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HomeMy WebLinkAbout04.d. Review draft Position Paper authorizing the execution of new adoption agreements for the 457 and 401(a) deferred compensation plans restating existing provisions and incorporating updates, including updates to eligibility Page 1 of 24 Item 4.d. CENTRAL SAN BOARD OF DIRECTORS ' POSITION PAPER DRAFT MEETING DATE: APRIL 24, 2018 SUBJECT: REVIEW DRAFT POSITION PAPER AUTHORIZING THE EXECUTION OF NEW ADOPTION AGREEMENTS FOR THE 457 AND 401(A) DEFERRED COMPENSATION PLANS RESTATING EXISTING PROVISIONS AND INCORPORATING UPDATES, INCLUDING UPDATES TO ELIGIBILITY SUBMITTED BY: INITIATING DEPARTMENT: THEAVASSALLO, FINANCE MANAGER ADMINISTRATION-FINANCE REVIEWED BY: PHIL LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION ANN SASAKI, DEPUTY GENERAL MANAGER ROGER S. BAILEY, GENERAL MANAGER ISSUE I CMA-RC, the service provider for the District's 457 and 401(a) plans, periodically updates their plan documents and incorporates amendments for legislative and regulatory changes. In addition to the legislative and regulatory updates, staff is proposing additional changes to both the 457 and 401(a) as part of the updates. Historically, updates and changes to the documents have been adopted and approved by the Board via resolution. BACKGROUND 457 Deferred Compensation Plan -Adoption of updated trust documents and eligibility The District established a Deferred Compensation Plan under Section 457 of the Internal Revenue Code in May 1976 after voluntarily withdrawing from the Social Security System. The 457 plan is administered by the District's Deferred Compensation Advisory Committee which was established by the Board of Directors in January 1982. 1 n 2017, 1 CMA-RC updated the 457 Deferred Compensation Plan and Trust document, and received a favorable Private Letter Ruling (PLR)from the Internal Revenue Service (I RS). The updated document incorporates previously adopted amendments for legislative and regulatory changes, including the Roth provisions, and introduces a new optional feature, Automatic Enrollment (which is not an option under California law). Adopting the updated plan document ensures that the District is operating the plan with the most current I RS 457 provisions. April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 57 of 192 Page 2 of 24 Most employers who use the I CMA-RC current 457 plan document will not need to take any action, unless required to do so by their legislative body and/or plan administrative committee and want to make any changes to the optional provision available within the plan. It is the District's past practice that updates and any changes are adopted and approved by the Board via resolution. Over the past few years, several District elected Board Members have inquired about investment options for the District's contributions in lieu of Social Security. For purposes of the 457 plan, the District has in the past considered Board Members as part-time employees and they are currently enrolled in the 457 Part-Time, Temporary, and Seasonal (PTS) plan. A 457 PTS plan is designed specifically for part-time, temporary, or seasonal employees who are not covered by their employer's regular retirement program. These are often called F I CA Alternative plans. Employers can adopt this plan as an alternative to putting all part-time, temporary, and seasonal employees in the Social Security System. A minimum contribution of 7.5% of the employee's gross salary is required and contributed to the employee's 457 PTS account. Under the 457 PTS plan, the Plus Fund is the only investment option. The Plus Fund is essentially a savings account with minimal interest earnings. Since I CMA-RC updates are historically adopted by the Board, staff is proposing that the 457 adoption package be updated to further specify eligibility requirements and allow Board Members the ability to benefit from the low-cost investment opportunities available through the 457 Deferred Compensation Plan. Updating the plan documents periodically allows the employer the option to introduce or remove any optional provisions included in the plan document. District staff has inquired with Erika Armstrong, I CMA- RC Regional Manager of Northern California, and Kim Hammond, the District's Retirement Plans Specialist, and both agree that changes can be made to specify who may participate. The attached proposed 457 Plan Adoption Package has been revised to include all full-time and part-time regular employees and Board Members. Per discussion with I CMA-RC, the District may specify eligible employees as long as the group specified corresponds to a group designation that is defined in the statutes, ordinances, rules, regulations, personnel manuals or other material in effect in the state or locality of the employer. That said, there are some potential limitations that may affect individual Board members. Per I CMA-RC, under the I RS rules, a rehired participant can continue withdrawals from a 457 plan if such withdrawals were initiated before the rehire date and the distributions are from the pre-severance event contributions. If the rehired participant stops the installment payments, he or she cannot resume taking distributions from the plan until he or she has another qualifying event (e.g., separation from service, emergency, termination, etc.). Furthermore, a participant is not allowed to contribute and take lump sum distributions at the same time. Co-op's, District Temporaries, and Seasonal employees will continue to be enrolled in the 457 PTS plan as the majority of this group of employees upon termination request a withdrawal. 4010 Money Purchase Plan -Adoption of revised plan document to allow for employee contribution The District established a second Deferred Compensation Plan under Section 401(a)of the Internal Revenue Code in January 1997. The District's 401(a) Money Purchase Plan is also administered by the District's Deferred Compensation Plan Advisory Committee. The District does not participate in the Social Security System but instead contributes on behalf of each participant the equivalent of up to the Social Security maximum (employer portion), including the Medicare percentage, for all employees hired before April 1, 1986, and up to the Social Security maximum (employer portion) excluding the Medicare percentage for employees hired on or after April 1, 1986. As of 2018, the I RS contribution limit to a 401(a) plan is the lesser of 100% of employee compensation or $55,000. This contribution limit includes contributions from the participating employee and the sponsoring employer. Currently, District employees are generally not able to take full advantage of the deferral limit on April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 58 of 192 Page 3 of 24 an annual basis because, apart from the social security in lieu payment, the 401(a) plan is only presently set up to receive two other limited contributions: (1) employees choosing to waive medical coverage receive a$400 per month payment to the 401(a) plan, or(2) upon termination, terminal compensation contributions to the 401(a) plan are specified at various percentages depending on the employees' prospective bargaining unit (See Appendix A of 401(a) adoption agreement). As noted above, the 401(a) allows for both employees and employers to contribute to the plan. Contributions to the 401(a) do not impact the 457 plan limits. Unlike the 457 plan contributions, which are elected by employee's subject to certain annual limits (generally$18,500 or$24,500 for those 50 or older), the 401(a) plan contribution amounts are not electable by individual employees, but instead are to be specified by group. Accordingly, the District can comply with these I RS regulations by amending the 401(a) plan to require mandatory contributions by bargaining groups, or subgroup. The discussions have not yet taken place with the bargaining groups, but the District anticipates there would be interest in such discussions and deferrals. The District would gain consensus by bargaining group or subgroup, before proceeding. Appendix B has been added to allow for an election by the individual bargaining units (unrepresented at will (Contract), Management, Management Support/Confidential Group (MS/CG), and General Local 1 (General). Each employee in the group or subgroup must contribute a dollar amount or percentage of employee compensation. Once a group or subgroup enters into the plan, the preset level of contribution becomes mandatory until retirement or until such time as employment is otherwise terminated. Though additional contributions may be allowed depending on the terms of the plan, the employer is not required to match any funds the employee contributes voluntarily, and no such matching contributions by the District are anticipated. The primary advantage to employees of being able to contribute additional money to the 401(a) is that participating employees have a predetermined amount of money saved for retirement because contributions are mandatory, and such contributions can be invested and grow prior to the payment of income taxes, which would be deferred until such funds are withdrawn. Having a mandatory contribution rate provides employees with a predetermined minimum amount of savings based on the number of years of service. This maybe a particularly attractive option for the Public Employees' Pension Reform Act (PEPRA) employees, those hired on or after January 1, 2013, because there is likely to be a desire to be able to supplement the benefits available in the defined benefit plan with additional tax deferred savings. Thus, this option can be a valued addition to the benefit program offered by Central San, at no additional direct cost to the District. A summary of the differences between a 457 Deferred Compensation versus a 401(a) Money Purchase Plan are included in Attachment 1 for informational purposes. ALTERNATIVES/CONSIDERATIONS 457 -Adoption of updated trust documents and eligibility None, for the updated trust documents. This action is automatically being done by I CMA-RC to ensure that the District is operating the plan with the most current 457 provisions. The Board could decide not to include Board Members for eligibility to participate in the regular 457 plan. 401(a) -Adoption of revised plan document to allow for employee contribution The Board could deny the proposed revision to the adoption agreement that allows the election of individual bargaining units to make an irrevocable contribution to the tax deferred 401(a) savings plan. April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 59 of 192 Page 4 of 24 FINANCIAL IMPACTS There are no additional costs to the District with any of the recommended changes; however, minimal additional administrative and accounting activities will be necessary to implement, monitor, and maintain the 457 and 401(a) Plans. COMMITTEE RECOMMENDATION These issues were reviewed by the Finance Committee at its April 24, 2018 meeting. The Finance Committee recommended that the Board adopt two resolutions (which will be drafted once the Committee has provided its recommendation) approving the execution of new adoption agreements for the 457 and 401(a) Deferred Compensation Plans. RECOMMENDED BOARD ACTION Adopt two resolutions (to be drafted once the Committee has provided its recommendation) approving the execution of new adoption agreements for the 457 and 401(a) Deferred Compensation Plans and authorizing staff to make the related administrative changes. Strategic Plan Tie-In GOAL THREE: Be a Fiscally Sound and Effective Water Sector Utility Strategy 1 - Conduct Long-Range Financial Planning GOAL FOUR: Develop and retain a highly trained and innovative workforce Strategy 2- Enhance Relationships with Employees and Bargaining Units ATTACHMENTS: 1. Summary of differences between 457 and 401 Plans 2. 457 Deferred Compensation Plan Adoption Agreement 3. 401(a) Money Purchase Plan & Trust Adoption Agreement AppendixA Appendix B April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 60 of 192 Page 5 of 24 ic"RC WHAT'S THE DIFFERENCE? BUILDING PUBLIC SECTOR 457 Deferred Compensation vs. 401 Money Purchase Plans RETIREMENT SECURITY 457 Deferred Compensation Plans 401(a)Money Purchase Plans ELIGIBILITY Employee Eligibility Any employee,and any independent contractor who has been Eligible employee groups are specified by the employer in the designated by the employer as eligible. plan's adoption agreement. CONTRIBUTIONS Contribution Limits(2018) Normal limit:$18,500 Normal Limit:$55,000 Catch-Up Age 50:$6,000($24,500 total) Catch-Up Age 50:N/A or or Pre-Retirement:$18,500($31,000 total).May be made Pre-Retirement:N/A during each of the three years prior to normal retirement Apply to the combination of employer and age based on the extent to which maximum contributions employee contributions. were not made in previous years.Note:the"Age 50"and "Pre-Retirement"provisions may not both be used in the Contributions do not impact 457 plan limits. some calendar year. Apply to the combination of pre-tax and Roth contributions, and employer and employee contributions. Contributions do not impact 401(a)plan limits. Employer Contributions Voluntary,typically funded solely by employee contributions. Your employer may contribute to the plan and may require that you contribute also. FICA Taxes Employer and employee contributions are subject to FICA taxes. Employer contributions are not subject to FICA taxes. Tax Treatment Pre-tax contributions reduce participants'taxable income for Contributions"picked-up"by the employer are made the year. pre-tax and reduce participants'taxable income for the year. Roth contributions may be allowed by the employer and are Employers elect whether or not: made on an after-tax basis,reported as income. / employee contributions are mandatory;or / employees may make a one-time irrevocable decision to contribute a certain percentage. Voluntary after-tax contributions may be allowed by the employer and are reported as income. Employee Contribution You can change your contribution amount at any time,as your Elections relating to contributions that are picked-up(i.e., Flexibility Circumstances change.You may even stop contributing 9 needed. contributed pre-tax)are irrevocable and cannot be changed. (Continued on next page) ICMA RETIREMENT CORPORATION 1 777 NORTH CAPITOL STREET,NE I WASHINGTON,OC 20002-4240 TEL:202-962-4600 I FAX:202-962-4601 I TOLL FREE:800.669.7400 1 WWW.I(MAR(.ORG April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 61 of 192 Page 6 of 24 457 Deferred(ompensation Plans (Continued) 401(a)Money Purchase Plans (Continued) WITHDRAWALS Withdrawal Eligibility Allowed upon separation from service,without restriction. Upon separation from service.Employer may require a lifetime The following in-service withdrawals may apply: annuity for married participants. Emergency The following in-servi(e withdrawals may apply: After age 70"2 ► After age 7012 Rollover assets(if elected by the employer) ► Voluntary after-tax contributions(if elected by the employer) Small account balance,if participant's balance is under ► Rollover assets(if elected by the employer) $5,000 and no contributions have been made for a period ► After attainment of the plan's Normal Retirement Age of two years. (if elected by the employer) Taxation of Withdrawals Withdrawals of pre-tax amounts are subject to federal and,in most cases,state income taxes.After-tax and Roth contribution amounts are withdrawn tax-free.Earnings associated with Roth contributions are also withdrawn tax-free 9: 1)five years have passed since January 1 of the year of your first Roth contribution,and 2)you are at least 59'2 years old(or disabled or deceased) 10%Early Withdrawal 457 plan contributions and associated earnings are not subject Withdrawals prior to age 591.2 are subject to a 10'.;�early Penalty Tax* to an early withdrawal penalty tax.However,the penalty withdrawal penalty tax,unless an exception applies. may apply to non-451 plan assets rolled into a 457 plan and subsequently withdrawn prior to age 5912. Required Minimum Applies after age 701:s or separation from service, whichever is later. Distributions(RMDs) Loans If permitted by your employer,you may be eligible to take loans from your account. ROLLOVERS Roll-ins/Roll-outs You may roll in assets from plans such as 401,457,403(b)and Traditional IRAs.After you leave employment,you may request a rollover to those plan types and/or a Roth IRA.Typically,you may also leave the money in your account until after you reach age 101.2,when you must begin taking annual withdrawals.Note.Roth assets in a 457 plan may only he rolled to a Roth IRA or a retirement plan with a Roth deferral feature(e.g.,4571401(W plan]. Purchase of Service Credits Permitted,other than Roth assets Permitted,other than Roth assets *See UA-RC's Special Tax Notice Regarding Plan Payments or the IRS Instructions for Form 5329 for more information about the IRS 10 early withdrawal penalty tax. This information is for educational purposes only.ICMA-RC does not provide tax or legal advice. ac 36371-0118-8610 April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 62 of 192 Page 7 of 24 Governmental 457 Plan and Trust Optional Provisions Election Form Employers should execute this forin to make elections,or change prior elections,related to optional provisions contained in the ICMA Retirement Corporation 457 Governmental Deferred Compensation Plan and Ti nst document.This form may also be used by plan sponsors utilizing an individually designed plan dociunent. Ptan Number: 30 389ti Employer Plan Nariie: Central Costa Sanitary District L PLANDOCUMENT(If yon are establishing a new plan,please skip this section.) Our Plan currently uses: © ICMA-RC's model plan dociunent ❑ An individually designed plan document IL PLA.\YEAR Tlie Plan Year will be(select one): © Jainimy 1 —December 31 (Defaulo; or ❑ The 12 month period beginning Month Daae Ea. ELIGIBILITY REQUIREi1 M1gTS The following group or groups of Employees are eligible to participate in the Plan: ❑ All Employees(Default) © All Full Time Employees ® Salaried Employees ❑ Non-union Employees ® Management ❑ Public Safety Employees ® General Employees ® Other Employees(specify the group(s)of eligible employees): Other includes Elected Board Members,and Management Support and Confidenfial Group(MSCG). Co-op's,Distril The group specified must con•espond to a group of the same designation that is defined in the statutes. ordinances,rules,regulations,personnel manuals or other material in effect in the state or locality of the Eniployer. 1 April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 63 of 192 Page 8 of 24 N LOANS Adopted Agreement on File Loans are allowed wider the Plan. X Yes F No(Default) If you select"Yes"above,you must also complete and return the Loan Guidelina5 Agreement in the Loan hnplementation Package for 457/401 Plaii Sponsors. V. DISTRIBtTIIONS a. Distributions wldle employed with the:Employer(inn-service distributions)at 701/2 will be allowed. X Yes(Default) No a. In-service distributions of rollovers are allowed at any time. Yes F No(Default) b. Tax-free di tributions for the payment of qualifying insurance preinduns for eligible retired public safety officers are available tinder the Plan. Yes X No(Default) c Unforeseeable emergency withdrawals are permitted. X Yes (Default) No i In applying the rules for unforeseeable emergency withdrawals, the detennination of any unforeseen enter gency shall include circunstauces applying to a Primary Beneficiary. X Yes(Default) No VI. ROTH PROVISIONS a The Plan will offer Designated Roth Accounts as described iii Article IX. Yes X No(Default) [If No is selected,skip the remainder of this Section VI] b. The Plan will allow Iii-Plan Roth Conversions as provided in Section 9.05. X Yes(Default) No c. Designated Roth Accounts will be available as a source for loans wider the Plan. X Yes No or N/A(Default) VII. AUTOMATIC ENROLL. NT The Plan will offer automatic enrollment. F Yes X No(Default) If you select"Yes"above,fiutlner steps are required to implement this feature, including completing implementation forms.We will contact you. 2 April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 64 of 192 Page 9 of 24 VQ[.DEFERRAL OF SICK PAY,VACATION AND BACK PAY(CHOOSE ANY/ALL THAT APPLY) Participants may elect to defer rX1 Accu iulated Sick Pay rX1 Acctunulated Vacation Pay ❑ Back Pay Note: If no election is made,a Participant will not be able to defer any of these. The Participant's election to defer accurnrlated sick pay.acctmrulated vacation pay,or back pay must be made before the beginning of the month in which these amounts would otherwise be paid or made available to the employee. IR. EMPLOYER MATCH Employer will match Elective Deferrals and Default Elective Deferrals("Deferrals"). begirar ng with the first payroll period occruring 91 days after a Participant's first Defen'al. Yes F No(Default) [If No is selected,skip the remainder of this Section IX.IF YES,COMPLETE ALL THAT APPLY] ❑ Employer Percentage Match of Deferrals The Employer shall contribute on behalf of each Participant an amount deterurined as follows(subject to the limitations of Article V of the :Plan): %of the Deferrals made on behalf of the Participant for the Plan Year (not including Deferrals exceeding %of Earrings or$ PLUS %of the Deferrals made on behalf of the Participant for the Plan Year in excess of those included in the above paragraph(but not including Deferrals exceeding in the aggregate %of Earnings or$ Employer matching contributions on behalf of a Participant for a Plan Year shall not exceed$ or %of Earnings, whichever is (CHOOSE ONE)[— more (— less. ❑ Employer Dollar Match of Deferrals The Employer shall contribute on behalf of each Participant an amount determined as follows(subject to the limitations of Article V of the Plan): $ for each %of Earnings or$ that the Employer contributes on behalf of the Participant as Deferrals for the Plan Year(not including Deferrals exceeding %of Earrings or 3 April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 65 of 192 Page 10 of 24 PLUS$ for each %of Earnings or$ that the Employer contributes on behalf of the Participant as Deferrals for the Plan Year in excess of those included in the above paragraph(but not including Deferrals exceeding in the aggregate o o of Earnings or Employer matching contributions on behalf of a Participant for a Plan Year shall not exceed$ or %of Earnings. whichever is (CHOOSE ONE)F— more less. X MII.ITARY SERVICE ELECTIONS a. Plan contributions shall be made under the plan for differential wage payments(.i.e. payments made by the employer to an individual performing military service that represents all or a portion of the wages lie/she would have received). X Yes(Default) No If yes is selected.this is effective beginning January 1,2009(or if later,the effective date of the Plan), unless another effective date is filled in here: b. A participant shall be deemed to have a severance from employment for purposes of eligibility for a distribution duuirg any period of military service for more than 30 days. Yes X No(Default) c. A participant who dies or becomes Disabled(as defined in the Plan)white performing qualified military service shall receive Plan contributions as if the individual had restuued employment on the day preceding death or disability and then terninated employment on the actual date of death or disability. I Yes F No(Default) If yes is selected,this is effective for participants who died or became disabled while performing military service on or after January 1.2007(or if later.the effective date of the Plan).unless another effective date is filled in here: (date cannot be prior to January 1.2007) )M SPOUSAL CONSENT(APPLIES ONLY TO CONVVIUNTTY PROPERTY STATES). If your state is not a conurrunity property state,sldp the remainder of section xi. Where spousal consent is required,it will apply to: ® Only to persons who are harried(Default) ❑ A person who is married,who is a domestic partner under state law.or who is a person in a civil union or other formally recognized personal partnership ❑ A person who is married or who is a domestic partner under state law 4 April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 66 of 192 Page 11 of 24 ❑ A person who is married or is a person in a civil union or other formally recognized personal partnership Note: This election applies only for Plans in co unnturity property states requiring the consent of a spouse to name someone other than the spouse as a beneficiary,and only for determining who is treated as a"spouse"for this purpose and not for any other Plan purposes. Xd SUMMARY OF CHANGES.If you are making changes to au existing plan,please surmrrarize the changes along with the effective dates of the changes below and identify the applicable Optional Provisions Election Forni section number.If you are establishing a new plan,please slap this section. a- III. Addition of Elected Board Members Effective Date: b. III District Temps,Co-op&Seasonal in the PTS Effective Date: C Effective Date: d Effective Date: XIIL EMPLOYER SIGNATURE By signing.the employer confirtrs lie or she is authorized to make the elections specified on this form. Employer hereby appoints ICMA-:RC as the non-discretionary Plan Administrator in accordance with the terms and conditions of the ICMA Retirement Corporation 457 Goverunental Defeffed Compensation Plan and Trust. Employer Hereby attests that it is a turn of state or local goverrrnent or ail agency or i stnunentalrty of one or more touts of state or local gover anent. Employer acLiowledges that applicable state law may or may not allow for the addition of all Automatic Enrollment Feature in their 457(b)plan arhuinistered by ICMA-RC, and Employer assumes fiill responsibility for the decision to add such a feature to their plan. Employer Signature: Date(nrun/dd/yyyy) Name(Please Print): James A.Ne]edly Title: President of the Board Preferred Phone Number: 92{ 5 ) 2289500 Email Address: Plan Ntunber: 303896 April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 67 of 192 Page 12 of 24 INA RETIREMENT CORPORATION GOVERNMENTAL MONEY PURCHASE PLAN & TRUST ADOPTION AGREEMENT ICAAC BUILDING PUBLIC SECTOR RETIREMENT SECURITY April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 68 of 192 Page 13 of 24 ICMA RETIREMENT CORPORATION GOVERNMENTAL MONEY PURCHASE PLAN&TRUST ADOPTION AGREEMENT Plan Number 10- 109623 The Employer hereby establishes a Money Purchase Plan and Trust to be known as CENTRAL CONTRA COSTA SANITARY DISTRICT (the"Plan")in the form of the ICMA Retirement Corporation Governmental Money Purchase Plan and Trust. This Plan is an amendment and restatement of an existing defined contribution money purchase plan. 0 Yes ❑ No If yes,please specify the name of the defined contribution money purchase plan which this Plan hereby amends and restates: CENTRAL CONTRA COSTA SANI DIST I. Employer: CENTRAL CONTRA COSTA SAN[DIST H. Effective Dates 911. Effective Date of Restatement. If this document is a restatement of an existing plan,the effective date of the Plan shall be January 1,2007 unless an alternate effective date is hereby specified: May 3,2018 (Note:An alternate effective date can be no earlier than January 1,2007.) ❑ 2. Effective Date of New Plan. If this is anew Plan,the effective date of the Plan shall be the first day of the Plan Year during which the Employer adopts the Plan,unless an alternate Effective Date is hereby specified: 3. Special Effective Dates. Please note here any elections in the Adoption Agreement with an effective date that is different from that noted in 1.or 2.above. (Note provision and effective date.) III.Plan Year will mean: The twelve(12)consecutive month period which coincides with the limitation year. (See Section 5.03(f)of the Plan.) ❑ The twelve(12)consecutive month period commencing on and each anniversary thereof. IV. Normal Retirement Age shall be age 50.0 (not to exceed age 65). Important Note to Employers Normal Retirement Age is significant for determining the earliest date at which the Plan may allow for in-service distributions.Normal Retirement Age also defines the latest date at which a Participant must have a fully vested right to his/her Account.There are IRS rules that limit the age that may be specified as the Plan's Normal Retirement Age.The Normal Retirement Age cannot be earlier than what is reasonably representative of the typical retirement age for the industry in which the covered workforce is employed.An age under 55 is presumed not to satisfy this requirement,unless the Commissioner of Internal Revenue determines that the facts and circumstances show otherwise. Money Purchase Plan Adoption Agreement l April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 69 of 192 Page 14 of 24 Whether an age between 55 and 62 satisfies this requirement depends on the face and circumstances,but an Employer's good faith,reasonable determination will generally be given deference.A special rule,however,applies in the case of a plan where substantially all of the participants in the plan are qualified public safety employees within the meaning of section 72(t)(10)(B) of the Code, in which case an age of 50 or later is deemed not to be earlier than the earliest age that is reasonably representative of the typical retirement age for the industry in which the covered workforce is employed. V. ELIGIBILITY REQUIREMENTS 1. The following group or groups of Employees are eligible to participate in the Plan: All Employees ✓ A]I Full Time Employees ✓ Salaried Employees Non union Employees Management Employees Public Safety Employees ✓General Employees ✓ Other Employees(Specify the group(s)of eligible employees below.Do not specify employees by name.Specific positions are acceptable.) The group specified must correspond to a group of the same designation that is defined in the statutes,ordinances, rules,regulations,personnel manuals or other material in effect in the state or locality of the Employer. The eligibility requirements cannot be such that an Employee becomes eligible only in the Plan Year in which the Employee terminates employment. Note: As stated in Sections 4.07 and 4.08.the Plan may,however,provide that Final Pay Contributions or Accrued Leave Contributions are the only contributions made under the Plan. 2. The Employer hereby waives or reduces the requirement of a twelve(12) month Period of Service for participation. The required Period of Service shall be(write N/A if an Employee is eligible to participate upon employment)N/A If this waiver or reduction is elected,it shall apply to all Employees within the Covered Employment Classification. 3. A minimum age requirement is hereby specified for eligibility to participate.The minimum age requirement is N/A _ (nor to exceed age 21.Write N/A if no minimum age is declared.) VI. CONTRIBUTION PROVISIONS 1. '1 lie Employer shall contribute as follows: (Choose all that apply,but at least one of Options A or B.If Option A is not selected,Employer must pick up Participant Contributions under Option B.) Fixed Employer Contributions With or Without Mandatory Participant Contributions.(If Option B is chosen,please complete section C.) A. Fm�lpti'er.Cantriurig-u.The Employer shall contribute on behalf of each Participant ''- ^��9'0 of 1 mornings or $ for the Plan Year(subject to the limitations of Article V of the Plan). Mandatory Participant Contributions ❑ are required 0 are not required to be eligible for this Employer Contribution. ** See Appendix A 71 B. Mandatory, Participant Contributions for Plan Participation. Required Maridatory Contributions.A Participant is required to contribute(subject to the limitations of Article V of the Plan)the specified amounts designated in items(i) through(iii)of the Contribution Schedule below: V1 Yes ❑No Money Purchase Plan Adoption Agreement 2 April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 70 of 192 Page 15 of 24 Employee Opt-In Mandatory Contributes.Each Employee eligible to participate in the Plan shall be given the opportunity to irrevocably elect to participate in the Mandatory Participant Contribution portion of the Plan by electing to contribute the specified amounts designated in items W through (iii)of the Contribution Schedule below for each Plan Year(subject to the limitations of Articic V of the Plan): ❑ Yes 0 No Contribution Schedule, See Appendix B (i) Qb of Earnings, (ii) $ 'or (iii) a whole percentage of Earnings between the range of (insert range of percentages between 1%and 20%inclusive(e.g.,3%, 6%, or 20%;5%to 7%)),as designated by the Employee in accordance with guidelines and procedures established by the Employer for the Plan Year as a condition of participation in the Plan.A Participant must pick a single percentage and shall not have the right to discontinue or vary the rate of such contributions after becoming a Plan Participant. Employer"Pick W.The Employer hereby elects to"pick up"the Mandatory Participant Contributions' (pick up is required if Option A is not selected). ❑ Yes 17 No ("Yes"is the default provision under the Plan if no selection is made.) ❑ C. Election Window(Complete if Option B is selected): Newly eligible Employees shall be provided an election window of days(no more than 60 calendar days) from the date of initial eligibility during which they may make the election to participate in the Mandatory Participant Contribution portion of the Plan.Participation in the Mandatory Participant Contribution portion of the Plan shall begin the first of the month following the end of the election window. An Employee's election is irrevocable and shall remain in force until the Employee terminates employment or ceases to be eligible to participate in the Plan.In the event of re-employment to an eligible position,the Employee's original election will resume.In no event does the Employee have the option of receiving the pick-up contribution amount directly. 2. The Employer may also elect to contribute as follows: ❑ A. Fixed Employer Match of Voluntary After-Tax Participant Contributions.The Employer shall contribute on behalf of each Participant_%of Earnings for the Plan Year(subject to the limitations of Article V of the Plan)for each Plan Year that such Participant has contributed %of Earnings or$ .Under this option,there is a single,fixed rate of Employer contributions,but a Participant may decline to make the required Participant contributions in any Plan Year,in which case no Employer contribution will be made on the Participant's behalf in that Plan Year. ❑ B. Variable Employer Match of Voluntary After-Tax Participant Contributions,The Employer shall contribute on behalf of each Participant an amount determined as follows(subject to the limitations of Article V of the Plan): °o of the Voluntary Participant Contributions made by the Participant for the Plan Year(not including Participant contributions exceeding %of Earnings or$ ); I Neither an IRS advisory letter nor a determination letter issued to an adopting Employer is a ruling by the Internal Revenue Service that Participant contributions that are picked up"by the Employer are not includable in the Participants gross income for federal income tax purposes. Pickup contributions are not mandated to receive private letter rulings;however, if an adopting employer wishes to receive a ruling on pick-up contributions they may request one in accordance with Rnrrnuc Procedure 2012-4(or subsequent guidance). Money Purchase Plan Adoption Agreement 3 April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 71 of 192 Page 16 of 24 PLUS %of the contributions made by the Participant for the Plan Year in excess of those included in the above paragraph(but not including Voluntary Participant Contributions exceeding in the aggregate %of Earnings or$ ). Employer Matching Contributions on behalf of a Participant for a Plan Year shall not exceed $ or %of Earnings,whichever is_more or_less. 3. Each Participant may make a voluntary(unmatched),after tax contribution,subject to the limitations of Section 4.05 and Article V of the Plan: ❑ Yes No ("No"is the default provision under the Plan if no selection is made.) 4. Employer contributions for a Plan Year shall be contributed to the Trust in accordance with the following payment schedule (no later than the 15th day of the tenth calendar month following the end of the calendar year or fiscal year(as applicable depending on the basis on which the Employer keeps its books)with or within which the particular Limitation year ends, or in accordance with applicable law): MONTHLY 5. Participant contributions for a Plan Year shall be contributed to the Trust in accordance with the following payment schedule(no later than the 15th day of the tenth calendar month following the end of the calendar year or fiscal year(as applicable depending on the basis on which the Employer keeps its books)with or within which the particular Limitation year ends,or in accordance with applicable law): 6. In the case of a Participant performing qualified military service(as defined in Code section 414(u))with respect to the Employer: A. Plan contributions will be made based on differential wage payments: Yes ❑ No("Yes"is the default provision under the Plan if no selection is made.) If yes is selected,this is effective beginning January 1,2009 unless another later effective date is filled in here: B. Participants who die or become disabled will receive Plan contributions with respect to such service: ❑ Yes No("No"is the default provision under the Plan if no selection is made.) If yes is selected,this is effective for participants who died or became disabled while performing qualified military service on or after January 1, 2007,unless another later effective date is filled in here: Money Purchase Plan Adoption Agreement + April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 72 of 192 Page 17 of 24 VII. EARNINGS Earnings,as defined under Section 2.09 of the Plan,shall include: 1. Overtime 0 Yes ❑ No 2. Bonuses ❑ Yes No 3. Other Pay(specifically describe any other types of pay to be included below) VIII. ROLLOVER PROVISIONS 1. The Employer will permit rollover contributions in accordance with Section 4.12 of the Plan! G(Yes ❑ No ("Yes"is the default provision under the Plan if no selection is made.) 2. Direct rollovers by non-spouse beneficiaries are effective for distributions after 2006 unless the Plan delay ed ruaking them available. If the Plan delayed making such rollovers available,check the box below and indicate the later effective date in the space provided. Effective Date is 1101/2010 (Note: Plans nust offer direct rollovers by non-spouse beneficiaries no later than plan years beginning after December 3l,2009.) IX. LIMITATION ON ALLOCATIONS If the Employer maintains or ever maintained another qualified plan in which any Participant in this Plan is(or was)a participant or could possibly become a participant,the Employer hereby agrees to limit contributions to all such plans as provided herein. if necessary in order to avoid excess contributions(as described in Section 5.02 of the Plan). 1, If the Participant is covered under another qualified defined contribution plan maintained by the Employer,the provisions of Section 5.02(a) through(e)of the Plan will apply unless another method has been indicated below. ❑ Other Method. (Provide the method under which the plans will limit total Annual Additions to the Maximum Permissible Amount,and will properly reduce any excess amounts,in a manner that precludes Employer discretion.) 2. The Limitation Year is the following 12 consecutive month period: 3. Unless the Employer elects a delayed effective date below,Article 5 of the Plan will apply to limitations years beginning on or after July 1,2007. (7be effective date luted cannot be later than 90 days after the close of thefirst regular legislative session ofthe legislative body udtb authority to amend the plan that begins on or after July 1,2007.) Money Purchase Plan Adoption Agreement 7 April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 73 of 192 Page 18 of 24 Y_ VESTING PROVISIONS The Employer hereby specifies the following vesting schedule,subject to(1}the minimum vesting requirements and (2) the concurrence of the PIan Administrator. (For the blanks below,enter the applicable percent-from 0 to 100(with no entry after the year in which 100%is entered),in ascending order.) Period of Service Completed yestm Percent Zero 100 % One 100 % Two 100 % Three 100 % Four 100 % Five 100 % Six 100 % Seven 100 % Eight 100 % Nine 100 % Ten 100 % XI. WITHDRAWALS AND LOANS 1. In service distributions are permitted under the Plan after a participant attains(select one of the below options).- Normal ptions):Normal Retirement Age Age 70'6 ("7046"is the default provision under the Plan if no selection is made.) ❑ Alternate age(after Normal Retirement Age): ❑ Not permitted at any age 2. 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 for more than 30 days. ❑ Y, Z No("Yes"is the default provision under the plan fno selection is made.) 3. Tax-free distributions of up to$3,000 for the direct payment of qualifying insurance premiums for eligible retired publi(. safety officers are available under the Plan. ❑ Yes pC1 No (`No"is the default provision under the Plan if no selection is made.) 4. In-service distributions of the Rollover Account are permitted under the Plan,as provided in Section 9.07. ❑ Yes 91 No("No"is the default provision under the Plan f no selection is made.) 5. Loans are permitted under the Plan,as provided in Article XIII of the Plan: ❑ Yes 0 No ("No"is the default provision under the Plan if no sekction is made.) Money Purchase Plan Adoption Agreement G April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 74 of 192 Page 19 of 24 XII. SPOUSAL PROTECTION The Plan will provide the following level of spousal protection(select one): ❑ 1. Participant Directed Election.The normal form of payment of benefits under the Plan is a lump sum.The Participant can name any person(s) as the Beneficiary of the Plan,with no spousal consent required. 712. Beneficiary Spousal Consent Election(Article XII).The normal form of payment of benefits under the Plan is a lump sum.Upon death,the surviving spouse is the Beneficiary,unless he or she consents to the Participant's naming another Beneficiary. ("Beneficiary Spousal Consent Election"is the default provision under the Plan if no selection is made.) ❑ 3. QJSA Election(Article XVII).The normal form of payment of benefits under the Plan is a 50%qualified joint and survivor annuity with the spouse(or life annuity,if single).In the event of the Participant's death prior to commencing payments,the spouse will receive an annuity for his or her lifetime. (If C is selected,the spousal consent requirements in Article XII also will apply.) XIII. FINAL PAY CONTRIBUTIONS The Plan will provide for Final Pay Contributions if either 1 or 2 below is selected. The following group of Employees shall be eligible for Final Pay Contributions: All Eligible Employees ❑ Other: Final Pay shall be defined as(select one): ❑ A. Accrued unpaid vacation ❑ B. Accrued unpaid sick leave ❑ C. Accrued unpaid vacation and sick leave D. Other(insert definition of Final Pay—must be leave that Employee would have been able to use if employment had continued and must be bona fide vacation andlor sick leave): See Appendix A. ❑ 1. Employer Final Pay Contribution.The Employer shall contribute on behalf of each Participant %of Final Pay to the Plan (subject to the limitations of Article V of the Plan). ❑ 2. Employee Designated Final Pay Contribution.Each Employee eligible to participate in the Plan shall be given the opportunity at enrollment to irrevocably elect to contribute__ _ .%(insert fixed percentage of final pay to be contributed)or up to.. %(insert maximum percentage of final pay to be contributed)of Final Pay to the Plan(subject to the limitations of Article V of the Plan). Once elected,an Employee's election shall remain in force and may not be revised or revoked. Money Purchase Plan Adoption Agreement April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 75 of 192 Page 20 of 24 XIV. ACCRUED LEAVE CONTRIBUTIONS The Plan will provide for accrued unpaid leave contributions annually if either 1 or 2 is selected below. The following group of Employees shall be eligible for Accrued Leave Contributions: ❑ All Eligible Employees ❑ Other: Accrued Leave shall be defined as(select one): ❑ A. Accrued unpaid vacation ❑ B. Accrued unpaid sick leave ❑ C. Accrued unpaid vacation and sick leave ❑ D. Other(insert definition of accrued leave that is bona fide vacation and/or sick leave): ❑ 1. Employer Accrued Leave Contribution.The Employer shall contribute as follows(choose one of the following options): For each Plan Year,the Employer shall contribute on behalf of each Eligible Participant the unused Accrued Leave in excess of .(insert number of hours/days/weeks(circle one))to the Plan (subject to the limitations of Article V of the Plan). ❑ For each Plan Year,the Employer shall contribute on behalf of each Eligible Participant %of unused Accrued Leave to the Plan (subject to the limitations of Article V of the Plan). ❑ 2. Employee Designated Accrued Leave Contribution. Each eligible Participant shall be given the opportunity at enrollment to irrevocably elect to contribute (insert fixed percentage of accrued unpaid leave to be contributed)or up to °o (insert maximum percentage of accrued unpaid leave to be contributed)of Accrued Leave to the Plan (subject to the limitations of Article V of the Plan). Once elected,an Employee's election shall remain in force and may not be revised or revoked. XV. The Employer hereby attests that it is a unit of state or local government or an agency or instrumentality of one or more units of state or local government. XV1. The Employer understands that this Adoption Agreement is to be used with only the ICMA Retirement Corporation Governmental Money Purchase Plan and Trust.This ICMA Retirement Corporation Governmental Money Purchase Plan and Trust is a restatement of a previous plan,which was submitted to the Internal Revenue Service for approval on April 2, 2012,and received approval on March 31,2014. The Plan Administrator hereby agrees to inform the Employer of any amendments to the Plan made pursuant to Section 14.05 of the Plan or of the discontinuance or abandonment of the Plan.The Employer understands that an amendment(s) made pursuant to Section 14.05 of the Plan will become effective within 30 days of notice of the amendment(s) unless the Employer notifies the Plan Administrator, in writing,that it disapproves of the amendment(s). If the Employer so disapproves,the Plan Administrator will be under no obligation to act as Administrator under the Plan. XVII. The Employer hereby appoints the ICNIA Retirement Corporation as the Plan Administrator pursuant to the terms and conditions of the ICMA RETIREMENT CORPORATION GOVERNMENTAL MONEY PLIRCHASE PLAN & TRUST. The Employer hereby agrees to the provisions of the Plan and Trust. Money Purchase Plan Adoption Agreement 8 April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 76 of 192 Page 21 of 24 XVIII. The Employer hereby acknowledges it understands that failure to properly fill out this Adoption Agreement may result in disqualification of the Plan. XIX. An adopting Employer may rely on an advisory letter issued by the Internal Revenue Service as evidence that the Plan is qualified under section 401 of the Internal Revenue Code to the extent provided in applicable IRS revenue procedures and other official guidance. In Witness Whereof,the Employer hereby causes this Agreement to be executed on this 3rd day of May ,2018 EMPLOYER ICMA RETIREMENT CORPORATION 777 North Capitol St.,NE Suite 600 Washington,DC 20002 800-326-7272 By: By: Print Name: James A. Nejedly Print Name: Title: President of the Board Title: Attest:Secretary of the District Attest: Money Purchase Plan Adoption Agreement 9 April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 77 of 192 Page 22 of 24 ICMA RETIREMENT CORPORATION 777 NORTH CAPITOL STREET,HE I WASHINGTON,DC 20002-4240 A� 800-669-7400 ICL�/�C 1\C WWW'I(MAR(.ORG ORC000-214-21268-201405-W1303 BUILDING PUBLIC SECTOR RETIREMENT SECURITY April 24, 2018 RJgular FINANCE Committee Meeting Agenda Packet- Page 78 of 192 Page 23 of 24 Appendix A CENTRAL CONTRA COSTA SANITARY DISTRICT MONEY PURCHASE PLAN 401(a) & TRUST ADOPTION AGREEMENT Employer Contribution The employer shall contribute on behalf of each participant the equivalent of the Social Security maximum (employer portion), including the Medicare percentage, for all employees hired before April 1, 1986, and the Social Security maximum (employer portion) excluding the Medicare percentage for employees hired on or after April 1 , 1986. Terminal Compensation A portion of each Participant's Terminal Compensation shall be contributed by the employer upon termination of employment as follows: Bargaining Terminal Compensation Portion of the Employee's Group Terminal Compensation to be Contributed by the District Local One More than $10,000 50% Between $5,000 and $10,000 25% Less than $5,000 0% MS/CG Not specified 100% Management Not specified 100% For purposes of this Appendix A, the term Terminal Compensation shall mean a Participant's accrued unused vacation, sick leave, earned overtime, and holiday comp pay. April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 79 of 192 Page 24 of 24 Appendix B CENTRAL CONTRA COSTA SANITARY DISTRICT MONEY PURCHASE PLAN 401(a) & TRUST ADOPTION AGREEMENT Employee Contribution Required Mandatory Participant Contribution for Plan Participation as Follows: A Participant is required to contribute (subject to the limitations of Article V of the Plan) the specified amounts designated in items (i) through (iii) of the Contribution Schedule below: Contribution Schedule (i) % of Earnings, (ii) $ , or (iii) a whole percentage of Earnings between the range of (insert range of percentages between 1% and 20% inclusive (e.g., 3%, 6%, or 20%; 5% to 7%), as designated by the Employee in accordance with guidelines and procedures established by the Employer for the Plan Year as a condition of participation in the Plan. A Participant must pick a single percentage and shall not have the right to discontinue or vary the rate of such contributions after becoming a Plan Participant. Bargaining Effective Date Portion of the Employee's Group Compensation to be Contributed by the District Contract Pre-PEPRA TBD TBD PEPRA TBD TBD Local One Pre-PEPRA TBD TBD PEPRA TBD TBD MS/CG Pre-PEPRA TBD TBD PEPRA TBD TBD Management Pre-PEPRA TBD TBD PEPRA TBD TBD April 2018 April 24, 2018 Regular FINANCE Committee Meeting Agenda Packet- Page 80 of 192