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HomeMy WebLinkAbout1918 RESOLUTION NO. 1918 A RESOLUTION amending Resolution No. 1649, as amended by Resolution No. 1871, relating to a Deferred Compensation Plan for the City of Bremerton. WHEREAS, the Revenue Act of 1978, by adding Section 457 to the Internal Revenue Code, established new requirements for Deferred Compensation Plans of governmental employees, and WHEREAS, that has made it necessary to modify the City of Bremerton Deferred Compensation Plan to comply with Section 457 of the Internal Revenue Code; NOW, THEREFORE, BE IT RESOLVED that Resolution No. 1649, as amended by Resolution No. 1871, be amended to adopt the Deferred Compensation Plan attached hereto marked as Exhibit A, entitled "City of Bremerton Deferred Compensation Plan" and consisting of 13 numerical pages, all of which is hereby made a part hereof by this reference. ADOPTED by the City Council of the City of signed by the Mayor and attested by the City Clerk in authen- tication of such adoption this 1st day of December, 1981. GLENN K. JARSTAD, Mayor ATTEST: KATHLEEN L. MANDIO, City Clerk CITY OF BREMERTON DEFERRED COMPENSATION PLAN NAME OF PLAN The name of this plan is the City of Bremerton Deferred Compen- sation Plan and hereinafter is referred to as "Plan". II. PURPOSE The Purpose of this Eligible State Deferred Compensation Plan is to secure lhe benefit of Employees' future services, knowledge and experience by permitting the employees, elected officials, and independent contractors (as authorized by IRC 457) to parti- cipate in this Plan whereby they may defer so much of their com- pensation as allowed in Section VI of this Plan, to provide retirement, disability and death benefits. III. DEFINITIONS For purposes of this Plan, certain words or phrases used herein will have the following meanings: 1. Committee means an administrative unit consisting of three persons appointed from time to time by the employer which shall have the duties defined in the Plan. 2. Community Property Laws - the amount of includable com- pensation shall be determined without regard to any community property laws. 3. Compensation Taken Into Account at Present Value - Compen- sation shall be taken into account at its present value. 4. Deferred Compensation means the portion of includable compensation not yet earned, which the Participant and Employer mutually agree shall be deferred in accordance with the provisions of this Plan and IRC 457. 5. Eligible State Deferred Compensation Plan means a plan established and maintained by a State that complies with IRC 457(b). 6. Employer means City of Bremerton, Washington. sn378 7. Includable Compensation means compensation for services parleyed for the state which (taking into account the provisions of tRC 457 and IRC 403(b)) is currently includehie in gross income. 8. Income Attributable - Gains from the disposition of property shall be treated as income attributable to such property. 9. Participant ~eans an individual who is eligible to defer compensation under this Plan, and who has executed a Participation Agreement. i0. Participation Agre~Jnent - the agreement attached as Exhibit A to this Plan. ii. Performance of Service - the performance of service includes performance of service as an independent contractor. 12. Separation From Service means separation from service with the Employer by death, disability, retirement, or termination of emplo.vment. 13. State means a State, a political subdivi~!In of a State, and an agency or instrumentality of a State or political subdivision of a State. I4. Unforeseeable Emergency - IRC 457(b)(5) provides that it shall be determined in the manner prescribed by the Secretary by regulation. Since regulations have not been promulgated, the following definition shall be utilized by the Committee until such time as regulatisus are svailable. At that tire, any ambiguities or inconsistencies between this definition and the regulation will be resolved in favor of the regulation which ~hatl be incorporated in this Plan by this reference. Unforesee- able Emergency for the purpose of this Plan, shall be defined as severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent of the Participant, loss of the Participant's property due to casualty, ~r other sffnilar extraordinary and nnforeseeable circumstances arising as a result of events beyond the control of the Participant. Subject to this definition, the committee shall be the sole arbiter of whether an "Unforeseeable Emergency" exists in any given case. Payment may not be made to the extent that such hardship is or !nay be relieved (i) through reimbursement, (2) by liquidation of the Participant's assets to the extent the liquidation of such assets would not itself cause severe financial hardship, or (3) be cessation of deferrain under the plan. Unexpected and unre~nbursed expenses which cause great hardship to one Participant may not cause such hardship to another Participant. Means available to one Participant for ~eeting a real emergency of a financial nature may not be ~vail- able to another Participant. Examples of what are not considered to be unforeseeable emergencies include the need to send a Participant's child to college or the desire to purchase a home. sn378 -2- IV. ADMINISTRATION This Plan shall be administered by a Deferred Compensation Committee, heroinafter referred to as "Committee", established by a resolutiom of the Employer. 1) Employer shall disburse those amounts which arise from duly executed Participation Agreements in accordance with instructions from the Committee. A duly executed Participation Agreement, in substantially the form as Exhibit ~ attached hereto, shall bear the signatures of both the Participant and a Committee member. Each participating employee's Participation Agreement shall become a part of this Plan and is incorporated heroin by this specific reference thereto. 2) All property and rights (pursuant to IRC 457(b)(6)) purchased with amounts deferred under the Plan and all income attributable to such amounts, property, or rights, shall remain (until ~ade available to the Participant or other beneficiary) solely the property and rights of the State (without being restricted to the provisions of benefits under the Plan) subject only to the claims of the Staro's general creditors. 3) An individual account shall be maintained in the name of each Participant, to which amounts deferred shall be credited. The maintenance of such accounts and the amounts credited to it shall be for purposes of accounting only. 4~ Account assets hereunder may be invested in fixed or variable life insurance or annuity contracts issued by IDS Life Insurance Company or any other investments as determined and approved by the Committee, provided, however, that no such investments shall be made in violation of applicable statutes. The Participant may advise the Ccnmittee of his or her investment or benefit preference for the .~ount credited to his or. her account, but the Eo~nittee shall at its own discretion ~naka the final investment and benefit deterainations. 5) With respect to each account hereunder, all dividends, interest, gains, rents ~nd other increments thereon, shall be credited to such acconnt, and the assets of each ~ccount shall be v~lued not less than once each year at present vslue. 6) The C~mmittee shall have the authority to appoint such administrative agents or agencies as it deems advisable or desirable, to carry out the ter~s and conditions of this Plan. 7) Employer shall not be required to invest assets nor be responsible for any loss due to the investment or failure of investment of funds and assets in said deferred colnpensation account nor shall Enployer be required to replace any loss whatsoever which may result from said investments. sn37B -B- 8) The Committee shall assume or incur no obligations hereunder except to exercise due care with respect to the assets from time to time in their custody hereunder pending application thereof as provided in this Agreement and to exercise due diligence in carrying out ~heir duties and functions under this Agreement. The Committee shall not be liable for any loss unless such loss is caused by a breach of its obligations under this Plan. V. ELIGIBILITY Any Employee or other party related to Employer by contract who is eligible to defer compensation under this Plan may be a Participant. VI. PARTICIPATION The Participant must agree to defer only compensation that is not yet earned as of the date of the execution of the Participation Agreement. He or she further must agree to defer not less than $25 per month, but shall not exceed the lesser of $7,500 or 33 1/3% of includehie compensation. Catch-Up Exclusion -- For one or more of the last three taxable years of a Participant ending before he or she reaches the normal retirement age of sixty-five (65), an additional catch-up exclusion is permitted if, in previous years the full amount of the Seven Thousand Five Hundred ($7,500) Dollars or 33 1/3% limitation has not been utilized. The maximum amount that can be deferred is an amount not in excess of the lesser of ' (1) Fifteen Thousand ($15,000) Dollars reduced by any amount excludable from the Participant's gross income for the taxable year under Section 403(b) on account of contributions made by the State, or (2) the sum of the plan ceiling ($7,500 or 33 1/3% of includab!e compensation) plus the Plan ceiling established for any prior taxable year, less the amount of comp~n~sation actually deferred under the Plan for such prior taxable year. A prior taxable 7ear can be taken into account only if (A) it begins after December 31, t978, (B) the Participant was eligible to participate in the Plan during 'all or any portion of the taxable year, and (C) compensation deferred under the Plan during the taxable year was subject to a Plan ceiling as required by Section 457 of the Internal Revenue Code. An eligible person may only elect to become a Participant beginning the calendar month following the calendar month of ekecution of a Participant Agreement, provided he or she executed the Participant Agre~nent within a reasonable time in the calendar month preceding the calendar month he or she desires to begin participating. Further, an employee may only elect to increase or decrease the amount of compensation he or she wishes deferred for compensation earned after the beginning of a subsequent calendar year. Such election is to be made 30 days prior to the calendar year in which it is to take effect. sn378 -4- A Participant may terminate his or her Participation Agreement with respect to future earnings, but in so doing will not be eligible to again participate in this plan until the beginning of the next calendar year following such termination. VII. BENEFITS A. In the event of separation from service or unforaseeable emergency, the Committee will apply the then present value of the amount credited to the Participant's account in accordance with one of the following settlement modes elected by the Employee or Employee's beneficiary. 1. Settlement modes under a qualified annuity contract which may be used to measure benefits to the Participant as elected in the Participation Agreement, provided, however, that such benefit payout options must provide for payment (l) over the life of the Participant, (2) over the lives of the Participant and the Participant's spouse, (3) within a period certain not extending beyond the life expectancy of the Participant, or (4) within a period certain not extending beyond the joint life and last survivor expectancy of the Participant and the Participant's spouse. If no settlement mode is elected by Participant by the time separation from service occurs, then, the Plan deems that the lump-sum mode has been elected by the Participant. 2. Monthly, quartarly, semiannual or annual installments of such nearly equal amounts, based on the amount credited to Participan~'s account at the time such pa)nents commence, subject to readjustment as necessary from ti~e to time, as will be required to exhaust ?articipant's interest over a specified period of years designated by the Employee at the tL~e he or she becomes a Partinipant, ~uch period not to ezceed ParticLpant's life expectancy, 2nd commencing on ~he first day of the Luonth following such retir=r:~ent or t~t~{~ation. 3. Lump-sum distribution on the first day of the ~onth following separation frown service or unforqeeable emergency. Beginning with the Participaat's taxable year in which the Participant attains age 70 1/2 (or, if later, the Participant's taxable year in which the payments c~nmence) the ~ount to be paid each year is not less than the lesser of (1) the balance of the deferred ~nounts, or (2) an amount equal to the quotient obtained by dividing the balance of the deferred amounts at the beginning of the year by the life expectancy of the Participant (or the joint life and last sur/ivor expectancy of the Participant and the Participant's spouse, as applicable), determined as of the date the Participant attains age 70 and reduced by one for each taxable year commencing after the Participant attains age 70 1/2. The life expectancy of the Participant or the joint life and last survivor expectancy of the sn378 -5- Participant and spouse cannot exceed the period computed by use of the expected return mul tipi es in Section 1.72-9 of the Income Tax Regulations, or, in the case of payments under a contract issued by an insurance company, the period comDuted by use of the mortality tables of such company. 5. If the amounts deferred under the plan are paid to the Participant or a beneficiary by distribution of an annuity contract, the contract must be distributed no later than the latest of (i) unless the Participant has otherwise elected, 60 days after the close of the participant's taxable year in which the Participant attains normal retirement age under the plan, or, if earlier, age 65, (2) close of the Participant's taxable year in which the Participant separates from service with the employer, or (3) the close of the Participant's taxable year in which the Participant attains age 70 1/2. B. In the event of the Participant's death before the entire amount deferred is paid to the Participant, or, if payment is commenced to the Participant's surviving spouse and said surviving spouse dies before the entire amount is paid to such spouse, the entire amount deferred (or the remaining part of such deferrals if payment thereof has commenced) will, within five years after the Participant's death (or the death of the surviving spouse), be paid under the Plan. In the event of the Participant's death after the commencement of his deferred compensation benefits but prior to the exhaustion thereof, the Employer agrees to pay the balance of the account to the Participant's designated beneficiary. The Participant shall have the right to designate a beneficiary and from t the to time ehan~e such !~signatien by written notice ~eiivered to the Committee. If there is no designated benefici.~ry ~urviving what a payment is due, payment of amy benefits shall be ~ade to his er her spouse if living; if not, to the executor or administrator. VIII. WITHDraWALS Due to unforeseeable ~T~ergenci~s beyond the Partici~ant's control, and after other sources of financial relief have been exhausted, a Participant nay apply to the Cor~nittee for withdrawal from the Plan prior to separation of the Participant fr~n sepTice with the Employer. All determinations by the Cemmittee of what would cause the Participant severe financial hardship if early withdrawal were eoE pennitted will be made on an individual basis. If such application for withdrawal is approved by the Committee, the withdrawal will be effective at the later of the data specified in the Partici~ant's application or the date of approval by the Committee. If the Participanc's request is honored by the Ccnnnittee, the Committee shall make payments in a [~p s~. Withdrawals for foreseeable expenditures normally sn378 -6- budgetable, such as down payments on a home or purchase of an auto or college expenses will not be permitted. Any amount withdrawn shall at no time be greater than the amount necessary to relieve the unforeseeable financial obligation that would result if .~ithdrawal were not permitted. (See III(14)) IX. ~MENDM~NT .~ND TERMINATION Employer may amend this Plan at any time, provided, however, that no amendment shall affect the rights of Participants or their beneficiaries to the extent of any amount deferred at the time of the amendment adjusted for investment experience. Notwithstanding any other provision of this Plan, Employer in its sole discretion, may terminate this Plan and discharge in full its obligations under Plan to all Participants or all Participants' beneficiaries by distributing to such Participants or beneficiaries the value of the Participant's account. The Employer cannot terminate this Plan with respect to an individual Participant without terminating the Plan for all Participants. X. PARTICIPATION IN MORE THAN ONE PL.~ The dollar limitation (as defined and designated in the second paragraph of Section VI) on the amount of compensation that can be deferred under an eligible deferred ccmpensation plan applies at the individual level as well as the plan level. Consequently, a person who participates in more than one plan (whether or not maintained by the same sponsor) must allocate the dollar 1tmitation among the plans in which he or she participates. XI. PARTICIPATION [N F_~K-SHELYERED .~NNUITY If an individual who participates in an eligible deferred compensation plan also participates in a tax-sheltered annuity program, contributions that are excludehie fr~-m his or her grose incctne nnder Code Sec. 403(b) reduce the lEviration, under Code Sec. 457, on the mount of compensation which may be deferred under the eligible deferred compensation plan. Both the $7,500 (or $15,000) limitation and the 33 1/3 percent of includable income limitation are reduced. For purposes of cc~puting the exclusion under Code Sec. 403(b), an amount deferred in an earlier taxable year under an eligible State deferred compensation plan (with regard to the sponsoring entity) is treated as an amount cuntributed by the employer and excluded by the employee under Cede Sec. 403(b), if the taxable year of the defertel counts as a 7ear of service for purposes of Code Sec. 403(b). sn378 -7- XII. NONASSIGNABILITY Neither Participant nor his or her beneficiary shall have any right to sell, assign, transfer or otherwise convey the right to receive any payment hereunder; nor shall any such payments be subject to attachment, garnis~hmen~ or execution of any kind in connection with any claim against Participant or his or her beneficiary. XIII. PROHIBITION AGAINST INTEREST Any funds or assets, including increment and accumulation thereon, acquired by Employer as a result of any Participants' deferral hereunder shall be an asset of the Employer and subject to Employer's ownership until such time as such funds or assets are actually distributed to Participant or his or her designated beneficiary in accordance with the provisions hereof. It is expressly under- stood and agreed that neither the Participant nor his or her beneficiaries shall have any right in or to such funds or assets and that such funds or assets shall be subject to the claims of Employer's creditors. The obligation of the Employer to Partici- pants or their designated beneficiaries for the benefits provided for hereunder is a contractual obligation only. Participants and their designated beneficiaries have no claim by way of trust, escrow, annuity or otherwise in or to any specific assets held by Employer. XIV. APPLICABLE LAW This Plan shall be construed under the laws of the State of Washington. IN WITNESS WHEREOF, Employer has caused this Plan to be signed and attested on this day of , 19 by a duly authorized person. CITY OF BREMERTON, Employer Attest: City Clerk GLENN K. JARSTAD, Mayor -8- EXHIBIT A APPLICATION TO PARTICIPATE IN THE DEFERRED COMPENSATION PLAN TO: Deferred Compensation Committee Beginning I wish to participate in the Deferred Compensation Plan to the extent of $ per month subject to the terms and conditions of the Plan. I wish to designate the following beneficiary (or beneficiaries) in accordance with the Plan: (Show name, relationship and address.) (If the designated beneficiary is other than the Participant's spouse, consent of said spouse is required in community property states.) I hereby select the following investment(s) which shall be the basis for measuring future benefits.* (Check one.) __ combination fixed and variable annuity issued by IDS Life Insurance Company with purchase payments allocated % fixed and % variable __ mutual f~nds (specify fund) insnrance (specify insurance) *%~nen purchasing life insurance with all or part of the Participant's deferred compensation, the Plan Sponsor (Employer) must be the sole beneficiary of the policy and must retain all incidents of ownership of the policy. I acknowledge receipt of ~ copy of the Deferred Compensation Plan and confirm that I have reviewed and understand all of the terms and conditions thereof. Signed Signed Commitee Member Employee Dated Hcme Address Dated sn378 -9- EXHIBIT B Upon the occurrence of an event calling for distribution of benefits under Section VII of the Plan, I elect on this date to receive said benefits in the following manner indicated by placing an X in the square opposite the elected mode of distribution. Section VII BENEFITS EARLY RETIREMENT Annuity__ Other__ A. settlement modes under a A. monthly, quarterly, qualified annuit7 semiannually, or 1) Life Income - annual installment Participant payments commencing on 2) Life income - Lives of early retirement the Participant and the date or deferred Participant's Spouse 65th birthday for a 3) Life Income - Participant - period of years. with 5 , 10 , or 15 years certain (term certain must not extend beyond the life expectancy of the Participant.) 4) Life Income with 5 , 10 , or 15 years certain (term certain must not extend beyond the joint life and Last survivor expectancy of the Participant and the Participant's spouse.) "~k78 -i0- NORMAL RETIREMENT Annuity Other__ A. settlement modes under a A. monthly, quarterly, qualified annuity semiannually, or I) Life Income - annual installment Participant payments commencing on 2) Life Income - Lives of early retirement 'the Participant and the date or deferred to Participant's Spouse 65th birthd'ay for a 3) Life Income - Participant - period of . years. with 5 , 10 , or 15 years certain (term certain must not extend beyond the life expectancy of the Participant.) 4) Life Income with 5 ., 10 , or 15 years certain (term certain must not extend beyond the joint life and last survivor expectancy of the Participant and the Participant's spouse.) B. l~p sum B. . lump sum LATE RETIREMENT Annul ty __ Other __ A. settlement ~odes under a A. inonthly, quarterly, ' qualified annuity semiannually, or 1) Life Income - annual installi~ent "Participant payments commencing on 2) Life lnc~e - Lives of . early cetirement ' the Participant and the date or deferred to Participant's Spouse 65th birthday for a 3) Life Income - Participant - period of years. with 5 , i0 , or 15 >'ears certain (tara certain must not extend beyond the life expec[ancy of the Participant.) 4) Life Income with 5 10 or 15 .. years certain (term certain must ~ot extend beyond the joint Life and last survivor expectancy of the Participant and the Participant's spouse.) DISABILITY Annuity Other__ &. settlement modes under a A. monthly, quarterly, ' qualified annuity ' semiannually', or I) Life Income - annual installment Participant payments commencing on 2) Life Income - Lives of early retirement the Participant and the date or deferred to Participant's Spouse 65th birthday for a 3) Life Income - Participant - period of years. with 5 , i0 , or 15 years certain (term certain must not extend beyond the life expectancy of the Participant.) 4) Life Income with 5 , 10 ., or 15 years certain (term certain must not extend beyond the joint life and last survivor expectancy of the Participant and the Participant's spouse.) B. lump sum B. lump sum TEtMINATION Annuity__ Other g A. settlement modes under a A. monthly, quarterly, qualified annuity semiannually, or 1) Life Income - annual installment Participant pa?~ents ccmmencing on 2) Life Income - Lives of early retirement the Participant and the date or deferred to Participant's Spouse 65th birtkday for a 3) Life Income - Participant - period of years. with 5 , 10 , or 15 years certain (term certain must not extend beyond the life expectancy of the Participant.) 4) Life Inceme with 5 10 , or 15 years certain (term certain must not extend beyond the joint life and last survivor expectancy of the Participant and the Participant's spouse.) B. __ lump sum B. __ lump sum sn378 -12- DEATH A. __ 60 consecutive monthly payments B. iump sum I acknowledge receipt of a copy of the Deferred Compensation Plan and confirm that I have reviewed and understand all of the terms and conditions thereof. Signed Signed Commitee Member Employee Dated Home Address Dated sn378 -13-