000, (or, such other dollar limitation determined for the Limitation Year by
automatically adjusting the $90,000 limitation by the cost of living adjustment factor
prescribed by the Secretary of the Treasury under Section 415(d) of the Code in such
manner as the Secretary shall prescribe); or (ii) only for Limitation Years commencing on
or before December 31, 1994, 100% of the Member's Average Section 415
Compensation. The new dollar limitation shall apply to Limitation Years ending within
the calendar year of the date of the adjustment.
(b) If the Member has less than ten Years of Participation with the
Employer, the dollar limitation in Section A.2(a) shall be reduced by multiplying it by a
fraction, the numerator of which is the Member's full and partial Years of Participation,
and the denominator of which is ten. To the extent provided in regulations or in other
guidance issued by the Internal Revenue Service, the preceding sentence shall be applied
separately with respect to each change in the benefit structure of the Plan. If the Member
has less than ten years of service with the Employer, the compensation limitation in
Section A.2(a) shall be reduced by it by a fraction, the numerator of which is the
Member's full and partial years of service. For Limitation Years commencing after
December 31, 1994, the reductions provided in this paragraph do not apply to payments
made to the Member ifhis payments commence after he has become disabled (within the
meaning of Code Section 415(b)(2)(I)), and do not apply to payments made on account of
the Member's death.
(c) If the Annual Benefit ofa Member commences prior to age 62, the
dollar limitation in Section A.2(a) shall not apply and the dollar limitation shall be the
actuarial equivalent of an Annual Benefit beginning at age 62, reduced for each month by
which benefits commence before the month in which the Member attains age 62. To
determine actuarial equivalence, the adjustment is the greater of (x) an adjustment based
on 5% and the mortality table specified in Section 415(b)(2)(E) of the Code or (y) the
early retirement factors specified in the Plan that are applicable to the Member's benefit.
Any decrease in the dollar limit determined in accordance with this Section A-2(c) shall
not reflect the mortality decrement to the extent that benefits will not be forfeited upon
the death of the Member. The reduction provided in this Subsection A.2(c) shall not
reduce the limitation of Subsection A.2(a) below (x) $75,000 if benefits begin after age
55, or (y) if the benefit begins before age 55, the equivalent of the $75,000 limit at age
55. Furthermore, the reduction in this Subsection A.2(c) shall not apply for a Member
who is a "qualified participant," as defined in Code Section 415(b )(2)(H).
(d) If the Annual Benefit of a Member commences after age 65, the
dollar limitation in Section A.2(a) as reduced in Section A.2(b), if necessary, shall be
increased so that it is the actuarial equivalent of an Annual Benefit of such dollar
limitation beginning at age 65. To determine actuarial equivalence, the adjustment is the
26
NB1595129.2
.
lesser of (x) an adjustment based on 5% and the mortality table specified in Section
415(b )(2)(E) of the Code or (y) the late retirement factors specified in the Plan that are
applicable to the Member's benefit. Any increase in the dollar limit determined in
accordance with this Section A-2( d) shall not reflect the mortality decrement to the extent
that benefits will not be forfeited upon the death of the Member.
(e) If the benefit the Member would otherwise accrue in a Limitation
Year would produce an Annual Benefit in excess of the limitation under Section A.2(a),
the rate of accrual will be reduced so that the Annual Benefit will equal the limitation
under Section A.2(a).
(I) The limitation in Section A.2(a) is deemed satisfied if the Annual
Benefit payable to a Member is not more than $1,000 multiplied by the Member's
number of years of service or parts thereof (not to exceed ten) with the Employer, and the
Employer has not at any time maintained a defined contribution plan, a welfare benefit
plan as defined in Section 419(e) of the Code, or an individual medical account as
defined in Section 415(1)(2) of the Code in which such Member participated.
.
(g) If the Employer maintains, or has ever maintained, one or more
defined contribution plans covering an Employee who is also a Member in this Plan, a
welfare benefit fund as defined in Section 419(e) of the Code, or an individual medical
account as defined in Section 415(1)(2) of the Code, the sum of the Defined Contribution
Plan Fraction and the Defined Benefit Plan Fraction, cannot exceed 1.0 for any
Limitation Year commencing before January 1,2000.
For the purpose of this Section A.2(g), Employee contributions to a
qualified defined benefit plan are treated as a separate defined contribution plan. In
addition, all defined contribution plans of the Employer are to be treated as one defined
contribution plan and all defined benefit plans of the Employer are to be treated as one
defined benefit plan, whether or not such plans have been terminated.
.
If the sum of the Defined Contribution Plan Fraction and the Defined
Benefit Plan Fraction exceeds 1.0, the sum of the fractions will be reduced to 1.0 as
follows: (i) voluntary nondeductible Employee contributions made by a Member to this
Plan which constitute an Annual Addition to a defined contribution plan, to the extent
they would reduce the sum of the fractions to 1.0, will be returned to the Member; (ii) if
additional reductions are required for the sum of the fractions to equal 1.0, voluntary
nondeductible Employee contributions made by a Member to the defined contribution
plans which constitute an Annual Addition to a defined contribution plan, to the extent
they would reduce the sum of the fractions to 1.0, will be returned to the Member; (iii) if
additional reductions are required for the sum of the fractions to equal 1.0, the Annual
Benefit of a Member under this Plan will be reduced (but not below zero and not below
the amount of the Member's Accrued Benefit to date) to the extent necessary to prevent
the sum of the fractions, computed as of the close of the Limitation Year from exceeding
1.0; and (iv) if additional reductions are required for the sum of the fractions to equal 1.0,
the reductions will then be made to the Annual Additions of the defined contribution
plans.
27
NBl :595129.2
tit
tit
tit
If the Employer maintains one or more defined benefit plans, in addition to this Plan,
covering an Employee who is also a Member in this Plan, the sum of the Annual Benefits
of all the plans will be treated as a single benefit for the purposes of applying the
limitations of Section A.2(a). If these benefits exceed, in the aggregate, the limitations of
Section A.2(a), the Normal Retirement Benefits under this Plan will be reduced (but not
below zero) until the sum of the benefits of the Related Plan(s) satisfy the limitations. In
the case of an individual who was a Member in one or more defined benefit plans of the
Employer as of the first day of the first Limitation Year beginning after December 31,
1986, the application of the limitations of this Section A.2 shall not cause the Limitation
under Section A.2(a) for such individual under all such defined benefit plans to be less
than the individual's Current Accrued Benefit. The preceding sentence applies only if
such defined benefit plans met the requirements of Section 415 of the Code, for all
Limitation Years beginning before May 6, 1986. For purposes of this Section A.2(k), an
individual's Current Accrued Benefit means a Member's Accrued Benefit under the Plan,
determined as if the Member had separated from service as of the close of the last
Limitation Year beginning before January 1, 1987,ewhen expressed as an annual benefit
within the meaning of Section 415(b)(2) of the Code. In determining the amount of a
Member's Current Accrued Benefit, the following shall be disregarded: (i) any change in
the terms and conditions of the Plan after May 5, 1986; and (ii) any cost of living
adjustments occurring after May 5, 1986.
28
NBI :595129.2
e
e
e
APPENDIX B
GOOD FAITH EGTRRA COMPLIANCE
B.l.
Adoption and Effective Date of Appendix B.
This Appendix B is adopted to reflect certain provisions of the Economic Growth and
Tax Relief Reconciliation Act of 2001 ("EGTRRA"). This Appendix B is intended as
good faith compliance with the requirements of EGTRRA and is to be construed in
accordance with EGTRRA and guidance issued thereunder. Except as otherwise
provided, this Appendix B shall be effective as of the first day of the first Plan Year
beginning after December 31, 2001. This Appendix B shall supersede the provisions of
the Plan and Appendix A to the extent those provisions are inconsistent with the
provisions of this Appendix B.
B.2. New Mortalitv Table.
Notwithstanding any other Plan provisions to the contrary, the applicable mortality table
used for purposes of adjusting any benefit or limitation under Section 415(b )(2)(B), (C),
or (D) of the Code is the table prescribed in Rev. Rul. 2001-62. Such table shall not be
used for any other purpose under the Plan. This Section B.2 shall apply to distributions
with annuity starting dates on or after December 31, 2002.
B.3. Increase in Compensation Limit.
The annual compensation of each Member taken into account in determining benefit
accruals in any Plan Year beginning after December 31,2001 shall not exceed $200,000.
Annual compensation means compensation during the Plan Year or such other
consecutive 12-month period over which compensation is otherwise determined under the
Plan (the determination period). The $200,000 limit on annual compensation described
in this Section B.3 shall be adjusted for cost-of-living increases in accordance with
Section 401 (a)(l 7)(B) of the Code. The cost-of-living adjustment in effect for a calendar
year applies to annual compensation for the determination period that begins with or
within such calendar year.
For purposes of determining benefit accruals in a Plan Year beginning after December
31,2001, the annual compensation limit described in this SectionB.3 for determination
periods beginning before January I, 2002 shall be $150,000 for any determination period
beginning in 1996 or earlier; $160,000 for any determination period beginning in 1997,
1998, or 1999; and $170,000 for any determination period beginning in 2000 or 2001.
Notwithstanding the foregoing, this Section B.3 shall not apply to any Member eligible
for a higher limit on annual compensation under the transition rule described in Section
1.401(a)(17)-I(d)(4)(ii) of the Treasury Regulations.
B.4. Modification of Definition of Elieible Retirement Plan.
For purposes of the direct rollover provisions in the Plan, an eligible retirement plan shall
also mean an annuity contract described in Section 403(b) of the Code and an eligible
plan under Section 457(b) of the Code which is maintained by a state, political
29
NBU9S129.2
.
.
.
subdivision of a state, or any agency or instrumentality of a state or political subdivision
of a state and which agrees to separately account for amounts transferred into such plan
from this Plan. The definition of eligible retirement plan shall also apply in the case of a
distribution to a surviving spouse, or to a spouse or former spouse who is the alternate
payee under a qualified domestic relation order, as defined in Section 414(p) of the Code.
This Section B.4 shall apply to distributions made after December 31, 200!.
B.S. Increase in Benefits Limit.
(a) This Section B.5 shall be effective for Limitation Years ending after December
31, 2001. Notwithstanding the foregoing, this Section B.5 shall not apply to any Member
eligible for higher limit on benefits under the special rule described in Section 415(b)(10)
of the Code.
(b) Benefit increases resulting from the increase in the limitations of Section 415(b)
of the Code shall be provided to all Employees participating in the Plan who have one
hour of service on or after the first day of the first Limitation Year ending after December
31,200!.
(c) The Annual Benefit payable with respect to a Member under the Plan for any
Limitation Year shall not exceed the maximum permissible benefit.
(d) Definitions.
(i) Defined benefit dollar limitation. The "defined benefit dollar limitation"
is $160,000, as adjusted, effective January 1 of each year, under Section 415(d) of the
Code in such manner as the Secretary shall prescribe, and payable in the form of a
straight life annuity. A limitation as adjusted under Section 415( d) will apply to
Limitation Years ending with or within the calendar year for which the adjustment
applies.
(ii) Maximum permissible benefit. The "maximum permissible benefit" is
the defined benefit dollar limitation (adjusted where required, as provided in (A) and, if
applicable, in (B) or (C) below).
(A) If the Member has fewer than ten Years of Participation in the Plan, the
defined benefit dollar limitation shall be multiplied by a fraction, (i) the numerator of
which is the number of full and partial Years of Participation in the Plan and (ii) the
denominator of which is ten.
(B) If the Annual Benefit of a Member begins prior to age 62, the defined
benefit dollar limitation applicable to the Member at such earlier age is an Annual Benefit
payable in the form of a straight life annuity beginning at the earlier age that is the
actuarial equivalent of the defined benefit dollar limitation applicable to the Member at
age 62 (adjusted under (A) above, if required). The defined benefit dollar limitation
applicable at an age prior to age 62 is determined as the lesser of (i) the actuarial
equivalent (at such age) of the defined benefit dollar limitation computed using the
interest rate and mortality table (or other tabular factor) specified in the plan for early
retirement calculations and (ii) the actuarial equivalent (at such age) of the defined
benefit dollar limitation computed using a five percent interest rate and the applicable
30
NBL595129.2
.
.
e
mortality table. Any decrease in the defined benefit dollar limitation determined in
accordance with this paragraph (B) shall not reflect a mortality decrement if benefits are
not forfeited upon the death of the Member. If any benefits are forfeited upon death, the
full mortality decrement is taken into account.
(C) If the benefit of a Member begins after the Member attains age 65, the
defined benefit dollar limitation applicable to the Member at the later age is the Annual
Benefit payable in the form of a straight life annuity beginning at the later age that is
actuarially equivalent to the defined benefit dollar limitation applicable to the Member at
age 65 (adjusted under (A) above, ifrequired). The actuarial equivalent of the defined
benefit dollar limitation applicable at an age after age 65 is determined as (i) the lesser of
the actuarial equivalent (at such age) of the defined benefit dollar limitation computed
using the interest rate and mortality table (or other tabular factor) specified in the Plan for
late retirement benefits, and (ii) the actuarial equivalent (at such age) of the defined
benefit dollar limitation computed using a five percent interest rate assumption and the
applicable mortality table. For these purposes, mortality between age 65 and the age at
which benefits commence shall be ignored.
31
NBU95129.2
.
.
.
APPENDIX C
MINIMUM DISTRIBUTION REQUIREMENTS
C.t.
Adoption and Effective Date of Appendix C.
This Appendix C is adopted to reflect the final Treasury Regulations promulgated under
Section 401 (a)(9) of the Code. Except as otherwise provided, this Appendix C shall
apply for purposes of detennining required minimum distributions for calendar years
beginning with the 2003 calendar year. This Appendix C shall supersede the provisions
of the Plan and Appendix A to the extent those provisions are inconsistent with the
provisions of this Appendix C.
All distributions required under this Appendix C will be detennined and made in
accordance with the Treasury Regulations promulgated under Section 401(a)(9) of the
Code. Notwithstanding the other provisions of this Appendix C, distributions may be
made under a designation made before January I, 1984, in accordance with Section
242(b)(2) of the Tax Equity and Fiscal Responsibility Act ("TEFRA") and the provisions
of the Plan that relate to Section 242(b)(2) ofTEFRA.
C.2. Time and Manner of Distribution.
(a) Required Beginning Date. The Member's entire interest will be distributed, or
begin to be distributed, to the Member no later than the Member's Required Beginning
Date.
(b) Death of Member Before Distributions Begin. If the Member dies before
distributions begin, the Member's entire interest will be distributed, or begin to be
distributed, no later than as follows:
(i) If the Member's surviving spouse is the Member'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 Member died, or by December 31
of the calendar year in which the Member would have attained age 70Y2, iflater.
(ii) If the Member's surviving spouse is not the Member'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 Member died.
(iii) If there is no Designated Beneficiary as of September 30 of the year following the
year of the Member's death, the Member's entire interest will be distributed by December
31 of the calendar year containing the fifth anniversary of the Member's death.
(iv) If the Member's surviving spouse is the Member's sole Designated Beneficiary
and the surviving spouse dies after the Member but before distributions to the surviving
spouse begin, this Section C.2(b), other than Section C.2(b )(i), will apply as if the
surviving spouse were the Member.
For purposes of this Section C.2(b) and Section C.5, distributions are considered to begin
on the Member's Required Beginning Date (or, if Section C.2(b)(iv) applies, the date
32
NB1595129.2
.
e
e
distributions are required to begin to the surviving spouse under Section C.2(b)(i)). If
annuity payments irrevocably commence to the Member before the Member's Required
Beginning Date (or to the Member's surviving spouse before the date distributions are
required to begin to the surviving spouse under Section C.2(b)(i)), the date distributions
are considered to begin is the date distributions actually commence.
(c) Form of Distribution. Unless the Member's interest is distributed in the form of
an annuity purchased from an insurance company or in a single sum on or before the
Required Beginning Date, as of the first Distribution Calendar Year distributions will be
made in accordance with Sections C.3, C.4 and C.5 of this Appendix C. If the Member's
interest is distributed in the form of an annuity purchased from an insurance company,
distributions thereunder will be made in accordance with the requirements of Section
401(a)(9) of the Code and the Treasury Regulations. Any part of the Member's interest
which is in the form ofan individual account described in Section 4l4(k) ofthe Code will
be distributed in a manner satisfying the requirements of Section 401(a)(9) of the Code
and the Treasury Regulations that apply to individual accounts.
C.3. Determination of Amount to be Distributed Each Year.
(a) General Annuity Requirements. If the Member's interest is paid in the form of
annuity distributions under the Plan, payments under the annuity will satisfy the
following requirements:
(i) the annuity distributions will be paid In periodic payments made at
intervals not longer than one year;
(ii) the distribution period will be over a life (or lives) or over a period certain
not longer than the period described in Section C.4 or C.5;
(iii) once payments have begun over a period certain, the period certain will
not be changed even if the period certain is shorter than the maximum permitted;
(iv) payments will either be nonincreasing or increase only as follows:
(A) by an annual percentage increase that does not exceed the annual
percentage increase in a cost-of-living index that is based on prices of all items and
issued by the Bureau of Labor Statistics;
(B) to the extent of the reduction in the amount of the Member's payments to
provide for a survivor benefit upon death, but only if the beneficiary whose life was being
used to determine the distribution period described in Section C.4 dies or is no longer the
Member's Beneficiary pursuant to a qualified domestic relations order within the
meaning of Section 414(P);
(C)
death; or
to provide cash refunds of employee contributions upon the Member's
(D)
to pay increased benefits that result from a plan amendment.
33
NBL595129.2
e
e
e
(b) Amount Required to be Distributed by Required Beginning Date. The
amount that must be distributed on or before the Member's Required Beginning Date (or,
if the Member dies before distributions begin, the date distributions are required to begin
under Section C.Z(b)(i) or C.Z(b)(ii)) is the payment that is required for one payment
interval. The second payment need not be made until the end of the next payment
interval even if that payment interval ends in the next calendar year. Payment intervals
are the periods for which payments are received, e.g., bi-monthly, monthly, semi-
annually, or annually. All of the Member's benefit accruals as of the last day of the first
Distribution Calendar Year will be included in the calculation of the amount of the
annuity payments for payment intervals ending on or after the Member's Required
Beginning Date.
(c) Additional Accruals After First Distribution Calendar Year. Any additional
benefits accruing to the Member in a calendar year after the first Distribution Calendar
Year will be distributed beginning with the first payment interval ending in the calendar
year immediately following the calendar year in which such amount accrues.
(d) Election to Allow Members or Beneficiaries to Elect 5-Year Rule. Members
or Beneficiaries may elect on an individual basis whether the 5-year rule or the life
expectancy rule in Sections C.Z(b) and C.5 of this Appendix C applies to distributions
after the death of a Member who has a Designated Beneficiary. The election must be
made no later than the earlier of September 30 of the calendar year in which distribution
would be required to begin under Section C.Z(b) of this Appendix C, or by September 30
of the calendar year which contains the fifth anniversary of the Member's (or, if
applicable, surviving spouse's) death. If neither the Member nor Beneficiary makes an
election under this paragraph, distributions will be made in accordance with Sections
C.Z(b) or C.5 of this Appendix C.
CA. Requirements For Annuity Distributions That Commence Durin!!
Member's Lifetime.
(a) Joint Life Annuities Where the Beneficiary Is Not the Member's Spouse. If
the Member's interest is being distributed in the form of a joint and survivor annuity for
the joint lives of the Member and a nonspouse Beneficiary, annuity payments to be made
on or after the Member's Required Beginning Date to the Designated Beneficiary after
the Member's death must not at any time exceed the applicable percentage ofthe annuity
payment for such period that would have been payable to the Member using the table set
forth in Q&A-Z of Section 1.401(a)(9)-6T of the Treasury Regulations. If the form of
distribution combines a joint and survivor annuity for the joint lives of the Member and a
nonspouse Beneficiary and a period certain annuity, the requirement in the preceding
sentence will apply to annuity payments to be made to the Designated Beneficiary after
the expiration of the period certain.
(b) Period Certain Annuities. Unless the Member's spouse is the sole Designated
Beneficiary and the form of distribution is a period certain and no life annuity, the period
certain for an annuity distribution commencing during the Member's lifetime may not
exceed the applicable distribution period for the Member under the Uniform Lifetime
34
NBl:595129.2
e
e
e
Table set forth in Section 1.401(a)(9)-9 of the Treasury Regulations for the calendar year
that contains the annuity starting date. If the annuity starting date precedes the year in
which the Member reaches age 70, the applicable distribution period for the Member is
the distribution period for age 70 under the Uniform Lifetime Table set forth in Section
1.401(a)(9)-9 of the Treasury Regulations plus the excess of 70 over the age of the
Member as of the Member's birthday in the year that contains the annuity starting date.
If the Member's spouse is the Member's sole Designated Beneficiary and the form of
distribution is a period certain and no life annuity, the period certain may not exceed the
longer of the Member's applicable distribution period, as determined under this Section
C.4(b), or the joint life and last survivor expectancy of the Member and the Member's
spouse as determined under the Joint and Last Survivor Table set forth in Section
1.401(a)(9)-9 of the Treasury Regulations, using the Member's and spouse's attained
ages as of the Member's and spouse's birthdays in the calendar year that contains the
annuity starting date.
(c) Election to Allow Designated Beneficiary Receiving Distributions Under 5-
Year Rule to Elect Life Expectancy Distributions. A Designated Beneficiary who is
receiving payments under the 5-year rule may make a new election to receive payments
under the life expectancy rule until December 31, 2003, provided that all amounts that
would have been required to be distributed under the life expectancy rule for all
Distribution Calendar Years before 2004 are distributed by the earlier of December 31,
2003 or the end of the 5-year period.
C.S. Requirements For Minimum Distributions Where Member Dies
Before Date Distributions Bel!in.
(a) Member Survived by Designated Beneficiary. Except as otherwise provided, if
the Member dies before the date distribution of his or her interest begins and there is a
Designated Beneficiary, the Member's entire interest will be distributed, beginning no
later than the time described in Section C.2(b )(i) or C.2(b )(ii), over the life of the
Designated Beneficiary or over a period certain not exceeding:
(i) unless the annuity starting date is before the first Distribution Calendar
Year, the life expectancy of the Designated Beneficiary determined using the
Beneficiary's age as of the Beneficiary's birthday in the calendar year immediately
following the calendar year of the Member's death; or
(ii) if the annuity starting date is before the first Distribution Calendar Year,
the life expectancy of the Designated Beneficiary determined using the Beneficiary's age
as of the Beneficiary's birthday in the calendar year that contains the annuity starting
date.
(b) No Designated Beneficiary. If the Member dies before the date distributions
begin and there is no Designated Beneficiary as of September 30 of the year following
the year of the Member's death, distribution of the Member's entire interest will be
completed by December 31 of the calendar year containing the fifth anniversary of the
Member's death.
35
NBl:595129.2
.
.
.
.
(c) Death of Surviving Spouse Before Distributions to Surviving Spouse Begin.
If the Member dies before the date distribution of his or her interest begins, the Member's
surviving spouse is the Member's sole Designated Beneficiary, and the surviving spouse
dies before distributions to the surviving spouse begin, this Section C.S will apply as if
the surviving spouse were the Member, except that the time by which distributions must
begin will be determined without regard to Section C.2(b)(i).
C.6. Definitions.
(a) Designated Beneficiary. The individual who is designated as the Beneficiary
consistent with the terms of the Plan and is the Designated Beneficiary under Section
401 (a)(9) of the Code and Section 1.401(a)(9)-4, Q&A-4, of the Treasury Regulations.
(b) Distribution Calendar Year. A calendar year for which a minimum distribution
is required. For distributions beginning before the Member's death, the first Distribution
Calendar Year is the calendar year immediately preceding the calendar year which
contains the Member's Required Beginning Date. For distributions beginning after the
Member's death, the first Distribution Calendar Year is the calendar year in which
distributions are required to begin under Section C.2(b).
(c) Life Expectancy. Life expectancy as computed by use of the Single Life Table
in Section 1.401(a)(9)-9 of the Treasury Regulations.
(d) Required Beginning Date. The April I of the calendar year following the later
of either the calendar year in which the employee attains age 70Yz or the calendar year in
which the employee retires.
36
NBL595129.2
e
ADOPTION OF THE CITY OF SAN BERNARDINO
PARS ACCUMULATED LEAVE CONVERSION PLAN
The City of San Bernardino PARS Accumulated Leave Conversion Plan effective
January 1,2004.
By:
Title:
Date:
Plan Submission to the IRS for a Letter of Determination
e The decision to submit the foregoing Plan to the IRS shall be determined by the Plan Administrator
pursuant to his/her initials below:
_ Yes, please submit the Plan to the IRS for a Letter of Determination.
_ No, do not submit this Plan to the IRS for a Letter of Determination.
If you answered Yes, please provide the following information:
Employer Tax ID#
lans offered b
e
NBL595129.2
.
e
e
NBI :595129.2
-2-
.
SCHEDULE A
PARTICIPANTS AND ACTUARIAL EQUIVALENT BENEFITS
Particioant
Effective Date
Actuarial Eauivalent Benefit
.
.
""
.
,
** FOR OFFICE USE ONLY - NOT A PUBLIC DOCUMENT **
RESOLUTION AGENDA ITEM TRACKING FORM
Meeting Date (Date Adopted): 1"2 -\5"0'3
Vote: Ayes [-Ij Nays
Change to motion to amend original documents:
Abstain
e-
-zco3 - 34 ')
Absent .4+-
Item # '2\
.kr
Resolution #
Reso. # On Attachments: -=- Contract term:
Note on Resolution of Attachment stored separately:-
Direct City Clerk to (circle I): PUBLISH, POST, RECORD WICOUNTY By:
NulllVoid After: .-
Date Sent to Mayor:
Date of Mayor's Signature:
Date of ClerklCDC Signature:
12-~ i '1-0~
iZ-\2l'-(y,
, 2- \ 1<-o~
Reso. Log Updated: ~
Seal Impressed: ..--
Date Memo/Letter ~nt for Sl~nMllTp.'
60 Day Reminder Letter Sent on 30th day:
90 Day Reminder Letter Sent on 45th day:
See Attached:
See Attachea:
Date Returned:
See Attached:
Request for Council Action & Staff Report Attached:
Updated Prior Resolutions (Other Than Below):
Updated CITY Personnel Folders (6413, 6429, 6433, 10584, 10585, 12634):
Updated CDC Personnel Folders (5557):
Updated Traffic Folders (3985, 8234, 655, 92-389):
Yes ,/' No By
Yes No /' By
Yes No /' By
Yes No ../ By
Yes No-.L. By'_
Copies Distributed to:
City Attorney /
Parks & Rec.
Code Compliance
Dev. Services
EDA
Finance
MIS
Police
Public Services
Water
Others:
1-\-.2._
Notes:
BEFORE FILING. REVIEW FORM TO ENSURE ANY NOTATIONS MADE HERE ARE TRANSFERRED TO THE
YEARLY RESOLUTION CHRONOLOGICAL LOG FOR FUTURE REFERENCE (Contract Term. etc.)
Ready to File: ~
Date:
Revised 0111210 I