01-20-2004 - Amendment of Section 457 Deferred Compensation Plan for Part Time, Seasonal, & Temporary EmployeesCity of West Covina
Memorandum
AGENDA
Item No.: G --ue
Date: January 20, 2004
TO: Andrew G. Pasmant, City Manager,
and City Council
FROM: Tom Bachman, Director
Finance Department
SUBJECT: AMENDMENT OF SECTION 457 DEFERRED COMPENSATION PLAN
FOR PART TIME, SEASONAL AND TEMPORARY EMPLOYEES
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1. Authorize the City Manager to execute the Restated and Amended Deferred
Compensation Plan and Trust Agreement for Part -Time, Seasonal and Temporary
Employees and related documents; and
2. Adopt the proposed resolution:
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RESOLUTION . No. OF THE CITY COUNCIL OF THE CITY OF
WEST COVINA, CALIFORNIA, APPROVING A RESTATED AND
AMENDED DEFERRED COMPENSATION PLAN AND TRUST
AGREEMENT FOR PART-TIME, SEASONAL AND TEMPORARY
EMPLOYEES
DISCUSSION:
To conform to legislation enacted by Congress in 1991, the City established a mandatory
deferred compensation plan, administered by National Deferred Compensation, Inc., for part-
time, seasonal and temporary employees in lieu of Social Security. Certain portions of Section
457 of the Internal Revenue Code were amended by the Economic Growth and Tax Relief
Reconciliation Act of 2001 (EGTRRA) and final regulations have been issued which require the
City's current plan document to be amended. Adoption of the attached resolution and restated
and amended deferred compensation plan and trust agreement will supercede all prior plan
documents and will bring the City's plan document into full compliance with federal law.
The following outlines affected provisions which were modified by EGTRRA:
• Maximum deferral limit— The dollar limits on contributions increase by $1,000 each year
to $15,000 in 2006, and will be indexed to inflation annually after it's fully phased in.
The new law also increases the percentage -of -compensation limits to the lesser of 100%
of includible compensation or the applicable dollar limits.
• Coordination of 457 plan deferrals with qualified plans — Because EGTRRA removes this
restriction from the Code, this provision has been removed from the Plan Document.
• Constructive receipt — Participants will no longer be subject to taxes on distributions until
the distributions are received. Participants no longer need to choose a payout date when
they separate from service, and they will be able to change payouts once begun.
• Required minimum distributions — EGTRRA repeals several required minimum
distribution requirement that were unique to 457 plans.
• Rollovers out of the Plan — Eligible distributions from governmental 457 plans may be
rolled over tax-free to other types of eligible plans that accept rollovers or to an IRA.
• Severance from employment — EGTRRA changes the criteria for determining when a
distribution may be made from a 457 plan from the more restrictive "separation from
service" standard to the "severance from employment" standard.
5
s
FISCAL IMPACT:
None.
Prepared by: Denise Bates
Accounting Manager
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Reviewed/Approve by: Tom Bachman
Finance Director
2
RESTATED AND AMENDED
DEFERRED COMPENSATION PLAN AND TRUST AGREEMENT
FOR PART-TIME, SEASONAL, AND TEMPORARY EMPLOYEES
(FICA -Substitute Plan or OBRA Plan)
CITY OF WEST COVIKA
(Name of Employer)
Effective January 1, 2002
The Plan consists of the provisions set forth in this document, and is applicable to each
Participant who elects to participate in the Plan.
Section 1. Name.
The name of this Restated and Amended Plan and Trust Agreement is the city of west Covina
Deferred Compensation Plan for Part -Time, Seasonal, and Temporary
Employees, hereinafter referred to as the "Plan." This Plan is the continuation in restated form
of the Plan previously executed by the Employer. The obligation of the Employer to provide
benefits under the prior Plans shall be continued under this Plan as amended and restated herein.
Section 2. Purpose.
The purpose of the Plan is to provide part-time, seasonal, and temporary Employees with a
retirement plan as mandated by and in compliance with the Federal Omnibus Reconciliation Act
of 1990, as now in effect or as hereafter amended. Per Department of Treasury regulations, the
Employer has established for non -regular Employees a deferred compensation plan, as a
substitute retirement plan, under Section 457 of the Internal Revenue Code of 1986, as amended.
Employer does not and cannot represent or guarantee that any particular federal or state income,
payroll or other tax consequence will occur by reason of participation in the Plan and
participation in the Plan is not considered as an Employees contract between the Employer and
the Employee.
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 Participant Account maintained for the purpose of recording
deferred compensation, exchanges, withdrawals, and other account activity as well as any
investment gains or losses allocated thereto.
3.2 "Administrator" means the organization selected by the Employer to administer the Plan.
3.3 `Beneficiary" means the person or persons a Participant designates to receive his/her
interest under the Plan after the Participant's death. The designation may be made,
revoked and/or changed only by a written instrument signed by the Participant and filed
Restated 0503
Page 1 of 13
with the Administrator prior to the Participant's death. A person must survive the
Participant to be his/her Beneficiary. If a Participant designates more than one person as
his/her Beneficiary, unless the Participant provides otherwise, all persons of the same
designation (i.e. "primary" or "contingent") shall share the Participant's Account equally.
If the Participant fails to designate a Beneficiary or if no designated Beneficiary survives
the Participant, his/her Beneficiary shall be his/her estate.
3.4 . "Code" or "IRC" means the Internal Revenue Code of 1986, as now in effect or as
hereafter.. amended. Any reference herein to a section of the IRC shall include any
successor provision herein.,
3.5 "Compensation" means all payments made by the Employer as remuneration for services
rendered, including salaries, fees, etc.
3.6 "Custodian" means any bank, trust company, or financial institution that may be
appointed by the Employer to have custody of some or all of the assets of the Plan.
3.7 "Eligible Rollover Distribution" means an eligible rollover distribution as defined in IRC
Section 402(c)(4), including Eligible Rollover Distributions to a surviving Spouse under
IRC Section 402(c)(9).
3.8 "Eligible Retirement Plan" means an Eligible Retirement Plan as defined in IRC Section
402(c)(8)(B).
3.9 "Employee" means all part-time, seasonal, or temporary employees of the Employer any
portion of whose income is subject to withholding of federal income tax.
3.10 "Employer" means the above -referenced Employer or any of its agencies, departments,
subdivisions, or instrumentalities for which services are performed by a Participant.
3.11 "Employer Contribution" means the contribution made by the Employer to the Plan.
3.12 "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.
3.13 Entity Authorization Form shall mean the form which the Employer shall provide to the
Administrator acknowledging that the Employer has established this Plan as a Takeover
Plan.
3.14 "Includible Compensation" means, for the purposes of the limitations on deferrals,
Compensation for services performed for the Employer, which is currently includible in
gross income after giving effect to all provisions of the IRC. The amount of Includible
Compensation shall be determined without regard to any community property laws.
Restated 0503 Page 2 of 13
3.15 "Investment 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 for the Trust or
custodial account, without distinction between principal and income.
3.16 "Participant" means any Employee who is subject to IRC Section 3121(b)(7)(F), as
amended, and the regulations thereunder, and who must participate under this Plan by
executing a Participation Agreement.
3.17 "Participation Agreement" means the required agreement executed and filed by an
Employee with the Employer under which the Employee elects to become a Participant in
the Plan.
3.18 "Plan" means the Part -Time, Seasonal, and Temporary Deferred Compensation Plan of
the Employer as set forth in this document and as it may be amended from time to time.
3.19 "Plan Year" means the calendar year in which the Plan becomes effective, and each
succeeding calendar year during the existence of this Plan.
3.20 "Severance From Employment" means the severance of a Participant's employment with
the Employer, as defined by IRC Section 457(d)(1)(A), or on account of the Participant's
death or retirement.
3.21 "Takeover Plan" means this Plan when established by the Employer to replace an
existing FICA Substitute or OBRA Plan.
3.22 "Spouse" means the person to whom the Participant is legally married to at the time in
question.
3.23 "Trustee/Custodian" means the entity or person hereafter appointed by the Employer to
act as Trustee or Custodian of the Trust in accordance with the Plan.
Section 4. Participation in the Plan.
4.1 Participation Agreement Required Prior to Deferral. Compensation shall be deferred for
any pay period only if a Participation Agreement authorizing such deferral has been
executed by the Employee.
4.2 Participation Mandatory. An Employee becomes a Participant in the Plan by executing a
Participation Agreement and filing it with the Employer. Each Employee upon
commencement of employment is required to become a Participant in the Plan and defer
payment of Compensation not yet earned by executing the required written Participation
Agreement and filing it with the Employer. Execution and filing of the Participation
Agreement with the Employer acknowledges the Participant's consent to a reduction of
salary by the Compensation amount specified on the Participation Agreement, subject to
the limitations pursuant to Sections 5.3 and 5.4 of this Plan. Compensation shall be
deferred effective the date the Employee commences work.
Restated 0503 Page 3 of 13-.
4.3 If the Plan is a Takeover Plan, an Employee who participated in the predecessor plan
shall become a Participant in the Plan upon the Employer's execution of the Entity
Authorization Form. Reduction of salary for each Participant must equal at least the
minimum amount required under Section 5.3 of the Plan; and the reduction in the
Participant's salary shall begin immediately thereafter.
4.4 Modification/Termination of Deferral Prohibited While Employed. A Participation
Agreement shall remain in effect until the Employee terminates. A Participant may not
modify or terminate deferrals of Compensation under the Plan during his/her term of
employment with the Employer.
4.5 Investment Option. The Participation Agreement shall indicate the Investment Option the
Employer may designate from time -to -time. The Employer shall invest the Participant's
deferrals in the designated Investment Option.
Section 5. Amount of Deferrals, Deferral of. Compensation.
5.1 Deferral of Compensation. During each Employment Period in which a Participant
participates in the Plan, the Employer shall defer payment of such part of the
Participant's Compensation as is specified in Section 5.3 of this Plan and in the
Participation Agreement which the Participant has executed and filed with the Employer.
5.2 Effect of Execution of Participation Agreement. Each Participant shall be deemed to
have assented to all the terms and conditions of the Plan upon execution of a
Participation Agreement.
5.3 Minimum Deferral Limitation. The annual deferral shall be at least 7.5% of wages as
defined in Section 3121(a) and 3121(v) of the IRC, or such other minimum amount as
shall be required for the Plan to be considered a retirement system under OBRA.
5.4 Maximum Deferral Limitation. The maximum amount of Compensation that a
Participant may defer under the Plan, or in sum under the Plan and any other deferred
compensation plans in which he participates, for the Participant's taxable year shall not
exceed the lesser of (a) the maximum dollar amount under IRC Section 457(b)(2)(A) as
adjusted for cost of living adjustments described in IRC Section 457(e)(15), or (b) 100%
of the Participant's Includible Compensation as provided in IRC Section 457(b)(2)(B).
5.5 USERRA. Notwithstanding the preceding provisions of this Section, a Participant who
is entitled to re-employment pursuant to the terms of the Uniformed Services
Employment and Re-employment Rights Act of 1994 (USERRA) may defer an
additional amount under the Plan as provided for in that Act for the years of his/her
service in the uniformed services (as defined by USERRA). Any such deferral will not
be subject to the limits set forth above in the year in which deferred but will be subject to
the limits for the Employment Period to which such deferrals relate.
Restated 0503 Page 4 of 13
i - 0
5.6 Participants in more than one (1) Deferred Compensation Plan. A Participant who
participates in more than one (1) deferred compensation plan, whether or not maintained
by the Employer, must allocate the dollar limitation among such plan(s) as defined 'in the
IRC among the plans in which he/she participates. The participant shall inform the
Employer of his/her participation in any other deferred compensation plans and is solely
responsible for any violations of the IRC in regard to such allocations
Section 6. Investment and Trust Fund Provisions.
6.1 Investment Funds. The assets of the Plan and each Participant's and Beneficiary's
interest herein, shall be invested and re -invested in accordance with the provisions of the
Plan. The Employer shall establish one or more Investment funds for the purpose of
investing amounts of Deferred Compensation credited to Participant Accounts. The
Employer may cause funds contributed or deferred under this Plan to be commingled for
investment purposes only with funds deferred under an eligible deferred compensation
plan sponsored by any other governmental authority acceptable to the Employer (the
"Other Plan") so long as the investment funds under the PST Plan and the Other Plan are
substantially similar to the Investment Funds under this Plan and so long as adequate
records are maintained to enable the identification of the portion of such funds and
earning thereon that pertain to each Plan.
6.2 Investments Trust.
(a) Plan Assets Held in Trust. All assets of the Plan, including all Compensation
deferred into the Plan, property and rights purchased with such amounts, and all
income attributable to such amounts, property or rights, shall (until made available to
the Participant or the Beneficiary) be held for the exclusive benefit of the Participants
and the Beneficiaries, as described in IRC Section 457(g).
(b) No Guarantee Against Loss. Neither the Employer nor the Trustee/Custodian
guarantees in any manner the Investment Funds or any part thereof against loss or
depreciation. All persons having an interest in the Investment Funds shall look solely
to such Funds for payment with respect to such interest.
6.3 Account. The Employer shall maintain or cause to be maintained an Account for each
Participant and Beneficiary of a deceased Participant to which shall be credited any
Employer Contributions made for such Participant and such Deferred Compensation at
such times as it would have been payable but for the terms of his/her Participation
Agreement. Each Participant's Account shall be revalued at least annually to reflect the
earnings, gains and losses creditable thereto or debitable therefrom in accordance with the
performance of the Investment Options selected by the Plan. The 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.
6.4 Vesting. All Accounts shall be fully vested at all times.
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Section 7. Distribution of Benefits.
7.1 Commencement of Distributions. The Participant may elect the time at which
distributions under the Plan are to commence by designating the month and year during
which the first distribution is to be made. Distributions from the Plan may not be made
to a Participant earlier than (a) the calendar year in which the Participant attains age 70
%Z; or (b) the calendar year in which there is a Severance From Employment by the
Participant. All irrevocable elections of a benefit commencement date made by
Participants prior to January 1, 2002 and defaulted distributions (other than a defaulted
distribution to an annuity option) may be voided at the election of the Participant.
7.2 Mode of Payment. Benefits to Participants with an account balance greater than
$1,000.00 shall be paid in accordance with the payment option elected by a Participant.
Payment amount, method of payment, and settlement options are available as provided
by the Investment Options. The Participant shall elect the mode of payment based upon
the options then available. A Participant who has chosen a payment option other than a
purchased annuity payment option shall have the ability to change his/her payment
option, but an administration charge or restriction may be applicable as determined by the
Employer and Administrator.
7.3 Provisions Required Pursuant to IRC Section 401(a)(9). Distribution of a Participant's
entire Account shall commence not later than April 1 following the calendar year in
which he/she attains age 70 % or Severance From Employment, whichever is later.
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/her Beneficiary.
7.4 Payments to a Beneficiary. If the Participant dies before the benefits to which he/she is
entitled under this Plan have been paid or exhausted, then the remaining benefits payable
under the Plan shall be paid to his/her designated Beneficiary. The Beneficiary shall
have the right to elect the time and mode of payment of such benefits, subject to the
limitations set forth in this Plan. Such election as to the time of payment distribution
(commencement date) shall be filed by the Beneficiary not later than ninety (90) days
following the Participant's death. Failure to file an election as to the form of payment
may result in the Administrator making a lump sum payment to the Beneficiary.
(a) Death After Benefit Commencement. If the Participant dies after having begun to
receive payments, the remainder of such scheduled payments shall be suspended for a
period of sixty (60) days after the Participant's death. _ During such suspension
period, the Beneficiary may elect to receive the balance of the Participant's Account
in a single lump sum or in another method of distribution, provided that any elected
method will distribute the remaining balance at least as rapidly as under the method
of distribution used prior to the Participant's death. If no such election is made by the
Beneficiary by the end of the sixty (60) day suspension period, the remaining
Page 6 of 13
Restated 0503
Account balance shall be paid to the Beneficiary by the same payment method
originally selected by the Participant;
(b) Death Prior to Benefit Commencement. If the Participant dies before payments have
begun, payments to a Beneficiary must comply with one of the following
requirements:
1. If the Participant has no Beneficiary, or the Beneficiary is not a person, such as an
estate or a trust, the entire Account value will be distributed within five (5) years
of the Participant's death; or
2. If the Beneficiary is not the Participant's Spouse, then the distribution of the
Account must begin on or before December 31 of the calendar year following the
Participant's death, and the entire Account must be paid over a period not
extending beyond the life expectancy of the Beneficiary; or
3. If the Beneficiary is the Participant's surviving Spouse, distribution of the
Account may be delayed until December 31 of the calendar year in which the
Participant would have attained age 70 %, at which time the entire Account must
then be paid over a period not extending beyond the life expectancy of the
Spousal Beneficiary.
(c) Interpretation. This Section has been drafted in accordance with Treasury
Regulations issued under Section 401(a)(9) of the IRC. To the extent there is a
conflict between this Section and the IRC, the provisions of the IRC and applicable
Treasury Regulations shall prevail.
7.5 Unforeseeable Emergency Withdrawals. Unforeseeable Emergency Withdrawals are not
permitted under this Plan.
7.6 Effect of Re-employment. If a Participant who has Severance From Employment again
becomes an Employee, no distributions shall be made or continued to the Participant
while he/she is so employed. Any amounts which the Participant was entitled to receive
on his/her prior Severance From Employment shall be withheld until the Participant is
again entitled to a distribution under the terms of the Plan.
7.7 Withholding of Taxes. Except as otherwise allowed by law, and notwithstanding any
other provision in this Plan, prior to distribution of benefits to the Participant, the
Employer shall cause to be withheld the applicable federal and state income taxes and any
other amounts required by law.
7.8 Facility of Pam If the Employer determines that any Participant or Beneficiary to
whom a benefit is payable under the Plan is unable to care for his/her affairs because of
physical, mental, or legal incompetence, the Employer, in its discretion, may cause any
payment due to Participant for which prior claim has not been made by a duly qualified
guardian or other legal representative, to be paid to the person deemed by the Employer to
Restated 0503 Page 7 of 13
be maintaining or responsible for the maintenance of such Participant or Beneficiary. Any
such payment shall be deemed for the Account of such Participant or Beneficiary and
shall constitute a complete discharge of any liability under the Plan.
7.9 Lost Participants. If the Participant or his/her Beneficiary cannot be located within four
(4) years of the date of the Participant's interest in the Plan is first payable, the entire
balance in his/her Account shall be forfeited; provided, however, that the amount so
forfeited shall be reinstated as of the date of the subsequent filing of an application for
benefits under the Plan and such payments of benefits shall be made in accordance with
the other provisions of the Plan.
Section 8. Plan Transfers and Eligible Distribution Rollovers.
8.1 Outgoing Section 457 Plan -to -Plan transfers through Severance From Employment. If a
Participant terminates employment with the Employer and accepts employment with
another employer, which maintains an eligible deferred compensation plan (as defined in
IRC Section 457) and the new employer's plan accepts transfers, the Participant may
transfer his/her Account balance from the Plan to the plan maintained by the new
employer.
8.2 Outgoing Eligible Rollover Distributions. Subject to Section 7, a Participant may elect
at the time and in the manner prescribed by the Administrator, to have any portion of an
Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by
the Participant, provided the Participant presents to the satisfaction of the Administrator a
letter of acceptance or other written acknowledgment from the accepting plan that it is an
Eligible Retirement Plan qualified to accept the Eligible Rollover Distributions.
8.3 Transfers from other eligible deferred compensation plans (as defined in IRC Section
457) to the Plan will be accepted at the Participant's request if such transfers are in cash
or non -annuity products currently offered under the Plan. Any such transferred amount
shall not be subject to the limitations of Sections 5.3 and 5.4 of this Plan, provided
however, that the actual amount deferred during the calendar year under both plans shall
be taken into account in calculating the deferral limitation for that year.
If a Participant is no longer eligible to participate in the Plan, but elects to participate in
the Employer's voluntary IRC Section 457 deferred compensation plan, and such other
plan accepts transfers, the value of the Participant's Account under the Plan shall be
transferred to the Employer's voluntary IRC Section 457 deferred compensation plan,
subsequent to Employer's receipt of investment instructions from the Participant.
Section 9. Nonassignability.
The interest of a Participant or a Beneficiary established under the Plan shall not be assignable in
whole or in part, directly or by operation of law or otherwise, in any manner unless specifically
allowed through this Plan. '
Page 8 of 13
Restated 0503
r.
Section 10. Miscellaneous.
10.1 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,
Administrator and the Trustee/Custodian, nor the payment of any benefits, shall be
construed as giving to any Participant, any Beneficiary, 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.
10.2 Construction. The laws of the state of the Employer shall apply in determining the
construction and validity of this Plan.
Section 11. Plan Administration.
11.1 Administration. The Plan shall be maintained by the Employer, which may implement
rules and regulations for the administration of the Plan consistent with its Plan.
11.2 Powers. The Employer, or its designee, shall have all powers to perform all duties
. necessary to exercise its functions including, but not limited to, the:
(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/her Account;
(c) Interpretation and construction of the provisions of the Plan;
(d) Direction to make disbursement of benefits under the Plan;
(e) Appointment of, and delegation to, such agents, advisors, counselors, and
delegates including an Administrator as may be necessary and appropriate for the
administration and operation of 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 to a
Beneficiary to offset any excess payment or underpayment made to such Participant or
Beneficiary.
11.4 Administrative Expenses. All expenses of administering the Plan and its investments
shall be paid by the Employer except as otherwise provided by a memorandum of
understanding with respect to represented Employees or a salary resolution or ordinance
with respect to unrepresented Employees.
Restated 0503
Page 9 of 13
Section 12. Trustee/Custodian Provisions.
Trust Requirement. All assets of the Plan, including all Compensation deferred into the
Plan, property and rights purchased with such amounts, and all income attributable to such
amounts, property or rights, shall (until made available to the Participant or the
Participant's Beneficiary) be held for the exclusive benefit of the Participants and their
Beneficiaries, as described in IRC.Section 457(g).
12.1 Authority of Trustee/Custodian. The Trustee/Custodian shall manage and administer the
Trust or custodial account, as applicable, without distinction between principal and
income, as a non -discretionary Trustee/Custodian, subject to the directions of the IRC.
The Trustee or Custodian shall not have any discretion or authority with regard to the
investment of the assets of the Trust or custodial account, as applicable and shall act
solely as a directed Trustee/Custodian of such assets in accordance with the directions of
Participants and Beneficiaries as provided herein. The Trustee/Custodian shall have all
powers and authority necessary to comply with such directions and with the
Trustee's/Custodian's responsibilities under the Plan.
12.2 Accounting. The Trustee/Custodian shall maintain or cause to be maintained suitable
records, data, and information relating to the Trustee's/Custodian's functions hereunder.
Within ninety (90) days after the close of each fiscal year of the Trust or custodial
account, as applicable, and at more frequent intervals as agreed to by the Employer, and
within ninety (90) days after the removal or resignation of the Trustee/Custodian, the
Trustee/Custodian shall render to the Employer a written statement and account showing
in reasonable summary the assets and liabilities of the Trust or custodial account, as
applicable, and transactions engaged in during the preceding fiscal year or period. Unless
the Employer shall have filed with the Trustee/Custodian written exceptions or objections
to any such statement and account within ninety (90) days after receipt thereof, the
Employer shall be deemed to have approved such statement and account; and in such case
or upon written approval by the Employer of any such statement and account, the
Trustee/Custodian shall be released and discharged with respect to all matters and things
embraced in such statement and account as though it had been settled by a decree of a
court of competent jurisdiction in an action or proceeding in which the Employer, all
other necessary parties and all persons having any beneficial interest in the Trust or
custodial account were parties, except for any actions resulting from the Trustee's/
Custodian's bad faith, fraud, gross negligence, or willful misconduct. Notwithstanding
the foregoing provisions of the subsection, however, the Trustee/Custodian shall have the
right to have a judicial settlement of the Trustee's/Custodian's account and in any
proceeding for such a judicial settlement or for instructions in connection with the Trust
or custodial account, the only necessary party in addition to the Trustee/Custodian shall
be the Employer, and no Participant or other person having or claiming any interest in the
Trust or custodial account shall be entitled to any notice or service of process (except as
required by law).
12.3 Resignation or Removal of Trustee/Custodian. The Trustee/Custodian acting hereunder
may resign at any time by giving sixty (60) days' prior written notice to the Employer,
Restated 0503 Page 10 of 13
which notice or time period may be waived by the Employer. The Employer may remove
the Trustee/Custodian at any time upon sixty (60) days' prior written notice to the
Trustee/Custodian, which notice or time period may be waived by the Trustee/Custodian.
In case of the resignation or removal of the Trustee/Custodian, the Employer shall appoint
a successor Trustee/Custodian.
12.4 Standard of Care. The Trustee/Custodian shall discharge the Trustee's/Custodian's
duties with respect to the Trust or custodial account (a) solely in the interest of, and for
the exclusive purposes of providing benefits to Participants and Beneficiaries and
defraying reasonable expenses of administering the Plan and (b) with the care, skill,
prudence and diligence under the circumstances then prevailing that a prudent person
acting in a like capacity and familiar with these matters would use in the conduct of an
enterprise of a like character and like aims.
Section 13. Amendment, Termination, and Miscellaneous Provisions.
13.1 Amendment and Termination. The Employer may at any time modify, amend, suspend,
or terminate the Plan in whole or in part (including retroactive amendments) or cease
deferring Compensation pursuant to the Plan for some or all Participants. In the event of
such an action, the Employer shall deliver to each affected Participant a notice of such
modification, amendment, or termination or a notice that it shall cease deferring
Compensation; provided, however, that the Employer shall not have the right to reduce or
affect the. value of any Participant's Account or any rights accrued under the Plan prior to
such modification, amendment, termination, or cessation.
13.2 Interpretation. This Plan is intended to be an eligible deferred compensation plan under
Section 457 of the IRC, and shall be interpreted and administered in a manner consistent
with the IRC. In addition, this Plan shall be interpreted such that it will continue to be
considered a retirement system pursuant to OBRA. 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 the IRC or OBRA and any other applicable law, 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 the IRC, the Employer shall correct such administration.
13.3 The Employer or its delegate shall be authorized to resolve any questions of fact
necessary to decide the Participant's right under this Plan and such decision shall be
binding on the Participant and the Beneficiaries, provided, however, that assets of the
Plan shall be held for the exclusive benefit of Participants and the Beneficiaries at all
times.
13.4 The Employer or its delegate shall be authorized to construe the Plan and to resolve any
ambiguity in the Plan.
13.5 The Participant, for himself/herself and the Beneficiaries, specifically agrees not to seek
recovery against the Employer, the Administrator or any other employee, contractee, or
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agent of the Employer or Administrator or any endorser for any loss sustained by the
Participant or the Beneficiaries, for the non-performance of their duties, negligence, or
any other misconduct of the above named persons except that this paragraph shall not
excuse fraud or wrongful taking by any person.
13.6 The Employer, the Administrator, or their respective agents, if in doubt concerning the
correctness of their action in making a payment of.a benefit, may suspend the payment
until satisfied as to the correctness of the payment or the identity of the person to receive
the.payment or allow the filing in any State court of competent jurisdiction, a suit in such
form as they consider appropriate for a legal determination of the benefits to be paid and
the persons to receive them. The Employer shall comply with the final orders of the court
in any such suit and the Participant, for himself and the Beneficiaries, consents to be
bound thereby insofar as it affects the benefits payable under this Plan or the method or
manner of payment.
13.7 The Employer, the Administrator, and their respective agents are hereby held harmless
from all court costs and all claims for the attorney's fees arising from any action brought
by the Participant or any Beneficiary under this Plan or to enforce Participant or
Beneficiary's rights under this Plan, including any amendment, modification, or
termination hereof.
13.8 The Administrator shall not be required to participate in any litigation concerning the Plan
except upon written demand from the Employer. The Administrator may compromise,
adjust or effect settlement of litigation when specifically instructed to do so by the
Employer.
Section 14. Gender and Plurals.
Whenever used herein, the masculine gender shall include the feminine and the singular shall
include the plural unless the provisions of the Plan specifically require a different construction.
Section 15. Effective Date.
This Restated and Amended Deferred Compensation Plan for Part -Time, Seasonal, and
Temporary Employees and Trust Document shall be effective January 1, 2002.
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Restated and Amended
Deferred Compensation Plan and Trust Agreement
for Part -Time, Seasonal, and Temporary Employees
Signature Page
Andrew G. Pasmant
City Manager
Date
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