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2002-163RESOLUTION NO. 2002R- ~63 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ANAHEIM AMENDING RESOLUTION NO. 91R-173 AND 98R-243, AS LAST AMENDED BY RESOLUTION 2001R-297, WHICH ESTABLISHED A DEFERRED COMPENSATION PLAN FOR PART-TIME EMPLOYEES, TO INCORPORATE NEW LEGISLATION. WHEREAS, the City Treasurer has recommended in a staff report dated July 23, 2002, that Resolution No. 91R-173 and 98R-243, as last amended by Resolution 01R-2001R-297, be amended in the manner herein set forth, effective retroactively January 1, 2002; and WHEREAS, as a result thereof, the need exists to amend Resolution 9 IR-173 which established the City of Anaheim Deferred Compensation Plan (hereinafter called "Plan"), for part- time employees in compliance with Section 457 of the Internal Revenue Code; and WHEREAS, the Economic Growth and Tax Relief Act of 2001 Technical Correction Bill provides for changes in Section 457 of the Internal Revenue code; and WHEREAS, the City Council of the City of Anaheim does find that the aforementioned amendment 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 be amended and restated. A copy of the Plan as amended is attached as Exhibit "A". BE H' FURTHER RESOLVED that the effective date of said amendment to Resolution No. 91 R- 173 is effective retroactively to January 1, 2002. AND BE IT FURTHER RESOLVED that, except as amended herein, Resolution No. 91R- 173 shall remain in full force and effect. THE FOREGOING RESOLUTION is approved and adopted by the City Council of the City of Anaheim this 23rd day of July 2002. MAYOR ~-~ ~'H~IM ATTEST: ~TY CLEI~ OF 'it~IE CiTY OF ANAHEIM APPROVED AS TO FORM: JACK L. WHITE, CITY ATTORNEY DEPU;F~/'~ITY A)~OI~Y 45507/ // H:\DEFCoMP\Resolution~ 002 dc-reso part-time plan. DOC Office of CITY TREASURER EXHIBIT "A" CITY OF ANAHEIM DEFERRED COMPENSATION PLAN FOR EMPLOYEES NOT COVERED BY CALPERS ARTICLE I. NAME 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 for Employees not Covered by CALPERS 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 January 1,2002, pursuant to PL 107-16 (HR1836) (June 7, 2001 )the Economic Growth and Tax Relief Reconciliation Act of 2001, as amended, and as adopted by California Revenue Taxation Code 17024.5, as amended. ARTICLE II. PURPOSE 2.01 The purpose of this Plan is to extend, to Eligible Employees of the Employer, certain benefits which ordinarily accrue from participation in an "eligible Deferred Compensation Plan" as that term is used in Section 457 of the Internal Revenue Code of 1986 as amended. It is intended that Participants in this Plan be considered members of a retirement system, within the meaning of Section 3121(b)(7)(F) of the Internal Revenue Code of 1986, as amended. 2.02 This Plan shall be an agreement solely between the Employer and participating Employees. The Plan and Trust forming a part hereof are established and shall be maintained for the exclusive benefit of eligible Employees and their Beneficiaries. No part of the corpus or income of the Trust shall revert to the Employer or be used for or diverted to purposes other than the exclusive benefit of Participants and their Beneficiaries. 2.03 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. ARTICLE III. DEFINITIONS For the purposes of this Plan, certain words or phrases used herein will have the following meanings: 3.01 Account: The bookkeeping account maintained for each Participant reflecting the cumulative amount of the Participant's Deferred Compensation, including any income, gains, losses, or increases or decreases in market value attributable to the investment of the Participant's Deferred Compensation, and further reflecting any distributions to the Participant or the Participant's Beneficiary and any fees or expenses charged against such Participant's Deferred Compensation. 3.02 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 Event. 3.03 Beneficiary: Any person, 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 on a City of Anaheim Participation Agreement executed by the Participant to the Plan Administrator, unless otherwise provided. Beneficiary may be singular or plural, primary or contingent. 3.04 CalPERS: Shall mean the California Public Employees Retirement System. 3.05 Compensation: The salary or wages which would be paid by the Employer to or for the benefit of an Employee (if he were not a Participant in the Plan) for actual services performed for the Employer for the period that he is a Participant. 3.06 Contract Administrator: An administrator employed under contract authorized by the City Council and under the direction of the Plan Administrator. 3.07 Contributions: Of a Participant shall mean his Participant Contributions and any Employer Contributions made on his behalf. 3.08 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. 3.09 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; and a Participating Employee. 3.10 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. 3.11 Eligible Employee: Shall mean any Employee who is not a Qualified CALPERS Participant. However, if an Employee's Compensation is determined pursuant to a collective bargaining agreement, he shall not be an Eligible Employee under this Plan unless he meets the preceding requirements of this Paragraph 3.11 and such bargaining agreement specifically provides that he may be an Eligible Employee hereunder; and further provided no employee shall be an Eligible employee if his service is described in clauses (1) through (v)of the IRC Section 3121(b)(7)(F). 3.12 Employee: Any individual who provides services for the Employer, whether as an employee or officer of the Employer and who has been designated by the Employer as eligible to participate in the Plan. 3.13 Employer: Shall mean the City of Anaheim 3.14 Employer Contributions: Shall mean the contributions of the Employer that are made to the Plan in accordance with Article 5.02. 3.15 Includible Compensation: The amount of an Employee's compensation from the Employer for a taxable year that is considered compensation within the meaning of Section 415(c)(3) of the Code. 3.16 IRC: Shall mean the Internal Revenue Code of 1986, as amended, and any Treasury Regulations and ruling thereunder. 3.17 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. 3.18 Normal Retirement Age: Shall mean age 70-1/2. For purposes of Article 9.01, the Participant may elect an alternate Normal Retirement Age by written Participation Agreement delivered to the Plan Administrator prior to a Severance Event. A Participant's alternate Normal Retirement Age shall be any date elected by the Participant in a written Participation Agreement filed with the Plan Administrator. Such date shall be no earlier than the earliest date that the Participant will become eligible to retire (without the consent of the Employer) and to receive retirement benefits under the California Public Employees Retirement System without actuarial or similar reduction because of retirement before an age which is later than such alternate age. A Participant may designate an age greater than 70-1/2 if the Participant continues employment after attaining age 70-1/2, not having previously elected an alternate Normal Retirement age. However, the Participant's alternate Normal Retirement Age shall not be later than the mandatory retirement age, if any, established by the Employer, or the age at which the Participant actually has a Severance Event (if the Employer has no mandatory retirement age). If the participant will not become eligible to receive benefits under the California Public Employees Retirement System, the Participant's alternate Normal Retirement Age may not be eadier than attainment of age 65. 3.19 Participant: Shall mean any Eligible Employee or former Eligible Employee who has made Participant Contributions pursuant to the Plan and has an Account under the Plan. 3.20 Participant Contributions: Shall mean that portion of a Participant's Compensation that is deducted by the Employer from such Compensation in accordance with Article 5.01. 3.21 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. 3.22 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) designate the Employee's Beneficiary or Beneficiaries; and (d) incorporate the terms, conditions, and provisions of the Plan by reference. 3.23 Plan Administrator: The City Treasurer unless another person or entity is designated by the City Council. 3.24 Plan Year: The calendar year. 3.25 Provider: An institution providing investments or deposit vehicles. 3.26 Qualified CALPERS Participant: Shall mean any Employee who: (i) is or ever has been a member of CALPERS, and (ii) either: (A) based upon his current compensation, is making Employee contributions to CALPERS and having Employer contributions made to CALPERS, (B) previously retired from the service of the Employer and has attained normal retirement age under the CALPERS, or (c) previously retired from the service of the Employer and is currently receiving retirement benefits under the CALPERS. 3.27 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 Event, whichever is later. 3.28 Retirement: The first date upon which both of the following shall have occurred with respect to a Participant: Severance Event and attainment of age 50. 3.29 Severance Event: Severance of the Participant's employment with the Employer within the meaning of Section 457(d)(2)(A)(ii) of the Code. In general, a Participant shall be deemed to have severed his employment with the Employer for purposes of this Plan when, in accordance with the established practices of the Employer, but not earlier than such time as the person is no longer on the payroll of the. 3.30 Sub-committee: A subdivision of the Committee and shall be less than a quorum of the Committee. 3.31 Trust: The Trust created under Article VII of the Plan which shall consist of all compensation deferred under the Plan, plus any income and gains thereon, less any losses, expenses and distributions to Participants and Beneficiaries. 3.32 Trustee: The Deferred Compensation Committee Members shall act as Trustees. 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, 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 Each Eligible Employee shall have up to 7.5% of his Compensation earned as an Eligible Employee withheld by the Employer as a Participant Contribution under this Plan. Notwithstanding the preceding, the Employer and the Eligible Employee mutually acknowledge that unless indicated otherwise in the salary resolution or personnel ordinance or policies of the Employer, the salary or wage of the Eligible Employee includes the Participant Contributions made under this Plan. As soon as practicable after the deduction from the Compensation of the Eligible Employee, the Employer shall pay all Participant Contributions to the fund or funds established under the Plan. 5.02 On behalf of each Eligible Employee that has Participant Contributions deducted from his Compensation pursuant to Article 5.01, the Employer shall pay to the fund or funds established under the Plan, any Employer Contribution required under the terms of any collective bargaining agreement or City Council Resolution. Payment of Employer Contributions shall be made concurrently with the payment of the Participant Contributions. 5.03 The Employer may change percentages of Compensation to be contributed as Participant Contributions or Employer Contributions to greater or lesser percentages by amending this Plan in accordance with Article XV. In addition, such percentages may be changed to comply with the terms of any collective bargaining agreement pursuant to which Employees participate in this Plan. Any percentage changes in the amount of Participant Contributions hereunder shall be effective only with respect to Compensation earned after the adoption date of the Plan amendment relating thereto or, if applicable and later, the ratification date of the collective bargaining agreement relating thereto. In no event shall the combined Participant Contributions and Employer Contributions total less than 7.5% of an Eligible Employee's Compensation earned or exceed the maximum deferral allowed by the Internal Revenue Code. 5.04 A Participant may designate by Participation Agreement, delivered to the Plan Administrator, a Beneficiary to receive any benefits which may be payable under the Plan upon the death of such Participant. A Participant may at any time amend his Participation Agreement to change the designated Beneficiary and such amendment shall become effective as of the date of delivery to the Employee Plan Administrator. ARTICLE VI. NON-RESPONSIBILITY CLAUSE 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. ARTICLE VII. TRUST AND INVESTMENT OF ACCOUNTS 7.01 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. 7.02 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. 7.03 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 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. Attached hereto as Exhibit A, an incorporated herein by reference is the City of Anaheim Section 457 Deferred Compensation Plan Trust. ARTICLE VIII. ELIGIBLE ROLLOVERS 8.01 Eligible Rollover Distributions: (a) Effective Date: This Article 8.01 is effective January 1,2002. (b) Outgoing Rollovers: Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this Article, a distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. (c) Definitions: (1) Eligible Rollover Distribution: An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Sections 401(a)(9) and 457(d)(2) of the Code; and any distribution made as a result of an unforeseeable emergency of the employee. For purposes of distributions from other eligible retirement plans rolled over into this Plan, the term eligible rollover distribution shall not include the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (2) (3) Eligible Retirement Plan: An eligible retirement plan is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Sections 403(a) or 403(b) of the Code, a qualified trust described in Section 401(a) of the Code, or an eligible deferred compensation plan described in Section 457(b) of the Code which is maintained by an eligible governmental employer described in Section 457(e)(1)(A) of the Code, provided that for outgoing rollovers it accepts the distributee's eligible rollover distribution. Distributee: For purposes of outgoing rollovers, a distributee includes an employee or former employee. In addition, the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are distributees with regard to the interest of the spouse or former spouse. (4) Direct Rollover: A direct rollover is a payment by the plan to the eligible retirement plan specified by the distributee. ARTICLE IX. DISTRIBUTION OF BENEFITS 9.01 Retirement Benefits and Elections on Severance Event: (a) General Rule: Except as otherwise provided in this Article IX, the distribution of a Participant's Account shall commence as of a Participant's Automatic Distribution Date, and the distribution of such benefits shall be made in accordance with one of the payment options described in Article 9.02. Notwithstanding the foregoing, but subject to the following paragraphs of this Article 9.01, the Participant may elect following a Severance Event to have the distribution of benefits commence on a fixed determinable date other than that described in the preceding sentence, but not later than April I of the year following the year of the Participant's Retirement or attainment of age 70-1/2, whichever is later. Prior to January 1, 2002, an election made pursuant to the preceding sentence shall not be valid unless such election is made not less than 30 days prior to the date that the distribution of a Participant's Account would otherwise commence. (b) Additional Delay in Distribution: The Participant may elect to defer the commencement of distribution of benefits to a fixed determinable date later than the date provided in Article 9.01(a), but not later than April 1 of the year following the year of the Participant's retirement or attainment of age 70-1/2, whichever is later, provided, however, that in the case of elections made prior to January 1, 2002, (a) such election is made after the 61st day following the Participant's Severance Event and before commencement of distributions, (b) the Participant may only make only one (1) such election, and (c) such election is made not less than 30 days prior to the date the distribution of a Participant's Account would otherwise commence. Notwithstanding the foregoing, the Plan Administrator, in order to ensure the orderly administration of this provision, may establish a deadline after which such election to defer the commencement of distribution of benefits shall not be allowed. 9.02 Payment Options: As provided in Articles 9.01, 9.05, 9.06 and 9.07, 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 9.04: (a) Equal monthly, quarterly, semi-annual or annual payments in an amount chosen by the Participant, continuing until his Account is exhausted; (b) One lump-sum payment; (c) Approximately equal monthly, quarterly, semi-annual or annual payments, calculated to continue for a certain period chosen by the Participant. (d) Annual Payments equal to the minimum distributions required under Section 401(a)(9) of the Code, including the incidental death benefit requirements of Section 401(a)(9)(G), over the life expectancy of the Participant or over the life expectancies of the Participant and his or her Beneficiary. (e) Payments equal to payments made by the issuer of a retirement annuity policy acquired by the Provider. (f) A split distribution under which payments under options (a), (b), (c) or (e) commence or are made at the same time, as elected by the Participant under Article 9.01, provided that all payments commence (or are made) by the latest benefit commencement date under Article 9.01. (g) 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 made after December 31, 1995, under Subsections (a), (c), or (g) above 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. 9.03 Default: A Participant's or Beneficiary's election of a payment option must be made at least 30 days before the payment of benefits is to commence. If, prior to January 1, 2002, a Participant or Beneficiary made a timely election of a payment date but failed to specify a payment option or failed to make a timely election of both payment date and option, and as a result, either was defaulted to benefit commencement at age 65, or such other date as the Participant or Beneficiary may have specified, benefits shall be paid annually in the amount of $100 per year commencing at age 65 or the date specified by the Participant or Beneficiary until the Participant or Beneficiary reaches age 70-1/2. When the Participant or Beneficiary reaches age 70-1/2, payments shall be made in accordance with Code section 401(a)(9) and the regulations thereunder. 9.04 Limitation on Options: No payment option may be selected by a Participant under subsections 9.02 (a) or (c) unless the amount of any installment is not less than $100 per year. No payment option may be selected by a Participant under Sections 9.02, 9.06, or 9.07 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). 9.05 Minimum Distribution: Starting the year a Participant who has a Severance Event reaches age 70-1/2 he is required to withdraw a minimum amount annually from his account. If the Participant works past age 70-1/2, he is required to begin withdrawals for the year in which he actually has a Severance Event. For purposes of this Section, the Internal Revenue Code Regulations shall apply when determining the minimum distribution. 9.06 Post-Retirement Death Benefits: (a) Should the Participant die after he has begun to receive benefits under a payment option, the remaining payments, if any, under the payment option shall be payable to the Participant's Beneficiary within the 30-day period beginning with the 61 st day after the Participant's death, unless the Beneficiary elects payment under a different payment option that is available under Article 9.02 within 60 days of the Participant's death. Any different payment option elected by a Beneficiary under this section must provide for payments at a rate that is at least as rapid under the payment option that was applicable to the Participant. In no event shall the Employer or Provider be liable to the Beneficiary for the amount of any payment made in the name of the Participant before the Employer or Provider receives proof of death of the Participant. (b) 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. (c) 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. 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. 9.07 Pre-Retirement Death Benefits: (a) Should the Participant die before he has begun to receive the benefits provided by Article 9.01, the value of the Participant's Account shall be payable to the Beneficiary l0 commencing within the 30-day period beginning on the 91st day after the Participant's death, unless the Beneficiary elects a different fixed or determinable benefit commencement date within 90 days of the Participant's death. Such benefit commencement date shall be not later than the later of (i) December 31 of the year following the year of the Participant's death, or (ii) if the Beneficiary is the Participant's spouse, December 31 of the year in which the Participant would have attained age 70- 1/2. (b) Unless a Beneficiary elects a different payment option prior to the benefit commencement date, death benefits under this Section shall be paid in approximately equal annual installments over five years, or over such shorter period as may be necessary to assure that the amount of any annual installment is not less than $1,200. A Beneficiary shall be treated as if he were a Participant for purposes of determining the payment options available under Article 9.02, provided, however, that the payment option chosen by the Beneficiary must provide for payments to the Beneficiary over a period no longer than the life expectancy of the Beneficiary, and provided that such period may not exceed (15) years if the Beneficiary is not the Participant's spouse. (c) In the event that the Beneficiary dies before the payment of death benefits has commenced or been completed, the remaining value of the Participant's Account 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. (d) 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. In the event that the Participant's estate is the Beneficiary, payment shall be made to the Participant's estate in a lump sum. 9.08 Unforeseeable Emergency Withdrawals: This Plan does not permit Unforeseeable Emergency Withdrawals. 9.09 Transitional Rule for Pre-1989 Benefit Elections: In the event that, prior to January 1, 1989, a Participant or Beneficiary has commenced receiving benefits under a payment option then that payment shall remain in effect unless a change is allowed by the Internal Revenue Service. 9.10 Inactive Accounts (De Minimis) Voluntary In-Service Distribution: A Participant who is an active Employee of the Employer may elect to receive a lump sum distribution of the total amount credited to his Accounts under the Plan if all of the following requirements are met: (i) The total amount credited to the Participant's Accounts under the Plan, exclusive of any Rollover Contribution Accounts, does not exceed $5,000 or such higher amount as may be provided under Section 411(a)(11)(A) of the Code. 3_3_ (ii) The Participant has not previously received a distribution under this Section. The Participant has not deferred Compensation under the Plan during the two-year period ending on the date of the distribution under this Section. 9.11 Other Distributions: Notwithstanding any other provisions of the Plan, the Employer may change the time or methods of benefit payment pursuant this Plan. If the balance due the Participant or Beneficiary is less than $5,000 (or as may be revised by the Internal Revenue Service and/or the Department of Labor), the Employer shall discharge its obligation by a lump sum payment. 9.12 Forfeiture: 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 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. All forfeitures shall be used to offset future Plan expenses. ARTICLE X. NON-ASSIGNABILITY 10.01 In General: Except as provided in Article 10.02, no Participant or Beneficiary shall have any right to commute, sell, assign, pledge, transfer or otherwise convey or encumber the right to receive any payments hereunder, which payments and rights are expressly declared to be non-assignable and non-transferable. 10.02 Domestic Relations Orders: (a) Allowance of Transfers: To the extent required under final judgment, decree, or order (including approval of a property settlement agreement) that (i) relates to the provision of child support, alimony payments, or marital property rights and (ii) is made pursuant to a state domestic relations law, any portion of a Participant's Account may be paid or set aside for payment to a spouse, former spouse, child, or other dependent of the Participant. 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 VIII, the alternate 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 Event. Any Payment made to a person other than the Participant (b) (c) pursuant to this Article shall be reduced by any required income tax withholding and shall be taxable to the alternate payee. 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. 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. ARTICLE Xl. RELATIONSHIP TO OTHER PLANS AND EMPLOYMENT AGREEMENTS 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 Xll. APPLICABLE LAW 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 Xlll. GENDER AND NUMBER 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 XIV. MISCELLANEOUS 14.01 The Deferred Compensation Committee, as defined in Article 3.06 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. and specific duties and responsibilities for overall deferred compensation plan administration are noted below; A. CITY COUNCIL Authorize, by resolution, the Anaheim Deferred Compensation Plan Document, in compliance with Section 457 of the Code. Approves additions or removal of Plan Providers, as well as approves major amendments to approved plans. 3. Authorize the administration of the Plan. B. PLAN ADMINISTRATOR Day to day administration, including approval of Plan participation agreements and preliminary evaluation of unforeseeable emergencies. Authority to sign all legal agreements with approved Plan Providers, including minor Plan amendments. Provide recommendations on adding or deleting Plan Providers, to the City Council. Communicating the Deferred Compensation Program to employee. Maintain Deferred Compensation Procedures Manual and related Plan documents. 6. Coordinate Plan Provider/City employee meeting schedule. The Plan Administrator shall have the right to delegate any of the above duties to staff. C. DEFERRED COMPENSATION COMMITTEE Conduct reviews of the Deferred Compensation Program and make recommendations as necessary. Review Plan Provider performance and assist the Plan Administrator in developing recommendations on adding, deleting or amending Plan Providers to the City Council. Review and make determinations on adding, deleting or amending Investment Options. Assist the Plan Administrator on unforeseeable emergency determinations, as necessary. 5. The Committee shall have the power to appoint subcommittees. The five (5) Deferred Compensation Committee Members shall serve as Trustees of the Trust. The Committee will select the 5th member (Participating Employee) of the Committee. D. SUBCOMMITTEE 1. Performs task within the scope of the Committee's responsibility The subcommittee makes reports and recommendations for consideration to the Committee. 14.02 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. 14.03 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. 14.04 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. 14.05 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. 14.06 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 records. Such notice shall be deemed given when mailed. 15 14.07 Deductions for Participant's contributions to the Public Employees' System, Social Security, or other retirement plan or associations, shall regardless of amounts deferred pursuant to the Plan. Retirement be made 14.08 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. 14.09 There shall be no loans or advances to the Participant or Beneficiary based upon book accounts, described herein, or upon any other obligations under the Plan. ARTICLE XV. AMENDMENT OR TERMINATION OF PLAN 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 VIII. 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. 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 XVl. TOTAL AGREEMENT 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. It,~YOR CITY TREAS~~'~ ' ATTEST.: , CiT~~)~'~ APPROVED ASTO FORM 1'7 CITY OF ANAHEIM SECTION 457 DEFERRED COMPENSATION PLAN TRUST ARTICLE I - CREATION OF TRUST 1.1 Effective Date. The City of Anaheim Section 457 Deferred Compensation Plan Trust shall be effective on January ~, ~999. Funding of the Trust with money or .other assets constituting trust assets shall occur as soon as is practical following the establishment of the Trust. ~.2 Name of Trust. The name of the trust created by this instrument shall be the City of Anaheim Section 457 Deferred Compensation Plan Trust. 1.3 Purpose of Trust. This Trust has been established to fulfill the obligations of the City of Anaheim to comply with the requirements of Section 457 (g) of the United States Internal Revenue Code of 1986, as amended. Specifically, assets of the Trust are to be held for the exclusive benefit of Participants and Beneficiaries under the Plans (as defined below), and shall not be available for use by the City of Anaheim or creditors of the City of Anaheim. ~.4 Selection of Trustee. The members of the Deferred Compensation Committee of the City of Anaheim shall serve in the capacity of Trustee. The three Deferred Compensation Committee members collectively shall serve as the Trustee of the Trust. ARTICLE II - TRUST ASSETS 2.1 Trust Assets. The Trust assets shall consist of all contributions and earnings thereon made under the Deferred Compensation Plan and the Deferred Compensation Plan for Employees Not Covered By CALPERS collectively (hereinafter referred to as "the Plan,") less payments made under the terms of the Plan including fees and expenses. If the assets of this Trust are invested in an annuity contract or custodial account, the Trustee shall own the contract or account. 2.2 No part of the Trust Fund shall be used for, or diverted to, purposes other than for the exclusive benefit of the participants, former participants with an interest in the Plan, or beneficiaries of a deceased participant having an interest in the Fund at the death of the participant. ARTICLE III - TRUST DUTIES AND RESPONSIBILITIES 3.1 Administration of Deferred Compensation Program. The City Council shall approve a written document which sets forth the requirements of the Plan. The Plan may be amended from time to time to reflect changes in the law affecting the management of the Plan, to modify administrative provisions to facilitate the operations of the Plan, and to make such other changes which are in the best interest of the participants and beneficiaries. 3.2 Fiduciary Standard of Conduct. The Trustees, and all other fiduciaries, shall discharge their duties with respect to this Plan solely in the interest of the participants and beneficiaries of the Plan. Such duties shall be discharged for the exclusive purpose of providing benefits to the participants and beneficiaries and defraying expenses of the Plan. The Trustees shall discharge their duties in accordance with applicable law. 3.3 Selection of Investment Options. The Trustee shall be responsible for the selection of investment options, and shall monitor and evaluate the investment options. The Trustee may make one or more investment options available to the participants. The Trustee may at any time revise or remove all or any number of the options which are available to the Participants. The specific details of the administrative requirements shall be enumerated in the Deferred Compensation Plan. 3.4 No Guarantee Against Investment Loss or Depreciation. Neither the City of Anaheim, the Trustee, nor a designee of the Trustee, shall be liable for any losses incurred by virtue of following a Plan Participant's or Beneficiary's directions regarding an investment option or with any reasonable administrative delay in implementing such directions. If a participant transfers funds from a former investment option, the Trustee shall not be responsible for the propriety of any investment under the former investment plan. 3.5 Duty to Account. The Trustee, or a designee, shall be responsible for preparing a statement of all individual accounts on a quarterly basis, at minimum. Such accounts shall reflect the contributions made into a participant's account, the earnings, gains and losses which are credited thereto. 3.6 Trustee Actions. Every action taken by the Trustee shall be presumed to be a fair and reasonable exercise of the authority vested in or the duties imposed. The Trustee shall be deemed to have exercised reasonable care, diligence and prudence and to have acted impartially as to all persons interested, unless the contrary is proven by affirmative evidence. 2 3.7 Indemnification. The Trustees shall be indemnified and held harmless by the City from and against ahy and all liability to which the Trustee may be subjected, including all expenses reasonably incurred in its defense, for any action or failure to act resulting from compliance with the instructions of the City, the employees or agents of the City, the Plan Administrator, Plan Participants and Beneficiaries, or any other fiduciary to the Plan validly given pursuant to the terms of the Plan, and for any liability arising from the actions or nonactions of any predecessor Trustee, custodian, or their fiduciaries of the Plan. ARTICLE IV- CONCLUDING PROVISIONS 4.1 Amendment or Termination. The provisions of this trust may be amended or' terminated by the City Council of the City of Anaheim by adoption of a Resolution specifying the desired changes to be made or the terms under which the termination will be accomplished. 4.2 Captions. The captions appearing in this instrument are for convenience of reference only, and shall be disregarded in determining the meaning and effect of the provisions of this instrument. 4.3 Severability Clause. If any provision of this instrument is invalid, that provision shall be disregarded, and the remainder of this instrument shall be construed as if the invalid provision had not been included. 4.4 California Law to Apply. All questions concerning the validity, interpretation, and administration of this instrument, including any trusts created under this instrument, shall be governed by the laws of the State of California. DATE ATTEST~ CITY CLERK MAYOR ClTY~TREASU R~R) APPROVED AS TO FORM: 3 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss. CITY OF ANAHEIM ) I, SHERYLL SCHROEDER, City Clerk of the City of Anaheim, do hereby certify that the foregoing Resolution No. 2002R-163 was introduced and adopted at a regular meeting provided by law, of the Anaheim City Council held on the 23rd day of July, 2002, by the following vote of the members thereof: AYES: MAYOR/COUNCIL MEMBERS: Feldhaus, Tait, Kdng, M¢Cracken, Daly NOES: MAYOR/COUNCIL MEMBERS: None ABSTAINED: MAYOR/COUNCIL MEMBERS: None ABSENT: MAYOR/COUNCIL MEMBERS: None (SEAL)