HomeMy WebLinkAbout94-97 !� •
RESOLUTION NO. 94-97
RESOLUTION• OF THE CITY COUNCIL OF THE
TOWN OF LOS ALTOS HILLS AMENDING
DEFERRED COMPENSATION PLAN
WITH HARTFORD LIFE INSURANCE COMPANY
WHEREAS, the Town provides a Deferred Compensation Plan
("Plan") for its employees pursuant to Section 457 of the United
States Internal Revenue Code;• and
• WHEREAS, the Plan is administered through Hartford Life
Insurance Company; and
WHEREAS, the Small Business Protection Act of 1996 enacted
amendments to the Internal Revenue Code that require changes to the
structure of and allow enhancements of the benefits of the deferred
• compensation plan; and
WHEREAS, the Small Business. Protection Act of 1996
specifically requires that eligible deferred compensation plans
established and maintained by governmental employers be amended to
provide that all assets of the plan be held in trust, or under one
or more appropriate annuity contracts or custodial accounts, for
the exclusive benefit of plan participants and their beneficiaries;
and
WHEREAS, it is also the desire of the City Council to amend
the Plan in order to provide employees with certain other
advantages brought about by the Act, including indexed limitation
of deferred amounts and certain elections with respect to the
commencement of distributions under the Plan.
NOW, THEREFORE, the City Council of the Town does RESOLVE as
follows :
1 . The City Council of the Town of Los Altos Hills hereby
deletes Article 11 of the Deferred Compensation Plan (the "Plan")
and replaces it with the following:
11 . 1 Effective immediately, all amounts of
compensation deferred under the Plan, all property
and rights purchased with such amounts, and all
income attributable to such amounts, property or
rights shall be held in trust or under one or more
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annuity contracts described in Section 401 (f) of
the Code. Except as may otherwise be permitted or
required by law, no assets or income of the Plan
shall be used for, or diverted to, purposes other
than for the exclusive purpose of providing
benefits for Participants and their Beneficiaries
or defraying reasonable expenses of administration
of the Plan.
2 . The City Council of the Town of Los Altos Hills hereby
deletes Article 2 .2 of the Deferred Compensation Plan (the "Plan" )
and replaces it with the following:
2 .2 "Adjusted" means adjusted for the cost of
living at the time and in the manner as prescribed
under section 457 (e) (15) of the Code.
3 . The City Council of the Town of Los Altos Hills hereby
deletes Article 3 . 5 (a) and 3 . 5 (b) of the Deferred Compensation Plan
(the "Plan") and replaces it with the following:
3 . 5 Regular Contributions . The regular
contribution is the amount of compensation which
may be deferred by a Participant subject to the
following limitations :
(a) Calendar Year Maximum. The maximum
amount a Participant may defer during a calendar
year shall not exceed the lesser of (i) $7, 500 (as
Adjusted) , or (ii) 33-1/3% of the Participant' s
Includible Compensation (typically 25% of the
Participant' s gross taxable income from the
Employer) .
(b) Pay Period Maximum. The maximum amount a
Participant may defer during a pay period, when
combined with previous deferrals during the
calendar year, shall not exceed the lesser of (i)
$7, 500 (as Adjusted) or (ii) 33-1/3% of the
Participant' s year to date Includible Compensation
(Typically 25% of the Participant' s year-to-date
gross taxable income from the Employer) .
4 . The City Council of the Town of Los Altos Hills hereby
deletes Article 5 .2 of the Deferred Compensation Plan (the "Plan" )
and replaces it with the following:
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5 .2 Distribution and Deferral . Distribution must
follow the minimum distribution requirements of
Sections 401 (a) (9) and 457 (d) of the Code and the
regulations thereunder as they may be amended from
time to time. There is a substantial penalty
(federal excise tax) for not satisfying the minimum
distribution requirements.
Upon becoming eligible in accordance with Section
5 . 1 hereof, distribution is subject to the
following provisions :
(a) A Participant may elect to commend
distribution in accordance with the distribution
schedules set forth at Section 5 .3 hereof. Unless
the Participant fails to make any election or if
the Participant elects a postponed distribution
commencement date pursuant to Section 5 .2 (b) below,
the Participants Participation Account shall be, or
shall commence to be, distributed not later than
sixty (60) days after the close of the Plan Year in
which the Participant' s Participant Account becomes
eligible for distribution. If a Participant fails
to make any election, distribution shall commence
in accordance with Section 5 . 5 hereof .
(b) A Participant may elect to postpone the
commencement date specified in the election made
pursuant to Section 5 .2 (a) to a later date if (i)
such postponement election is made prior to the
original commencement date specified in the
election made pursuant to Section 5 .2 (a) , and (ii)
no other postponement election has been made
pursuant to this Section 5 .2 (b) ; provided further,
that a Participant may change the form of payment
elected at any time that is at least sixty (60)
days prior to the date on which payments will
commence .
(c) A Participant may elect to postpone
distribution, even after using the "catch-up"
provision.
(d) If eligibility for distribution is on
account of the Participant' s death, distribution
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shall commence in accordance with Section 5 . 8
hereof .
(e) Notwithstanding any provision of the Plan
to the contrary, distribution must commence no
later than April 1st following the later of (i) the
calendar year in which the Participant attains age
70-1/2 or (ii) the calendar year in which the
Participant separates from service, and must be
completed by the Participant' s allowable life
expectancy, defined as the single or joint
(spousal) life expectancy as set forth in the life
annuity actuarial tables (Code Section 72 and
regulations thereunder. )
5 . The City Council of the Town of Los Altos Hills hereby
deletes Article 5 .4 of the Deferred Compensation Plan (the "Plan")
and replaces it with the following:
5 .4 Participation Accounts Not Exceeding $3 , 500 .
Notwithstanding any provision of the Plan to the
contrary, if the total amount of a Participant' s
Participation Account under the Plan does not
exceed $3, 500, the Participant may elect to receive
(or the Employer may elect to pay to the
Participant without the Participant' s consent) the
total amount in a lump sum payable within 60 days
of such election; provided, however, such amount
may be distributed pursuant to this Section 5 .4
only if : (a) no amount has been deferred under the
Plan with respect to such Participant during the
two-year period ending on the date of the
distribution, and (b) there has been no prior
distribution under the Plan to such Participant to
which this Section 5 .4 applied.
6 . The City Council of the Town of Los Altos Hills hereby
deletes Article 5 . 5 of the Deferred Compensation Plan (the "Plan")
and replaces it with the following:
5 . 5 Default Distribution Schedule. If the
Participant fails to select a payment option for
any event which causes amounts to become available
under the Plan, the Participant shall be deemed to
have elected, pursuant to Section 5 .2 (b) hereof, to
postpone distribution of his benefit until the year
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in which the Participant attains age 70-1/2 . Upon
such participant' s attainment of 70-1/2, payments
shall commence for a
specified period of ten (10)
years as provided for in Option 2 . Notwithstanding
the foregoing, Participation Accounts not exceeding
$3 , 500 shall be subject to earlier distribution in
accordance with Section 5 .4 hereof.
7 . The assets of the Plan shall be held in trust, with the
Town serving as trustee,, for the exclusive benefit of the Plan
participants and ,their beneficiaries, and the assets shall not be
diverted to any other purpose. The Trustee' s beneficial ownership
of Plan assets held in Hartford Life Insurance shall be held for ,
the further exclusive benefit of the Plan participants and their
beneficiaries .
8 . The Plan shall not permit loans.
9 . The Town hereby agrees to serve as Trustee under the
Plan.
10 . The City Manager or designee is hereby authorized to take
any actions, including execution of a restated Plan document
incorporating provisions which are desirable and necessary to
effect this Resolution.
PASSED AND ADOPTED this 19th day of November , 1997 .
By: (:
Mayor
ATTEST:
.
City Clerk •
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