HomeMy WebLinkAbout10- City Administrator CITY- OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
From:Fred Wilson, City Administrator Subject: Resolution modifying the City of San
Bernardino Deferred Compensation Plan
Dept:City Administrator ORI
Date.April 29 1998 GINAL
Synopsis of Previous Council action:
Resolution No. 11817 established the Deferred Compensation Plan.
Resolution No. 80-395 modified the Deferred Compensation Plan.
Recommended motion:
That said resolution be adopted.
C„ . '
1 I Signature
Contact person: Fred Wilson, City Administrator Phone:
Supporting data attached: Staff Report, Plan Document & Reso. ward:
FUNDING REQUIREMENTS: Amount:
Source: (Acct. No.)
Acct. Description)
Finance:
Council Notes:
,5-1
1�
75-0262 Agenda Item No.
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CITY OF SAN BERNARDINO- REQUEST FOR COUNCIL ACTION
STAFF REPORT
Subiect:
Modification of the City of San Bernardino Deferred Compensation Plan.
Background•
The City of San Bernardino established a deferred compensation plan under the authority of USC
457 in 1974. The City's Plan was modified in 1980. USC Section 457 was amended in 1997.
The City's Plan needs to be amended to reflect the 1997 changes in USC Section 457.
There were three significant changes in USC Section 457, Deferred Compensation Plans, in
1997. These changes require the following:
1. Funds held in a qualifying deferred compensation account will be maintained in a trust and
are no longer considered an asset of the City. The proposed Plan revision establishes the
City of San Bernardino Deferred Compensation Advisory Board as the Trustee/Custodian of
the City's Plan.
2. The allowable deferral amount has been indexed to the Consumer Price Index. The
maximum allowed annual deferral amount was raised in 1998 to $8,000.
3. Employees who separate from the City are allowed to make one modification in their
disbursement declaration. This modification can delay disbursement.
In addition to the modifications required by the changes in USC Section 457, the proposed Plan
would enable the Deferred Compensation Advisory Board to modify the investment options
offered by the "Fund Administrator", Washington Mutual Bank. The Deferred Compensation
Advisory Board can not change the fund administrator without the approval of the City Council.
Financial Impact:
The modification to the City's Deferred Compensation Plan, required by changes to USC Section
457, eliminates the deferred compensation fund from being considered as assets of the City of
San Bernardino. There are no changes in cost to the City to continue providing the Plan.
Recommendation:
The City Council adopt the proposed resolution modifying the City of San Bernardino Deferred
Compensation Plan in accordance to the 1997 changes in USC Section 457.
RESOLUTION NO.
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2 RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING AN
3 AMENDMENT TO TITE CITY OF SAN BERNARDINO DEFERRED
COMPENSATION PLAN TO REFLECT THE 1997 CHANGES IN UNITES) STATES
4 CODE SECTION 457.
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6 BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE
7 CITY OF SAN BERNARDINO AS FOLLOWS:
g Section 1. The Mayor of the City of San Bernardino is hereby authorized and
9 directed to execute on behalf of said City an amended City of San Bernardino Deferred
10 Compensation Plan which incorporates the 1997 changes in United States Code Section
11 457, Deferred Compensation Plans, a copy of which is attached hereto, and incorporated
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13 herein by reference as fully as though set forth at length.
14 Section 2. The authorization to execute the above referenced amendment is
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16 rescinded if it is not executed within sixty (60) days of passage of this resolution.
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May 5, 1998 1
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RESOLUTION OF THE CITY OF SAN BERNARDINO AUTHORIZING AN
AMENDMENT TO THE CITY OF SAN BERNARDINO DEFERRED
1 COMPENSATION PLAN TO REFLECT THE 1997 CHANGES IN UNTIED STATES
CODE SECTION 457.
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3 I HEREBY CERTIFY that the foregoing resolution was duly adopted by the Mayor
4 and Common Council of the City of San Bernardino at a meeting thereof,
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held on the day of , 1997, by the following vote, to wit:
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7 Council Members AYES NAYS ABSTAIN ABSENT
8 ESTRADA — — — —
9 LIEN — — — —
10 ARIAS — — — —
11 SCHNETZ — — — —
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DEVLIN — — — —
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14 ANDERSON — — — —
15 MILLER — — — —
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18 City Clerk
19 The foregoing resolution is hereby approved this day of
, 1998.
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21 Judith Valles, Mayor
22 City of San Bernardino
Approved as to form and
23 legal content
24 James F. Penman,
25 City Attorney
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May 5, 1998
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CITY OF SAN BERNARDINO
DEFERRED COMPENSATION
AMENDED AND RESTATED PLAN AND TRUST/CUSTODIAL DOCUMENT
Section 1. Name: The name of this Plan and Trust/Custodial Document is the City of San
Bernardino, State of California, Deferred Compensation Plan, hereinafter referred to as the
"Plan." This Plan is the continuation in restated form of the City of San Bernardino Deferred
Compensation Plan previously established by the Resolution 11817 6/20/74.
Section 2. Purpose: The primary purpose of the Plan is to attract and retain personnel by
permitting them to enter into agreements with the Employer that will provide for deferral of
payment of a portion of their current Compensation until death, disability, retirement, termination
of employment, or other events as provided herein, in accordance with applicable provisions of
State law, and Section 457 and other applicable Sections of the Internal Revenue Code. Except
as otherwise stated herein, this amended and restated Plan shall become effective
Section 3. Definitions: For the purposes of this Plan when used and capitalized herein the
following words and phrases shall have the meanings set forth below.
3.1 "Account" means the book account maintained in accordance with Subsection 6.4 for the
purpose of recording Deferred Compensation and investment gains or losses allocated thereto.
3.2 "Administrator" means the service provider or providers with whom the Employer
contracts either investment, record-keeping or other management services for the Plan.
3.3 "Beneficiary" means the person or persons a Participant designates to receive his interest
under the Plan after the Participant's death, [provided that a married Participant may
designate someone other than his spouse as his Beneficiary only with his spouse's consent.]
The designation may be made, and may be revoked and changed, only by a written instrument
(in form acceptable to the Employer) signed by the Participant, consented to by the
Participant's spouse, if necessary, and filed with the Employer prior to the participant's death,
or if no designated Beneficiary survives the Participant, his Beneficiary shall be his spouse if
he is married, or if not, his estate.
3.4 "Code" means the Internal Revenue Code of 1986, as amended.
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3.5 "Compensation" means the total of all amounts of salary or wages which would be paid by the
Employer to or for the benefit of an Employee (if he were not a Participant in the Plan) for
services performed during the period that the Employee is a Participant, including any
amounts of Deferred Compensation that may be credited to the Participant's Account.
Compensation shall be taken into account at its present value and its amount shall be
determined without regard to any community property laws.
3.6"Trustee/Custodian" means the City of San Bernardino Deferred Compensation Advisory
Board.
3.7"Deferred Compensation" means the amount of Compensation which the Participant defers
pursuant to his Participation Agreement in accordance with the provisions of this Plan.
3.8 "Disability" means the inability of a Participant to engage in his usual occupation by reason of
a medically determinable physical or mental impairment as determined by the Employer on the
basis of advice from a physician or physicians.
3.9"Election Period" means the 59-day period after separation from service with the Employer
during which a Participant may elect to defer commencement of benefit payments under the
Plan.
3.10 "Employee" means any officer, employee or elected official of the Employer; provided,
however, that all extra-help or temporary employees and/or any contract employee whose
contract does not provide for participation in the Plan shall not be"employees".
3.11 "Employer" means the City of San Bernardino, City of San Bernardino Municipal Water
Department and the City of San Bernardino Community Development Commission.
3.12 "Employer Contribution" means the contribution made by the Employer pursuant to
Subsection 5.2 of the Plan.
3.13 "Employment Period" means a period from January 1 through December 31 of the same
year, except that the first Employment Period of an Employee hired on any date other than
January 1 shall be the period beginning with the date of employment and ending on December
31 of the same year.
3.14 "Includible Compensation" means Compensation which (taking into account the provisions
of the Code, including Section 403(b) and Section 457) is currently includible in gross income
for federal income tax purposes.
3.15 "Investment and Trust/Custodial Fund" means a fund established by the Employer as a
convenient method of setting aside a portion of its assets to meet its obligations under the
Plan, as provided in Subsection 6.1.
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3.16 "Normal Retirement Age" means the date a Participant attains age 70-1/2 or, at the election
of the Participant, any earlier date that is no earlier than the earliest age at which the
Participant has the right to retire under the City of San Bernardino Retirement Plan and to
receive immediate retirement benefits calculated without actuarial reduction, but in any event
not later than the date or age at which the Participant separates from service with the
Employer. If a Participant is employed by the Employer beyond age 70-1/2, his Normal
Retirement Age may be the age at which he separates from service with the Employer;
provided that the distribution requirements of Subsection 7.5 are still satisfied with respect to
the Participant.
3.17"Participant" means any Employee who fulfills the participation requirements under Section
4.
3.18 "Participation Agreement" means the agreement executed and filed by an Employee with the
Employer pursuant to Section 4, under which the Employee elects to become a Participant in
the Plan and to defer Compensation thereunder.
Section 4. Participation in the Plan:
4.1 Participation. Each Employee may elect to become a Participant in the Plan and defer
payment of Compensation not yet earned by executing a written Participation Agreement and
filing it with the Employer at any time during active employment with the Employer.
Compensation shall be deferred for any calendar month only if a Participation Agreement
providing for such deferral has been entered into and is effective before the beginning of such
month.
4.2 Modification of Deferral. A Participation Agreement shall remain in effect until it is
terminated or modified. A Participant may modify an existing Participation Agreement to effect
subsequent deferrals in accordance with rules established by the Employer. Such modification
must be filed by the Participant with the Employer prior to the beginning of the month for which
the modification is to be effective.
4.3 Termination of Deferral. A Participant may terminate further deferral of Compensation
under the Plan effective at the beginning of any month by filing with the Employer an executed
notice of termination of his Participation Agreement prior to the effective date of termination.
Once further deferral of Compensation is terminated, a participant may rejoin the Plan in
accordance with rules established by the Employer. No previously deferred amounts shall be
payable to an Employee upon terminating further deferral of Compensation under the Plan unless
otherwise due pursuant to Section 7 hereof.
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4.4 Selection of Investment Options. The Participation Agreement shall also provide for the
selection, pursuant to Subsection 6.3, of one or more investment options in the Investment and
Trust/Custodial Fund to which the Participant's Deferred Compensation shall be allocated;
provided that any amounts so allocated equal or exceed a minimum of $10.00 per pay period.
The employer shall deposit the Participant's deferrals in accordance with such selection.
Section 5. Amount of Deferrals: Deferral of Compensation:
5.1 Deferral of Compensation. During each Employment period in which an Employee is a
Participant in the Plan, the Employer shall defer payment of such part of the Participant's
Compensation as is specified by the Participant in the Participation Agreement which the
Participant has executed and filed with the Employer.
5.2 Employer Contribution. During each Employment period in which an Employee is a
Participant in the Plan, the Employer may make an Employer Contribution to the Participant's
Account equal to the percentage of the Participant's Compensation specified by resolution or
labor contract approved by the Employer.
5.3 Limitation. The amount of Compensation which may be deferred by a Participant and the
amount of employer Contributions, if any, made to a Participant's Account are subject to the
following limitations:
a) Annual Limitation. Except as provided in Paragraph (b) below, the maximum amount that a
Participant may defer during an Employment Period, when added to the amount of any
Employer Contribution for such Participant during the Employment Period, shall not exceed
the lesser of$7,500 (or as may be adjusted for cost-of-living by the Secretary of the Treasury)
or 33-1/3% of the Participant's Includible Compensation. The minimum amount that a
Participant may defer is $10.00 per pay period.
b) Catch-Up Deferrals. For one or more of a Participant's last three Employment Periods ending
before the Participant attains Normal Retirement Age, the maximum amount a Participant may
defer during the Employment Period, when added to the amount of any Employer
Contribution for such Participant during the Employment period established in paragraph (a)
above, plus so much of such maximum amounts determined under such Paragraph (a) for
Employment Periods beginning after December 31, 1978 but before the current Employment
period in which the Participant was eligible to participate in the Plan (or in another eligible
deferred compensation plan under Section 457(b) of the Code) less the amount of
compensation actually deferred under such Paragraph (a) for such prior Employment periods
shall not exceed $15,000 (or as may be adjusted for cost-of-living by the Secretary of the
Treasury) per each of such three Employment Periods. The provisions of the Paragraph (b)
shall not apply more than once to each Participant.
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c) Aggregation of Plans. In applying paragraphs (a) and (b) above, the amount that may be
deferred by a Participant under the Plan for any Employment Period shall be reduced by (i) the
amount deferred by the Participant for such Employment period under any other eligible
deferred compensation plan under Section 457(b) of the Code, (ii) any Employment period
under Section 403(b) of the Code, (iii) any amount excluded from the Participant's gross
income for such Employment Period under Section 402(a)(8) or Section 402(h)(B) of the
Code, and (iv) any amount with respect to which a deduction is allowable for such
Employment Period by reason of a contribution on behalf of the Participant to an organization
described in Section 501(c)(18) of the Code. The Participant shall inform the Employer of his
participation in any of the above-listed plans and is solely responsible for any violation of the
paragraph(c).
Section 6. Investment and Trust/Custodial Fund Provisions:
6.1 Investment and Trust/Custodial Fund. The Employer shall establish an Investment and
Trust/Custodial Fund for the purpose of investing amounts of Deferred Compensation and
Employer Contributions, if any, credited to Participant Accounts. Such Participants Accounts
shall at all times be held by the Trustee/Custodian for the exclusive benefit of the Participant or
Beneficiary.
6.2 Trust/Custodial Provisions:
a) Trustees/Custodian. The Trustees/Custodian shall be, at any time the duly appointed
and authorized San Bernardino City Employees Deferred Compensation Advisory
Board. Resignation, removal and appointment of such Trustees/Custodian, as well as
compensation and expense reimbursement of the Trustees/Custodian shall also be in
accordance with appropriate legal guidelines for resignation, removal, appointment,
compensation and expenses of City of San Bernardino.
b) The Trustees/Custodian or the Employer shall adopt various investment options for
the investment of deferred amounts by Participants or their Beneficiaries, and shall
monitor and evaluate the appropriateness of continued offering by the Plan. The
Trustees/Custodian or the Employer may de-select options that are determined to be
no longer appropriate for offering. In adopting or de-selecting such options, the
Trustees/Custodian or Employer, the Participants or their Beneficiaries shall be
entitled to select from among the available options for investment of their deferred
amounts. By exercising such right to select investment options the Participants, and
their Beneficiaries agree that none of the Plan fiduciaries will be liable for any
investment losses, or lost investment opportunity.
c) Designation of Fiduciaries. The Employer, Administrator and Trustees/Custodian and
the persons they designate to carry out or help carry out their duties or responsibilities
are fiduciaries under the Plan. Each fiduciary has only those duties or responsibilities
specifically assigned 4e him under the Plan or delegated to him by another fiduciary.
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Each fiduciary may assume that any direction, information of action of another
fiduciary is proper and need not inquire into the propriety of any such action, direction
or information. Except as provided by law, no fiduciary will be responsible for the
malfeasance, misfeasance or nonfeasance of any other fiduciary.
d) Fiduciaryy Standards.
(i) The Trustees/Custodian and all other fiduciaries shall discharge their duties
with respect to this Plan solely in the interest of the Participants and Beneficiaries
of the Plan. Such duties shall be discharged for the exclusive purpose of providing
benefits to the Participants and Beneficiaries and defraying expenses of the Plan.
(ii) All fiduciaries shall discharge their duties with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent person acting in
like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, and as defined by applicable State
law.
e) Trustees/Custodian's Powers and Duties. Trustees/Custodian's powers and duties
shall be those defined under applicable State law.
f) This Plan and Investment and Trust/Custodial Fund is intended to be exempt from
taxation under Section 501(a) of the Internal Revenue Code ("Code") and intended to
comply with Section 457(g) of such code. The Trustees/Custodian shall be empowered to
submit or designate appropriate agents to submit this Plan and Investment and
Trust/Custodial Fund to the Internal Revenue Service for a determination of the eligibility
of the Plan under Section 457, and the exempt status of the Investment and
Trust/Custodial Fund under Section 501(a), if the Trustees/Custodian conclude that such a
determination is desirable.
6.3 Investment Options. Each Participant may allocate his Deferred Compensation and
employer Contributions, if any, among the investment options, if any, provided under the Plan. A
Participant may change his investment options in accordance with rules established by the
Employer. Such modification may effect transfers of Compensation already deferred and any
Employer Contributions that may have already been made from one investment option to another
and/or may prospectively change the investments to which future deferrals of Compensation and
Employer Contributions, if any, shall be allocated, effective as soon as practicable after the
Participant makes the change.
6.4 Account. The Employer shall maintain an Account for each Participant to which shall be
credited any Employer Contributions made for such Participant and such Participant's Deferred
Compensation at such times as it would have been payable but for the terms of his Participation
Agreement. Each Participant's Account shall be revalued at least quarterly to reflect the earnings,
gains and losses creditable thereto or debitable therefrom in accordance with the performance of
the investment options selected by the Participant pursuant to Subsections 4.4, 6.2 and 6.3. The
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earnings, gains and losses creditable to or debitable from an Account shall mean the actual
earnings, gains and losses of each investment option, on a pro rata basis among the Accounts of
those Participants who selected that investment option.
Section 7. Distribution of Benefits:
7.1 PgMents on Separation from Service. Subject to the provisions of Subsection 7.5, upon a
Participant's separation from service with the Employer for any reason (including disability), the
entire amount credited to his Account (less any federal, state or local income tax required to be
withheld therefrom) shall be paid to him in a single lump sum immediately after the expiration of
the Election period; provided, however, that during such Election Period a Participant (including
a Participant who has utilized the catch-up deferral provisions of Subsection 5.3(b) with an
Account balance in excess of an amount specified by the Employer, which amount shall not
exceed the amount specified in Section 457(e)(9)(A) of the Code, as the same may be adjusted
from time-to-time, may irrevocably elect in writing (on a form acceptable to the Employer) a
specific later date for first receiving payment under the Plan. In addition, a Participant may elect a
different method of payment as provided in Subsection 7.2 by filing the appropriate form with the
Employer no later than ninety days prior to the Participant's elected payment date. The Account
balance of a Participant with less than the amount specified by the Employer in his Account at the
time of his separation from service shall be paid in a single lump sum to the Participant (less
applicable taxes) as soon as practicable following his separation from service.
A Participant who has elected a specific later date for first receiving a payment under the Plan, as
set forth above, may elect to further defer the date upon which such payment(s) will begin. Such
election to further defer payment may be made only once, to a later date, as long as payments
have not yet begun when such election is made.
7.2 Optional Forms of Benefit Payments. Subject to the provisions of Section 7.5, as an
alternative to payment in a lump sum, a Participant whose Account balance exceeds the amount
specified by the Employer under Subsection 7.1 above, may elect to receive payment under the
Plan in the form of substantially equal monthly, quarterly, semiannual or annual installments for a
period not to exceed the life expectancy(which may be recalculated annually) of the Participant or
the joint life expectancy of the Participant and his Beneficiary; provided that no single payment
(other than the last scheduled payment) is less than $100.00. Any amount remaining in the
Participant's Account at the end of the specified period shall be paid in a single lump sum
payment. Alternatively, such a Participant may elect an annuity under any one of the settlement
options offered in a commercial annuity contract purchased by the Employer for the purpose of
providing benefit payments for the life of the Participant or the joint lives of the Participant and
his Beneficiary and once begun, periodic payments must be made not less frequently than
annually, in substantially non-increasing amounts.
7.3 Emergency Withdrawals. Except as otherwise provided in Subsection 7.5, distributions to
or on behalf of a Participant shall be made only in the event of his separation from service with the
Employer, unless such Participant experiences an unforeseeable emergency. "Unforeseeable
emergency" means a severe financial hardship to the Participant resulting from (a) a sudden and
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unexpected illness or accident of the Participant or a dependent of the Participant as defined in
Section 152(a) of the Code, (b) the Participant's loss of property due to casualty, or (c) other
similar extraordinary and unforeseeable circumstances arising as a result of events beyond the
control of the Participant. Examples of events which may cause an "unforeseeable emergency"
are catastrophic illness, flood, fire, earthquake, death in the family or disabling injury.
Withdrawals will not be permitted for expenditures normally budgetable, such as a down payment
on a home, purchase of an automobile, or education expenses. Withdrawal will not be allowed to
the extent that the hardship may be relieved (i) through reimbursement or compensation by
insurance or otherwise, (ii)by liquidation of the Participant's assets (to the extent such liquidation
would not itself cause severe financial hardship), or (iii) by cessation or temporary suspension of
deferrals under the Plan. Withdrawals of amounts because of an unforeseeable emergency will be
permitted only to the extent reasonably needed to satisfy the emergency. Former Employees who
have not yet received distribution of their entire Account balances shall also be eligible for
emergency withdrawals under the same conditions as active Participants. A Participant or former
Employee who experiences such an unforeseeable emergency may apply to the Employer for a
withdrawal which shall be permitted, in the discretion of the Employer, only to the extent it
complies with the requirement of this Subsection 7.3. Any amount approved hereunder for
emergency withdrawal shall be paid to the Participant in a single lump sum (less any applicable
withholding taxes). The withdrawal shall be effective at the later of the date specified in the
Participant's application or the date approved by the Employer.
7.4 Payments on the Death of a Participant.
a) Death After Benefit Commencement. If the Participant dies after having begun to
receive installment payments in accordance with Section 7.2, the Beneficiary of such
Participant may elect, subject to the distribution requirements of Subsection 7.5, to
receive the balance then credited to the Participant's Account in a single lump sum or
in installments as specified under Section 7.2, provided that the Participant's Account
will be distributed to the Beneficiary as least as rapidly as under the method of
distribution being used prior to the Participant's death. The election shall be made by
the Beneficiary within 60 days or the remaining installment payments selected by the
Participant (adjusted, if necessary, to comply with the distribution requirements of
Subsection 7.5) shall be paid to the Beneficiary.
b) Death Prior to Benefit Commencement. Subject to the provisions of Section 7.5, if
the Participant dies before distribution of his Account commences, his Beneficiary shall
receive distribution of such Participant's Account as provided under Section 7.1,
treating the Beneficiary as if he were the Participant; provided, however, that if the
Beneficiary elects installment payments, the Participant's entire Account shall be
distributed over a period not to exceed 15 years (or the life expectancy of the
Participant's surviving spouse, if such spouse is the Participant's Beneficiary).
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7.5 Provisions Required Pursuant to Code Section 401(a)
a) Timing and Amount of Required Distributions.
1) Notwithstanding any of the foregoing, distribution of a Participant's entire
Account shall commence no later than April 1 following the calendar year in which
he attains age 70 '/z, whether or not the Participant has separated from service with
the Employer. Unless the form of distribution is a single lump sum payment,
distributions shall be made over a period not exceeding the life expectancy of the
Participant, or the joint life expectancy of the Participant and his Beneficiary.
2) If the Participant's entire Account is to be distributed in a form other than a single
lump sum payment, then the amount to be distributed each year must be at least an
amount equal to the quotient obtained by dividing the Participant's entire Account
balance(determined as of the last valuation date of the preceding calendar year) by
the life expectancy of the Participant or (if applicable) the joint life expectancy of
the Participant and his designated Beneficiary. Life expectancy and joint life
expectancy shall be computed by the use of the return multiples contained in
Section 1.72-9 of the Treasury Regulations.
b) Distributions After Death.
1) If the Participant dies after having begun to receive installment payments in
accordance with Subsection 7.2, the remaining portion of such Participant's
Account shall continue to be distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death.
2) If the Participant dies before distribution of his Account commences, the
Participant's entire Account shall be distributed in one of the distribution options
provided under Subsections 7.1 and 7.2 no later than December 31 of the calendar
year which contains the fifth anniversary of the Participant's death except:
(i) that if the beneficiary is not the Participant's spouse, and such non-spousal
beneficiary elects to commence distribution by December 31 of the year
following the year the Participant died, such non-spousal beneficiary may elect
a periodic payment not exceeding 15 years, as set forth in Sec. 7.4(b) above; or
(ii) that if the designated Beneficiary is the Participant's surviving spouse, such
spouse may elect to receive distribution of the Participant's entire Account in
substantially equal monthly, quarterly, semiannual or annual installment
payments over the life expectancy of the surviving spouse. Such distributions
are required to commence on or before the later of (i) December 31 of the
calendar year immediately following the year in which the Participant died, or
(ii) December 31 of the calendar year in which the Participant would have
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attained age 70-1/2. If the spouse dies before such payments begin,
subsequent distributions shall be made as if the spouse had been the
Participant. For purposes of the subparagraph, payments will be calculated by
use of the return multiples specified in Section 1.72-9 of the Treasury
Regulations.
c) Interpretation. The provisions of the Subsection 7.5 shall override any distribution
options in the Plan that are inconsistent with this Subsection. All distributions under the
Plan shall be made in accordance with Treasury Regulations issued under Section
401(a)(9) of the Code. The provisions of the Subsection shall be effective as of January 1,
1989.
7.6 Effect of Reemployment. If a Participant who separates from service again becomes an
Employe as defined in Section 3.10, no distributions shall be made or continued to the Participant
while he is so employed. Any amounts which the Participant was entitled to receive on his prior
separation from service shall be held until the Participant or his Beneficiary is again entitled to a
distribution under the terms of the Plan.
7.7 De Minimis Distributions. Notwithstanding any other provision of the Plan, if the
Participant has not deferred any amount for a 2-year period and the total amount of the
Participant's Account under the Plan does not exceed $3,500, a Participant may elect to receive,
or the Plan may elect to distribute without the Participant's consent, the entire value of the
Participant's Account in a lump sum distribution. No subsequent distribution under this provision
to such Participant may be made, once such distribution occurs.
Section 8. Nonassi nag bility: The interest of a Participant in the contractual obligation of the
Employer, established by the Plan, shall not be assignable in whole or in part, directly or by
operation of law or otherwise, in any manner.
Section 9. Miscellaneous:
9.1 No Effect on Employment. Neither the establishment of the Plan nor any modification
thereof, nor the establishment of an Account, nor any agreement between the Employer and the
Custodian, nor the payment of any benefits, shall be construed as giving to any Participant or
other person any legal or equitable right against the Employer except as herein provided, and in
no event shall the terms of employment of the Employee or Participant be modified or in any way
affected hereby.
9.2 Construction. This Plan shall be construed, administered and enforced according to the
Constitution and laws of the State of California.
9.3 Plan-to-Plan Transfers. Plan-to-Plan transfers shall be permitted as follows:
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a) Transfers from Plan. To the extent and in the manner permitted under Section 457(e)(10) of
the Code and the Treasury Regulations thereunder, the balance in the Account of a Participant
who is no longer an Employee and who subsequently becomes a participant in another eligible
deferred compensation plan under Section 457(b) of the Code shall be transferred to his
account in the plan of his new employer; provided that such plan provides for the receipt of
such transferred amounts. If a Participant's Account has been transferred to such plan, the
Participant shall not be entitled to receive any benefit under this Plan, notwithstanding
anything in this Plan to the contrary.
b) Transfers to Plan. If prior to becoming an Employee, an individual participated in another
eligible deferred compensation plan under Section 457(b) of the Code, the Employer may in
its discretion accept transfer of any amount credited to the deferred compensation account of
such Employee under that plan and, in the event of such transfer, shall establish for the
Employee an Account under the Plan to which such amount shall be treated as an amount
deferred under and subject to the terms of the Plan, except that no amount so transferred will
be taken into account in applying the deferral limitations set forth in Subsection 5.1.
9.4 Since deferred compensation assets belong to the employer and cannot be distributed until
a participant is eligible (ie: through separation of service), court orders will not be considered
authorization to distribute funds. If a court order does provide this direction, the court shall be
informed the action could be in violation of IRS code and also could jeopardize the plan.
Section 10. Inter_._pretation. This Plan is intended to qualify as an eligible deferred
compensation plan under Section 457 of the Code, and shall be interpreted and administered in a
manner consistent with such qualification. The Employer reserves the right to amend the Plan to
the extent that it may be necessary to conform the Plan to the requirements of Section 457 of the
Code and any other applicable laws, regulation or ruling, including amendments that are
retroactive to the effective date of the Plan. In the event that the Plan is deemed by the Internal
Revenue Service to be administered in a manner inconsistent with Section 457 of the Code, the
Employer shall correct such administration within the period provided in Section 457 of the Code.
The Employer reserves the right to take such action and do such things as are required to make
the Plan, as administered, consistent with Section 457 of the Code.
Section 11. Plan Administration:
11.1 Administration. The Plan shall be administered by the Employer, which may recommend
rules and regulations for the administration of the Plan consistent with the terms of the Plan. All
rules and regulations recommended by the Employer shall be final and conclusive upon adoption
by resolution of the governing or appointing board of the Employer.
11.2 Powers. The Employer shall have all powers to perform all duties necessary to exercise its
functions including, but not limited to, the:
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a) Determination of Employees' eligibility, participation and benefits under the Plan;
b) Establishment and maintenance of written records showing at any time the interest of a
Participant in his book Account;
c) Interpretation and construction of the provisions of the Plan;
d) Direction of the Employer (or the Trustee/Custodian on behalf of the Employer) to make
disbursement of benefits under the Plan;
e) Appointment of such agents, advisors, counselors and delegates including an Administrator as
may be necessary and appropriate for the administration and operation of the Plan and the
delegation to such agent, advisors, counselors and delegates of any of its discretionary and
ministerial powers and duties in accordance with this Section; and
f) Composition of any provision to Participants of all forms as described in this Plan.
11.3 Revocability of Administrative Action. Any action taken by the Employer with respect to
the rights or benefits under the Plan of any person shall be revocable by the Employer as to
payments or distributions not theretofore made pursuant to such actions and appropriate
adjustments may be made in future payments or distributions to a Participant or Beneficiary to
offset any excess payment or underpayment theretofore made to such Participant or Beneficiary.
Section 12. Gender and Plurals. The masculine gender shall include the feminine and neuter,
the masculine pronoun shall include the feminine and neuter, the singular number the plural, and
conversely, whenever appropriate.
Revised 4/29/98
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