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HomeMy WebLinkAboutResolution 97-32 - Revision of City Employees Deferred Compe -r. J A CITY OF HUNTINGTON BEACH INTERDEPARTMENTAL COMMUNICATION Office of the City Clerk Connie Brockway, City Clerk TO: FROM: Maybrice Henry, Deputy City Clerk DATE: -6//i 7/9 7 SUBJECT: STATUS OF ITEMS REMOVED FROM AGENDA Please advise this office as to the status of attached item that was removed from the agenda. Meeting Date: 7/71g7 Agenda Item: e_A Subject: . 97,3 o� �Z� C a,a � ✓ Status of Agenda Item: (Please fill in and sign) =_ Name Title Date G:agendalagmisHstatusc �irs�w�- Gam. ed¢,w•, G� fY OF HUNTINGTON BEACh MEETING DATE: July 7, 1997 DEPARTMENT ID NUMBER: AS-97-019 Council/Agency Meeting Held: 7107 ?00,55 Deferred/Continued to: ❑ Approved ❑ Conditionally Approved ❑ Denied City rk's Signature Council Meeting Date: July 7, 1997 Department ID Number: AS-97-019 CITY OF HUNTINGTON BEACH REQUEST FOR COUNCIL ACTION SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS © �..�"m_ N vr,< 7z s.q SUBMITTED BY: MICHAEL T. UBERUAGA, City Administrato -7 PREPARED BY: ROBERT J. FRANZ, Deputy City Administrat g-7-32-- SUBJECT: REVISION OF DEFERRED COMPENSATION PLAN Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis, Environmental Status,Attachment(s) Statement of Issue: The City adopted an IRS Section 457 Deferred Compensation Plan in 1973, amended the plan in 1989, and again in 1991. The Plan needs to be updated to conform to the latest revisions to the Internal Revenue Code. Funding Source: Not applicable. Recommended Action: Adopt Resolution No. 97-32 amending the City of Huntington Beach Employee Deferred Compensation Plan. Alternative Action(s): None Analysis: The Federal Government allows City employees to defer a portion of their current compensation until retirement or earlier date if they leave the employment of the City. This is similar to IRA plans in the private sector. Changes in Internal Revenue Code Section 457 were signed into law on August 20, 1996 by President Clinton as part of the Federal legislation "Small Business Job Protection Act of - a RCARESDE.DOC -2- 06/17/97 1:19 PM AUTHOR: Ima User MEETING DATE: July 7, 1997 DEPARTMENT ID NUMBER: AS-97-019 1996. The new law changes the requirements for eligible Deferred Compensation Plans, and requires that the City's Plan be revised. All 457 plan funds will now be held in "trust" for the participants 'to protect the assets from creditors of a bankrupt or financially troubled public jurisdiction. This amendment creates a trust for the City Deferred Compensation Plan. At your May 19, 1997 meeting the City Council requested additional information on the Deferred Compensation program. That information was forwarded to the City Council in June under separate cover. Environmental Status: n/a Attachment(s): City Clerk's Page Number 1. Exhibit "A" City of Huntington Beach Deferred Compensation Plan 2. Resolution No. 97-32 RCARESDE.DOC -3- 06/17/97 9:59 AM AUTHOR: Ima User (7) 07/07/97 - Council/Agency Agenda - Page 7 E. CONSENT CALENDAR All matters listed on the Consent Calendar are considered by the City Council and Redevelopment Agency to be routine and will be enacted by one motion in the form listed. Recommended Motion: Approve all items on the Consent Calendar by affirmative roll call vote. E-1. (City Council/Redevelopment Agency) Minutes (120.65) -Approve and adopt minutes of the adjourned regular meetings of May 19, 1997 and May 30, 1997, regular meeting of June 2, 1997, adjourned regular meeting of June 9, 1997, and regular meeting of June 16, 1997 as written and on file in the Office of the City Clerk. Submitted by the City Clerk [Approved and Adopted --6-0 -- Julien: Absent, Harman: Abstain 619197 and 6116197] E-2. (City Council) (Deferred From May 19, 1997) Resolution No. 97-32 - Revision Of Deferred Compensation plan - Update To Conform To Latest Revisions To The Internal Revenue Code -Adopt Resolution No. 97-32 - "A Resolution Of The City Council Of The City Of Huntington Beach Updating An Employee's Deferred Compensation Plan And Authorizing It's Implementation."Submitted by the Deputy City Administrator/Administrative Services Director [Removed from Agenda] E-3. (City Council) Resolution No. 97-41 - Designate The Trinidad Island Bridge A County Bridge During The Seismic Retrofit Pro-ject - CC-1044 -Adopt Resolution No. 97-41 - "A Resolution Of The City Council Of The City Of Huntington Beach Consenting To The Designation Of The Trinidad Island Bridge In The City Of Huntington Beach As A County Bridge For The Purposes Of Construction, Maintenance, Improvement And/Or Repair." Submitted by the Public Works Director [Adopted 6-0 -- Julien: Absent] E-4. (City Council) Amendment No. 2 To Professional Services Contract Between City & Gibbs, Giden, Locher & Acret - Outside Counsel - Peck Reservoir Litigation (City of Huntington Beach v. Montgomery Watson, et al) -Approve Amendment No. 2 to the Professional Services Contract between the City of Huntington Beach and Gibbs, Giden, Locher and Acret Legal Services regarding Peck Reservoir and appropriate $125,000 into Account No. E-EW-AT-130-4-05-00 for Gibbs, Giden, Locher and Acret for Peck Reservoir representation. Submitted by the City Attorney [Adopted 6-0 -- Julien: Absent] E-5. (City Council) Citizen Participation Advisory Board Appointments - Cohen. LeBow, Lewis, Phillips & Zisakis -Appoint the following members to serve a second four-year term on the Citizen Participation Advisory Board: Stan Cohen, Jeff LeBow, Judith Lewis, Floyd Phillips, and Phil Zisakis, commencing July 1, 1997 and ending June 30, 2001. Submitted by the Economic Development Director [Approved 6-0 -- Julien: Absent] (7) 97-32 EXHIBIT A CITY OF HUNTINGTON BEACH 2000 Main Street Huntington Beach, California 92648 DEFERRED COMPENSATION TRUST The City of Huntington Beach, California hereby revises the Huntington Beach Deferred Compensation Plan and creates the City of Huntington Beach, California Deferred Compensation Trust for its Employees (hereinafter called the Trust). The Trust consists of the provisions set forth in this document and is applicable to each employee who adopts the Trust. The Trust is effective as to each such employee upon the date he/she becomes a "Participant" by signing and filing with the Trustee the Participation Agreement herein referred in Article V. ARTICLE I TRUST PURPOSE 1.1 The purpose of this Trust is to allow Employees to defer a portion of their compensation to a future time. Such compensation will be withheld by the Employer each pay period and will be invested in the manner allowed. 1.2 Amounts Deferred under this Trust are excludable from gross income for federal and state tax purposes, until they are paid or otherwise made available to the Participant or a Beneficiary. 1.3 Participation in this Trust shall not be considered as an employment contract between the Employer and the Employee nor as giving the Employee any right to continued employment. ARTICLE II DEFINITIONS 2.1 Whenever used in this Trust, the following Capitalized words and phrases shall have the meanings set forth below, unless a different context is clearly expressed: (a) AMOUNTS DEFERRED means compensation withheld under this Trust,plus any income resulting from the investment of the compensation withhetd. (b) BENEFICIARY means a person designated by a Participant, a Participant's estate, or any person, whose rights under this Trust are derived as a result of the Participant's death. (c) EMPLOYEE means any person who is eligible to participate in either the Public Employees' Retirement System (P.E.R.S.) or Public Agency Retirement System (P.A.R.S.) 1 97-32 (d) EMPLOYER means the City of Huntington Beach, California. (f) NORMAL RETIREMENT AGE means any age, at the option of the Participant, that is within the range of ages (1) beginning no earlier than the earliest age at which the participant has the right to retire under the Employee's Retirement System and to receive immediate benefits and (2) ending no later than age 70 1/2. However, if a participant continues to work beyond the specified ages,Normal Retirement Age shall be the date or age designated by the Participant, which shall not be later than the mandatory retirement age applicable to the Participant or the date the Participant separates from service with the Employer. (g) PARTICIPANT means an Employee, as defined, who enters into a written agreement with the respective Employer to defer compensation under this Trust. (h) TRUST ADMINISTRATOR shall mean the Deputy City Administrator/ Administrative Services. (i) PROVIDER TRUST is a Trust created pursuant to an agreement between the City of Huntington Beach and a vendor for the purpose of administrative and investment services of funds set aside by the City of Huntington Beach in connection with the employee deferred compensation Trust agreements. (j) TRUSTEE shall mean the City of Huntington Beach (k) TRUSTEE COMMITTEE means persons appointed by the Trust Administrator to assist and advise the administrator of this Trust. (1) CODE means Section 457 of Internal Revenue Code of the United States. 2.2 The plural shall include the singular and the singular shall include the plural, unless the context clearly indicates the contrary. ARTICLE III ADMINISTRATION 3.1 This Trust shall be administered by the Trust Administrator who shall represent the Employer in all matters concerning the administration of this Trust. 3.2 The Trustee Committee shall recommend services, as necessary to establish, administer and maintain this Trust under the Trust Administrators' direction. 3.3 The Trust Administrator is authorized to adopt, amend, or revoke rules for the administration of the Trust. 2 97-32 ARTICLE IV ELIGIBILITY 4.1 Only employees as defined in Section 2.1 may defer Compensation under this Trust. ARTICLE V ENROLLMENT 5.1 An eligible Employee may become a Participant by entering into a written agreement (hereinafter Participation Agreement) with the Employer to have compensation withheld by the Employer each pay period and invested as provided under Article VII. 5.2 The Participant shall specify in the Participation Agreement the amount of compensation to be withheld and preference for investment. The Participant may designate Beneficiaries in the Participation Agreement. 5.3 The Participant Agreement shall remain in effect until it is modified or revoked in accordance with rules established by the Trust Administrator. A former Participant, who is an eligible Employee, may again become a Participant by entering a new Participation Agreement as provided for by the Trust Administrator. 5.4 Compensation may be deferred during a calendar month only if a Participation Agreement has been entered into before the first day of that month. 5.5 Compensation to be deferred under this Trust shall be subject to minimum amounts which the Trust Administrator may specify and maximum amounts set forth in Sections 5.6 and 5.7. 5.6 Except as provided in Section 5.7, the maximum amount that may be deferred for each taxable year of the Participant is 33-1/3% of the Participant's includable compensation (as defined in regulations regard Section 457 of the Code) for the taxable year or$7,500, whichever is less or the maximum allowed by the Code. 5.7 During one or more of the Participant's last three taxable years ending before the Participant attains Normal Retirement age, a Participant may utilize the catch up provision as follows: (a) The maximum amount that may be deferred for each taxable year of the catch up period is the sum of the underutilized limitation, as computed under(b) or $15,000, whichever is less or the maximum allowed by the Code,. (b) Underutilized limitation shall be computed by adding (1)the maximum amount under Section 5.6 for the taxable year and (2)the amount which a Participant could have deferred but did not defer(i.e., the maximum amount under Section 3 97-32 5.6 less any amount previously deferred) for any prior taxable years in which the Participant was eligible to participate in this Trust or another eligible Trust. A prior taxable year can be taken into account only if such taxable year began after December 31, 1978. (c) The Participant may only utilize the catch up provisions once, regardless of whether the Participant fully utilizes these provisions or rejoins the Trust. 5.8 In the case of Employees who participate in another Trust under any Section of the Code, the maximum amounts set forth in Sections 5.6 and 5.7 shall be reduced in accordance with regulations regarding Section 457 of the Code. ARTICLE VI ASSETS 6.1 All assets of the Trust (including amount Deferred, property and rights to property purchased with Amounts Deferred, and income attributable to Amounts Deferred, property or rights to property) shall remain the exclusive property of the Participant and shall be held in Trust until paid or otherwise made available to the Participant or Beneficiary under this Trust. 6.2 The Participant or Beneficiary shall have a beneficial interest in the Trust account. 6.3 The right to receive any payments under this Trust are non-transferable. Any attempt to assign or transfer shall not be recognized and shall impose no liability upon the Trust Administrator. 6.4 Except as otherwise required by law, Amounts Deferred under this Trust shall not be subject to attachment, garnishment, or execution or be transferable by operation of law in the event of bankruptcy or insolvency of the Participant or otherwise. ARTICLE VII INVESTMENTS 7.1 The Trust Administrator is authorized to select and enter into contracts with Trust Providers selected to provide the investment products for this Trust. 7.2 At the time of enrollment each Participant may designate preferences as provided by the Trust Provider for the investment of Amounts Deferred by the Participant. 7.3 Designation, changes or revocations of investment preferences shall be made in accordance with rules established by the Code. 4 97-32 7.4 Any action taken by the Trust Administrator or Trustee Committee regarding the investment of Amounts Deferred shall not be considered as guaranteeing any investment nor attesting to the suitability of any investment for the purposes of meeting future obligations of the Participant. The Trustee, Trust Administrator, Trustee Committee or Trust Providers are not liable to any Participant for investment results. ARTICLE VIII ACCOUNTS AND REPORTS 8.1 To facilitate orderly administration of the Trust, the Trust Administrator shall maintain a deferred compensation account for each Participant. 8.2 Each Participant's account shall be credited with the amount of compensation deferred and shall be further adjusted by an increase or decrease resulting from investments made under Article VIII, any costs for implementing and administering the Trust, if charged, and any withdrawals or payments of benefits. 8.3 Each Participant shall be provided with written reports on the Participant's deferred compensation account in accordance with rules established by the Trust Administrator. ARTICLE IX BENEFITS 9.1 Benefits under this Trust shall only be paid or made available to the Participant upon (a) separation from service, except as provided in Articles XI and XII, or(b) the occurrence of an unforeseeable emergency as provided in Article X. 9.2 Election of benefits shall take place no later than 60 days after the close of the calendar year in which the Participant attains 70.5 years of age. 9.3 Payment of benefits shall be made primarily for the benefit of Participants or former Participants. Thus, the method for payment selected by the Participant shall be such that benefits payable to a Beneficiary are not more than incidental. 9.4 If a participant dies before the entire amount of benefits is paid to the Participant, the entire amount of benefits (or the remaining part if payment has commenced) shall be paid to the Beneficiary as follows: (a) If the Beneficiary is the Participant's primary beneficiary,that primary beneficiary has the right to select the same benefits as would have been available to the Participant. (b) If the Beneficiary is not the Participant's primary beneficiary, benefits shall be paid over a period not in excess of 15 years. 5 97-32 9.5 A Participant may elect before benefits become payable, the method for payment of benefits (except for emergency withdrawals under Article X) from among the options made available by the Code. Additionally, a participant may irrevocably elect benefits become payable to defer payment of some or all of the benefits to a fixed or determinable future time (to the extent allowable under regulations regarding Section 457 of the Code). The elections shall be made in accordance with rules established by the Code. In the absence of an election of the method for payment of benefits shall be paid in accordance with the Code. 9.6 A Participant may designate a Beneficiary or Beneficiaries who will receive the Participant's benefits in the event of the Participant's death. If a Beneficiary has not been designated or the designation is ineffective, the Participant's estate shall become the Beneficiary. Upon the death of the Participant, any Beneficiary entitled to receive the Participant's benefits shall have all rights of the Participant. ARTICLE X UNFORESEEABLE EMERGENCY 10.1 In the event a Participant incurs an unforeseeable emergency as defined in Section 10.2, the Participant may apply for an emergency withdrawal in accordance with the Trust rules. 10.2 An unforeseeable emergency means severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a Participant's dependent (as defined in Section 152(a) of the Code), loss of the Participant's property due to casualty, or similar extraordinary and unforeseeable circumstances beyond the control of the Participant. 10.3 Emergency withdrawals shall only be permitted in accordance with the Code to the extent reasonably needed to satisfy the emergency and shall be paid as directed by Trust Administrator. An emergency withdrawal shall only be approved to the extent that severe financial hardship cannot be relieved by: (a) Reimbursement or compensation from sources other than an emergency withdrawal under the Trust; (b) Cessation of deferrals under the Trust; or (c) Liquidation of the Participant's assets, to the extent that the liquidation of assets would not itself cause severe financial hardship. 6 97-32 ARTICLE XI TRANSFERS BETWEEN EMPLOYERS UNDER THIS TRUST 11.1 In the event a Participant changes employment from the employer of this Trust, the change in employment shall not be considered as a separation from service under this Trust. The Participant's deferred compensation account shall continue in full force and effect. 11.2 The Amounts Deferred in the Participant's account may be transferred to and become an asset under the new Employer's Trust. The new Employer then shall maintain the Participant's rights under its Trust. ARTICLE XII TRUST-TO-TRUST TRANSFERS 12.1 When a Participant separates from service (i.e., no longer employed by an Employer under this Trust), benefits shall.not be payable upon separation from services, regardless of any other provision of this Trust, and Amounts Deferred by the Participant may be transferred to another employer Trust if the following conditions exist: (a) The Participant separates from service to accept employment with an entity which has an eligible Trust (b) The Participant has become a Participant in the eligible Trust of that entity; and (c) The eligible Trust of that entity accepts the transfer of previously deferred amounts under another eligible Trust. 12.2 This Trust shall accept the transfer of a Participant's previously deferred amounts under another eligible Trust which has a Trust-to-Trust transfer provision. ARTICLE XIII AMENDMENT OR TERMINATION OF THE TRUST 13.1 The Trustee is authorized to amend this Trust or adopt a new Trust in accordance with IRS code. However, no amendment or substitution shall affect the right of a Participant or Beneficiary to receive payment of benefits, to the extent of any compensation deferred before the time of the amendment or substitution. 13.2 In the event the Trustee amends an existing Trust, adopts a new Trust or revokes future contributions in a Trust, these changes will not eliminate the participant's rights under the old Trust or Trust providers, if it continues to exist. The participant will have the option of maintaining existing investments with the old Trust or transferring all, or a 7 97-32 portion of those investments to another available Deferred Compensation Trust approved by the Trustee, as allowable under the Code. ARTICLE XIV MISCELLANEOUS 14.1 . The Trust Administrator, the Trustee, the Trustee Committee and Trust Providers shall be held harmless by the Participant and the Participant's Beneficiaries, heirs, successors, and assignees for all acts performed under the Trust in good faith, including, but not limited to the investment of Amounts Deferred. 14.2 The Trust Administrator or Trustee does not represent or guarantee that any particular federal or state tax consequences will occur because of participation in this Trust. 14.3 The Trustee shall indemnify and hold harmless the Trust Administrator and Trustee Committee, for acts performed under the Trust in good faith. ARTICLE XV APPLICABLE LAW 15.1 This Trust, which is intended to be an eligible deferred compensation Trust within the meaning of Section 457 of the Code, shall be interpreted consistent with that Section and all regulations regarding.that Section. 8 RESOLUTION NO.97-32 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH UPDATING AN EMPLOYEES' DEFERRED COMPENSATION PLAN AND AUTHORIZING ITS IMPLEMENTATION WHEREAS, the City of Huntington Beach, as an incentive to retain existing personnel and attract qualified personnel to employment with the City, is desirous of 4, dating and implementing a Deferred Compensation Plan enabling employees to defer a portion of their income pursuant to such plan, NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach that the City of Huntington Beach Deferred Compensation Plan attached to this resolution, marked "Exhibit A," and by reference incorporated herein, is hereby adopted. BE IT FURTHER RESOLVED that the mode of investment of the funds u ds must be approved by the City Treasurer or his designee and that»4he Deputy City Administrator/Administrative Services is authorized t5�implement said plan; and the City of Huntington Beach consents to the plan and assumes the obligations to be performed on its part as set forth in said plan; and That the updated plan shall be operative immediately; and At the end of each calendar year the City shall prepare a financial statement of the amount of employee compensation deferred pursuant to said plan and the types of investments held under such plan. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the day of - , 1997 Mayor ATTEST: 2 4�isr�G APPROVED AS TO F RM: City Clerk ~ `, b7y AttorneyPcxF Ld P REVIEWED AND APPROVED: 7=D, PP D: Ci y Administrator ty City A mi ist for/Administrati e Services 3/k/d efe rred/3/20/97 CITY OF HUNTINGTON BEACH MEETING DATE: May 19, 1997 DEPARTMENT ID NUMBER: AS-97-019 Council/Agency Meeting Held: -5 9 7 GD,55 Deferred/Continued to: � `��n1,•��, 121 Approved ❑ Conditionally Approved ❑ Denied 49e4 City rk's Signature Council Meeting Date: May 19, 1997 Department ID Number: AS-97-019 CITY OF HUNTINGTON BEACH REQUEST FOR COUNCIL ACTION SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS SUBMITTED BY: MICHAEL T. UBERUAGA, City Administrator PREPARED BY: ROBERT J. FRANZ, Deputy City Administrator SUBJECT: REVISION OF DEFERRED COMPENSATION PLAN Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachmen s) Statement of Issue: The City adopted an IRS Section 457 Deferred Compensation Plan in 1973, amended the plan in 1989, and again in 1991. The Plan needs to be updated to conform to the latest revisions to the Internal Revenue Code. Funding Source: Not applicable. / Recommended Action: Adopt the attached Resolution amending the City of Huntington Beach Employee Deferred Compensation Plan. Alternative Action(s): None Analysis: The Federal Government allows City employees to defer a portion of their current compensation until retirement or earlier date if they leave the employment of the City. This is similar to IRA plans in the private sector. Changes in Internal Revenue Code Section 457 were signed into law on August 20, 1996 by President Clinton as part of the Federal legislation "Small Business Job Protection Act of RCARESDE.DOC -2- 05/05/97 3:01 PM MEETING DATE: May 19, 1997 DEPARTMENT ID NUMBER: AS-97-019 1996. The new law changes the requirements for eligible Deferred Compensation Plans, and requires that the City's Plan be revised. All 457 plan funds will now be held in "trust" for the participants to protect the assets from creditors of a bankrupt or financially troubled public jurisdiction. This amendment creates a trust for the City Deferred Compensation Plan. Environmental Status: n/a Attachment(s): City Clerk's Page Number 1. Exhibit "A" City of Huntington Beach Deferred Compensation Plan 2. Resolution RCARESDE.DOC -3- 05/05/97 3:01 PM RESOLUTION NO.97-32 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH UPDATING AN EMPLOYEES' DEFERRED COMPENSATION PLAN AND AUTHORIZING ITS IMPLEMENTATION WHEREAS, the City of Huntington Beach, as an incentive to retain existing personnel and attract qualified personnel to employment with the City, is desirous of updating and implementing a Deferred Compensation Plan enabling employees to defer a portion of their income pursuant to such plan, NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Huntington Beach that the City of Huntington Beach Deferred Compensation Plan attached to this resolution, marked "Exhibit A," and by reference incorporated herein, is hereby adopted. BE IT FURTHER RESOLVED that the mode of investment of the funds must be approved by the City Treasurer or his designee and that the Deputy City Administrator/Administrative Services is authorized to implement said plan; and the City of Huntington Beach consents to the plan and assumes the obligations to be performed on its part as set forth in said plan; and That the updated plan shall be operative immediately; and At the end of each calendar year the City shall prepare a financial statement of the amount of employee compensation deferred pursuant to said plan and the types of investments held under such plan. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 19th day of May , 1997 Mayor ATTEST: �G APPROVED AS TO F RM: City Clerk City Attorney REVIEWED AND APPROVED: 77 71 =D PP D: Ci y Administrator ty City A mi ist for/Administrati e Services 3/k/d efe rred/3/20/97 97-32 EXHIBIT A CITY OF HUNTINGTON BEACH 2000 Main Street Huntington Beach, California 92648 DEFERRED COMPENSATION TRUST The City of Huntington Beach, California hereby revises the Huntington Beach Deferred Compensation Plan and creates the City of Huntington Beach, California Deferred Compensation Trust for its Employees (hereinafter called the Trust). The Trust consists of the provisions set forth in this document and is applicable to each employee who adopts the Trust. The Trust is effective as to each such employee upon the date he/she becomes a "Participant" by signing and filing with the Trustee the Participation Agreement herein referred in Article V. ARTICLE I TRUST PURPOSE 1.1 The purpose of this Trust is to allow Employees to defer a portion of their compensation to a future time. Such compensation will be withheld by the Employer each pay period and will be invested in the manner allowed. 1.2 Amounts Deferred under this Trust are excludable from gross income for federal and state tax purposes, until they are paid or otherwise made available to the Participant or a Beneficiary. 1.3 Participation in this Trust shall not be considered as an employment contract between the Employer and the Employee nor as giving the Employee any right to continued employment. ARTICLE II DEFINITIONS 2.1 Whenever used in this Trust, the following Capitalized words and phrases shall have the meanings set forth below, unless a different context is clearly expressed: (a) AMOUNTS DEFERRED means compensation withheld under this Trust, plus any income resulting from the investment of the compensation withheld. (b) BENEFICIARY means a person designated by a Participant, a Participant's estate, or any person, whose rights under this Trust are derived as a result of the Participant's death. (c) EMPLOYEE means any person who is eligible to participate in either the Public Employees' Retirement System (P.E.R.S.) or Public Agency Retirement System (P.A.R.S.) 1 97-32 (d) EMPLOYER means the City of Huntington Beach, California. (f) NORMAL RETIREMENT AGE means any age, at the option of the Participant, that is within the range of ages (1) beginning no earlier than the earliest age at which the participant has the right to retire under the Employee's Retirement System and to receive immediate benefits and (2) ending no later than age 70 1/2. However, if a participant continues to work beyond the specified ages, Normal Retirement Age shall be the date or age designated by the Participant, which shall not be later than the mandatory retirement age applicable to the Participant or the date the Participant separates from service with the Employer. (g) PARTICIPANT means an Employee, as defined, who enters into a written agreement with the respective Employer to defer compensation under this Trust. (h) TRUST ADMINISTRATOR shall mean the Deputy City Administrator/ Administrative Services. (i) PROVIDER TRUST is a Trust created pursuant to an agreement between the City of Huntington Beach and a vendor for the purpose of administrative and investment services of funds set aside by the City of Huntington Beach in connection with the employee deferred compensation Trust agreements. (j) TRUSTEE shall mean the City of Huntington Beach (k) TRUSTEE COMMITTEE means persons appointed by the Trust Administrator to assist and advise the administrator of this Trust. (1) CODE means Section 457 of Internal Revenue Code of the United States. 2.2 The plural shall include the singular and the singular shall include the plural, unless the context clearly indicates the contrary. ARTICLE III ADMINISTRATION 3.1 This Trust shall be administered by the Trust Administrator who shall represent the Employer in all matters concerning the administration of this Trust. 3.2 The Trustee Committee shall recommend services, as necessary to establish, administer and maintain this Trust under the Trust Administrators' direction. 3.3 The Trust Administrator is authorized to adopt, amend, or revoke rules for the administration of the Trust. 2 97-32 ARTICLE IV ELIGIBILITY 4.1 Only employees as defined in Section 2.1 may defer Compensation under this Trust. ARTICLE V ENROLLMENT 5.1 An eligible Employee may become a Participant by entering into a written agreement (hereinafter Participation Agreement) with the Employer to have compensation withheld by the Employer each pay period and invested as provided under Article VII. 5.2 The Participant shall specify in the Participation Agreement the amount of compensation to be withheld and preference for investment. The Participant may designate Beneficiaries in the Participation Agreement. 5.3 The Participant Agreement shall remain in effect until it is modified or revoked in accordance with rules established by the Trust Administrator. A former Participant, who is an eligible Employee, may again become a Participant by entering a new Participation Agreement as provided for by the Trust Administrator. 5.4 Compensation may be deferred during a calendar month only if a Participation Agreement has been entered into before the first day of that month. 5.5 Compensation to be deferred under this Trust shall be subject to minimum amounts which the Trust Administrator may specify and maximum amounts set forth in Sections 5.6 and 5.7. 5.6 Except as provided in Section 5.7, the maximum amount that may be deferred for each taxable year of the Participant is 33-1/3% of the Participant's includable compensation (as defined in regulations regard Section 457 of the Code) for the taxable year or $7,500, whichever is less or the maximum allowed by the Code. 5.7 During one or more of the Participant's last three taxable years ending before the Participant attains Normal Retirement age, a Participant may utilize the catch up provision as follows: (a) The maximum amount that may be deferred for each taxable year of the catch up period is the sum of the underutilized limitation, as computed under(b) or $15,000, whichever is less or the maximum allowed by the Code,. (b) Underutilized limitation shall be computed by adding (1) the maximum amount under Section 5.6 for the taxable year and (2) the amount which a Participant could have deferred but did not defer(i.e., the maximum amount under Section 3 97-32 5.6 less any amount previously deferred) for any prior taxable years in which the Participant was eligible to participate in this Trust or another eligible Trust. A prior taxable year can be taken into account only if such taxable year began after December 31, 1978. (c) The Participant may only utilize the catch up provisions once, regardless of whether the Participant fully utilizes these provisions or rejoins the Trust. 5.8 In the case of Employees who participate in another Trust under any Section of the Code; the maximum amounts set forth in Sections 5.6 and 5.7 shall be reduced in accordance with regulations regarding Section 457 of the Code. ARTICLE VI ASSETS 6.1 All assets of the Trust(including amount Deferred, property and rights to property purchased with Amounts Deferred, and income attributable to Amounts Deferred, property or rights to property) shall remain the exclusive property of the Participant and shall be held in Trust until paid or otherwise made available to the Participant or Beneficiary under this Trust. 6.2 The Participant or Beneficiary shall have a beneficial interest in the Trust account. 6.3 The right to receive any payments under this Trust are non-transferable. Any attempt to assign or transfer shall not be recognized and shall impose no liability upon the Trust Administrator. 6.4 Except as otherwise required by law, Amounts Deferred under this Trust shall not be subject to attachment, garnishment, or execution or be transferable by operation of law in the event of bankruptcy or insolvency of the Participant or otherwise. ARTICLE VII INVESTMENTS 7.1 The Trust Administrator is authorized to select and enter into contracts with Trust Providers selected to provide the investment products for this Trust. 7.2 At the time of enrollment each Participant may designate preferences as provided by the Trust Provider for the investment of Amounts Deferred by the Participant. 7.3 Designation, changes or revocations of investment preferences shall be made in accordance with rules established by the Code. 4 97-32 7.4 Any action taken by the Trust Administrator or Trustee Committee regarding the investment of Amounts Deferred shall not be considered as guaranteeing any investment nor attesting to the suitability of any investment for the purposes of meeting future obligations of the Participant. The Trustee, Trust Administrator, Trustee Committee or Trust Providers are not liable to any Participant for investment results. ARTICLE VIII ACCOUNTS AND REPORTS 8.1 To facilitate orderly administration of the Trust, the Trust Administrator shall maintain a deferred compensation account for each Participant. 8.2 Each Participant's account shall be credited with the amount of compensation deferred and shall be further adjusted by an increase or decrease resulting from investments made under Article VIII, any costs for implementing and administering the Trust, if charged, and any withdrawals or payments of benefits. 8.3 Each Participant shall be provided with written reports on the Participant's deferred compensation account in accordance with rules established by the Trust Administrator. ARTICLE IX BENEFITS 9.1 Benefits under this Trust shall only be paid or made available to the Participant upon (a) separation from service, except as provided in Articles XI and XII, or(b) the occurrence of an unforeseeable emergency as provided in Article X. 9.2 Election of benefits shall take place no later than 60 days after the close of the calendar year in which the Participant attains 70.5 years of age. 9.3 Payment of benefits shall be made primarily for the benefit of Participants or former Participants. Thus, the method for payment selected by the Participant shall be such that benefits payable to a Beneficiary are not more than incidental. 9.4 If a participant dies before the entire amount of benefits is paid to the Participant, the entire amount of benefits (or the remaining part if payment has commenced) shall be paid to the Beneficiary as follows: (a) If the Beneficiary is the Participant's primary beneficiary, that primary beneficiary has the right to select the same benefits as would have been available to the Participant. (b) If the Beneficiary is not the Participant's primary beneficiary, benefits shall be paid over a period not in excess of 15 years. 5 97-32 9.5 A Participant may elect before benefits become payable, the method for payment of benefits (except for emergency withdrawals under Article X) from among the options made available by the Code. Additionally, a participant may irrevocably elect benefits become payable to defer payment of some or all of the benefits to a fixed or determinable future time (to the extent allowable under regulations regarding Section 457 of the Code). The elections shall be made in accordance with rules established by the Code. In the absence of an election of the method for payment of benefits shall be paid in accordance with the Code. 9.6 A Participant may designate a Beneficiary or Beneficiaries who will receive the Participant's benefits in the event of the Participant's death. If a Beneficiary has not been designated or the designation is ineffective, the Participant's estate shall become the Beneficiary. Upon the death of the Participant, any Beneficiary entitled to receive the Participant's benefits shall have all rights of the Participant. ARTICLE X UNFORESEEABLE EMERGENCY 10.1 In the event a Participant incurs an unforeseeable emergency as defined in Section 10.2, the Participant may apply for an emergency withdrawal in accordance with the Trust rules. 10.2 An unforeseeable emergency means severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a Participant's dependent (as defined in Section 152(a) of the Code), loss of the Participant's property due to casualty, or similar extraordinary and unforeseeable circumstances beyond the control of the Participant. 10.3 Emergency withdrawals shall only be permitted in accordance with the Code to the extent reasonably needed to satisfy the emergency and shall be paid as directed by Trust Administrator. An emergency withdrawal shall only be approved to the extent that severe financial hardship cannot be relieved by: (a) Reimbursement or compensation from sources other than an emergency withdrawal under the Trust; (b) Cessation of deferrals under the Trust; or (c) Liquidation of the Participant's assets, to the extent that the liquidation of assets would not itself cause severe financial hardship. 6 97-32 ARTICLE XI TRANSFERS BETWEEN EMPLOYERS UNDER THIS TRUST 11.1 In the event a Participant changes employment from the employer of this Trust, the change in employment shall not be considered as a separation from service under this Trust. The Participant's deferred compensation account shall continue in full force and effect. 11.2 The Amounts Deferred in the Participant's account may be transferred to and become an asset under the new Employer's Trust. The new Employer then shall maintain the Participant's rights under its Trust. ARTICLE XII TRUST-TO-TRUST TRANSFERS 12.1 When a Participant separates from service (i.e., no longer employed by an Employer under this Trust), benefits shall not be payable upon separation from services, regardless of any other provision of this Trust, and Amounts Deferred by the Participant may be transferred to another employer Trust if the following conditions exist: (a) The Participant separates from service to accept employment with an entity which has an eligible Trust (b) The Participant has become a Participant in the eligible Trust of that entity; and (c) The eligible Trust of that entity accepts the transfer of previously deferred amounts under another eligible Trust. 12.2 This Trust shall accept the transfer of a Participant's previously deferred amounts under another eligible Trust which has a Trust-to-Trust transfer provision. ARTICLE XIII AMENDMENT OR TERMINATION OF THE TRUST 13.1 The Trustee is authorized to amend this Trust or adopt a new Trust in accordance with IRS code. However, no amendment or substitution shall affect the right of a Participant or Beneficiary to receive payment of benefits, to the extent of any compensation deferred before the time of the amendment or substitution. 13.2 In the event the Trustee amends an existing Trust, adopts a new Trust or revokes future contributions in a Trust, these changes will not eliminate the participant's rights under the old Trust or Trust providers, if it continues to exist. The participant will have the option of maintaining existing investments with the old Trust or transferring all, or a 7 97-32 portion of those investments to another available Deferred Compensation Trust approved by the Trustee, as allowable under the Code. ARTICLE XIV MISCELLANEOUS 14.1 The Trust Administrator, the Trustee, the Trustee Committee and Trust Providers shall be held harmless by the Participant and the Participant's Beneficiaries, heirs, successors, and assignees for all acts performed under the Trust in good faith, including, but not limited to the investment of Amounts Deferred. 14.2 The Trust Administrator or Trustee does not represent or guarantee that any particular federal or state tax consequences will occur because of participation in this Trust. 14.3 The Trustee shall indemnify and hold harmless the Trust Administrator and Trustee Committee, for acts performed under the Trust in good faith. ARTICLE XV APPLICABLE LAW 15.1 This Trust, which is intended to be an eligible deferred compensation Trust within the meaning of Section 457 of the Code, shall be interpreted consistent with that Section and all regulations regarding that Section. 8 Res. No. 97-32 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at an regular meeting thereof held on the 19th day of May, 1997 by the following vote: AYES: Julien, Harman, Dettloff, Bauer, Sullivan, Green, Garofalo NOES: None .ABSENT: None City Clerk and ex-officio eerk of the City Council of the City of Huntington Beach, California G/resol uti/resUpg/97-28 RCA ROUTING SHEET INITIATING DEPARTMENT: ADMINISTRATIVE SERVICES SUBJECT: RESOLUTION NO. 97-32 - REVISION OF DEFERRED COMPENSATION PLAN COUNCIL MEETING DATE: July 7, 1997 RCA ATTACHMENTS STATUS Ordinance (w/exhibits & legislative draft if applicable) Not Applicable Resolution (w/exhibits & legislative draft if applicable) Attached Tract Map, Location Map and/or other Exhibits Not Applicable Contract/Agreement (w/exhibits if applicable) (Signed in full by the City Attorney) Attached Subleases, Third Party Agreements, etc. (Approved as to form by City Attorney) Not Applicable Certificates of Insurance (Approved by the City Attorney) Not Applicable Financial Impact Statement (Unbudget, over $5,000) Not Applicable Bonds (If applicable) Not Applicable Staff Report (If applicable) Not Applicable Commission, Board or Committee Report (If applicable) Not Applicable Findings/Conditions for Approval and/or Denial Not Applicable EXPLANATION FOR MISSING ATTACHMENTS REVIEWED RETURNED FORWARDED Administrative Staff ( ) ( ) Assistant City Administrator (Initial) City Administrator (Initial) ( ) City Clerk ( ) EXPLANATION FOR RETURN OF ITEM: Only)(Below Space For City Clerk's Use RCA ROUTING SHEET INITIATING DEPARTMENT: ADMINISTRATIVE SERVICES SUBJECT: RESOLUTION NO. 97-32 - REVISION OF DEFERRED COMPENSATION PLAN COUNCIL MEETING DATE: July 7, 1997 RCA ATTACHMENTS STATUS Ordinance (w/exhibits & legislative draft if applicable) Not Applicable Resolution (w/exhibits & legislative draft if applicable) Attached Tract Map, Location Map and/or other Exhibits Not Applicable Contract/Agreement (w/exhibits if applicable) (Signed in full by the City Attorney) Attached Subleases, Third Party Agreements, etc. (Approved as to form by City Attorney) Not Applicable Certificates of Insurance (Approved by the City Attorney) Not Applicable Financial Impact Statement (Unbudget, over $5,000) Not Applicable Bonds (If applicable) Not Applicable Staff Report (If applicable) Not Applicable Commission, Board or Committee Report (If applicable) Not Applicable Findings/Conditions for Approval and/or Denial Not Applicable EXPLANATION FOR MISSING ATTACHMENTS REVIEWED RETURNED FORWARDED Administrative Staff ( ) ( ) Assistant City Administrator (Initial) City Administrator (Initial) ( ) City Clerk ( ) EXPLANATION FOR RETURN OF-ITEM: Only)(Below Space For City Clerk's Use