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HomeMy WebLinkAboutR-97-0047J-97-53 1/13/97 RESOLUTION NO. 9 7 — 47 A RESOLUTION, WITH ATTACHMENTS, AMENDING AND RESTATING A CITY OF MIAMI 457 DEFERRED COMPENSATION PLAN, KNOWN AS THE PEBSCO MAYOR'S DEFERRED COMPENSATION PLAN (THE "PLAN"), ATTACHED HERETO AND MADE A PART HEREOF, TO BRING SAID PLAN INTO COMPLIANCE WITH CERTAIN NEWLY ENACTED INTERNAL REVENUE CODE REGULATIONS; AUTHORIZING THE CITY MANAGER TO EXECUTE ANY NECESSARY DOCUMENTS, IN A FORM ACCEPTABLE TO THE CITY ATTORNEY, TO EFFECTUATE SAID PLAN AMENDMENTS. WHEREAS to attract and retain competent personnel and to provide reasonable retirement security for its employees, the City of Miami, pursuant to Internal Revenue Code provisions, established a 457 Deferred Compensation Plan known as the PEBSCO Mayor's Deferred Compensation .Plan; and WHEREAS, Congress enacted the Small Business Job Protection Act and the Health Insurance Portability and Accountability Act of 1996 ("Acts"), which Acts amended the Internal Revenue Code to effect changes to the structure of and allow enhancements to the benefits of said deferred compensation plan; and WHEREAS, due to said amendments, it is necessary to amend and restate the PEBSCO Mayor's Deferred Compensation Plan to bring said Plan into compliance with said newly enacted Acts; NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA: AiiAt&9�t7�Ny r; .tOPfTAEM G'iTl' COXmssi om- MEETING O '7 JAB! 2 3 1997 Resolution Na. 9'7 - 4'7 Section 1. The recitals and findings contained in the Preamble to this Resolution are hereby adopted by reference thereto and incorporated herein as if fully set forth in this Section. i' Section 2. The PEBSCO Mayor's Deferred Compensation Plan (the "Plan"), attached hereto and made a part hereof, one of the City of Miami's 457 Deferred Compensation Plans, is hereby amended and restated to bring said Plan into compliance with certain newly enacted Internal Revenue Code Regulations. Section 3. The City of Miami hereby agrees to serve as Trustee under said Plan and the assets of the Plan are to be held in trust by said Trustee. Section 4. The Trustee's beneficial ownership of the Plan's assets shall be held for the exclusive benefit of the Plan participants and their beneficiaries and the assets of the Plan shall not be diverted to or for any other purpose other than as set forth in said Plan. Section 5. The Plan shall not permit loans. Section 6. The City Manager is hereby authorizedY to execute any necessary documents, in a form acceptable to the City Attorney, to effectuate said Plan amendments. Section 7. This Resolution shall become effective immediately upon its adoption. 1 The herein authorization is further subject to compliance with all requirements that may be imposed by the City Attorney, including but not limited to those prescribed by applicable City Charter and Code provisions. - 2 - 0 IL.- 9'7 - 4'7 PASSED AND ADOPTED this 23rd day of January 1997. .CAROLLO, MAYOR ATTES21: " � WALTER J . V09MAN CITY C�g& APPROVED AS TO FORM AND CORRECTNESS: A! QU[XNN J'9S`/N , I I I CITY ATTO W1377:BS CITY OF MIAMI, FLORIDA INTER -OFFICE MEMORANDUM TO: Honorable Mayor and Members of the City Commission 9 � FROM: Edward M r ez City Manag RECOMMENDATION: DATE: JAN 16 1997 FILE : SUBJECT: Amendment to PEBSCO Mayor's Deferred Compensation Plan REFERENCES: ENCLOSURES: It is recommended that the City Commission adopt the attached Resolution authorizing the City Manager or his designee to execute the necessary documents amending the City of Miami's 457 Deferred Compensation Plan in the form of the PEBSCO Mayor's Deferred Compensation Plan for City employees. The adoption of this Resolution will authorize the execution of appropriate amendments to the PEBSCO Mayor's Deferred Compensation Plan thereby bringing the Deferred Compensation Plan into compliance with the Small Business Job Protection Act and the Health Insurance Portability and Accountability Act of 1996. BACKGROUND: In 1996 Congress passed several bills that included substantial tax law changes that require changes to the structure of and allow enhancements of the benefits of the deferred compensation plan. Under the new law, the state or local government employer is required to establish a trust or use an annuity contract or custodial account so that deferred compensation will be funded and not merely an unsecured promise by the employer. Under the new law, all § 457(b) plan amounts are required to be held in trust (or a custodial account or annuity contract) for the exclusive benefit of plan participants and beneficiaries. Therefore, the plan assets will not be subject to the claims of the employer's creditors. Any trust or custodial account maintained for this purpose will be exempt from federal income tax. Although the law does not require a trust to be established prior to January 1, 1999, until the trust is established, assets remain unprotected. Other provisions of the law which are effective January 1, 1991 include providing 1 for: indexed maximum contribution amounts, one-time forward changes, small balance distributions, and participant loans without tax consequences, if elected by the employer. The Resolution specifies that loans will not be permitted. i 97- 47 2 Honorable Mayor and Members of the City Commission RE: PEBSCO Mayor's Deferred Compensation Plan Page 2 The adoption of this Resolution will enable the City, through the deferred compensation plans offered to its employees, to provide reasonable retirement security for its employees by providing increased flexibility in its personnel management system, and by assisting in the attraction and retention of competent personnel. The City will incur no cost by the adoption of the attached Resolution amending the deferred compensation plan. 97- 47 iAA. I ESTABLISHMENT OF CUSTODIAL ACCOUNT AND LIFE INSURANCE TRANSFER AUTHORIZATION WHEREAS, the undersigned Employer is the owner of one or more life insurance policies issued to it by Commonwealth Life Insurance Company, Kentucky Commonwealth Life Insurance Company, Peoples Security Life Insurance Company, or Providian Life and Health Insurance Company (the "Policies") in connection with the deferred compensation plan it maintains for its employees (the "Plan") pursuant to Section 457 of the Internal Revenue Code of 1986, as amended (the "Code"); and WHEREAS, as a result of an amendment to the Code, all assets and income of the Plan must be held in a trust, custodial account or annuity contract; and WHEREAS, the Plan has been amended to reflect the changes required by the amendment to the Code; and WHEREAS, the Employer desires to adopt the Code Custodial Account (the "Custodial Account") to hold assets, other than annuity contracts, which will provide benefits for the participants and beneficiaries; and WHEREAS, as a result of the amendment to the Code, the Employer desires to transfer ownership of the Policies to Bank One Trust Company, N.A. (the "Custodian") for the exclusive benefit of the Plan's participants and beneficiaries; NOW THEREFORE, the undersigned Employer hereby accepts the Code Custodial Account Agreement, adopts the Custodial Account, authorizes transfer of ownership to the Policies to the '' - -' - -r --ary to the Policies. Sue Weller Labor Relations City of Miami i EMPLOYER: 'M LAM I FL 3:3133 Mom - BY: i ........... TITLE: DATE: i i DC-2948-A r • r 97- 47 3 a TRANSFER AUTHORIZATION WHEREAS, the Deferred Compensation Plan (the "Plan") shown below is the owner of one or more life insurance policies issued to it by Commonwealth Life insurance Company, Kentucky Commonwealth Life Insurance Company, Peoples Security Life insurance Company or Providian Life and Health Insurance Company (the "Policies"); and WHEREAS, as a result of an amendment to Section 457 of the Internal Revenue Code of 1986, the plan will be required, and now desires, to transfer the ownership of the Policies to Bank One Trust Company, N.A., (the `Bank") as custodian for the exclusive benefit of the Plan's participants and their beneficiaries; NOW TI ~ ~FORE, the undersigned Plan hereby authorizes the transfer of ownership of the Policies from the Plan to the Bank as custodian for the exclusive benefit of the Plan's participants and their beneficiaries. R. Sue Weller Pl Labor Relations Officer By: Title: Date: DC -? 948 2 9'7 - 47 I I - I IN WITNESS WHEREOF, the undersigned has executed this Amendment this I R. Sue Weller I Labor Relations Officer I l I l t BY: PLEASE SIGN AND RETURN THIS PACE ONLY. ti UNITED STATES CONFERENCE OF MAYORS DEFERRED COMPENSATION PROGRAM THE DEFERRED COMPENSATION PLAN FOR PUBLIC EMPLOYEES AMENDMENT #1 TO PLAN DOCUMENT WHEREAS EMPLOYER executed the above referenced Plan Document; and ; . WHEREAS, effective January 1, 1997, EMPLOYER desires to amend the Plan Document as follows: 1. The first sentence of Article I, Section 1.01(n) is hereby deleted and replaced with the following: SEPARATION FROM SERVICE means Separation From Service as used in IRC Section 402 (d)(4)(A)(iii), and on account of the PARTICIPANT'S death or retirement. 2. ARTICLE II, Section 2.04 is hereby deleted and replaced with the following: 2.04. Except as provided in Section 2.05, the maximum deferred amount under the PLAN for the PARTICIPANT'S taxable year shall not exceed the lesser of (a) $7,500 (as adjusted by the Secretary of the Treasury) or (b) 33 1/3% of the PARTICIPANT'S Includ- ible Compensation as provided in IRC Section 457. 3. ARTICLE 11, Section 2.06 is amended by replacing "402(a)(8)" with "402(e)(3)" and by adding, in the third line "or (k)" following "402(h)(1)(B)". 4. Article 11 is hereby amended by the addition of the following Section: 2.07. Notwithstanding the preceding provisions of Article II, a PARTICIPANT who is entitled to reemployment pursuant to the terms of the Uniformed Services Employment and Reemployment Act of 1994 (USERRA) may defer an additional amount under the PLAN as provided in that act for the years of his or her service in the uniformed services (as defined in USERRA). Any such deferrals will not be subject to the limits set forth above in the year in which deferred, but will be subject to the limits for the year to which such deferrals relate. 5. ARTICLE VII, Section 7.02 is hereby deleted and replaced with the following: 7.02. The EMPLOYER shall use the PARTICIPANT'S or Beneficiary's investment specifi- cations so as to determine the value of the deferred account maintained with respect to the PARTICIPANT as if the deferred amounts had been invested according to such speci- 97- 47 7 DC-2947-B Page 1 fications; provided, however, that only upon approval from EMPLOYER may a PARTICI- PANT allocate an amount greater than 25% of the total annual deferrals of the PARTICI- PANT to a life insurance option. 6. ARTICLE VII, Section 7.04 is hereby deleted and replaced with the following: 7.04. All assets of the PLAN, including all deferred amounts, property and rights pur- chased with deferred amounts, and all incorne attributable to such deferred amounts, property or rights, shall (until made available to the PARTICIPANT or Beneficiary) be held in a trust, custodial account or annuity contract described in IRC Section 457(g) for the exclusive benefit of the PARTICIPANTS and their beneficiaries. 7. ARTICLE VIII, Section 8.01 is hereby deleted and replaced with the following: 8.01. Commencement of Distributions: The PARTICIPANT may elect the time at which distributions under the PLAN are to commence by designating the month and year during which the first distribution is to be made. The earliest distribution commencement date that may be elected by the PARTICIPANT shall be the earlier of: (a) thirty-one (31) days after Administrator is notified of PARTICIPANT'S separation from service or the date the PARTICIPANT separates from service, whichever is later; or (b) the date on which the PARTICIPANT attains age 70 1/2 or terminates deferrals under this PLAN, whichever is later. At least thirty (30) days prior to the date on which a PARTICIPANT is eligible for benefits to commence under the PLAN, the EMPLOYER shall notify the ADMINISTRATOR in writing, mailed to the ADMINISTRATOR'S Home Office, of the PARTICIPANT'S eligibility. The PARTICIPANT shall make such election no later than the earlier of: (a) thirty (30) days following the date Administrator is notified of PARTICIPANT'S separation from Service or (b) thirty (30) days following attainment of age 70. Benefits payable to the PARTICIPANT will be the equivalent of the total benefits that would have been created had the deferred amounts been invested as specified by the PARTICIPANT. The date elected for commencement of distributions ("the Elected Commencement Date") 8 9 7 - 47 Page 2 DC-2947-B �1 shall be not later than the Mandatory Commencement Date, which shall be the later of: (a) April 1 of the calendar year following the calendar year in which the PARTICIPANT attains age 70 112: or (b) April 1 of the calendar year following the calendar year in. which the PARTICIPANT separates from service with the EMPLOYER. The Elected Commencement Date may be postponed, once, following the PARTICIPANT's separation from service, if the PARTICIPANT files an election designat- ing a new date for benefits to begin, prior to the original Elected Commencement Date. Failure to file an election with the Administrator within the appropriate time period will result in the Administrator beginning distributions one hundred and eighty (180) days following the date the PARTICIPANT separated from service or the date the Administrator is notified of PARTICIPANT'S separation from service, whichever is later. 8. ARTICLE Vlll, is hereby amended by the addition of the following Section: 8.05. In service distribution - $3,500 or less: If the total amount payable to a PARTICI- PANT under the PLAN is $3,500 or less, the PARTICIPANT may elect to receive such amount before separation of service (or the PLAN may distribute such amount without the PARTICIPANT'S consent) 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 distribution, s and (b) there has been no prior distribution under the PLAN to such PARTICI- PANT to which this Section applied. 9. ARTICLE X is hereby amended by the addition of the following Section: 10.07. The EMPLOYER adopts the Section 457 Custodial Account to hold assets, other than assets held in annuity contracts, which will provide benefits for the PARTICIPANTS and Beneficiaries hereunder in a common fund with the assets of other Section 457 Plans. Such custodial account shall be held by the custodian thereof for the exclusive benefit of such PARTICIPANTS and Beneficiaries of this and other Section 457 Plans and the assets may not be diverted to any other use. The Administrator shall be the agent of the EMPLOYER for purposes of providing direction to the custodian of the custodial account from time to time as to the investment of the funds held in the account, the transfer of assets to or from the account and all other matters. A copy of the Section 457 Custodial Account Agreement which describe the duties of the custodian is attached hereto as Exhibit A and is incorporated herein by reference. 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