2005-229 RESOLUTION NO.2005R- 229_
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ANAHEIM AMENDING
THE DEFERRED COMPENSATION PLAN FOR FULL-TIME EMPLOYEES,AS LAST
AMENDED BY RESOLUTION 2004R-147.
WHEREAS,the City Treasurer has recommended in a staff report dated December 20, 2005, that
Resolution No. 75R-431, as last amended by Resolution 2004R-147, be amended to change the Deferred
Compensation Plan Document to reflect model language provided by Internal Revenue Service Revenue
Procedure 2004-56. The Revenue Procedure replaces existing final regulations and requires that Employer
plan documents be revised and adopted by December 31, 2005.
WHEREAS, as a result thereof,the need exists to amend Resolution 75R-431 which established the
City of Anaheim Deferred Compensation Plan(hereinafter called"Plan"), for full-time employees in
compliance with Section 457 of the Internal Revenue Code; and
WHEREAS, the City Council of the City of Anaheim does find that the aforementioned amendment
11111 is in the best interests of the City of Anaheim;
NOW, THEREFORE,BE IT RESOLVED by the City Council of the City of Anaheim that the Plan
he amended and restated. A copy of the Plan as amended is attached as Exhibit"A".
BE IT FURTHER RESOLVED that the effective date of said amendment to Resolution No. 75R-431
is December 31, 2005.
AND BE IT FURTHER RESOLVED that, except as amended herein,Resolution No. 75R-431 shall
remain in full force and effect.
THE FOREGOING RESOLUTION is approved and adopted by the City Council of the City of
Anaheim this 20th"'day of December 2005.
• di-___2_,
MAYOR OF THE CITY 0 ANAHEIM
ATTEST:
4-L-4-c_et--e_/-1--A—
',ITY CLE OF HE CITY OF ANAHEIM
APPROVED AS TO FORM:
JACK L. WHITE, CITY ATTORNEY
/I
Y:
14'j , Lig
MOSES JOHNSO ".
DEPUTY ITY ATT 'NEY
H.'\DEFCOMP\Resolution\2005DEC do reso full-time plan.DOC
EXHIBIT A
CITY OF ANAHEIM
DEFERRED COMPENSATION PLAN
ARTICLE I. NAME
1.01 The Employer hereby amends and restates the Employer's Deferred
Compensation Plan and Trust. The name of this plan is the City of Anaheim Deferred
Compensation Plan hereinafter referred to as the "Plan." The Plan consists of the
provisions set forth in this document. This amendment and restatement of the Plan is
effective December 31, 2005.
ARTICLE II. PURPOSE
2.01 The primary purpose of this Plan is to provide retirement income and other
deferred benefits to the Employees of the Employer and the Employees' Beneficiaries in
accordance with the provisions of Section 457 of the Internal Revenue Code of 1986, as
amended (the "Code").
2.02 This Plan shall be an agreement solely between the Employer and participating
Employees.
2.03 Trust Fund: All amounts of Annual Deferrals, all property and rights purchased
with such amounts, and all income attributable to such amounts, property, or rights shall
be held and invested in the Trust Fund in accordance with this Plan and the Trust
Agreement. The Trust Fund, and any subtrust established under the Plan, shall be
established pursuant to a written agreement that constitutes a valid trust under the law
of the State of California. The Trustee shall ensure that all investments, amounts,
property, and rights held under the Trust Fund are held for the exclusive benefit of
Participants and their Beneficiaries. The Trust Fund shall be held in trust pursuant to
the Trust Agreement for the exclusive benefit of Participants and their Beneficiaries and
defraying reasonable expenses of the Plan and of the Trust Fund. It shall be
impossible, prior to the satisfaction of all liabilities with respect to Participants and their
Beneficiaries, for any part of the assets and income of the Trust Fund to be used for, or
diverted to, purposes other than for the exclusive benefit of Participants and their
Beneficiaries.
2.04 The Employer does not and cannot represent or guarantee that any particular
federal and state income, payroll or other tax consequences will occur by reason of an
Employee's participation in this Plan. The Participant should consult with his own attorney
or other representative regarding all tax or other consequences of participation in this
Plan.
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ARTICLE III. DEFINITIONS
For the purposes of this Plan, certain words or phrases used herein will have the following
meanings:
3.01 Account Balance: The bookkeeping account maintained with respect to each
Participant which reflects the value of the deferred Compensation credited to the
Participant, including the Participant's Annual Deferrals, the earnings or loss of the
Fund (net of Fund expenses) allocable to the Participant, any transfers for the
Participant's benefit, any distribution made to the Participant or the Participant's
Beneficiary and any fees or expenses charged against such Participant's Deferred
Compensation. If a Participant has more than one Beneficiary at the time of the
Participant's death, then a separate Account Balance shall be maintained for each
Beneficiary. The Account Balance includes any account established under Article IX for
rollover contributions and plan-to-plan transfers made for a Participant, the account
established for a Beneficiary after a Participant's death, and any account or accounts
established for an alternate payee (as defined in Section 414(p)(8) of the Code).
3.02 Administrator: Shall mean Plan Administrator. The City Treasurer shall serve as
Plan Administrator unless another person or entity is designated by the City Council.
3.03 Annual Deferral: The amount of Compensation deferred in any year.
3.04 Automatic Distribution Date: On or after January 1, 2002, "Automatic Distribution
Date" means April 1 of the calendar year after the Plan year the Participant attains age
70-1/2, or, if later, has a Severance from Employment.
3.05 Beneficiary: The designated person (or, if none, the Participant's estate) who is
entitled to receive benefits under the Plan after the death of a Participant. A designated
person includes an individual, trust, corporation or firm, or the estate of the Participant, or
any combination of the foregoing designated by a Participant to receive benefits under
the Plan. Designation shall be made on a Provider Beneficiary Designation Form
executed by the Participant to the Provider, unless otherwise provided. Beneficiary may
be singular or plural, primary or contingent.
3.06 Code: The Internal Revenue Code of 1986, as now in effect or as hereafter
amended. All citations to Sections of the Code are to such sections as they may from
time to time be amended or renumbered.
3.07 Compensation: All cash compensation for services to the Employer, including
salary, wages, fees, commissions, bonuses, overtime pay, and any payments
attributable to accrued vacation, accrued sick leave and other accrued paid leave that is
includible in the Employee's gross income for the calendar year, plus amounts that
would be cash compensation for services to the Employer includible in the Employee's
gross income for the calendar year but for a compensation reduction election under
Section 125, 132(f), 401(k), 403(b), or 457(b) of the Code (including an election to defer
compensation under Article VI).
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3.08 Contract Administrator: An administrator employed under contract authorized by
the City Council and under the direction of the Plan Administrator.
3.09 Deferred Compensation: The portion of Compensation which the Participant and
the Employer mutually agree to defer in accordance with the provisions of this Plan; any
amount credited to the Participant's Account.
3.10 Deferred Compensation Committee: Shall mean the Committee, consisting of the
Plan Administrator, as Chairperson; the City Manager or his appointee; the Finance
Director or his appointee; the Human Resources Director or his appointee; two (2)
Participating Employees and one (1) Rotating Department Employee Representative.
3.11 Disability: The substantial permanent 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 or by the Public Employees' Retirement System, on the
basis of advice from a physician or physicians.
3.12 Employee: Each natural person, whether appointed or elected, who is employed
by the Employer, whether as an employee or officer of the Employer.
3.13 Employer: Shall mean the City of Anaheim.
3.14 Includible Compensation: An Employee's actual wages in box 1 of Form W-2 for
a year for services to the Employer, but subject to a maximum of $200,000 (or such
higher maximum as may apply under Section 401(a)(17) of the Code) and increased
(up to the dollar maximum) by any compensation reduction election under Section 125,
132(f), 401(k), 403(b), or 457(b) of the Code (including an election to defer
Compensation under Article VI).
3.15 Normal Compensation: The amount of compensation which would be payable to a
Participant by the Employer for a taxable year if no Participation Agreement were in effect
to defer compensation under this Plan.
3.16 Normal Retirement Age: Normal Retirement age is designated as 70-1/2 unless
the Participant has elected an alternate Normal Retirement Age in writing (to be provided
to the Plan Administrator before severance). Once a Participant elects to use the Special
Section 457 Catch-up provision, the normal retirement age may not be changed.
A Participant's alternate Normal Retirement Age may not be earlier than the earliest date
that the Participant will become eligible to retire and receive unreduced retirement
benefits under the California Public Employees Retirement System, and may not be later
than the date the Participant will attain age 70-1/2. If a Participant continues employment
after attaining age 70-1/2, but has not previously elected an alternate Normal Retirement
Age, the Participant's alternate Normal Retirement Age can not be later than the
mandatory retirement age established by the Employer, or the age at which the
Participant actually leaves service if the employer has no mandatory retirement age, or as
required by law.
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3.17 Participant: An individual who is currently deferring Compensation, or who has
previously deferred Compensation under the Plan by salary reduction and who has not
received a distribution of his entire benefit under the Plan. Only individuals who perform
services for the Employer as an Employee may defer Compensation under the Plan.
3.18 Participating Employee: An appointed member to the Deferred Compensation
Committee. The Participating Employee must submit an Application for Appointment to
the Committee. The Committee will select the Participating Employee. The Participating
Employee must be a full-time employee with the City of Anaheim and must be a
Participant of the Plan. This member shall serve a two (2) year term.
3.19 Participating Employee (Rotating Department Employee Representative): The
Rotating Department Representative will be selected from Departments in the order of
staff size. Any Department may choose to pass or not participate. The respective
Department Head shall select the Department Representative. The Department
Representative must be a full-time employee with the City of Anaheim and must be a
Participant of the Plan. This member shall serve a two (2) year term.
3.20 Participation Agreement: An agreement entered into between an Employee and
the Employer, including any amendments or modifications, thereof. Such agreement
shall: (a) fix the amount of Deferred Compensation; (b) specify a preference among the
Providers designated by the Employer; (c) incorporate the terms, conditions, and
provisions of the Plan by reference.
3.21 Plan: City of Anaheim Deferred Compensation Plan.
3.22 Plan Year: The calendar year.
3.23 Provider: An institution providing investments or deposit vehicles.
3.24 Required Beginning Date: April 1 of the calendar year following the calendar year,
in which the Participant attains age 70-1/2 or a Severance from Employment, whichever
is later.
3.25 Retirement: The first date upon which both of the following shall have occurred
with respect to a Participant: Severance from Employment and attainment of age 50.
3.26 Severance from Employment: The term Severance from Employment means the
date that the Employee dies, retires, or otherwise has a severance from employment
with the Employer, as determined by the Plan Administrator (and taking into account
guidance issued under the Code).
3.27 Spouse: refers only to a person of the opposite sex who is a husband or a wife.
However, registered domestic partners shall have the same rights and responsibilities
as are granted to and imposed upon spouses under this Plan pursuant to California
Family Code Section 297.5(a) effective January 1, 2005, except as required by federal
law.
3.28 Sub-Committee: A subdivision of the Committee and shall be less than a quorum
of the Committee.
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3.29 Trust Agreement: The written agreement (or declaration) made by and between
the Employer and the Trustees under which the Trust Fund is maintained under Article
VIII.
3.30 Trust Fund: The trust fund created under and subject to the Trust Agreement
under Article VIII.
3.31 Trustee(s): The Trustee(s) duly appointed and currently serving under the Trust
Agreement, which are the Deferred Compensation Committee members.
3.32 Valuation Date: Each business day.
ARTICLE IV. ADMINISTRATION
4.01 The Plan shall be administered by the Plan Administrator but may be administered
through a Contract Administrator under the direction of the Plan Administrator.
Participants receiving services from said Plan Administrator and/or Contract Administrator
may be charged a fee for said services.
The Trustees shall determine said fees in a manner deemed fair and equitable. The
Trustees may have withheld or collect, such fee, in such manner as it deems equitable,
from the compensation deferred pursuant to the Plan, or the income produced from the
compensation deferred pursuant to the Plan.
4.02 Duties of the Plan Administrator: The Plan Administrator shall have the authority to
make all discretionary decisions affecting the rights or benefits of Participants which may
be required in the administration of this Plan. The Plan Administrator's decisions shall be
afforded the maximum deference permitted by applicable law.
4.03 Duties of the Provider: The Provider shall act for the exclusive benefit of the
Participants and their Beneficiaries. The Provider, as agent for the Trust, shall perform
nondiscretionary administrative functions in connection with the Plan, including but not
limited to; the maintenance of Participants' Accounts, the provision of periodic reports of
the status of each Account, and the disbursement of benefits on behalf of the Trust in
accordance with the provisions of this Plan.
ARTICLE V. PARTICIPATION IN THE PLAN
5.01 Eligibility: Each Employee shall be eligible to participate in the Plan and defer
Compensation hereunder immediately upon becoming employed by the Employer. The
Employer and Employee mutually acknowledge that the compensation of each Employee
is as set forth in the salary resolution or personnel ordinance of the Employer and that
said compensation includes the dollar amount of funds deferred under this Plan. Each
employee may elect to become a Participant and to defer payment of part of his
compensation by executing and delivering to the Employer a written Participation
Agreement.
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5.02 Election Required for Participation: An Employee may elect to become a
Participant by executing an election to defer a portion of his Compensation (and have
that amount contributed as an Annual Deferral on his behalf) and filing it with the Plan
Administrator. This participation election shall be made on the deferral agreement
provided by the Plan Administrator under which the Employee agrees to be bound by all
the terms and conditions of the Plan. The Plan Administrator has established a
minimum deferral amount of $10.00 per pay period and may change such minimum
from time to time. The participation election shall also include designation of
investment funds and a designation of Beneficiary. Any such election shall remain in
effect until a new election is filed.
5.03 Commencement of Participation: An Employee shall become a Participant as
soon as administratively practicable following the date the Employee files a participation
election pursuant to Article 5.02. Such election shall become effective no earlier than
the calendar month following the month in which the election is made. A new Employee
may defer compensation payable in the calendar month during which the Participant
first becomes an Employee if an agreement providing for the deferral is entered into on
or before the first day on which the Participant performs services for the Employer.
5.04 Information Provided by the Participant: Each Employee enrolling in the Plan
should provide to the Plan Administrator at the time of initial enrollment, and later if
there are any changes, any information necessary or advisable for the Plan
Administrator to administer the plan, including, without limitation, whether the Employee
is a participant in any other eligible plan under Code Section 457(b).
5.05 Contributions Made Promptly: Annual Deferrals by the Participant under the Plan
shall be transferred to the Trust Fund within a period that is not longer than is
reasonable for the proper administration of the Participant's Account Balance. For this
purpose, Annual Deferrals shall be treated as contributed within a period that is not
longer than is reasonable for the proper administration if the contribution is made to the
Trust Fund within 15 business days following the end of the month in which the amount
would otherwise have been paid to the Participant.
5.06 Amendment of Annual Deferrals Election: Subject to other provisions of the Plan,
a Participant may at any time revise his participation election, including a change of the
amount of his Annual Deferrals, his investment direction and his designated
Beneficiary. Unless the election specifies a later effective date, a change in the amount
of the Annual Deferrals shall take effect as of the first day of the next following month or
as soon as administratively practicable if later. A change in the investment direction
shall take effect as of the date provided by the Provider on a uniform basis for all
Employees. A change in the Beneficiary designation shall take effect when the election
is accepted by the Provider.
5.07 Leave of Absence: Unless an election is otherwise revised, if a Participant is
absent from work by leave of absence, Annual Deferrals under the Plan shall continue
to the extent that Compensation continues.
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5.08 Disability: A disabled Participant may elect Annual Deferrals during any portion
of the period of his disability to the extent that he or she has actual Compensation (not
imputed Compensation and not disability benefits) from which to make contributions to
the Plan and has not had a Severance from Employment.
ARTICLE VI. LIMITATIONS ON DEFERRALS
6.01 Basic Annual Limitation: The maximum amount of the Annual Deferral under the
Plan for any calendar year shall not exceed the lesser of (i) the Applicable Dollar
Amount or (ii) the Participant's Includible Compensation for the calendar year. The
Applicable Dollar Amount is the amount established under Section 457(e)(15) of the
Code applicable as set forth below:
For the following years: The Applicable Dollar Amount is:
2002 $11,000
2003 $12,000
2004 $13,000
2005 $14,000
2006 or thereafter $15,000 Adjusted for cost-of-living after
2006 to the extent provided under Section
415(d) of the Code.
6.02 Age 50 Catch-up Annual Deferral Contributions: A Participant who will attain age
50 or more by the end of the calendar year is permitted to elect an additional amount of
Annual Deferrals, up to the maximum age 50 catch-up Annual Deferrals for the year.
The maximum dollar amount of the age 50 catch-up Annual Deferrals for a year is as
follows:
For the following years: The Applicable Dollar Amount is:
2002 $1,000
2003 $2,000
2004 $3,000
2005 $4,000
2006 or thereafter $5,000 Adjusted for cost-of-living after 2006
to the extent provided under the Code.
6.03 Special Section 457 Catch-up Limitation: If the applicable year is one of a
Participant's last three (3) calendar years ending before the year in which the
Participant attains Normal Retirement Age and the amount determined under this
Article 6.03 exceeds the amount computed under Articles 6.01 and 6.02, then the
Annual Deferral limit under this Article VI shall be the lesser of:
(a) An amount equal to 2 times the Article 6.01 Applicable Dollar Amount for such year;
or
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(b) The sum of:
(1) An amount equal to (A) the aggregate Article 6.01 limit for the current year
plus each prior calendar year beginning after December 31, 2001 during
which the Participant was an Employee under the Plan, minus (B) the
aggregate amount of Compensation that the Participant deferred under the
Plan during such years, plus
(2) An amount equal to (A) the aggregate limit referred to in Section 457(b)(2) of
the Code for each prior calendar year beginning after December 31, 1978
and before January 1, 2002 during which the Participant was an Employee
(determined without regard to Articles 6.02 and 6.03), minus (B) the
aggregate contributions to Pre-2002 Coordination Plans for such years.
However, in no event can the deferred amount be more than the Participant's
compensation for the year.
6.04 If Both Limits Apply: If a Participant is eligible for both the Special Section 457
Catch-up Provision and Age 50 Catch-Up Provision in the same Plan Year, the following
rules shall apply:
(a) The Participant shall be eligible to contribute an additional amount under this Article
6.03 that is equal to the greater of the Special Section 457 Catch-up Provision or the
Age 50 Catch-Up Provision.
(b) For purposes of clause Article VI above, amounts contributed by the Participant under
Article VI for any Plan Year shall be considered to have been made:
(1) Under the Special Section 457 Catch-up Provision if the Special Section 457
Catch-up Provision was greater than the Age 50 Catch-Up Provision for such
year; and
(2) Under the Age 50 Catch-Up Provision if the Age 50 Catch-Up Provision was
greater than the Special Section 457 Catch-up Provision for such year.
(c) All amounts deferred under the Age 50 Catch-Up Provision will not be considered
when determining the amounts eligible to be contributed under the Special Section
457 Catch-up Provision.
6.05 Special Rules: For purposes of this Article VI, the following rules shall apply:
(a) Participant Covered By More Than One Eligible Plan: If the Participant is or has
been a participant in one or more other eligible plans within the meaning of Section
457(b) of the Code, then this Plan and all such other plans shall be considered as
one plan for purposes of applying the foregoing limitations of this Article VI. For this
purpose, the Plan Administrator shall take into account any other such eligible plan
maintained by the Employer and shall also take into account any other such eligible
plan for which the Plan Administrator receives from the Participant sufficient
information concerning his participation in such other plan.
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(b) Pre-Participation Years: In applying Article 6.03, a year shall be taken into account
only if (i) the Participant was eligible to participate in the Plan during all or a portion
of the year and (ii) Compensation deferred, if any, under the Plan during the year
was subject to the Basic Annual Limitation described in Article 6.01 or any other
plan ceiling required by Section 457(b) of the Code.
(c) Pre-2002 Coordination Years: For purposes of Article 6.03(b)(2)(B), "contributions to
Pre-2002 Coordination Plans" means any employer contribution, salary reduction or
elective contribution under any other eligible Code Section 457(b) plan, or a salary
reduction or elective contribution under any Code Section 401(k) qualified cash or
deferred arrangement, Code Section 402(h)(1)(B) simplified employee pension
(SARSEP), Code Section 403(b) annuity contract, and Code Section 408(p) simple
retirement account, or under any plan for which a deduction is allowed because of a
contribution to an organization described in Section 501(c)(18) of the Code,
including plans, arrangements or accounts maintained by the Employer or any
employer for whom the Participant performed services. However, the contributions
for any calendar year are only taken into account for purposes of Article
6.03(b)(2)(B) to the extent that the total of such contributions does not exceed the
aggregate limit referred to in Section 457(b)(2) of the Code for that year.
(d) Disregard Excess Deferral: For purposes of Articles 6.1, 6.2 and 6.3, an individual is
treated as not having deferred compensation under a plan for a prior taxable year to
the extent Excess Deferrals under the plan are distributed, as described in Article
6.06. To the extent that the combined deferrals for pre-2002 years exceeded the
maximum deferral limitations, the amount is treated as an Excess Deferral for those
prior years.
6.06 Correction of Excess Deferrals: If the Annual Deferral on behalf of a Participant
for any calendar year exceeds the limitations described above, or the Annual Deferral
on behalf of a Participant for any calendar year exceeds the limitations described above
when combined with other amounts deferred by the Participant under another eligible
deferred compensation plan under Section 457(b) of the Code for which the Participant
provides information that is accepted by the Plan Administrator, then the Annual
Deferral, to the extent in excess of the applicable limitation (adjusted for any income or
loss in value, if any, allocable thereto), shall be distributed to the Participant.
6.07 Protection of Persons Who Serve in a Uniformed Service: An Employee whose
employment is interrupted by qualified military service under Code Section 414(u) or
who is on a leave of absence for qualified military service under Code Section 414(u)
may elect to make additional Annual Deferrals upon resumption of employment with the
Employer equal to the maximum Annual Deferrals that the Employee could have
elected during that period if the Employee's employment with the Employer had
continued (at the same level of Compensation) without the interruption or leave,
reduced by the Annual Deferrals, if any, actually made for the Employee during the
period of the interruption or leave. This right applies for five years following the
resumption of employment (or, if sooner, for a period equal to three times the period of
the interruption or leave).
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ARTICLE VII. NON-RESPONSIBILITY CLAUSE
7.01 The Employer may, but is not required to, invest funds held pursuant to
agreements between Participants and the Employer in accordance with the preference or
preferences indicated by each Participant at the time of enrollment or change in
enrollment, prospectively only. The Employer shall retain the right to approve or
disapprove such investment request or requests, for transfer of investment among
different modes of investment available under the Plan. Any such action by the Employer
in investing funds, or approving of any investment of funds, shall not be considered to be
either an endorsement or guarantee of any investment, nor shall it be considered to attest
to the financial soundness or the suitability of any investment for the purpose of meeting
future obligations.
In no event shall the Employer's obligation to pay benefits to a Participant exceed the
value of the amounts credited to the Participant's account; the Employer shall not be
liable for losses arising from depreciation or shrinkage, in the value of any investments
acquired under this Plan.
7.02 Safe Harbor: No person who is otherwise a fiduciary shall be liable for any loss,
or by reason of any breach, which results from such participant's or beneficiary's
exercise of control. This relieves the Trustees and the Employer of responsibility for
participant-directed investments under the terms of the plan and Trust. The fiduciaries
of the plan are relieved of liability for any losses resulting from investment instructions
given by the participant or beneficiary.
ARTICLE VIII. TRUST AND INVESTMENT OF ACCOUNTS
8.01 Investment Funds: In accordance with uniform and nondiscriminatory rules
established by the Employer and the Provider, the Participant may direct his Accounts to
be invested in one (1) or more investment funds available under the Plan; provided,
however, that the Participant's investment directions shall not violate any investment
restrictions established by the Employer. Neither the Employer, the Provider, nor any
other person shall be liable for any losses incurred by virtue of following such directions or
with any reasonable administrative delay in implementing such directions. Participants
must notify the Plan Administrator or Provider of errors in the Participants account
statement within 60 days after the end of the quarter in which the error occurred.
8.02 Crediting of Accounts: The Participant's Account shall reflect the amount and value
of the investments or other property obtained by the Employer through the investment of
the Participant's Deferred Compensation. Each Participant shall receive periodic reports
from the Providers, not less frequently than annually, showing the then current value of
his Account. Investment and market valuation of mutual funds can be made only when
the New York Stock Exchange is open for trading.
8.03 Trust: Notwithstanding any contrary provision of the Plan, in accordance with
Section 457(g) of the Internal Revenue Code, all amounts of compensation deferred
pursuant to the Plan, all property and rights purchased with such amounts, and all income
attributable to such amounts, property, or rights shall be held in trust for the exclusive
benefit of participants and beneficiaries under the Plan. Any Trust under the Plan shall
10
be established pursuant to a written agreement that constitutes a valid trust under the law
of the State of California.
All amounts of compensation deferred under the Plan shall be transferred to a trust
established under the Plan within a period that is not longer than is reasonable for the
proper administration of the accounts of participants. Incorporated herein by reference is
the City of Anaheim Section 457 Deferred Compensation Plan Trust.
ARTICLE IX. ELIGIBLE ROLLOVERS
9.01 Eligible Rollover Contributions to the Plan:
(a) A Participant who is an Employee and who is entitled to receive an eligible rollover
distribution from another eligible retirement plan may request to have all or a portion
of the eligible rollover distribution paid to the Plan. The Plan Administrator may
require such documentation from the distributing plan as it deems necessary to
effectuate the rollover in accordance with Section 402 of the Code and to confirm
that such plan is an eligible retirement plan within the meaning of Section
402(c)(8)(B) of the Code.
(b) For purposes of Article 9.01(a), an eligible rollover distribution means any
distribution of all or any portion of a Participant's benefit under another eligible
retirement plan, except that an eligible rollover distribution does not include (1) any
installment payment for a period of 10 years or more, (2) any distribution made as a
result of an unforeseeable emergency or other distribution which is made upon
hardship of the employee, or (c) for any other distribution, the portion, if any, of the
distribution that is a required minimum distribution under Section 401(a)(9) of the
Code. In addition, an eligible retirement plan means an individual retirement account
described in Section 408(a) of the Code, an individual retirement annuity described
in Section 408(b) of the Code, a qualified trust described in Section 401(a) of the
Code, an annuity plan described in Section 403(a) or 403(b) of the Code, or an
eligible governmental plan described in Section 457(b) of the Code, that accepts the
eligible rollover distribution.
(c) The Plan shall establish and maintain for the Participant a separate account for any
eligible rollover distribution paid to the Plan from any eligible retirement plan that is
not an eligible governmental plan under Section 457(b) of the Code. In addition, the
Plan shall establish and maintain for the Participant a separate account for any
eligible rollover distribution paid to the Plan from any eligible retirement plan that is
an eligible governmental plan under Section 457(b) of the Code.
Rollover Contributions to the Plan are payable to the participant only as provided in
Article X and may be the basis for a Participant loan that is made under Article Xl.
9.02 Plan-to-Plan Transfers to the Plan: At the direction of the Employer, the Plan
Administrator may permit a class of Participants who are participants in another eligible
governmental plan under Section 457(b) of the Code to transfer assets to the Plan as
provided in this Article 9.02. Such a transfer is permitted only if the other plan provides
for the direct transfer of each Participant's interest therein to the Plan. The Plan
11
Administrator may require in its sole discretion that the transfer be in cash or other
property acceptable to the Plan Administrator. The Plan Administrator may require such
documentation from the other plan as it deems necessary to effectuate the transfer in
accordance with Section 457(e)(10) of the Code and Section 1 .457-10(b) of the Income
Tax Regulations and to confirm that the other plan is an eligible governmental plan as
defined in Section 1 .457-2(f) of the Income Tax Regulations. The amount so transferred
shall be credited to the Participant's Account Balance and shall be held, accounted for,
administered and otherwise treated in the same manner as an Annual Deferral by the
Participant under the Plan, except that the transferred amount shall not be considered
an Annual Deferral under the Plan in determining the maximum deferral under Article
VI.
9.03 Plan-to-Plan Transfers from the Plan:
(a) At the direction of the Employer, the Plan Administrator may permit a class of
Participants and Beneficiaries to elect to have all or any portion of their Account
Balance transferred to another eligible governmental plan within the meaning of
Section 457(b) of the Code and Section 1 .457-2(f) of the Income Tax Regulations. A
transfer is permitted under this Article 9.03(a) for a Participant only if the Participant
has had a Severance from Employment with the Employer and is an employee of
the entity that maintains the other eligible governmental plan. Further, a transfer is
permitted under this Article 9.03(a) only if the other eligible governmental plan
provides for the acceptance of plan-to plan transfers with respect to the Participants
and Beneficiaries and for each Participant and Beneficiary to have an amount
deferred under the other plan immediately after the transfer at least equal to the
amount transferred.
(b) Upon the transfer of assets under this Article 9.03, the Plan's liability to pay benefits
to the Participant or Beneficiary under this Plan shall be discharged to the extent of
the amount so transferred for the Participant or Beneficiary. The Plan Administrator
may require such documentation from the receiving plan as it deems appropriate or
necessary to comply with this Article 9.03 (for example, to confirm that the receiving
plan is an eligible governmental plan under paragraph (a) of this Article 9.03, and to
assure that the transfer is permitted under the receiving plan) or to effectuate the
transfer pursuant to Section 1.457-10(b) of the Income Tax Regulations.
9.04 Rollover Distributions:
(a) A Participant or the surviving spouse of a Participant (or a Participant's former
spouse who is the alternate payee under a domestic relations order, as defined in
Section 414(p) of the Code) who is entitled to an eligible rollover distribution may
elect, at the time and in the manner prescribed by the Plan Administrator, to have all
or any portion of the distribution paid directly to an eligible retirement plan specified
by the Participant in a direct rollover.
(b) For purposes of this Article 9.04, an eligible rollover distribution means any
distribution of all or any portion of a Participant's Account Balance, except that an
eligible rollover distribution does not include (a) any installment payment under
Article 10.05 for a period of 10 years or more (b) any distribution made under Article
10.09 as a result of an unforeseeable emergency, or
12
(c) For any other distribution, the portion, if any, of the distribution that is a required
minimum distribution under Section 401(a)(9). In addition, an eligible retirement plan
means an individual retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code, a qualified
trust described in Section 401(a) of the Code, an annuity plan described in Section
403(a) or 403(b) of the Code, or an eligible governmental plan described in Section
457(b) of the Code, that accepts the eligible rollover distribution.
9.05 Permissive Service Credit Transfers:
(a) If a Participant is also a participant in a tax-qualified defined benefit governmental
plan (as defined in Section 414(d) of the Code) that provides for the acceptance of
plan-to-plan transfers with respect to the Participant, then the Participant may elect
to have any portion of the Participant's Account Balance transferred to the defined
benefit governmental plan. A transfer under this Article 9.05(a) may be made before
the Participant has had a Severance from Employment.
(b) A transfer may be made under Article 9.05(a) only if the transfer is either for the
purchase of permissive service credit (as defined in Section 415(n)(3)(A) of the
Code) under the receiving defined benefit governmental plan or a repayment to
which Section 415 of the Code does not apply by reason of Section 415(k)(3) of the
Code.
ARTICLE X. DISTRIBUTION OF BENEFITS
10.01 Benefit Distributions At Retirement or Other Severance from Employment: Upon
retirement or other Severance from Employment (other than due to death), a Participant
is entitled to receive a distribution of his Account Balance under any form of distribution
permitted under Article 10.05 commencing at the date elected under Article 10.03. If a
Participant does not elect otherwise, the distribution shall be paid as soon as
practicable following Normal Retirement Age or, if later, following retirement or other
Severance from Employment and payment shall be made in monthly installments of the
minimum annual payments described in paragraph (b) of Article 10.05.
10.02 Latest Distribution Date: In no event shall any distribution under this Article X
begin later than the later of (a) April 1 of the year following the calendar year in which
the Participant attains age 70-1/2 or (b) April 1 of the year following the year in which
the Participant retires or otherwise has a Severance from Employment. If distributions
commence in the calendar year following the later of the calendar year in which the
Participant attains age 70-1/2 or the calendar year in which the Severance from
Employment occurs, the distribution on the date that distribution commences must be
equal to the annual installment payment for the year that the Participant has a
Severance from Employment determined under paragraph (b) of Article 10.05 and an
amount equal to the annual installment payment for the year after Severance from
Employment determined under paragraph (b) of Article 10.05 must also be paid before
the end of the calendar year of commencement.
13
10.03 Election of Benefit Commencement Date: A Participant may elect to commence
distribution of benefits at any time after retirement or other Severance from
Employment by a notice filed at least 30 days before the date on which benefits are to
commence. However, in no event may distribution of benefits commence later than the
date described in Article 10.02.
(a) Loans: Notwithstanding the foregoing provisions of this Article 10.03, no election to
defer the commencement of benefits after a Severance from Employment shall
operate to defer the distribution of any amount in the Participant's Loan Account in
the event of a default of the Participant's loan.
(b) Amount of Account Balance: Except as provided in Article 10.05, the amount of any
payment under this Article X shall be based on the amount of the Account Balance
on the preceding Valuation Date.
(c) Revocation of Prior Election: Any election made under this Article X may be revoked
at any time.
10.04 Payment Options: As provided in Articles 10.01, 10.02, and 10.07, a Participant or
Beneficiary may elect to have the value of the Participant's Account distributed in
accordance with one of the following payment options, provided that such option is
consistent with the limitations set forth in Article 10.06.
10.05 Forms of Distribution: In an election to commence benefits under Article 10.03, a
Participant entitled to a distribution of benefits under this Article X may elect to receive
payment in any of the following forms of distribution:
(a) A lump sum payment of the total Account Balance or
(b) Annual installment payments through the year of the Participant's death, the amount
payable each year equal to a fraction of the Account Balance equal to one divided
by the distribution period set forth in the Uniform Lifetime Table at Section
1.401(a)(9)-9, A-2, of the Income Tax Regulations for the Participant's age on the
Participant's birthday for that year. If the Participant's age is less than age 70, the
distribution period is 27.4 plus the number of years that the Participant's age is less
than age 70. At the Participant's election, this annual payment can be made in
monthly or quarterly installments. The Account Balance for this calculation (other
than the final installment payment) is the Account Balance as of the end of the year
prior to the year for which the distribution is being calculated. Payments shall
commence on the date elected under Article 10.03. For any year, the Participant
can elect distribution of a greater amount (not to exceed the amount of the
remaining Account Balance) in lieu of the amount calculated using this formula.
(c) Equal monthly, quarterly, semi-annual or annual payments in an amount chosen by
the Participant, continuing until his Account is exhausted;
(d) Approximately equal monthly, quarterly, semi-annual or annual payments, calculated
to continue for a certain period chosen by the Participant.
14
(e) Payments equal to payments made by the issuer of a retirement annuity policy
acquired by the Provider.
(f) Any payment option elected by the Participant and agreed to by the Employer and
Provider and as provided for by the Internal Revenue Service.
A Participant's or Beneficiary's selection of a payment option may include the selection of
an automatic annual cost-of-living increase. Such increase will be based on the rise in the
Consumer Price Index for All Urban Consumers (CPI-U) from the third quarter of the last
year in which a cost-of-living increase was provided to the third quarter of the current
year. Any increase will be made in periodic payment checks beginning the following
January.
10.06 Limitation on Options: No payment option, other than a lump sum payment, may
be selected by a Participant unless the amount is not less than $100 per year. No
payment option may be selected by a Participant under Articles 10.05 or 10.07 unless it
satisfies the requirements of Sections 401(a)(9) and 457(d)(2) of the Code, including
that payments commencing before the death of the Participant shall satisfy the
incidental death benefit requirements under Section 401(a)(9)(G).
10.07 Death Benefit Distributions: Commencing in the calendar year following the
calendar year of the Participant's death, the Participant's Account Balance shall be paid
to the Beneficiary in a lump sum.
Alternatively, if the Beneficiary with respect to the Participant's Account Balance is a
natural person, at the Beneficiary's election, distribution can be made in installments
(calculated in a manner that is similar to installments under Article 10.05) with the
distribution period determined under this paragraph. If the Beneficiary is the
Participant's surviving spouse, the distribution period is equal to the Beneficiary's life
expectancy using the single life table in Section 1.401(a)(9)-9, A-1 , of the Income Tax
Regulations for the spouse's age on the spouse's birthday for that year. If the
Beneficiary is not the Participant's surviving spouse, the distribution period is the
Beneficiary's life expectancy determined in the year following the year of the
Participant's death using the single life table in Section 1 .401(a)(9)-9, A-1, of the
Income Tax Regulations for the Beneficiary's age on the Beneficiary's birthday for that
year, reduced by one for each year that has elapsed after that year. For any year, a
Beneficiary can elect distribution of a greater amount (not to exceed the amount of the
remaining Account Balance) in lieu of the amount calculated using this formula.
(a) If the designated Beneficiary does not continue to live for the remaining period of
payments under the payment option, then the commuted value of any remaining
payments under the payment option shall be paid in a lump sum to the
Beneficiary(ies) of the Beneficiary. In the event that the Beneficiary has no named
Beneficiary(ies) on file, payment shall be made in a lump sum to the estate of the
Beneficiary.
(b) If the beneficiary is a spouse, the Beneficiary may rollover distributions to an IRA or
a 401, 403(b) or governmental 457 plan in which the spouse participates.
15
(c) In the event that the Participant's estate is the Beneficiary, the commuted value of any
remaining payments under the payment option shall be paid to the Participant's estate
in a lump sum.
10.08 Designation of a Trust as a Beneficiary: A Participant may name a trust as a
Beneficiary with respect to the Participant's account in accordance with the requirements
of Code Section 401(a)(9) and Treasury Regulation Section 1.401(a)(9)-4. In order for a
trust to be validly named as Beneficiary under the Plan, certification of the trust
establishing the existence and terms of the trust executed by the trustee shall be
provided to the Provider, which certification shall include the following:
(a) The existence of the trust and date of execution of the trust.
(b) The identity of the settlor(s) and the currently acting trustee(s) of the trust.
(c) The powers of the trustee.
(d) The revocability or irrevocability of the trust, or a confirmation that the trust shall
become irrevocable upon the death of the Participant.
(e) The signature authority of the trustees indicating whether all of the currently acting
trustees are required to sign in order to exercise their powers.
(f) The trust identification number (taxpayer identification number)
(g) The manner in which title to trust assets should be taken.
(h) A statement that the trust has not been revoked, modified, or amended in any
manner which would cause the representations to be incorrect.
(i) A statement that the certification is being signed by all of the currently acting
trustees of the trust.
(j) The certification shall be in the form of an acknowledged declaration signed by all
currently acting trustees of the trust under penalty of perjury.
(k) Copies of excerpts from the trust documents which designate the trustee.
(I) Copies of excerpts from the trust documents which confer upon the trustee the
power to act in the pending transaction.
To the extent any of the foregoing does not comply with the requirements of Code
Section 401(a)(9) and the Treasury Department Regulations thereunder, the Plan shall be
administered in accordance with such provisions of the Code and Treasury Regulations.
10.09 Unforeseeable Emergency Distribution:
(a) Distribution: If the Participant has an unforeseeable emergency before retirement or
other Severance from Employment, the Participant may elect to receive a lump sum
distribution equal to the amount requested or, if less, the maximum amount
determined by the Plan Administrator to be permitted to be distributed under this
Article 10.09.
(b) Unforeseeable emergency defined: An unforeseeable emergency is defined as a
severe financial hardship of the Participant resulting from: an illness or accident of
the Participant, the Participant's spouse, or the Participant's dependent (as defined
in Section 152(a)); loss of the Participant's property due to casualty (including the
need to rebuild a home following damage to a home not otherwise covered by
homeowner's insurance, e.g., as a result of a natural disaster); the need to pay for
the funeral expenses of the Participant's spouse or dependent (as defined in
Section 152(a) of the Code); or other similar extraordinary and unforeseeable
16
circumstances arising as a result of events beyond the control of the Participant. For
example, the imminent foreclosure of or eviction from the Participant's primary
residence may constitute an unforeseeable emergency. In addition, the need to pay
for medical expenses, including non-refundable deductibles, as well as for the cost
of prescription drug medication, may constitute an unforeseeable emergency.
Except as otherwise specifically provided in this Article 10.09, neither the purchase
of a home nor the payment of college tuition is an unforeseeable emergency.
(c) Unforeseeable emergency distribution standard: A distribution on account of
unforeseeable emergency may not be made to the extent that such emergency is or
may be relieved through reimbursement or compensation from insurance or
otherwise, by liquidation of the Participant's assets, to the extent the liquidation of
such assets would not itself cause severe financial hardship, or by cessation of
deferrals under the plan.
(d) Distribution necessary to satisfy emergency need: Distributions because of an
unforeseeable emergency may not exceed the amount reasonably necessary to
satisfy the emergency need (which may include any amounts necessary to pay any
federal, state, or local income taxes or penalties reasonably anticipated to result
from the distribution).
The Plan Administrator shall determine whether such unforeseeable emergency exists.
If a request for an unforeseeable emergency is denied, the Participant may appeal the
decision to the Deferred Compensation Committee. The written appeal must be filed with
the Plan Administrator within 30 days of the date of the denial. The decision of the
Deferred Compensation Committee shall be final.
If the Participant receives a withdrawal for an Unforeseeable Emergency, he must stop
contributions to the Deferred Compensation Plan for a period of six (6) months, or as
allowable by IRS Regulations
10.10 Mandatory Distributions for Certain Account Balances of $1 ,000 or Less: At the
direction of the Plan Administrator, a Participant's total Account Balance shall be paid in
a lump sum as soon as practical following the direction if
(a) The total Account Balance does not exceed $1,000 (or the dollar limit under Section
411(a)(11) of the Code, if greater),
(b) The Participant has not previously received a distribution of the total amount
payable to the Participant under this Article 10.10 and
(c) No Annual Deferral has been made with respect to the Participant during the two-
year period ending immediately before the date of the distribution.
10.11 Account Balances of $1,000 or Less: Notwithstanding Articles 10.03, 10.05 and
10.07, if the amount of a Participant's Account Balance is not in excess of $1,000 (or
the dollar limit under Section 411(a)(11) of the Code, if greater) on the date that
payments commence under Article 10.05 or on the date of the Participant's death, then
payment shall be made to the Participant (or to the Beneficiary if the Participant is
17
deceased) in a lump sum equal to the Participant's Account Balance as soon as
practicable following the Participant's retirement, death, or other Severance from
Employment.
10.12 Procedure When Distributee Cannot Be Located: The Plan Administrator is
authorized to declare a forfeiture to the Plan of all Plan distributions and any income or
other increment thereon if the owner, participant or beneficiary cannot be found and has
not, within three (3) years after it becomes payable or distributable, accepted the
distribution, corresponded in writing concerning the distribution, or otherwise indicated
an interest as evidenced by a memorandum or other written record on file with the Plan
Administrator. For this purpose the Plan Administrator or Provider will mail a notice to
the last known address shown on the City or Providers records. All forfeitures shall be
used to offset future Plan expenses.
ARTICLE XI. LOANS TO PARTICIPANTS
11.01 Loans: A Participant who is an active full-time Employee may apply for and
receive a loan from his Account Balance as provided in this Article Xl. Any such loan
may not be for an amount less than the minimum amount specified by the
Administrator. If not specified by the Plan Administrator, the minimum loan amount shall
be $1,000.
A full-time Employee shall be as an employee with an average workweek of 40 hours or
80 hours per payroll period or other alternate work schedules as agreed upon per the
Memorandum of Understandings between the collective Bargaining Units and the City
of Anaheim.
11.02 Application for Loan: The Participant must give the Employer adequate written
notice, as determined by the Plan Administrator, of the amount and desired time for
receiving a loan. Loans will be limited to one (1) loan per Provider. No more than one
(1) loan may be made by the Provider to a Participant in any calendar year.
The Plan Administrator shall establish written guidelines governing the granting of
loans, provided that such guidelines are approved by the Provider and are not
inconsistent with the provisions of this Article and that loans are made available to all
Participants on an equivalent basis.
11.03 Terms of Loan: The terms of the loan shall:
(a) Require level amortization with payments not less frequently than quarterly
throughout the repayment period, except that alternative arrangements for
repayment may apply in the event that the borrower is on an bona fide unpaid leave
of absence for a period not to exceed one year for leaves other than a qualified
military leave within the meaning of Section 414(u) of the Code or for the duration of
a leave which is due to qualified military service;
18
(b) Require that the loan be repaid within five years unless the Participant certifies in
writing to the Plan Administrator that the loan is to be used to acquire any dwelling
unit which within a reasonable time is to be used (determined at the time the loan is
made) as a principal residence of the Participant; and
(c) Provide for interest at a rate equal to one percentage point above the prime rate as
published in the Wall Street Journal on the first business day of the month in which
the loan is approved by the Plan Administrator.
(d) Promissory Note: The loan shall be evidenced by a promissory note executed by
the Participant and delivered to the Plan Administrator, and shall bear interest at a
reasonable rate determined by the Plan Provider.
(e) Other Terms and Conditions: The Plan Administrator shall fix such other terms and
conditions of the loan, as it deems necessary to comply with legal requirements, to
maintain the qualification of the Plan and Trust under Section 457 of the Code, or
to prevent the treatment of the loan for tax purposes as a distribution to the
Participant.
11.04 Maximum Loan Amount: No loan to a Participant hereunder may exceed the
lesser of:
(a) $50,000, reduced by the greater of (i) the outstanding balance on any loan from the
Plan to the Participant on the date the loan is made or (ii) the highest outstanding
balance on loans from the Plan to the Participant during the one-year period ending
on the day before the date the loan is approved by the Plan Administrator (not
taking into account any payments made during such one-year period), or
(b) One half of the value of the Participant's vested Account Balance (as of the
Valuation Date immediately preceding the date on which such loan is approved by
the Plan Administrator).
(c) No Participant loan shall exceed the present value of the Participant's Account.
For purposes of this Article 11 .04, any loan from any other plan maintained by a
participating employer shall be treated as if it were a loan made from the Plan, and the
Participant's vested interest under any such other plan shall be considered a vested
interest under this Plan; provided, however, that the provisions of this paragraph shall
not be applied so as to allow the amount of a loan under this Article 11.04 to exceed the
amount that would otherwise be permitted in the absence of this paragraph.
11.05 Security For Loans: Any loan to a Participant under the Plan shall be secured by
the pledge of the portion of the Participant's interest in the Plan invested in such loan.
11.06 Default: In the event that a Participant fails to make a loan payment under this
Article XI within 90 days after the date such payment is due, a default on the loan shall
occur. In the event of such default;
19
(i) all remaining payments on the loan shall be immediately due and payable,
(ii) effective as of the first day of the calendar month next following the month in
which any such loan default occurs, the interest rate for such loan shall be
(if higher than the rate otherwise applicable) the rate being charged on
loans from the Plan that are approved by the Plan Administrator in the
month in which such default occurs,
(iii) no contributions shall be made on such Participant's behalf prior to the first
payroll period that follows by 12 calendar months the date of repayment in
full of such loan, and
(iv) the Participant shall be permanently ineligible for any future loans from the
Plan.
In the case of any default on a loan to a Participant, the Plan Administrator shall apply
the portion of the Participant's interest in the Plan held as security for the loan in
satisfaction of the loan in the calendar year of default. In addition, the Plan
Administrator may take any legal action it shall consider necessary or appropriate to
enforce collection of the unpaid loan, with the costs of any legal proceeding or
collection to be charged to the Account Balance of the Participant. This distribution will
be deemed taxable within the year of default.
Notwithstanding anything elsewhere in the Plan to the contrary, in the event a loan is
outstanding hereunder on the date of a Participant's death, his estate shall be his
Beneficiary as to the portion of his interest in the Plan invested in such loan (with the
Beneficiary or Beneficiaries as to the remainder of his interest in the Plan to be
determined in accordance with otherwise applicable provisions of the Plan).
The Employer, in its discretion for any reason, may also fix other terms and conditions
of the loan, including, but not limited to, the provision of grace periods following an
event of default, not inconsistent with the provisions of this Article and Section 72(p) of
the Code, and any applicable regulations thereunder.
11.07 Participant Loan Accounts:
(a) Upon distribution of a loan to a Participant by the Plan, an amount not in excess of
the loan shall be transferred from the Participant's other investment fund(s),
described in Article 8.01 of the Plan, to the Participant's Loan Account as of the
Accounting Date immediately preceding the agreed upon date on which the loan is
to be made.
(b) The assets of a Participant's Loan Account may be invested and reinvested only in
promissory notes received by the Plan from the Participant as consideration for a
loan permitted by Article 11 .01 of the Plan or in cash. Uninvested cash balances in
a Participant's Loan Account shall not bear interest. Neither the Employer, the
Provider, nor any other person shall be liable for any loss, or by reason of any
breach, that results from the Participant's exercise of such control.
20
11.08 Repayment: The Participant shall be required, as a condition to receiving a loan,
to enter into an irrevocable agreement authorizing the Employer to make payroll
deductions from his Compensation as long as the Participant is an Employee and to
transfer such payroll deduction amounts to the Trustee in payment of such loan plus
interest. Repayments of a loan shall be made by payroll deduction of equal amounts
(comprised of both principal and interest) from each paycheck, with the first such
deduction to be made as soon as practicable after the loan funds are disbursed;
provided however, that a Participant may prepay the entire outstanding balance of his
loan at any time (but may not make a partial prepayment); and provided, further, that if
any payroll deductions cannot be made in full because a Participant is on an unpaid
leave of absence or is no longer employed by a participating employer (that has
consented to make payroll deductions for this purpose) or the Participant's paycheck is
insufficient for any other reason, the Participant shall pay directly to the Plan the full
amount that would have been deducted from the Participant's paycheck, with such
payment to be made by the last business day of the calendar month in which the
amount would have been deducted.
The Employer shall have the authority to establish other reasonable rules, not
inconsistent with the provisions of the Plan, governing the establishment and
maintenance of Participant Loan Accounts.
ARTICLE XII. NON-ASSIGNABILITY/ MISCELLANEOUS
12.01 Non-Assignability: Except as provided in Article 12.02, the interests of each
Participant or Beneficiary under the Plan are not subject to the claims of the
Participant's or Beneficiary's creditors; and neither the Participant nor any Beneficiary
shall have any right to sell, assign, transfer, or otherwise convey the right to receive any
payments hereunder or any interest under the Plan, which payments and interest are
expressly declared to be non-assignable and non-transferable.
12.02 Domestic Relations Orders:
Notwithstanding Article 12.01, if a judgment, decree or order (including approval of a
property settlement agreement) that relates to the provision of child support, alimony
payments, or the marital property rights of a spouse or former spouse, child, or other
dependent of a Participant is made pursuant to the domestic relations law of any State
("domestic relations order"), then the amount of the Participant's Account Balance shall
be paid in the manner and to the person or persons so directed in the domestic
relations order. Such payment shall be made without regard to whether the Participant
is eligible for a distribution of benefits under the Plan. The Plan Administrator shall
establish reasonable procedures for determining the status of any such decree or order
and for effectuating distribution pursuant to the domestic relations order.
Where necessary to carry out the terms of such an order, a separate Account shall be
established with respect to the spouse, former spouse, or child who shall be entitled to
make investment selections with respect thereto in the same manner as the Participant;
any amount so set aside for a spouse, former spouse, or child shall be paid out in a lump
at the earliest date that benefits may be paid to the Participant, unless the order directs
a different time or form of payment. To the extent provided in Article IX, the alternate
21
payee may elect to transfer all or part of a distribution to an eligible retirement plan. In
addition, in accordance with Code Section 414(p)(10), this Plan shall consider an order
a qualified domestic relations order even if such order requires a distribution to an
alternate payee prior to the time that a Participant has a Severance from Employment.
Any Payment made to a person other than the Participant pursuant to this Article XII shall
be reduced by any required income tax withholding and shall be taxable to the alternate
payee.
(a) Release from Liability to Participant: The Employer's liability to pay benefits to a
Participant shall be reduced to the extent that amounts have been paid or set aside
for payment to a spouse, former spouse, or child pursuant to paragraph (a) of the
Article. No such transfer shall be effectuated unless the Employer has been provided
with satisfactory evidence that the Employer is released from any further claim by the
Participant with respect to such amounts. The Participant shall be deemed to have
released the Employer from any claim with respect to such amounts, in any case in
which;
(i) the Employer has been served with legal process or otherwise joined in a
proceeding relating to such transfer;
(ii) the Participant has been notified of the pendency of such proceeding in the
manner prescribed by the law of the jurisdiction in which the proceeding is
pending for service of process in such action or by mail from the Employer to
the Participant's last known mailing address; and
(iii) the Participant fails to obtain an order of the court in the proceeding relieving
the Employer from the obligation to comply with the judgment, decree, or
order.
(b) Participation in Legal Proceedings: The Employer shall not be obligated to defend
against or set aside any judgment, decree, or order described in paragraph (a) or any
legal order relating to the garnishment of a Participant's benefits, unless the full
expense of such legal action is borne by the Participant. In the event that the
Participant's action (or inaction) nonetheless causes the Employer to incur such
expense, the amount of the expense may be charged against the Participant's
Account and thereby reduce the Employer's obligation to pay benefits to the
Participant. In the course of any proceeding relating to divorce, separation, or child
support, the Employer shall be authorized to disclose information relating to the
Participant's Account to the Participant's spouse, former spouse, or child (including
the legal representatives of the spouse, former spouse, or child), or to a court.
12.03 Mistaken Contributions: If any contribution (or any portion of a contribution) is
made to the Plan by a good faith mistake of fact, then within one year after the payment
of the contribution, and upon receipt in good order of a proper request approved by the
Plan Administrator, the amount of the mistaken contribution (adjusted for any income or
loss in value, if any, allocable thereto) shall be returned directly to the Participant or, to
the extent required or permitted by the Plan Administrator, to the Employer.
22
ARTICLE XIII. RELATIONSHIP TO OTHER PLANS AND EMPLOYMENT
AGREEMENTS
13.01 This Plan serves in addition to any other retirement, pension, or benefit plan or
system presently in existence or hereinafter established for the benefit of the Employer's
employees. Nothing contained in this Plan shall be deemed to constitute an employment
contract or agreement between any Participant and the Employer or to give any
Participant the right to be retained in the employ of the Employer. Nor shall anything
herein be construed to modify the terms of any employment contract or agreement
between a Participant and the Employer.
ARTICLE XIV. APPLICABLE LAW
14.01 This Plan and Trust shall be construed under the laws of the State of California
and is established with the intent that it meets the requirements of an "eligible deferred
compensation plan" under Section 457 of the Code, as amended. The provisions of this
Plan and Trust shall be interpreted and applied so as to conform with the requirements of
Section 457 of the Code.
ARTICLE XV. GENDER AND NUMBER
15.01 The masculine pronoun, whenever used herein, shall include the feminine
pronoun, and the singular shall include the plural, except where the context requires
otherwise.
ARTICLE XVI. MISCELLANEOUS
16.01 The Deferred Compensation Committee, as defined in Article 3.10 is empowered
to review, evaluate, and make recommendations for product providers to the City Council.
Additionally, the Deferred Compensation Committee will serve as an advisor to the Plan
Administrator in decisions such as unforeseeable emergency limitations, etc. Specific
duties and responsibilities for overall deferred compensation plan administration are
noted below:
A. CITY COUNCIL
1. Authorize, by Resolution, the Anaheim Deferred Compensation Plan Document, in
compliance with Section 457 of the Code.
2. Approves additions or removal of Providers, as well as approve major amendments
to the Plan.
3. Authorize the administration of the Plan.
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B. PLAN ADMINISTRATOR
1. Day to day administration, including approval of Plan Participation Agreements and
preliminary evaluation of unforeseeable emergencies.
2. Authority to sign all legal agreements with approved Providers, including minor
Plan amendments.
3. Communicating the Deferred Compensation Program to employees.
4. Maintain Deferred Compensation Procedures Manual and related Plan
documents.
5. Coordinate Provider/City employee meeting schedule.
6. The Plan Administrator shall have the right to delegate any of the above duties to
staff.
C. DEFERRED COMPENSATION COMMITTEE
1. Conduct reviews of the Deferred Compensation Program and make
recommendations as necessary.
2. Conduct reviews of the Retirement Health Savings Program and make
recommendations as necessary.
3. Review Provider performance and provide recommendations on adding, deleting
Providers to the City Council.
4. Review and make determinations on adding, deleting or amending Investment
Options.
5. Assist the Plan Administrator on unforeseeable emergency determinations, as
necessary.
6. The Committee shall have the power to appoint subcommittees.
7. The seven (7) Deferred Compensation Committee Members shall serve as
Trustees of the Trust.
8. The Committee will select the two (2) Participating Employee members of the
Committee.
D. SUBCOMMITTEE
1. Performs task within the scope of the Committee's responsibility
2. The Subcommittee makes reports and recommendations for consideration to the
Committee.
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16.02 No Participant or other person shall have any legal or equitable right against the
Employer except as provided in the Plan, and in no event shall the terms of employment
of any Employee or Participant be modified or in any way affected thereby.
16.03 Each Participant herein expressly agrees for himself, his successors, assignees
and his beneficiaries that he shall look solely to the general assets of the Trust for the
payment of any such benefit to which he may become entitled under the Plan.
16.04 The Plan has been adopted in the State of California and shall be construed and
governed and administered in compliance with all applicable State law.
16.05 The Plan shall be binding upon and shall inure to the benefit of the Employer, its
successors and assigns, all Participants and Beneficiaries, and their heirs, and legal
representatives.
16.06 Any notice or other communication required or permitted under the Plan shall be in
writing, and if directed to the Employer shall be sent to the Employer or Contract
Administrator at its principal office, as applicable; and, if directed to a Participant or a
Beneficiary, shall be sent to such Participant or Beneficiary at his last-known address as it
appears on the Employer's and Provider's records, or delivered to a participant (stapling
to a paycheck), emailed or faxed. Such notice shall be deemed given when mailed,
delivered to a Participant (stapling to a paycheck), emailed or faxed.
16.07 Deductions for Participant's contributions to the Public Employees' Retirement
System, Social Security, Retirement Health Savings Program, and other retirement plan
or associations shall be made regardless of amounts deferred pursuant to the Plan.
16.08 A permitted leave of absence without pay shall be considered to be a temporary
suspension of contribution to the Plan. Contribution shall be automatically reinstated in
accordance with the Participation Agreement as of the first day of the next payperiod
subsequent to the termination of such leave of absence status. In the event of a non-
permitted leave of absence without pay, the Employer at its discretion may deem such
absence a revocation of the Participation Agreement.
ARTICLE XVII. AMENDMENT OR TERMINATION OF PLAN
17.01 The Employer has the sole and exclusive right to terminate this Plan for all
Participants at any time. Upon such termination, each Participant in the Plan will be
deemed to have revoked his Participation Agreement as of the date of such termination.
Such termination shall have no effect on the rights of the Participant with respect to
amounts already deferred under the Plan or transferred pursuant to Article IX.
The Employer may also amend the provisions of this Plan at any time; provided, however,
that no amendment shall affect the rights of the Participants or their Beneficiaries to the
receipt of payment of benefits, to the extent of any Compensation deferred at the time of
the amendment as adjusted for income or losses attributable to such Deferred
Compensation prior to and subsequent to the amendment.
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To the extent that there are legislative changes affecting Section 457 of the Internal
Revenue Service Code, this plan shall be interpreted to allow implementation of
mandatory changes.
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 qualifications. The Employer reserves the right to amend the Plan to the extent that
may be necessary to conform the Plan to the requirements of Section 457 of the Code
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 Section 457 of
the Code, the Employer shall correct such inconsistency within the period provided in
Section 457 of the Code, or terminate the Plan. 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.
ARTICLE XVIII. TOTAL AGREEMENT
18.01 This Plan and the Participation Agreement, and any subsequently adopted
amendment thereof, shall constitute the total agreement or contract between the
Employer and the Participant regarding the Plan. No oral statement regarding the Plan
may be relied upon by the Participant.
The Employer hereby establishes this Deferred Compensation Plan on the terms and
conditions set forth herein.
DATE: /- (O + d 0 e4dkAk'
CITY OF ANAHEIMYOR
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CITY ATTORNEY
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