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HomeMy WebLinkAbout04.d. Adopt resolution amending 457 Deferred Comp Plan and 401(a) Money Purchase PlanCentral Contra Costa Sanitary District. �. ' BOARD OF DIRECTORS POSITION PAPER Board Meeting Date: January 12, 2012 subject: ADOPT A BOARD RESOLUTION APPROVING THE AMENDMENT TO THE SECTION 457 DEFERRED COMPENSATION PLAN DOCUMENT AND THE 401(A) MONEY PURCHASE PLAN Submitted By: Debbie Ratcliff, Controller Initiating Dept /Div.: Administrative / Finance & Accounting REVIEWED AND RECOMMENDED FOR BOARD ACTION: D. Ratcli R u aves James M. elly, General Manager ISSUE: Board authorization is needed to approve the amendment to both the Section 457 Deferred Compensation Plan Document and the 401(a) Money Purchase Plan Document. RECOMMENDATION: Adopt a Board Resolution approving the amendment to the Section 457 Deferred Compensation Plan Document and the 401(a) Money Purchase Plan Document. FINANCIAL IMPACTS: None ALTERNATIVES /CONSIDERATIONS: The Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART) was issued to amend the Internal Revenue Code. Plan amendments are required. BACKGROUND: The District established a Section 457 Deferred Compensation Plan covering all full -time employees in January 1976 and a 401(a) Money Purchase Plan in January 1997. The Plans are administered by the District's Deferred Compensation Plan Advisory Committee. Amendments are necessary to the District's Section 457 Deferred Compensation Plan Document and the 401(a) Money Purchase Plan Document, based on the Heroes Earning Assistance and Relief Tax Act of 2008 (HEART). This Act provides several employee benefit related advantages to eligible military personnel and their families as indicated below. The following three provisions are mandatory: N:\ ADMINSUP\ADMIN \POSPAPER\Approve Section 457 Deferred Comp Plan 01 -1 2-2012.doc Page 1 of 2 POSITION PAPER Board Meeting Date: January 12, 2012 Subject. ADOPT A BOARD RESOLUTION APPROVING THE AMENDMENT TO THE SECTION 457 DEFERRED COMPENSATION PLAN DOCUMENT AND THE 401(A) MONEY PURCHASE PLAN Differential Pay Included in Compensation: While differential wage payments are not required, some employers offer differential pay to employees that perform qualified military service for more than 30 days. HEART requires that differential wage payments be treated as compensation when determining contributions and benefits available under eligible retirement plans (including 401(k), 401(a), 457(b) and IRA's). Differential pay is generally equal to the difference between an employee's military pay and the amount he /she would have received from the employer during the time qualified military service was performed. Deemed Severance Distributions: Plan participants on active duty for more than 30 days are treated as having a severance from employment and eligible to withdraw funds from their 457 Plan Account or 401(a) Money Purchase Plan account. Employers must suspend the participant's contributions to the plan for six months following a distribution under this provision. Survivor Benefits: Survivors of plan participants who die while performing qualified military service are granted the same benefits that apply to survivors of plan participants who die during employment. The amendments have been provided by ICMA -RC and are included as Attachments 1 and 2. The other two deferred compensation carriers that the District utilizes (i.e., ITT Hartford and Nationwide Retirement Solutions) have reviewed and approved the amendment as well. The changes to the Section 457 Deferred Compensation Plan Document and the 401(a) Money Purchase Plan were reviewed in detail with the Board Budget & Finance Committee. RECOMMENDED BOARD ACTION: The Deferred Compensation Plan Advisory Committee recommends that the Board adopt a Resolution approving the amendment to both the Section 457 Deferred Compensation Plan Document and the 401(a) Money Purchase Plan. N: \ADMINSUP\ADMIN \POSPAPER\Approve Section 457 Deferred Comp Plan 01- 12- 2012.doc Page 2 of 2 RESOLUTION NO. 2012 -002 A RESOLUTION OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT APPROVING THE REVISED SECTION 457 DEFERRED COMPENSATION PLAN AND 401(a) MONEY PURCHASE PLAN DOCUMENT WHEREAS, Central Contra Costa Sanitary District ( "District ") has employees rendering valuable services; and WHEREAS, the District has established a Section 457 Deferred Compensation Plan and a 401(a) Money Purchase Plan for such employees that serve the interests of the District by enabling it to provide reasonable retirement security for its employees and by assisting in the attraction and retention of competent personnel; and WHEREAS, the District has determined that the continuance of the Section 457 Deferred Compensation Plan and 401(a) Money Purchase Plan will serve these objectives; and WHEREAS, amendments to both Plans have been enacted to provide up -to -date plans which comply with changes in legislation regarding the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART): NOW, THEREFORE, BE IT RESOLVED BY THE Board of Directors of the Central Contra Costa Sanitary District as follows: THAT, the District hereby amends and restates the Section 457 Deferred Compensation Plan and the 401(a) Money Purchase Plan Document as of January 12, 2012. PASSED AND ADOPTED this 12th day of January, 2012, by the Board of Directors of the Central Contra Costa Sanitary District by the following vote: AYES: Members: NOES: Members: ABSENT: Members: James A. Nejedly President of the Board of Directors Central Contra Costa Sanitary District County of Contra Costa, State of California COUNTERSIGNED: Elaine R. Boehme, CMC Secretary of the District Central Contra Costa Sanitary District County of Contra Costa, State of California Approved as to form: Kenton L. Alm, Esq. Counsel for the District Attachment 1 icmARC Building Retirement Security ICMA RETIREMENT CORPORATION GOVERNMENTAL 457 DEFERRED COMPENSATION PLAN & TRUST AMENDMENT FOR THE HEROES EARNINGS ASSISTANCE AND RELIEF TAX ACT OF 2008 Pursuant to Section XII of the ICMA Retirement Corporation 457 Governmental Deferred Compensation Plan & Trust (the "Plan ") to add a new Appendix B as follows, effective as provided therein. Appendix BB ARTICLE I PREAMBLE 1.01 Applicabilitv. This Appendix memorializes the operation of the Plan in accordance with the Heroes Earnings Assistance and Relief Tax Act. 1.02 Superseding of Inconsistent Provisions. This Appendix supersedes the provisions of the Plan and .Adoption Agreement to the extent those provisions are inconsistent with the provisions of this Appendix. 1.03 Construction. Except as otherwise provided herein, any reference to "Section" in this Appendix refers only to sections within this Appendix and is not a reference to the Plan. The Article and Section numbering in this Appendix is solely for purposes of this Appendix and does not relate to any Plan article, section, or other numbering designations. ARTICLE II ACCRUAL OF ADDITIONAL BENEFITS 2.01 Death Benefits with Respect to Qualified Military Service. In the case of a Participant who dies on or after January 1, 2007 while performing qualified military service (as defined in Code section 414(u)) with respect to the Employer, his /her Beneficiary shall have a Nonforfeitable Interest in all employer contributions to the Participant to the extent that he /she would have had had the Participant resumed and then terminated employment on account of death. 2.02 Benefit Accruals with Respect to Qualified Military Service. Notwithstanding any provision of the Plan to the contrary, effective as elected by the Employer but no earlier than January 1, 2007, if the Employer so elects, Participants who die or become Disabled while performing qualified military service (as defined in Code section 414(u)) with respect to the Employer shall receive Plan contributions as permitted under Code section 414(u)(9). 2.03 Benefit Accruals with Respect to Differential Wage Pam. If the Employer so elects, effective as elected by the Employer but no earlier than January 1, 2009, Plan contributions shall be made based on differential wage payments (as such term is defined in Code section 3401(h) (2)). 2.04 Deemed Severance from Employ. (a) Unless otherwise elected by the Employer, effective January 1, 2009, a Participant shall be deemed to have a severance from employment solely for purposes of eligibility to receive distributions from the Plan during any period the individual is performing service in the uniformed services (as defined in chapter 43 of title 38, United States Code) for more than 30 days. (b) If a Participant receives a distribution pursuant to subsection (a), then the Participant shall not be permitted to defer compensation during the six -month period beginning on the date of the distribution. (c) If a Participant receives a distribution which could be attributable to: (i) a deemed severance from employment described in subsection (a); or (ii) another distribution event under the Plan, then the distribution shall be considered made pursuant to the distribution event referenced in paragraph (ii), and the Participant shall not be subject to the limitation on Deferred Compensation as set forth in subsection (b). K Attachment 2 icmARC Building Retirement Security ICMA RETIREMENT CORPORATION GOVERNMENTAL MONEY PURCHASE PLAN & TRUST AMENDMENT FOR THE HEROES EARNINGS ASSISTANCE AND RELIEF TAX ACT OF 2008 Pursuant to Section 14.05 of the ICMA Retirement Corporation Governmental Profit - Sharing Plan & Trust (the "Plan ") and Section 5.01 of Revenue Procedure 2005 -16, 2005 -1 C.B. 674, ICMA Retirement Corporation, as Plan Administrator, hereby adopts this Amendment on behalf of all adopting Employers to add a new Appendix B as follows, effective as provided therein. Appendix B ARTICLE I PREAMBLE 1.01 Applicability. This Appendix memorializes the operation of the Plan in accordance with the Heroes Earnings Assistance and Relief Tax Act. 1.02 Superseding of Inconsistent Provisions. This Appendix supersedes the provisions of the Plan and Adoption Agreement to the extent those provisions are inconsistent with the provisions of this Appendix. 1.03 Construction. Except as otherwise provided herein, any reference to "Section" in this Appendix refers only to sections within this Appendix and is not a reference to the Plan. The Article and Section numbering in this Appendix is solely for purposes of this Appendix and does not relate to any Plan article, section, or other numbering designations. ARTICLE II ACCRUAL OF ADDITIONAL BENEFITS 2.01 Death Benefits with Respect to Qualified Military Service. In the case of a Participant who dies on or after January 1, 2007 while performing qualified military service (as defined in Code section 414(u)) with respect to the Employer, his /her Beneficiary shall have a Nonforfeitable Interest in the Participant's entire Employer Contribution Account to the extent that he /she would have had had the Participant resumed and then terminated employment on account of death. 2.02 Benefit Accruals with Res'ect to Differential Wage Payments. If the Employer so elects, effective as elected by the Employer but no earlier than January 1, 2009, Plan contributions shall be made based on differential wage payments (as such term is defined in Code section 3401(h)(2)). Solely for purposes of applying the limits of Code section 415, differential wage payments shall be treated as compensation. 2.03 Benefit Accruals with Respect to Qualified Military Service. Notwithstanding any provision of the Plan to the contrary, effective as elected by the Employer but no earlier than January 1, 2007, if the Employer so elects, Participants who die or become Disabled while performing qualified military service (as defined in Code section 414(u)) with respect to the Employer shall receive Plan contributions as permitted under Code section 414(u)(9). 2.04 Deemed Severance from Employment. (a) Unless otherwise elected by the Employer, effective January 1, 2009, a Participant shall be deemed to have a severance from employment solely for purposes of eligibility to receive distributions from the Plan during any period the individual is performing service in the uniformed services (as defined in chapter 43 of title 38, United States Code) for more than 30 days. (b) If a Participant receives a distribution pursuant to subsection (a), then the Participant shall not be permitted to make a Participant Contribution during the six -month period beginning on the date of the distribution. (c) If a Participant receives a distribution which could be attributable to: (i) a deemed severance from employment described in subsection (a); or (ii) another distribution event under the Plan, then the distribution shall be considered made pursuant to the distribution event referenced in paragraph (ii), and the Participant shall not be subject to the limitation on Participant Contributions set forth in subsection (b). OA