CITY OF FRESNO
DEFERRED COMPENSATION PLAN DOCUMENT
Adopted by City Council on ______________
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TABLE OF CONTENTS
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ARTICLE I PLAN ESTABLISHED ......................................................................................1
1.1 Plan Established .......................................................................................................... .....1 ARTICLE II PURPOSE ...........................................................................................................1
2.1 Primary Purpose ........................................................................................................... ....1
2.2 Agreement ................................................................................................................. .......1
2.3 Tax Status not Guaranteed ...............................................................................................1 ARTICLE III DEFINITIONS .... ................................................................................................1
3.1 Accumulated Deferrals ....................................................................................................1
3.2 Administrator ............................................................................................................. ......1
3.3 Annual Deferral ........................................................................................................... ....1
3.4 Beneficiary ............................................................................................................... ........2
3.5 Compensation .............................................................................................................. ....2
3.6 Deferred Compensation ...................................................................................................2
3.7 Deferred Compensation Board ........................................................................................2
3.8 Eligible Deferred Compensation Plan Transfer ...............................................................2
3.9 Eligible Deferred Compensation Plan Transfer Subaccount ...........................................3
3.10 Eligible Employee ........................................................................................................ ....3
3.11 Employee ................................................................................................................. ........3
3.12 Eligible Retirement Plan ................................................................................................. .3
3.13 Eligible Rollover Distribution .........................................................................................3
3.14 Employer ................................................................................................................. .........3
3.15 Includible Compensation .................................................................................................3
3.16 IRC ...................................................................................................................... .............3
3.17 Normal Retirement Age ...................................................................................................3
3.18 Participant .............................................................................................................. ..........4
3.19 Participation Agreement .................................................................................................. 4
3.20 Participation Account .................................................................................................... ..4
3.21 Plan Year ................................................................................................................ ..........4
3.22 Pre-Tax Deferrals ........................................................................................................ .....4
3.23 Pre-Tax Deferrals Subaccount .. .......................................................................................4
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3.24 Qualified Domestic Relations Order ................................................................................4
3.25 Required Beginning Date .................................................................................................4
3.26 Rollover Amount .......................................................................................................... ...4
3.27 Rollover Contribution .................................................................................................... ..5
3.28 Rollover Subaccount ...................................................................................................... ..5
3.29 Roth Contribution(s) ..................................................................................................... ...5
3.30 Roth Contribution Subaccount .........................................................................................5
3.31 Roth In-Plan Rollover Contribution ................ ................................................................5
3.32 Roth In-Plan Rollover Subaccount ..................................................................................5
3.33 Severance Event .......................................................................................................... .....5
3.34 State Law ................................................................................................................ .........5
3.35 Trust .................................................................................................................... .............5
3.36 Trust Agreement .......................................................................................................... ....5
3.37 Trustee .................................................................................................................. ...........5 ARTICLE IV ADMINISTRATION ..........................................................................................6
4.1 Administered by Deferred Compensation Board .............................................................6
4.2 Deferred Compensation Board Duties and Responsibilities ............................................6
4.3 Deferred Compensation Board Powers ............................................................................6 ARTICLE V PARTICIPATION IN THE PLAN .....................................................................7
5.1 Eligibility ............................................................................................................... ..........7
5.2 Enrollment in the Plan .................................................................................................... .7
5.3 Investment Options ........................................................................................................ ..7
5.4 Deferral .................................................................................................................. ..........7
5.5 Investment Vehicle Election and Direction of Investments ............................................8
5.6 Designation of Beneficiary ..............................................................................................8
5.7 Modification of Deferral or Investment Option(s) ..........................................................8
5.8 Payment of Elective Deferrals to the Trust ......................................................................9 ARTICLE VI LIMITATION ON DEFERRALS .............. ........................................................9
6.1 Deferral Limitation ....................................................................................................... ...9
6.2 Catch-up Provisions ....................................................................................................... ..9
6.3 Excess Deferrals .......................................................................................................... ..10
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6.4 Coordination of Limits ...................................................................................................1 0 ARTICLE VII TRANSFERS AND ELIGIBLE ROLLOVERS ...............................................10
7.1 Rollover Contributions ..................................................................................................10
7.2 Transfers to Certain Plans for the Purchase of Service Credit ......................................11
7.3 Roth In-Plan Rollover Contributions .............................................................................12 ARTICLE VIII DISTRIBUTION OF BENEFITS ......... ............................................................12
8.1 Inactive De Minimis Accounts ......................................................................................12
8.2 Distribution upon the Death of Participant or Beneficiary ............................................12
8.3 Elections Regarding Distribution ...................................................................................12
8.4 Distribution of Deferrals ................................................................................................1 3
8.5 Eligible Rollover Distributions ......................................................................................13
8.6 Unforeseeable Emergency – General ............................................................................14
8.7 Qualified Domestic Relations Orders – General ...........................................................14 ARTICLE IX LOANS TO PARTICIPANTS ..........................................................................15
9.1 Loans to Participants ..................................................................................................... .15 ARTICLE X MISCELLANEOUS PROVISIONS ............. ....................................................18
10.1 Leave of Absence ......................................................................................................... ..18
10.2 Termination of Plan ...................................................................................................... .18
10.3 Amendment of Plan .......................................................................................................1 8
10.4 Non alienation of Benefits - Attachment .......................................................................18
10.5 Plan Assets .............................................................................................................. .......18
10.6 Participation by Deferred Compensation Boar d Members ............................................18
10.7 Employer Contributions .................................................................................................18
10.8 Controlling Law .......................................................................................................... ...19
10.9 Suspension of Contributions ......................... .................................................................19
10.10 No Contract of Employment ..........................................................................................19
10.11 Severability of Provisions .............................................................................................. 19
10.12 Heirs, Assigns and Personal Representatives ................................................................19
10.13 Payments to Minors, Etc ................................................................................................1 9
10.14 Reliance on Data and Consents .....................................................................................19
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10.15 Equal Access to Benefits, Rights and Features ..............................................................20
10.16 Claim Procedures ........................................................................................................ ...20
10.17 Gender and Number ....................................................................................................... 20
10.18 Qualified Military Service .............................................................................................2 0
10.19 Entire Agreement ........................................................................................................ ...20 ARTICLE I PLAN ESTABLISHED ...................................................................................... 1
1.1 Plan Established .......................................................................................................... .....1
1.2 Primary Purpose ........................................................................................................... ....1
1.3 Agreement ................................................................................................................. .......1 ARTICLE II DEFINITIONS .................................................................................................... 1
2.1 Accumulated Deferrals .................................................................................................... 1
2.2 Administrator ............................................................................................................. ......1
2.3 Annual Deferral ........................................................................................................... ....2
2.4 Beneficiary ............................................................................................................... ........2
2.5 Compensation .............................................................................................................. ....2
2.6 Deferred Compensation Board ........................................................................................ 2
2.7 Eligible Deferred Compensation Plan Transfers Account ............................................... 3
2.8 Eligible Rollover Contribution ........................................................................................ 3
2.9 Eligible Rollover Subaccount .. ........................................................................................3
2.10 Employee ................................................................................................................. ........3
2.11 Employer ................................................................................................................. .........3
2.12 Includible Compensation ................................................................................................. 3
2.13 IRC ...................................................................................................................... .............4
2.14 Normal Retirement Age ................................................................................................... 4
2.15 Participant .............................................................................................................. ..........4
2.16 Participation Account .................................................................................................... ..5
2.17 Plan Year ................................................................................................................ ..........5
2.18 Pre-Tax Deferrals Subaccount .........................................................................................5
2.19 Required Beginning Date ................................................................................................. 5
2.20 Rollover Amount .......................................................................................................... ...5
2.21 Roth Contribution(s) ..................................................................................................... ...5
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2.22 Roth Contribution Subaccount ......................................................................................... 6
2.23 Roth In-Plan Eligible Rollover Contribution ................................................................... 6
2.24 Roth In-Plan Rollover Subaccount .................................................................................. 6
2.25 Severance from Employment ........................................................................................... 6
2.26 Trust .................................................................................................................... .............6
2.27 Trust Agreement .......................................................................................................... ....6
2.28 Trust Fund ............................................................................................................... .........6
2.29 Trustee .................................................................................................................. ...........6 ARTICLE III PARTICIPATION IN TH E PLAN .....................................................................7
3.1 Eligibility ............................................................................................................... ..........7
3.2 Deferral and Contribution Elections ................................................................................ 7
3.3 Commencement of Participation ..................................................................................... 7
3.4 Information Provided by the Participant .......................................................................... 7
3.5 Contributions Made Promptly ......................................................................................... 8
3.6 Amendment of Annual Deferrals Election ...................................................................... 8
3.7 Leave of Absence ......................................................................................................... 856
3.8 Disability ................................................................................................................ ..........8
3.9 Employer Contributions ................................................................................................... 8 ARTICLE IV LIMITATION ON DEFE RRALS ......................................................................8
4.1 Basic Annual Limitation .................................................................................................. 8
4.2 Age 50 Plus Catch-up Annual Deferral Contributions .................................................... 9
4.3 Special Section 457 Catch-up Limitation ........................................................................ 9
4.4 Special Rules ............................................................................................................. .......9
4.5 Disregard Excess Deferral ............................................................................................. 10
4.6 Correction of Excess Deferrals ...................................................................................... 10
4.7 Protection of Persons Who Serve in a Uniformed Service ............................................ 10 ARTICLE V LOANS TO PARTICIPANTS .......................................................................... 10
5.1 Loans to Participants ..................................................................................................... .10
5.2 Maximum Loan Amount ............................................................................................... 11 ARTICLE VI DISTRIBUTION OF BENEFITS ......... ............................................................13
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6.1 Benefit Distribution at Retirement or Ot her Severance from Employment ..................13
6.2 Election of Benefit Commencement Date ..................................................................... 14
6.3 Forms of Distribution ..................................................................................................... 14
6.4 Death Benefit Distributions ................................................................................... 141112
6.5 Amount of Participation Accoun t ..................................................................................14
6.6 Revocation of Prior Election .......................................................................................... 14
6.7 Latest Distribution Date ................................................................................................. 14
6.8 In-Service Distributions from Rollover Account ........................................................... 15
6.9 Unforeseeable Emergency Distribution ......................................................................... 15
6.10 Voluntary Distributions for Certain Partic ipation Accounts of $5,000 or Less ............16
6.11 Eligible Rollover Distributions .............................................................................. 161314 ARTICLE VII ROLLOVERS TO THE PLAN AND TR ANSFERS .......................................16
7.1 Eligible Rollover Contributions to the Plan ................................................................... 16
7.2 Plan-to-Plan Transfers to the Plan ......................................................................... 171415
7.3 Roth Rollover Contribution ........................................................................................... 17
7.4 Plan-to-Plan Transfers from the Plan ............................................................................. 17
7.5 Permissive Service Credit Transfers ...................................................................... 181516
7.6 In-Plan Roth Transfers ................................................................................................... 18 ARTICLE VIII TRUST FUNDS .......... ......................................................................................19
8.1 Trust Fund ................................................................................................................ ......19 ARTICLE IX MISCELLANEOUS PROVISIONS ........ .................................................191617
9.1 Non-Assignability .................................................................................................. 191617
9.2 Domestic Relations Orders ............................................................................................ 19
9.3 IRS Levy .................................................................................................................. ......20
9.4 Mistaken Contributions .................................................................................................. 20
9.5 Payments to Minors and Incompetents .................................................................. 201718
9.6 Procedure When Distributee Cannot Be Located .................................................. 201718
9.7 Termination of Plan ....................................................................................................... 20
9.8 Amendment of Plan ....................................................................................................... 20
9.9 Participation by Deferred Compensation Board Members ............................................ 21
9.10 No Contract of Employment .................................................................................. 211819
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9.11 Heirs, Assigns and Personal Representati ves ........................................................211819
9.12 Equal Access to Benefits, Rights and Features ...................................................... 211819
9.13 Administered by Deferred Compensation Board ................................................... 211819
1 CITY OF FRESNO
DEFERRED COMPENSATION PLAN DOCUMENT
ARTICLE I
PLAN ESTABLISHED
1.1 Plan Established. The Employer hereby amends and re states the City of Fresno Deferred Compensation Plan Document (hereina fter referred to as the "Plan") effective ___________.[__________, 2021]. It is intended that the Plan shall qualify as an Eligible Deferred Compensation Plan within the meaning of Section 457(b)(1) of the Internal Revenue Code of 1986 as amended ("IRC"), and the regulations thereunder, and that the Plan is sponsored by an eligible governmental Employer in accordance with IRC 457(e)(1).
ARTICLE II
PURPOSE
2.11.2 Primary Purpose . The primary purpose of the Plan is to provide retirement income and other deferred benefits to the Em ployees of the Employer and the Employees' Beneficiaries in accordance with the provisions of Section 457 of the IRC, and Government Code Sections 53212 et seq.
2.21.3 Agreement. The Plan shall be an agreement solely between the Employer and participating Employees. The Employer has established a Trust in the Trust Agreement, to hold all assets of the Plan for the exclusive benefit of Participants and Beneficiaries. The Trust shall comply with IRC Section 457(g) and constitute a valid trust un der applicable state law. The powers and duties of the Trustee are set forth in the Trust Agreement.
2.3 Tax Status not Guaranteed. The Employer, and the Deferred Compensation Board which administers the Plan, do not, and can not, represent or guarantee that any particular federal and state income, payroll, or other tax consequences will occur by reason of an Employee's participation in this Plan. The Participant shall consult with his own attorney or other representative regarding all tax or other consequences of participation in this Plan.
ARTICLE IIIARTICLE II
DEFINITIONS
The following terms when used herein, shall have the following meaning:
3.12.1 Accumulated Deferrals means Compensation deferred under the Plan, adjusted until date of payment by income received, increasesincreases, or decreases in investment value, fees and any prior distributions made.
3.22.2 Administrator means the Deferred Compensation Board or the duly authorized representative contracted to provide, if ap plicable, the agent appointed by the Deferred Compensation Board that is responsible for administrative services for the Plan.
DEFERRED COMPENSATION PLAN DOCUMENT
2 3.32.3 Annual Deferral means the amount of Deferred Compensation for a Participantdeferred in aany Plan Year.
3.42.4 Beneficiary means any the designated person, trust, corporation or firm , ( or, if none, the estate of the Participant , or any combination of the foregoing designated by the Participant), who is entitled to receive benefits under the Plan . after the death of the Participant.
Beneficiary may mean singular or plural, primary or contingent.
3.52.5 Compensation means all payments made cash compensation for services to the Employee by the Employer as remuneration for services rendered, including salary, wages, fees, commissions, bonuses and overtime pay, that is includible in the Participant'sEmployee's gross income for the calendar year, plus amounts that would be cash compensation for services to the Employer includible in the Participant'sEmployee's gross income for the calendar year but for a compensation reduction election under IRC Sections 125, 132(f), 401(k), 403(b), or 457(b) (including an election to defer compensation under Article 4Section 3.2). Compensation shall be taken into accountconsidered at its present value and its amount shall be determined without regard to any community property laws. Compensation shall include differential wage payments (as such term is defined in IRC Section 3401(h)(2)). To the extent permitted by Federal law and Treasury Regulations ("Treas. Reg.") or other similar guidance, Compensation also includespayments of accrued bona fide sick, vacation, or other leave pay, which may beare paid to a Participant by the later of two and one-half (2½) months afterfollowing (a) a Participant's SeparationSeverance from Employment or (b) by the endlast day of the calendar year that includesPlan Year during which the date of such SeparationSeverance from Employment so long asoccurred that are includible in the Employee would have been able to useParticipant's gross income for the leave if employment had continued.applicable Plan Year under the Code and Treasury Regulations are Compensation.
For purposes of Section 4.1, Compensation shall not include any amounts that are excludible from the Participant's gross income for each Plan Year pursuant to IRC 457(e)(5).
3.6 Deferred Compensation means the amount of Participant's Compensation which the Participant and the Employer mutually agree to defer in accordance with the provisions of this Plan, or any other amount which the Employer agrees to credit to a Participant's Account under this Plan. “Deferred Compensation” means the aggreg ate Pre-Tax Deferrals and Roth Contributions made from a Participant’s Compensation, which said Participant has elected to defer in accordance with the provisions of this Plan. When used in the context of deferrals of Compensation, “defer(s)”, “deferral” or “deferred” means, individually or collectively, Pre-Tax Deferrals and Roth Contributions, as applicable.
3.72.6 Deferred Compensation Board means the Deferred Compensation Board which shall administer the City of Fr esno Deferred Compensation Plan. The Deferred Compensation Board shall consist of five members selected as follows:
(a) Two members from any City department(s ) appointed by the City Manager with the approval of the City Council; and
(b) Two members elected by and from the plan Participants who have a nonzero balance in their Deferred Compensation Account (active or any other status); and
DEFERRED COMPENSATION PLAN DOCUMENT
3 (c) A fifth member chosen by the previously designated four members from the qualified electors of Fresno County not connected with the City of Fresno or the Plan.
The members elected by and from the Plan Participants shall serve a term of four years, whose terms shall be staggered. The remaining members shall serve at the pleasure of the appointing or electing authority.
3.82.7 Eligible Deferred Compensation Plan Transfer means a transfer to the Plan on behalf of a Participant from another eligible deferred compensation plan. Transfers AccountEligible Deferred Compensation Plan Transfer Subaccount means the subaccount established within a Participation Account to which a Participant’s Eligible Deferred Compensation Plan Transfers are recorded, as applicable, and any interest, dividends, gains, losses, earnings or expenses or the like thereon.
2.8 Eligible EmployeeRollover Contribution means any full time permanent Employee or City Councilmember of the City or any contribution of an Eligible Rollover Distribution on behalf of a Participant from an Eligible Retirement Plan ( other Employeethan an eligible for the City's pension system.deferred compensation plan).
2.9 Eligible Rollover Subaccount means the subaccount established within a Participation Account to which a Participant's E ligible Rollover Contributions are recorded, as applicable, and any interest, dividends, gains, losses, earnings or expenses or the like thereon.
2.10 Employee means each natural person, whether appointed or elected, who is employed by the Employer as a common law employee or a permanent part time City Employees are also eligible to participateEmployee, excluding any employee who is included in this Deferred Compensation Plan.a unit of employees covered by a collective bargaining agreement that does not specifically provide for participation in the Plan. Employee does not include independent contractors.
Employee means any individual who performs services for the Employer for Compensation on a regular basis, including elected and appointed officials. Employee does not include independent contractors.
3.9 Eligible Retirement Plan means any account, annuity, plan or trust as defined in IRC Section 402(c)(8)(B).
3.10 Eligible Rollover Distribution means any distribution as defined in IRC Section 402(c)(4)(E).
3.112.11 Employer means the City of Fresno, California.
3.122.12 Includible Compensation means Compensation for services performed for the Employer, as defined in IRC Section 457(e)(5). Includible Compensation shall be limited in accordance with IRC Section 401(a)(17).
DEFERRED COMPENSATION PLAN DOCUMENT
4 means an Employee's actual wages in box 1 of Form W-2 for a year for services to the Employer, but subject to a maximum of $200,000 (or such higher maximum as may apply under IRC 401(a)(17)) and increased (up to the dollar maximum) by any compensation reduction election under IRC 125, 132(f), 401(k), 403(b), or 457(b) (including an election to defer Compensation under Section 3.2).
3.132.13 IRC means the Internal Revenue Code of 1986, as amended from time to time.
3.14 Normal Retirement Age means age 70½, unless the Participant has elected an alternate Normal Retirement Age by written instrument delivered to the Deferred Compensation Board prior to a Severance Event. A Participant’s Normal Retirement Age determines the period during which a Participant may utilize the 457 Catch-Up Dollar Limitation set forth in Article VI.
Once a Participant has to any extent utilized the catch-up limitation in Article VI, his or her Normal Retirement Age cannot be changed.
2.14 A Participant’s alternate Normal Retirement Age may not beNormal Retirement Age means any age designated by a Participant beginning no earlier than the earliest date that theat which a Participant will becomeis eligible to retire and receive immediate unreduced retirement benefits under his or her respective C ity of Fresno Retirement System ( the Fire and Police Retirement System or Employees’the City Employees' Retirement System), and may not be later than the date the Participant will attain age 70½.
If a Participant continues employment after attaining age 70½, not having previously elected an alternate Normal Retirement Age, the Participant’s alternate Normal Retirement Age shall be 70 ½ for purposesor in the case of the Special 457 Catch-Up provisions.
If thea Participant who will not become eligible to receive benefits under his or her respective City of Fresno Retirement System, the Participant’sParticipant's alternate Normal Retirement Age may not be earlier than attainment of age 50 for Participants who are members of the Fire and Police Retirement System, and age 55 for Participants who are members of the City Employees’ Retirement System or are Perman ent Part time EmployeesEmployees' Retirement System or are permanent part time Employees and may not be later than the date the Participant will attain age 70½. If a Participant continues employment after attaining age 70½, not having previously made the catch-up election provided for under Section 4.2, the Normal Retirement Age shall be the age designated by the Participant, which shall not be later than the age at which the Participant has a Severance from Employment. Once a Participant has to any extent utilized the catch-up limitation in Section 4.3, his or her Normal Retirement Age cannot be changed.
3.152.15 Participant means any member of the Plan who has elected, pursuant to the Plan, to defer a portion of his Compensation, and who fulfills the requirements of participation in the Plan. A Participant shall also mean, when appropriate to the context, a former an Employee who is eligible to receive a benefit of any typecurrently deferring Compensation, or who has previously deferred Compensation under the Plan. by salary reduction and who has not received a distribution of his or her entire benefit under the Plan. Only individuals who perform services for the Employer as an Employee may defer Compensation under the Plan.
DEFERRED COMPENSATION PLAN DOCUMENT
5 3.16 Participation Agreement means the agreement, including any amendments and modifications thereof, executed and filed by an Eligible Employee with the Administrator pursuant to Article V, in which the Eligible Employee elects to become a Participant in the Plan.
3.172.16 Participation Account means the account and subaccounts established and maintained for a Participant under the Plan to which there is recorded, as applicable, the Participant’s . The Administrator may establish the following subaccounts for each Participant:
(a) Pre-Tax Deferrals, Account;
(b) Roth Contributions, Contribution Account;
(c) Eligible Deferred Compensation Plan Transfers, Account; and (d) Eligible Rollover Contributions and Roth In-Plan Ro llover Contributions, if any, and any interest, dividends, gains, losses, earnings or expenses or the like thereon.
A Participant’s Participation Account shall be divided into the following subaccounts, as applicable: the Contribution Account.
2.17 Plan Year means the calendar year.
3.182.18 Pre-Tax Deferrals Subaccount, the Roth Contribution Subaccount, the Eligible Deferred Compensation Plan Transfer Subaccount, the Rollover Subaccount and the Roth In-Plan Rollover Subaccount.Plan Year means the calendar year.
3.20 Pre-Tax Deferrals means the amount of a Participant's Compensation deferred on a pre-tax basis.
Pre-Tax Deferrals Subaccount means the subaccount established within a Participation Account to which a Participant’sParticipant's Pre-Tax Deferrals are recorded, as applicable, and any interest, dividends, gains, losses, earnings or expenses or the like thereon.
3.21 Qualified Domestic Relations Order or "QDRO" means any judgment, decree or order as defined in IRC Section 414(p).Required Beginning Date means April 1 of the calendar year following the later of: (a) the calendar year in which the Participant attains age 72 (if the Participant was born after June 30, 1949) or age 70½ (if the Participant was born before July 1, 1949); or (b) the calendar year in which the Participant retires or leaves City service.
3.232.20 Rollover Amount means that portion of an Eligible Rollover Distribution from this Plan that, by election of the prospective distributee, is transferred directly or indirectly to an Eligible Retirement Plan.
3.242.21 RolloverRoth Contribution (s) means the contribution of an Eligible Rollover Distribution on behalf of a Participant from an Eligible Retirement Plan (other than an eligible deferred compensation plan).
Rollover means after-tax contributions allocated to a Participant's Roth Contribution subaccount.
DEFERRED COMPENSATION PLAN DOCUMENT
6 3.252.22 Roth Contribution Subaccount means the subaccount established within a Participation Account to which a Participant’s RolloverParticipant's Roth Contributions are recorded, as applicable, and any interest, dividends, gains, losses, earnings or expenses or the like thereon.
3.26 Roth Contribution(s) means contributions made pursuant to the Participant’s Participation Agreement that (i) the Participant irrevocably designates at the time of the contribution election as post-tax Roth contributions that are being made from Compensation on an after-tax basis; and (ii) the Employer treats as includible in the Participant’s gross income in the year deferred.
Roth Contribution Subaccount means the subaccount established within a Participation Account to which a Participant’s Roth Contributions are recorded, as applicable, and any interest, dividends, gains, losses, earnings or expenses or the like thereon.
3.272.23 Roth In-Plan Eligible Rollover Contribution means the portion of an Eligible Rollover Distribution from the Plan that a Participant elects to have allocated to the Roth In-Plan Rollover Subaccount within the Participant’sParticipant's Participation Account.
3.282.24 Roth In-Plan Rollover Subaccount means the subaccount established within a Participant’sParticipant's Participation Account to which a Participant’sParticipant's Roth In-Plan Eligible Rollover Contributions are recorded, as applicable, and any interest, dividends, gains, losses, earnings or expenses or the like thereon.
2.25 Severance Eventfrom Employment means the date that the Employee dies, retires, or otherwise has a severance of the Participant’sfrom employment with the Employer that constitutes a separation of service within the meaning of IRC Sections 414(u)(12)(B), , as determined by the Administrator (and 457(d)(1)(A)(ii) or ontaking into account of the Participant’s death or retirement. guidance issued under the IRC). In general, a Participant will be deemed to have severed his or herhad a Severance from Employment as of the date of his or her last payroll date.
3.29 State Law means any statutes, court decisions, executive orders, administrative rulings, regulations or other proclamations having the force of law in the State of California.
3.302.26 Trust means the funding vehicle established pursuant to IRC Section 457(g) which shall consist of all assets of the Plan held by the Trustee pursuant to the terms of the Trust Agreement.
3.312.27 Trust Agreement means the written agreement (or declaration) made by and between the City of Fresno, as the Sponsor,Employer and the Trustee under which governs the operation of the Trust Fund is maintained.
2.28 Trust Fund means the trust fund created under and subject to the Trust Agreement.
2.29 Trustee means the Trustee duly appointed and currently serving under the Trust Agreement.
DEFERRED COMPENSATION PLAN DOCUMENT
7 ARTICLE III
PARTICIPATION IN THE PLAN
3.1 Eligibility. means Each Employee shall be eligible to participate in the Plan and defer Compensation hereunder on the first day of the first month immediately upon employment with the Employer.
3.2 Deferral and Contribution Elections.
(a) An Employee may elect to become a Participant by executing an election to defer a portion a portion of his or her Compensation (and having that amount contributed as an Annual Deferral on his or her behalf) and filing it with the Administrator.
This participation election shall be made on the deferral agreement provided by the Administrator under which the Employee agrees to be bound by all the terms and conditions of the Plan. The Administ rator may establish a minimum deferral amount and may change such minimums from time to time. The participation election shall also include designation of investment funds and a designation of Beneficiary.
(b) Any election shall remain in effect until a new election is filed. If a Participant does not have a valid and complete investme nt direction on file, deferrals may be invested in a default fund selected by the Administrator in its sole discretion, until the Participant makes an affirmative election regarding the investment of his or her Participation Account.
(c) Unless otherwise designated by the Participant in the participation election, any Accumulated Deferrals under the Plan shall be treated as pre-tax deferrals. (d) Roth Contributions. Roth Contributions will be credited and debited to the Roth Contribution Account maintained for each Participant. The Plan will maintain a separate record of the amount of Roth Contributions in each Participant's Participation Account. No contributions other than Roth Contributions and properly attributable earnings will be credited to each Participant's Roth Contribution Account.
3.3 Commencement of Participation . An Employee shall become a Participant as soon as administratively practicable following the date the Employee files a participation election pursuant to Section 3.2. Such election shall become effective no earlier than the calendar month during which the Participant first becomes an Employee if an agreement providing for the deferral is entered into on or before the first day on which the Participant performs services for the Employer.
3.4 Information Provided by the Participant. Each Employee enrolling in the Plan should provide to the Administrator at the time of initial enrollment, and later if there are any changes, any information necessary or advisable for the Administrator to administer the plan, including, without limitation, whether the Employee is a participant in any other eligible plan under IRC 457(b).
DEFERRED COMPENSATION PLAN DOCUMENT
8 3.5 Contributions Made Promptly. Annual Deferrals by the Participant shall be transferred to the Trust Fund within a period that is not longer than is reasonable for the proper administration of the Participant's Participation Account. For this purpose, Annual Deferrals shall be treated as contributed within a period that is not longer than is reasonable for the proper administration if the contribution is made to the Trust Fund within 15 business days following the end of the month in which the amount would otherwise have been paid to the Participant.
3.6 Amendment of Annual Deferrals Election. Subject to other provisions of the Plan, a Participant may at any time revise his or her participation election, including a change of the amount of his or her Annual Deferrals, the amount designated as pre-tax deferrals or Roth Contributions, his or her investment direction an d his or her designated Beneficiary. Unless the election specifies a later effective date, a change in the amount of the Annual Deferrals shall take effect as of the first day of the next following month, or as soon as administratively practicable if later, and be equal at least $5.00 dollars per pay period. A change in the investment direction shall take effect as of the date provided by the Admini strator. A change in the Beneficiary designation shall take effect at the earliest possible payroll period which allows sufficient time for the order to be processed through the City payroll.
3.7 Leave of Absence. Unless an election is otherwise revised, if a Participant is absent from work by leave of absence, Annual Deferrals und er the Plan shall continue to the extent that Compensation continues.
3.8 Disability. A disabled Participant may elect Annual Deferrals during any portion of the period of his or her disability to the extent that he or she has actual Compensation (not imputed Compensation and not disability benefits) from which to make contributions to the Plan and has not had a Severance from Employment.
3.9 Employer Contributions . The Employer may add additional deferred Compensation for services that will be rendered by the Employee to the Employer during any calendar month, provided:
(a) The Employee has elected to have such additional Compensation deferred, invested, and distributed, pursuant to this Plan, prior to the calendar month in which the Compensation is earned; and
(b) Such additional deferred Compensation, when added to all other Annual Deferrals under the Plan, does not exceed the maximum deferral permitted under Article IV.
ARTICLE IV
LIMITATION ON DEFERRALS
4.1 Basic Annual Limitation. Except as provided in Section 4.2, relating to catch-up provisions, the maximum amount of the Annual Deferral under the Plan for any calendar year, shall not exceed the lesser of (a) 100% of the Participant's Includible Compensation or (b) the Applicable Dollar amount established under IRC 457(e)(15) ($19,500 in the year 2021), adjusted for the cost-of-living, to the extent provided under the IRC.
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9 4.2 Age 50 Plus Catch-up Annual Deferral Contributions. Pursuant to IRC 414(v), a Participant who will attain age 50 or more by the end of the calendar year is permitted to elect an additional amount of Annual Deferrals, up to the maximum age 50 catch-up Annual Deferrals adjusted for cost-of-living to the extent provided under the IRC ($6,500 for 2021).
4.3 Special Section 457 Catch-up Limitation. If the applicable year is one of a Participant's last three calendar years ending before the year in which the Participant attains Normal Retirement Age and the amount determin ed under this Section 4.3 exceeds the amount computed under Sections 4.1 and 4.2, then the An nual Deferral limit under this Section 4.3 shall be the lesser of:
(a) An amount equal to twice the Section 4.1 Applicable Dollar Amount for such year or
(b) The sum of:
(i) An amount equal to (A) the aggregate Section 4.1 limit for the current year plus each prior calendar year beginning after December 31, 20012001, during which the Participant was an Employee under the Plan, minus (B) the aggregate amount of Compensation that the Participant deferred under the Plan during such years, plus
(ii) An amount equal to (A) the aggregate limit referred to in IRC 457(b)(2) for each prior calendar year beginning after December 31, 19781978, and before January 1, 20022002, during which the Participant was an Employee (determined without regard to Section 4.2 and 4.3), minus (B) the aggregate contributions to Pre-2002 Coordination Plans for such years.
4.4 Special Rules. For purposes of this Article IV, the following rules shall apply:
(a) Participant Covered by More Than One Eligible Plan. If the Participant is or has been a participant in one or more other eligible plans within the meaning of IRC 457(b), then this Plan and all such other plans shall be considered as one plan for purposes of applying the foregoing limitations of this Article IV. For this purpose, the Administrator shall take into account any other such eligib le plan maintained by the Employer and shall also take into account any other such eligible plan for which the Administrator receives from the Participant sufficient information concerning his or her participation in such other plan. (b) Pre-Participation Years. In applying Section 4.3, a year shall be taken into account only if the Participant was eligible to participate in this Plan during all or a portion of the year was subject to the Basic Annual Limitation described in Section 4.1 or any other plan ceiling required by IRC 457(b).
(c) Pre-2002 Coordination Years. For purposes of Section 4.3(b)(2)(B), "contributions to Pre-2002 Coordination Plans" mean s any employer cont ribution, salary reduction or elective contribution under any other eligible Code section 457(b) plan, or a salary reduction or elective contribution under any Code section 401(k)
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10 qualified cash or deferred arrangement, Code section 402(h)(1)(B) simplified employee pension (SARSEP), Code section 403(b) annuity contract, and Code section 408(p) simple retirement account, or under any plan for which a deduction is allowed because of a contribution to an organization described in IRC 501(c)(18), including plans, arrangements or accounts maintained by the Employer or any employer for whom the Participant performed services. However, the contributions for any calendar year are only taken into account for purposes of Section
4.3(b)(2)(B) to the extent that the total of such contributions does not exceed the aggregate limit referred to in IRC 457(b)(2) for that year.
4.5 Disregard Excess Deferral. For purposes of Sections 4.1, 4.2 and 4.3, an individual is treated as not having deferred compensation under a plan for a prior taxable year to the extent Excess Deferrals under the plan are distributed, as described in Section 4.6. To the extent that the combined deferrals for pre-2002 years ex ceeded the maximum deferral limitations, the amount is treated as an Excess Deferral for those prior years.
4.6 Correction of Excess Deferrals. If the Annual Deferral amount on behalf of a Participant for any calendar year exceeds the limitations described in this Article IV, or the Annual Deferral on behalf of a Participant for any calendar year exceeds the limitations described in this Article IV when combined with other amounts deferred by the Participant under another eligible deferred compensation plan described under IRC 457(b) for which the Participant provides information that is accepted by the Administrator, then the Annual Deferral, to the extent in excess of the applicable limitation (adjusted for any income or loss in value, if any, allocable thereto), shall be distributed to the Participant, with allocable net income, as soon as practicable after the Administrator determines that such amount wa s an excess deferral or contribution. Excess Amounts shall first be distributed from pre-tax deferrals, and second from Roth Contributions, as determined in accordance with methods and procedures established by the Administrator.
4.7 Protection of Persons Who Serve in a Uniformed Service. An Employee whose employment is interrupted by qualified military service under IRC 414(u) or who is on a leave of absence for qualified military service under IRC 41 4(u) may elect to make additional Annual Deferrals upon resumption of employment with the Employer equal to the maximum Annual Deferrals that the Employee could have elected during that period if the Employee's employment with the Employer had continued (at the same level of Compensation) without the interruption or leave, reduced by the Annual Deferrals, if any, actually made for the Employee during the period of the interruption or leave. This right applies for five years following the resumption of employment (or, if sooner, for a period equal to three times the period of the interruption or leave).
ARTICLE V
LOANS TO PARTICIPANTS
5.1 Loans to Participants. A Participant who has a minimum Participation Account of $2,000 who is an Employee may apply for and receive a loan from his or her Participation Account subject to the terms and conditions of th is Section 5.1 and the IRC. Any such loan may not be for an amount less than the minimum amount specified by the Administrator. If not specified by the Administrator, the minimum loan amount shall be $1,000. If a Participant's Severance from Employment occurs after he or sh e has requested a loan but before the loan is
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11 distributed to the Participant, the Participant's request for a loan shall automatically be cancelled.
A loan shall be made from the Participant's pre-tax deferrals, and may not be made from a Roth Contribution Account.
5.2 Maximum Loan Amount. No loan to a Participant hereunder may exceed the lesser of:
(a) $50,000 reduced by the greater of (i) highest outstanding balance of any other loan from the Plan during the one-year period ending on the day before the date the loan is approved by the Administrator (not taking into account any payments made during such one-year period) or (ii) the outstanding balance on any loan from the Plan to the Participant on the date the loan is made or (b) 50% of the value of the vested Participation Account (as of the Valuation Date immediately preceding the date on which such loan is approved by the Administrator).
For purposes of this Section 5.2, any loan from any other plan maintained by a participating employer shall be treated as if it were a loan made from the Plan, and the Participant's vested interest under any such other plan shall be considered a vested interest under this Plan; provided, however, that the provisions of this paragraph shall not be applied so as to allow the amount of a loan under this S ection 5.2 to exceed the amount that would otherwise be permitted in the absence of this paragraph. (c) Loan Terms. The terms of the loan shall:
(i) require level amortization with paym ents not less frequently than by monthly automatic deduction (ACH) fro m the Participant's personal bank account throughout the repayment period except that alternative arrangements for repayment may apply in the event that the borrower is on an bona fide unpaid leave of absence for a period not to exceed one year for leaves other than a qualified military leave within the meaning of IRC 414(u) or for the duration of a leave which is due to qualified military service;
(ii) require that the loan be repaid within five years from the date of the loan, unless the Participant certifies in writing to the Administrator that the loan is to be used to acquire any dwelling unit which within a reasonable time is to be used (determined at the time the loan is made) as a principal residence of the Participant; and
(iii) provide for interest charged at prime plus 1%, designed to provide the Plan with a return commensurate with interest rates charged by persons in the business of lending money under similar circumstances.
(d) Security for Loan; Default.
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12 (i) Security. Any loan to a Participant shall be secured by the pledge of the portion of the Participant's interest in the Plan invested in such loan. (ii) Default. In the event that a Participant fails to make a loan payment under this Section 5 within 90 days after the date such payment is due, a default on the loan shall occur. In the event of such default, (A) all remaining payments on the loan shall be immedi ately due and payable, (B) effective as of the first day of the calendar month next following the month in which any such loan default occurs, the interest rate for such loan shall be (if higher than the rate otherwise applicable) the rate being charged on loans from the Plan that are approved by the Administrator in the month in which default occurs, (C) no contributions shall be made on such Participant's behalf prior to the first payroll period that follows by 12 calendar months the date of repayment in full of such loan, and (D) the Participant shall be permanently ineligible for any future loans from the Plan.
In the case of any default on a loan to a Pa rticipant, the Administrator shall apply the portion of the Participant's interest in the Plan held as security for the loan in satisfaction of the loan on the date of Severance from Employment. In addition, the Administrator shall take any legal action it shall consider necessary or appropriate to enforce collection of the unpaid loan, with the costs of any legal proceeding or collection to be charged to the Participation Account of the Participant.
Notwithstanding anything elsewhere in the Plan to the contrary, in the event a loan is outstanding hereunder on the date of a Participant' s death, his or her es tate shall be his or her Beneficiary as to the portion of his or her interest in the Plan invested in such loan (with the Beneficiary or Beneficiaries as to the remainder of his or her interest in the Plan to be determined in accordance with otherwise applicable provisions of the Plan). (e) Prepayment. The Participant shall be permitted to repay the loan in whole or in part at any time prior to maturity, without penalty.
(f) Loan Procedures. All Plan loans sh all be made and administered by the Administrator in accordance with the rules and procedures the Administrator may establish from time to time, which are hereby incorporated into the Plan by reference.
(g) Payment of Fees. The Participant shall be responsible for the payment of fees to cover the cost of administering his/her loan. Payment shall be made by deduction from the Participant's Participation Account.
(h) Repayment. The Participant shall be required, as a condition to receiving a loan, to enter intoenter an irrevocable, written agreement authorizing the Employer toCity to make payroll deductions from his or herthe Participant’s Compensationpaycheck until the loan plus interest is paid in full, as long as the Participant is still employed with the City. Payroll shall as long as the Participant is an Employee and to= transfer such payroll deduction amountsthe amount collected each pay period to the
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13 Trustee in payment of suchthe loan plus interest. Repayments of a loan shall be made by payroll deduction of equal amounts (comprised of both principal and interest) from each paycheck, with the firs t such deduction to be made as soon as practicable after the loan funds are disbursed;disbursed. provided however, that aIn any event, a Participant may prepay the entire outstanding balance of histhe loan at any time (but may not make a partial prepayment) .; and provided, further, that ifIf any installment of payroll deductions described in this subsection cannot be made in full because a Participant is on an unpaid leave of absence or , is no longer employed by a participating employer (that has consented to make payroll deductions for this purpose) , or the Participant's paycheck is insufficient to allow for collection of the agreed-upon installment for any other reason, the Participant shall pay directly to the Plan the full amount that would have been deducted from the Participant's paycheck, with such payment to be made by the last business day of the calendar month in which in which the amount would have been deducted. (i) Suspension of Repayment. Notwithstanding the foregoing to the contrary, loan repayments may be suspended as permitted under IRC 414(u)(4). (i) Military Service and Disaster Relief. Loan repayment shall be suspended by the Administrator without penalty for any period during which a Participant is serving on active duty in the uniformed services of the United States or for periods specified by the IRC for any given disaster relief efforts.
(ii) Other Leaves of Absence. In the event of an Employer-approved unpaid leave of absence for any other reason, the Participant may suspend principal installments and interest payments otherwise due for the duration of the leave or one year, whichever is shorter. Interest shall continue to accrue during the leave of absence
(iii) Interest shall continue to accrue during the suspension of repayment. Upon termination of a repayment suspension, the Participant may either: (1) make a one-time payment equal to the total amount that accumulated during the suspension, or (2) reamortize the loan.
ARTICLE VI
DISTRIBUTION OF BENEFITS
6.1 Benefit Distribution at Retirement or Other Severance from Employment.
Upon retirement or the Severance from Employment (other than due to death), a Participant is entitled to receive a distribution of his or her Participation Account under any form of distribution permitted under Section 6.3 If the Participant does not elect otherwise, the distribution will be paid as soon as practicable following Normal Retirement Age or, if later, following retirement or other Severance from Employment and commencing on the date elected under Section 6.2 and payment shall be made in monthly installments of th e minimum annual payments described in Section
6.3(b).
Commented [JD1]: Assuming enforcement will be as described in 5.2 d ii above?
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14 6.2 Election of Benefit Commencement Date. A Participant may elect to commence distribution of benefits at any time after reti rement or other Severance from Employment by a notice filed at least 30 days before the date on which benefits are to commence. However, in no event may distribution of benefits commence later than the date described in Section 6.7.
6.3 Forms of Distribution. In an election to commence benefits under Section 6.2, a Participant entitled to a distribution of benefits under this Article VI may elect to receive payment in at least annual, quarterly, or monthly payments as requested by the Participant. A Participant electing to commence distribution shall be the opportunity to designate the extent to which the distribution should be taken in whole or in part from subaccounts within the Participant's Participation Account in which Roth Contributions, eligible deferred compensation plan transfers, and eligible rollover contributions are held, as applicable. In the absence of such designation, the distribution shall be taken pro rata from the subaccounts within the Participant's Participation Account. Any amount payable to an organization, es tate, or trust shall be paid in a lump sum as prescribed in Sections 6.4
6.4 Death Benefit Distributions. Commencing in the calendar year following the calendar year of the Participant's death, the Participant's Participation Account shall be paid to the Beneficiary in a lump sum. Alternatively, if the Beneficiary with respect to the Participant's Participation Account is a natural person, at the Beneficiary's election, distribution can be made in annual installments (calculated in a manner that is similar to installments under Section 6.3) with the distribution period determined under this para graph. If the Beneficiary is the Participant's surviving spouse, the distribution period is equal to the Beneficiary's life expectancy using the single life table in Treas. Reg. 1.401(a)(9)-9, A-1 for the spouse's age on the spouse's birthday for that year. If the Beneficiary is not the Participant's surviving spouse, the distribution period is the Beneficiary's life expectancy determined in the ye ar following the year of the Participant's death using the single life table in Treas. Reg. 1.401(a)(9)-9, A-1 for the Beneficiary's age on the Beneficiary's birthday for that year, reduced by one for each year that has elapsed after that year.
For any year, a Beneficiary can elect distribution of a greater amount (not to exceed the amount of the remaining Participation Account) in lieu of the amount calculated using this formula.
6.5 Amount of Participation Account. Except as provided in Section 6.3, the amount of any payment under this Article VI shall be based on the amount of the Participation Account on the preceding Valuation Date.
6.6 Revocation of Prior Election. Any election made under this Article VI may be revoked at any time.
6.7 Latest Distribution Date. In no event shall any distribution under this Article VI begin later than the later of:
(a) April 1 of the year following the calendar year in which the Participant attains age 72 (if the Participant was born after June 30, 1949) or age 70½ (if the Participant was born before July 1, 1949); or
(b) April 1 of the year following the calendar year in which the Participant retires or otherwise has a Severance from Employment. If distributions commence in the
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15 calendar year following the later of the calendar year in which the Participant attains age 72 (if the Participant was born after June 30, 1949) or age 70 ½ (if the Participant was born before July 1, 1949) or the calendar year in which the Severance from Employment occurs, the di stribution on the date that distribution commences must be equal to the annual in stallment payment for the year that the Participant has a Severance from Employ ment determined und er paragraph (b) of Section 5.3 and an amount equal to the annual installment payment for the year after Severance from Employm ent determined under paragraph (b) of Section 6.3 must also be paid before the end of the calendar year of commencement.
6.8 In-Service Distributions from Rollover Account. If a Participant has a separate account attributable to eligible rollover contributions to the plan, the Participant may at any time elect to receive a distribution of all or any portion of the amount held in the rollover account.
6.9 Unforeseeable Emergency Distribution.
(a) Distribution. If a Participant has an unforeseeable emergency before retirement or other Severance from Employment, the Participant may elect to receive a lump sum distribution equal to the amount requested or, if less, the maximum amount determined by the Administrator to be permitted to be distributed under this Section
6.9. (b) Unforeseeable emergency defined. An unforeseeable emergency is defined as a severe financial hardship of the Participant resulting from: an illness or accident of the Participant, the Participant's spouse, or the Participant's dependent (as defined in IRC 152(a)); loss of the Participant's property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by homeowner's insurance, e.g., as a result of a natural di saster); the need to pay for the funeral expenses of the Participant' s spouse or dependent (as defined in IRC 152(a)); or other similar extraordinary a nd unforeseeable circumstances arising as a result of an event beyond the control of the Participant. For example, the imminent foreclosure of or eviction from the Participant's primary residence may constitute an unforeseeable emergency. In addition, the need to pay for medical expenses, including non-refundable deductibles, as well as for the cost of prescription drug medication, may constitute an unforeseeable emergency. Except as otherwise specifically provided in this Section 6.9, neither the purchase of a home nor the payment of college tuition is an unforeseeable emergency. (c) Unforeseeable emergency distribution standard. A distribution on account of unforeseeable emergency may not be made to the extent that such emergency is or may be relieved through reimbursement or compensation from insurance or otherwise, by liquidation of the Participant's assets, to the extent the liquidation of such assets would not itself cause seve re financial hardship, or by cessation of deferrals under the Plan.
(d) Distribution necessary to satisfy emergenc y need. Distributions because of an unforeseeable emergency may not exceed the amount reasonably necessary to
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16 satisfy the emergency need (which may include any amounts necessary to pay any federal, state, or local income taxes or penalties reasonably anticipated to result from the distribution).
6.10 Voluntary Distributions for Certain Participation Accounts of $5,000 or Less.
At the direction of the Participant, the Participant's total Participation Account may be paid in a lump sum as soon as practical following the direction if (a) the total Participation Account does not exceed $5,000 (or the dollar limit under IRC 411(a)(11), if greater), (b) the Participant has not previously authorized a distribution of the total amount payable to the Participant under this Section 6.10 and (c) no Annual Deferral has been made with respect to the Participant during the two-year period ending immediately before the date of distribution. The amount of the Participant's Participation Account attributable to eligible rollover contributions shall not be considered in determining whether the Participant's Participation Account is less than $5,000.
6.11 Eligible Rollover Distributions.
(a) Election Procedure. A Participant or the surviving spouse of a Participant (or a Participant's former spouse who is the alternate payee under a domestic relations order, as defined in IRC 414(p)) who is enti tled to an eligible rollover distribution may elect, at the time and in the manner prescribed by the Administrator, to have all or any portion of the distribution paid directly to an eligible retirement plan specified by the Participant in a direct rollover.
(b) For purposes of this Section 6.11, an eligible rollover distribution means any distribution of all or any portion of a Participant's benefit, except that an eligible rollover distribution does not include (a) any installment payment under Section
6.3 for a period of 10 years or more, (b) any distribution made under Section 6.9 as a result of an unforeseeable emergency, or (c) for any other distribution, the portion, if any, of the distribution that is a required minimum distribution under IRC 401(a)(9). In addition, an eligible retirem ent plan means an individual retirement account described in IRC 408(a), an individual retirement annuity described in IRC 408(b), a qualified trust described in IRC 401(a), an annuity plan described in IRC 403(a) or 403(b), or an eligible governmental plan described in IRC 457(b), that accepts the eligible rollover distribution.
ARTICLE VII
ROLLOVERS TO THE PLAN AND TRANSFERS
7.1 Eligible Rollover Contributions to the Plan.
(a) A Participant who is an Employee and who is entitled to receive an eligible rollover distribution from another eligible retireme nt plan may request to have all or a portion of the eligible rollover distribution paid to the Plan. The Administrator may require such documentation from the distributing plan as it deems necessary to effectuate the rollover in accordance with IRC 402 and to confirm that such plan is an eligible retirement plan within the meaning of IRC 402(c)(8)(B).
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17 (b) For purposes of Section 7.1(a), an eligible rollover distribution means any distribution of all or any portion of a Par ticipant's benefit under another eligible retirement plan, except that an eligible rollover distribution does not include (a) any installment payment for a period of 10 years or more, (b) any distribution made as a result of an unforeseeable emergency, or (c) for any other distribution, the portion, if any, of the distribution that is a required minimum distribution under IRC 401(a)(9). In addition, an eligible retirem ent plan means an individual retirement account described in IRC 408(a), an individual retirement annuity described in IRC 408(b), a qualified trust described in IRC 401(a), an annuity plan described in IRC 403(a) or 403(b), or an eligible governmental plan described in IRC 457(b), that accepts the eligible rollover distribution.
(c) The Plan shall establish and maintain for the Participant a separate account for any eligible rollover distribution paid to the Plan from any eligible retirement plan that is not an eligible governmental plan under IRC 457(b). In addition, the Plan shall establish and maintain for the Participant a separate account for any eligible rollover distribution paid to the Plan from any eligible retirement plan that is an eligible governmental plan under IRC 457(b).
7.2 Plan-to-Plan Transfers to the Plan. At the direction of the Employer, the Administrator may permit a Participant or Benefici ary who are participants in another eligible governmental plan under IRC 457(b) to transfer assets to the Plan as provided in this Section 7.2.
Such a transfer is permitted only if the other plan provides for the direct transfer of each Participant's interest therein to the Plan. The Administrator may require in its sole discretion that the transfer be in cash or other property acceptable to the Administrator. The Administrator may require such documentation from the other plan as it deems necessary to effectuate the transfer in accordance with IRC 457(e)(10) and Treas. Reg. 1.457-10(b) and to confirm that the other plan is an eligible governmental plan as defined in Treas. Reg. 1.457-2(f). The amount so transferred shall be credited to the Participant's Eligible Deferred Compensation Plan Transfers Account and shall be held, accounted for, administeredadministered, and otherwise treated in the same manner as an Annual Deferral by the Participant under the Plan, except that the transferred amount shall not be considered an Annual Deferral under the Plan in determining the maximum deferral under Article IV.
7.3 Roth Rollover Contribution. Notwithstanding (s) or any other provisions in the Plan to the contrary, the Plan will accept a rollover contribution to the Participant's Roth Contribution Account if it is a direct rollover from another Roth account under an applicable retirement plan in accordance with IRC 402A(e)(l), and only to the extent the rollover is permitted under the rules of IRC 402(c).
7.4 Plan-to-Plan Transfers from the Plan.
(a) At the direction of the Employer, the Administrator may permit a Participant or Beneficiary to elect to have all or any portion of their Participation Account transferred to another eligible governmental plan within the meaning of IRC 457(b) and Treas. Reg. 1.457-2(f). A transfer is permitted under this Section 7.4(a) for a Participant only if the Participant has had a Severance from Employment with the
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18 Employer and is an employee of the entity that maintains the other eligible governmental plan. Further, a transfer is permitted under this Section 7.4(a) only if the other eligible governmental plan provi des for the acceptance of plan-to-plan transfers with respect to the Participant and Beneficiary and for each Participant and Beneficiary to have an amount deferred under the other plan immediately after the transfer at least equal to the amount transferred.
(b) Upon the transfer of assets under this Section 7.4, the Plan's liability to pay benefits to the Participant or Beneficiary under this Plan shall be discharged to the extent of the amount so transferred for the Participant or Beneficiary. The Administrator may require such documentation from the receiving plan as it deems appropriate or necessary to comply with this Section 7.4 (for example, to confirm that the receiving plan is an eligible governmental plan under paragraph (a) of this Section
7.4, and to assure that the transfer is permitted under the receiving plan) or to effectuate the transfer pursuant to Treas. Reg. 1.457-10(b).
7.5 Permissive Service Credit Transfers.
(a) If a Participant is also a participant in a tax-qualified defined benefit governmental plan (as defined in IRC 414(d)) that provides for the acceptance of plan-to-plan transfers with respect to the Participant, then the Participant may elect to have any portion of the Participant's Participation Account transferred to the defined benefit governmental plan. A transfer under this S ection 7.5(a) may be made before the Participant has had a Severance from Employment.
(b) A transfer may be made under Section 7.5(a) only if the transfer is either for the purchase of permissive service credit (a s defined in IRC 415(n)(3)(A)) under the receiving defined benefit governmental plan or a repayment to which IRC 415 does not apply by reason of IRC 415(k)(3).
7.6 In-Plan Roth Transfers
(a) Any amounts held in a Participant's Participation Account (other than an amount held in a Roth Account) is eligible for direct rollover or transfer to the Participant's Roth Account under the Plan, even if the amount is not otherwise distributable (pursuant to IRC 402A(c)(4(E)) under Article VI, and the transfer shall be treated as a qualified eligible rollover contribution (within the meaning of IRC 408A(e)). (b) A Participant's election under this Sectio n 7.6 shall be subject to the reasonable administrative procedures established by the Administrator, IRC 402A(c)(4), the Treasury Regulations thereunder, and any subsequent guidance from the Internal Revenue Service.
(c) The taxable portion of the Participant's Participation Account transferred to a Roth Account under this Section 7.6 shall be in cluded in the Participant's gross income in the tax year in which the transfer occurs.
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19 (d) The Administrator shall provide written information regarding in-plan Roth rollovers under this Section, for amounts that are otherwise distributable under this Section to the extent required by IRC 402(f).
ARTICLE VIII
TRUST FUNDS
8.1 Trust Fund. All amounts of Annual Deferrals, all property and rights purchased with such amounts, and all income attributable to such amounts, property, or rights shall be held and invested in the Trust Fund in accordance with this Plan and the Trust Agreement, pursuant to IRC 457(g)(3). The Trust Fund, and any subtrust established under the Plan, shall be established pursuant to a written agreement that constitutes a valid trust under the law of California. The Trustee shall ensure that all investments, amounts, property, and rights held under the Trust Fund are held for the exclusive benefit of Participants and their Beneficiaries. The Trust Fund shall be held in trust pursuant to the Trust Agreement for the exclusive benefit of Participants and their Beneficiaries and defraying reasonable expenses of the Plan and of the Trust Fund. It shall be impossible, prior to the satisfaction of all liabilities with respect to Participants and their Beneficiaries, for any part of the assets and income of the Trust Fund to be used for, or diverted to, purposes other than for the exclusive benefit of Participants and their Beneficiaries.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Non-Assignability. Except as provided in Sections 9.2 and 9.3, neither the Participant nor any Beneficiary shall have any right to sell, transfer, assign, or otherwise convey the right to receive any payments hereunder or any interest under the Plan, which payments and interest are expressly declared to be non-assi gnable and non-transferable. The rights of the Participant and Beneficiary under this Plan shall not be subject to the claims of the Participant's or Beneficiary's creditors and shall be exempt from execution, attachment, prior assignment, or any other judicial relief or order for the benefit of any creditors or other third persons having claims against the Participant.
9.2 Domestic Relations Orders . Parties to a divorce or termination of registered domestic partnership will be required to file a joinder with the Plan, notifying the Plan that a divorce or termination of registered domestic partnership is pending. Notwithstanding Section 9.1, in accordance with IRC 414(p), if a judgment, de cree or order (including approval of a property settlement agreement) that relates to the prov ision of child support, alimony payments, or the marital property rights of a spouse or former spouse, child, or other dependent of a Participant is made pursuant to the domestic relations law of a ny State ("domestic relations order"), then the amount of the Participant's Participation Account shall be paid in the manner and to the person or persons so directed in the domestic relations orde r. Such payment shall be made without regard to whether the Participant is eligible for a distribution of benefits under the Plan. The Administrator shall establish reasonable procedures for determining the status of any such decree or order and for effectuating distribution pursuant to the domestic relations order. Any expense related to the administration of a domestic relations order shall be assessed against the Participant's account and the alternate payee's account, apportioned pursuant to the domestic relations order.
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20 9.3 IRS Levy. Notwithstanding Section 9.1, the Administrator may pay from a Participant's or Beneficiary's Participation Account the amount that the Administrator finds is lawfully demanded under a levy issued by the Internal Revenue Service with respect to that Participant or Beneficiary or is sought to be collected by the United States Government under a judgment resulting from an unpaid tax assessment against the Participant or Beneficiary.
9.4 Mistaken Contributions. If any contribution (or any portion of a contribution) is made to the Plan by a good faith mistake of fact, then within one year after the payment of the contribution, and upon receipt in good order of a proper request approved by the Administrator, the amount of the mistaken contribution (adjusted for any income or loss in value, if any, allocable thereto) shall be returned directly to the Participant or, to the extent required or permitted by the Administrator, to the Employer.
9.5 Payments to Minors and Incompetents. If a Participant or Beneficiary entitled to receive any benefits hereunder is a minor or is adjudged to be legally incapable of giving valid receipt and discharge for such benefits, or is deemed so by the Administrator, benefits will be paid to such person as the Administrator may designate for the benefit of such Participant or Beneficiary. Such payments shall be considered a payment to such Participant or Beneficiary and shall, to the extent made, be deemed a complete discharge of any liability for such payments under the Plan.
9.6 Procedure When Distributee Cannot Be Located. If the Administrator does not have current contact information for or is unable to identify a Participant or Beneficiary, the Administrator shall make reasonable attempts to determine the address and identity of the Participant or Beneficiary entitled to benefits under the Plan. A reasonable attempt to locate a missing or lost Participant or Beneficiary shall include (a) providing notice to the Participant at the Participant's last known address via certified mail; (b) determining whether the Employer's records or the records of another plan maintained by the Employer has a more current address for the Participant; (c) attempting to contact any named Beneficiary of the Participant; and (d) searching for the missing Participant via free electronic search tools, such as internet search engines, public record da tabases, obituaries, and social media. If such search methods are unsuccessful, based on the facts and circumstances, the Administrator may use other search methods, including using internet search tools, commercial locator services, credit reporting agencies, information brokers, investigation databa ses, and analogous services that may involve charges. The Administrator may charge missing Participants and Beneficiaries reasonable expenses for efforts to find them. In the event that the Administrator is unable to locate a Participant or Beneficiary entitled to benefits under the Plan, the Trustee shall continue to hold the benefits due to such person under the Plan in the Participant’s Account.
9.7 Termination of Plan. The City of Fresno may, by appropriate action of the City Council, terminate this Plan. No such termination shall deprive a Participant or Beneficiary of any benefits to which the Participant or Beneficiary is entitled under this Plan immediately prior to the effective date of such termination.
3.329.8 Amendment of Plan. The designated by the City of Fresno may, by action of the City Council, amend this Plan for any reason, including to the extent that may be necessary to conform the Plan to the requirements of IRC 45 7 and any other applicable law, regulation, or
DEFERRED COMPENSATION PLAN DOCUMENT
21 ruling. No amendment shall deprive any Participant or Beneficiary of any right or benefit to which the Participant or Beneficiary is entitled under this Plan immediately prior to the effective date of such amendment. or the
3.339.9 Participation by Deferred Compensation Board with the duties and responsibilities set forth in the Trust Agreement. Members. Members of the Deferred Compensation Board, who are otherwise eligible, may participate in the Plan under the same terms and conditions as apply to other Participants, but a Deferred Compensation Board member shall not participate in any Administrator action taken with respect to that member's participation.
9.10 No Contract of Employment . Neither the establishment of the Plan, nor the participation in the Plan, shall be construed as giving any Participant the right to be retained in the service of the City of Fresno.
9.11 Heirs, Assigns and Personal Representatives. This Plan shall be binding upon the heirs, executors, administra tors, successors and assigns of the parties; including each Participant and Beneficiary, present and future.
9.12 Equal Access to Benefits, Rights and Features . ANY
ADMINISTRATION
determination made by the Administrator with respect to the availability of benefits, rightsrights, and features under this Plan shall apply on a non-discriminatory basis allowing equal access for all Participants; provide d, however, that such access ma y be limited by the terms of a collective bargaining agreement or individual employment contract.
4.19.13 Administered by Deferred Compensation Board. This Plan shall be administered by the City of Fresno Deferred Compensation Board which shall represent the Employer and all participants in all matters concerning the administration of this Plan. (a) Deferred Compensation Board Duties and Responsibilities. (i) Deferred Compensation Board to Adopt Rules and Regulations. The Deferred Compensation Board shall have full power and authority to adopt rules and regulations for the administration of the Plan, and to interpret, alter, amend, or revoke any rules and regulations so adopted. (ii) Deferred Compensation Board Action Fair and Reasonable. Every action taken by the Deferred Compensation Boar d shall be presumed to be a fair and reasonable exercise of the authority vested in or the duties imposed upon it. The Deferred Compensation Board and its individual members shall be deemed to have exercised their fi duciary duties with reasonable care, diligence, and prudence and to have ac ted impartially as to all persons interested, unless the contrary may be proven by affirmative evidence. (b) Deferred Compensation Board Powers.
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22 (i) Plan Prevails. In the event any form or other document used in administering this Plan, including , but not limited to Participation Agreement and, marketing materials, conflicts with the terms of the Plan, the terms of the Plan shall prevail.
(ii) Decision Binding. The Deferred Compensation Board is authorized to determine any matters concerning the rights of any Participant under this Plan, and such determination shall be binding on the Participant and any Beneficiary thereof.
(iii) Deferred Compensation Board to Interpret. The Deferred Compensation Board is authorized to construe this Plan and resolve any ambiguity in the Plan. The Plan and any form or othe r document used in administering the Plan shall be interpreted, and this Plan shall be administered, so as to comply with IRC Section 457, as amended, and the regulations of the Treasury Department promulgated thereunder.
(a) Deferred Compensation Board May Require Court Order. The Deferred Compensation Board or the Employer, if in doubt concerning the correctness of their action in making a payment of Accumulated Deferrals, may suspend payment until satisfied as to the correctness of the payment or the person to receive the payment or to allow the filing in any state court of competent jurisdiction of a civil action seeking a determination of the amounts to be paid and the persons to receive them. The Deferred Compensation Board and the Employer shall comply with the final orders of the court in any such suit, and the Participant, or the Participant and the Participant's Beneficiary, consent to be bound thereby. Whenever payment of Accumulated Deferrals is suspended pursuant to this Section, the time for a Participant or Beneficiary making any election under Article VIII of this Plan, shall not begin until amount(s) and person(s) entitled are determined either by written agreement of all parties concerned or by a court judgment that has become final. (c) Delegation of Authority. The Deferred Compensation Board may delegate to the staff, an individual, committee or organi zation certain functions to be performed under this Plan. The Deferred Compensation Board retains the discretion to revoke any designation.
(d) Employment of Service Provider(s). The Deferred Compensation Board may employ one or more service providers to perform such functions as delegated under Section 4.3(c) of this Plan.9.13(c).
ARTICLE V
PARTICIPATION IN THE PLAN
5.1 Eligibility. Except as set forth in Section 5.2 of this Plan, each Eligible Employee shall be eligible to participate in the Plan on the first day of the first month immediately following commencement of employment or reemployment with the Employer.
DEFERRED COMPENSATION PLAN DOCUMENT
23 5.2 Enrollment in the Plan. An Eligible Employee may enroll in the Plan to become a Participant by executing and delivering a Part icipation Agreement approved by the Deferred Compensation Board or its designee, not less than fifteen (15) days (or such other period as the Deferred Compensation Board may designate) prior to the effective date of the Participation Agreement. In accordance with Treas. Reg. §1457-4(b), an eligible Employee may defer compensation for any calendar month only if the El igible Employee enters into a Participation Agreement before the first day of the month in which the Compensation is paid or made available.
A new Eligible Employee may become a Participant and may defer Compensation payable in the calendar month during which the Participant first becomes an Eligible Employee if a Participation Agreement is entered into on or before the first day on which the Participant performs services.
5.3 Investment Options. As part of the Participation Agreement, the Participant shall be responsible for contacting the Trustee directly to select his/her investment option(s) from among those selected by the Deferred Compensation Board in its sole discretion from time to time, and to designate the amount of compensa tion to be deferred and whethe r such deferral is a Pre-Tax Deferral or a Roth Contribution or consists of both Pre-Tax Deferrals and Roth Contributions. The amount(s) requested must equal at least ten ($10.00) dollars per pay period and shall continue until changed or revoked pursuant to Section 5.7 of this Plan.
If a Participant does not have a valid and complete investment direction on file, deferrals may be invested in a default fund selected by the Deferred Compensation Board in its sole discretion, until the Participant makes an affirmative election regarding the investment of his or her Account.
5.4 Deferral. By executing the Participation Agreement, the Participant consents to the Employer taking the necessary actions to defer that portion of his or her Includible Compensation which the Participant has specified is to be deferred from the Participant’s gross Compensation for each pay period. The Participant shall indicate whether such deferral is a Pre- Tax Deferral, a Roth Contribution, or consists of both Pre-Tax Deferrals and Roth Contributions, in which case the Participant shall designate specific amounts for each, as applicable. Deferral of Compensation shall occur as soon as administratively possible after completing the Participation Agreement, or on such other date as may be permitted under the IRC. Compensation for any calendar month will be deferred only if the Part icipation Agreement providing for such deferral has been entered into before the beginning of such month.
5.5 Investment Vehicle Election and Direction of Investments. (a) Investment Options. The Deferred Compensation Board shall establish such Investment Options as it deems necessary to provide Participants with a diversified range of alternatives. Each Investment Option shall be based upon its investment performance as well as its ability to provid e a range of investment diversification under the Plan. The Deferred Compensation Board shall specify the investment objectives and characteristics of each Investment Option and the corresponding investment portfolio or portfolios and shall provide Eligible Employees with a written description of each available Investment Option. The Deferred Compensation Board, in its sole discretion, may add, eliminate, or consolidate Investment Options and corresponding investment portfolios from time to time. In
DEFERRED COMPENSATION PLAN DOCUMENT
24 the event that an Investment Option is eliminated, the Deferred Compensation Board shall provide prior notice of such elimination, and if the Participants whose accounts were wholly or partially allocated to that Investment Option do not make a reallocation, the Deferred Compensation Board shall reallocate such amounts to the available Investment Option or Investment Options that the Deferred Compensation Board in its sole discretion deems most comparable to the eliminated Investment Option.
(b) Experience of Loss. In the event that the selected investment vehicle experiences a loss, the Participant’s Accumulated De ferrals payable hereunder shall likewise reflect a loss, rather than income, for the period.
(c) Actions of Deferred Compensation Bo ard. Any such action by the Deferred Compensation Board in investment funds, or approving of any such investment funds, shall not be considered to be either an endorsement or guarantee of any investment, nor shall it be considered to attest to financial soundness or the suitability of any investment for the purpose of meeting future obligations.
5.6 Designation of Beneficiary. A Participant may designate a Beneficiary subject to Federal and California law, to receive any benefits which may be payable under the Plan upon the death of such Participant. A Participant may at any time update his or her Beneficiaries using online access provided by the Plan. Any change in the Beneficiary designation, filed in proper form, shall become effective as of the date of delivery.
5.7 Modification of Deferral or Investment Option(s). A Participant may on a prospective basis change his/her deferral amount , change the deferrals designated as Pre-Tax Deferrals or Roth Contributions, change investment options, suspend or revoke participation in the Plan, or reinstate participation at any time. The Participant shall be responsible for contacting and notifying the Administrator of any modifications. Changes in the amount of the deferral must equal at least five ($5.00) dollars per pay period. Investment changes may be made at any time subject to the terms of the Administrator/mutual fund provider(s). The requested change shall become effective at the earliest possible payroll period which allows sufficient time for the order to be processed through the City payroll.
5.8 Payment of Elective Deferrals to the Trust. Elective Deferrals shall reduce the Compensation otherwise payable to a Participant and shall be paid in cash to the Trustee by the Employer, on a basis consistent with its payroll practices, as soon as administratively feasible after being withheld from the Compensation of a Participant, but no later than fifteen (15) business days following the end of the month in which such amount is withheld from the Compensation of the Participant.
ARTICLE VIARTICLE I
LIMITATION ON DEFERRALS
6.1 Deferral Limitation . Except as provided in Section 6. 2, relating to catch-up provisions, the maximum amount of the Annual Deferral under the Plan for any calendar year, shall not exceed the lesser of (1) 100% of the Participant's Includible Compensation or (2) $19,500
DEFERRED COMPENSATION PLAN DOCUMENT
25 in the year 2020 (and $19,000 in 2019), and thereafter adjusted for the calendar year to reflect increases in the cost-of-living, in accordan ce with IRC Section 457(e)(15) and 415(d). The Participant acknowledges the right of the Deferred Compensation Board to disallow deferral of Compensation under the Plan in excess of the limitations set forth in this Section.
However, the Deferred Compensation Board shall have no duty or assume or incur any liability for failure to assure that amounts deferred are in compliance with such limitations.
6.2 Catch-up Provisions
(a) Age 50 Plus Catch-up Provision. Pursuant to IRC Section 414(v), a Participant who will attain age 50 or more by the end of the calendar year is permitted to elect an additional amount of Annual Deferrals for the year, up to the maximum age 50 catch-up Annual Deferrals for the year, which is:
(i) A specified dollar limit as provided in IRC Section 414(v). Those dollar limits are an additional $6,500 in the year 2020 ($6,000 in 2015-2019), thereafter adjusted for the calendar year to reflect increases in the cost of living in accordance with IRC Sections 457(e)(15) and 415 (d). (ii) The age fifty plus catch-up contributions can be made beginning in the year in which the Participant reaches age fifty and for as many years as the Participant desires; however, the age fifty plus catch-up contribution may not be used in the same year as the special Section 457 catch-up provision for which the additional contributions permitted under IRC Section 457(b)(3) applies to such Participant, to the extent required by applicable statute or regulations.
(b) Special Section 457 Catch-up Provision. Special 457(b) catch-up contributions, permitted by the plan, shall be in accordance with Treas. Reg. § 1.457-4(c)(3) which allows a Participant on one or more of the Participant's last three taxable years prior to Normal Retirement Age to contribute the lesser of: (1) twice the annual limit ($39,000 in 2020 and $38,000 in 2019) or (2) the basic annual limit plus the amount of the basic limit not used in prior years (the underutilized maximum amounts for prior years are only allowed if not using age 50 plus catch-up contributions).
Notwithstanding any provision in this Article to the contrary, with respect to any one or more of the three (3) taxable years ending before the date of the Participant's Normal Retirement Age, such Participant may elect to have Deferred Compensation contributed to the Plan in an amount not to exceed the lesser of (1) twice the dollar amount of the Deferral Limitation established in Section 6.1, or (2) the Underutilized Limitation. For purposes of this subsection, the Underutilized Limitation with respect to a Participant shall be equal to The sum of: the Deferral Limitation for the taxable year, and the excess of (i) less (ii) where:
(i) equals the sum of the limitations set forth in IRC Section 457(b)(2) for all taxable years on or after December 31, 1978 in which the Participant was eligible to participate in this Plan or any other eligible deferred
DEFERRED COMPENSATION PLAN DOCUMENT
26 compensation plan sponsored by an en tity within the State of California, and
(ii) equals the sum of all Deferred Comp ensation made on behalf of such Participant for such taxable years plus his/her deferred compensation under any other eligible deferred compensation plan sponsor by an entity within the State of California.
6.3 Excess Deferrals. If the Annual Deferral amount on behalf of a Participant for any calendar year exceeds the limitations described in this Article VI, or the Annual Deferral amount on behalf of a Participant for any calendar year exceeds the limitations described in this Article VI when combined with other amounts deferred by the Participant under another eligible deferred compensation plan described in IRC Sections 4 57(a) and (b) for which the Participant provides information that is accepted by the Deferred Co mpensation Board, then the Deferral amount, to the extent in excess of the applicable limitation (adjusted for any income or loss in value, if any, allocable thereto), shall be distributed to the Participant, and the Participation Agreement may be amended or modified to comply with the requirements of this Article VI , IRC Section 457, and Treasury Regulation Section 1.457-4(e). A Part icipant shall receive a distribution of Excess Deferrals from any other eligible deferred compensation plan in which the Participant participated in the calendar year prior to receiving a distribution of Excess Deferrals from this Plan.
6.4 Coordination of Limits. Participant shall be responsible for ensuring coordination of these limits.
ARTICLE VII
TRANSFERS AND ELIGIBLE ROLLOVERS
7.1 Rollover Contributions.
(a) Eligible Deferred Compensation Plans. The direct transfer and/or rollover contribution of an Eligible Rollover Distribution from another eligible deferred compensation plan (as defined in IRC Section 457(b)) shall be accepted and allocated to a Participant’s Eligible Deferred Compensation Plan Transfer Subaccount under this Plan provided that such amounts are in cash or other property acceptable to the Deferred Compensa tion Board. The Deferred Compensation Board may request proof that the prior plan is an eligible deferred compensation plan under IRC Section 457(b). Direct transfer and/or rollover contribution amounts shall not be subject to the limitations of Article VI; provided, however, that the actual amount deferred during the calendar year under both the prior plan and the Plan shall be taken into account in calculating the deferral limitations for that year. For purposes of determining the limitations set forth in Article VI, years of eligibility to participate in the prior plan and deferrals under the prior plan shall be taken into account to the extent required by IRC Section 457. (b) Other Eligible Retirement Plans. The direct transfer and/or rollover contribution of an Eligible Rollover Distribution from another Eligible Retirement Plan (other than an eligible deferred compensation plan) shall be accepted and allocated to a
DEFERRED COMPENSATION PLAN DOCUMENT
27 Participant’s Rollover Subaccount under this Plan provided that such amounts are in cash or other property acceptable to the Deferred Compensation Board. The Deferred Compensation Board ma y request verification that the prior plan is an Eligible Retirement Plan. Direct transf er and rollover contribution amounts shall not be subject to the limitations of Article VI.
In addition, in order for Eligible Rollover Distributions to be accepted by this Plan, the Deferred Compensation Board may request verification that (1) the amounts to be transferred are not subject to a QDRO, and (2) spousal consent, if required, to transfer such amounts from the prior plan, has been obtained.
Amounts shall be identified as to source and nature (such as non-deductible Employee contributions, elective deferral amounts and deemed elective deferral amounts subject to the provisions of IRC Section 401(k), employer contributions, etc.) Any amounts accepted for contribution under this Section 7.1(b) shall be allocated to the Rollover Subaccount, and will share in the investment gains and losses experienced by the account as a whole; however, it will have separate accounting for taxation and distribution purposes as required under IRC Section 457.
7.2 Transfers to Certain Plans for the Purchase of Service Credit. (a) Direct Trustee to Trustee Transfer. Any Participant who is also a Participant in a defined benefit governmental plan (as defi ned in IRC Section 414(d)) may have a direct trustee to trustee transfer made from this Plan to the defined benefit governmental plan if the transferred assets are used for:
(i) the purchase of permissive service credit (as defined in IRC 415(n)(3)(A)) in the defined benefit governmental plan; or
(ii) a repayment of a cash out from the defined benefit governmental plan which meets the requirements of IRC Section 415(k)(3).
(b) Application for Transfer. If the conditions in subsections (i) or (ii) of this Section are met and the Participant wishes to transfer his/her account, he/she shall complete any application form and/or other docume nts as may be required by the Deferred Compensation Board.
(c) Administrative Rules. The Deferred Compensation Board shall prescribe such rules consistent with the provisions of Subsections (i) and (ii) of this Section concerning plan-to-plan transfers as in its sole judgment it deems desirable for the orderly administration of the Plan.
7.3 Roth In-Plan Rollover Contributions. The Plan, to the extent permitted by the IRC and otherwise pursuant to procedures esta blished by the Plan, will accept Roth In-Plan Rollover Contributions with such amounts to be credited to the Participant’s Roth In-Plan Rollover Subaccount. The Participant shall, in the time and manner prescribed by the Plan, specify the amount to be rolled over as a Roth In-Plan Rollover Contribution.
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28 ARTICLE VIIIARTICLE I
DISTRIBUTION OF BENEFITS
8.1 Inactive De Minimis Accounts.
(a) Voluntary Withdrawals. A Participant currently employed with the City of Fresno shall be entitled to request a withdrawal of his/her account, other than that portion attributable to a rollover of contributions, provided that:
(i) the total amount credited to the Participant's account does not exceed $5,000 (or the amount as may be revised by the Internal Revenue Service and/or Department of Labor);
(ii) the Participant has not authorized Deferred Compensation under the Plan during the two (2) year period immediately preceding such request; and (iii) the Participant has not previously applied for a withdrawal under this Section.
The amount of the Participant's account attribut able to rollover contributions shall not be considered in determining whether the Participant's account is less than $5,000.
8.2 Distribution upon the Death of Participant or Beneficiary. Should the Participant or Beneficiary die at any time, Accumulated Deferrals shall be paid to the Beneficiary designated by the Participant or Be neficiary. If no Beneficiary is designated, or if the designated Beneficiary does not survive a period of thirty days, then a lump sum shall be paid, to the surviving spouse, or if none, a lump sum shall be paid to the estate of the Participant.
8.3 Elections Regarding Distribution. Each participant (or in the event of death, each Beneficiary other than an organization, estate, or trust) shall direct the Trustee regarding the details of paying out his/her account. A Participant el ecting to commence distribution shall have the opportunity to designate the extent to which the distribution should be taken in whole or in part from subaccounts within the Participant’s Partic ipation Account in whic h Roth Contributions, Roth In-Plan Rollover Contributions or Eligib le Deferred Compensation Plan Transfers or Rollover Contributions from Qualified Roth Contribution Programs are held, as applicable. In the absence of such designation, the distribution shal l be taken pro rata from the subaccounts within the Participant’s Participation Account. The Participant/Beneficiary may change this direction from time to time within the distribution rules that apply to all qualified plans and within the constraints of the Trustee. Any amount payable to an organization, estate, or trust shall be paid in a lump sum as prescribed in Sections 8.2 and 8.4(c).
8.4 Distribution of Deferrals.
(a) General Rule. Upon the occurrence of a Se verance Event, and assuming a request is made to the Trustee, payment will be made in at least annual, quarterly, or monthly payments as requested by the Participant.
DEFERRED COMPENSATION PLAN DOCUMENT
29 (b) Distribution to Participant. The Participant's Participation Account will be distributed, or begin to be distributed, to the Participant not later than the Participant's Required Beginning Date.
(c) Distribution to Beneficiary.
(i) When distribution begins prior to the Participant's death payments must be made at least as rapidly as they were as being made to the Participant. When the Beneficiary is an organization, estate or trust, then payment will be payable in a lump sum.
(ii) When distribution does not begin prior to the Participant's death, and is to be made:
(1) To an organization, estate or trust, then payment will be payable in one lump sum.
(2) To the Participant's surviving spouse, whether as designated Beneficiary, or by default, then payment will be made by the Trustee as directed by the spouse within the minimum distribution rules under the IRC regulations.
(3) Notwithstanding anything in this Plan to the contrary, distributions from the Plan will be made in compliance with a good faith interpretation of the minimum distribution requirements of IRC Section 401(a)(9).
8.5 Eligible Rollover Distributions.
(a) Election Procedure. If all or any portion of a prospective distribution is an Eligible Rollover Distribution, the prospective distributee shall have the right to elect to have all or any portion of the Eligible Rollover Distribution treated as a Rollover Amount. Subject to satisfaction of the requirements of IRC Section 457(e)(16) and this Section, Rollover Amounts shall be delivered directly by this Plan to an Eligible Retirement Plan as designated by the distribut ee. The Plan permits non- spouse rollovers described in IRC Section 402 (c)(11). Any such transfers shall also comply with all applicable rules and regulations issued by the Internal Revenue Service.
(b) Effect of Delivery of Rollover Amounts. Each prospective distributee, by electing to have any portion of his/her Eligible Rollover Distribution treated as a Rollover Amount, agrees that, upon transmittal as instructed of the funds to which such election applies, the Deferred Compensation Board shall be released from all duties, obligations responsibilities, and liabilities in connection with the amount so transmitted. The Deferred Compensation Board shall not be responsible for the crediting or application of the funds so transferred.
DEFERRED COMPENSATION PLAN DOCUMENT
30 8.6 Unforeseeable Emergency – General. In the event an unforeseeable emergency occurs, a Participant may apply to the Deferred Compensation Board to request a withdrawal of a portion of his/her account as necessary to satisfy the emergency need. If the application is approved by the Deferred Compensation Board, the Participant shall be paid only such amount as the Deferred Compensation Board deems reasonably necessary to meet the emergency need. Payment shall not be made to the extent that the financial hardship may be relieved (1) through reimbursement or compensation by insurance or otherwise, (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) by cessation of Deferred Compensation under the Plan.
An unforeseeable emergency shall be deemed to involve only circumstances of severe financial hardship to the Participant resulting from an illness or accident of the Participant, spouse, or a dependent (as defined in IRC Section 152) of the Participant ; loss of the Participant's property due to casualty; or other similar extraordinary and unforeseeable circumstances arising as a result of an event beyond the control of the Participant .
The circumstances that will constitute an un foreseeable emergency will depend upon the facts of each case. Examples of what shall not be considered to be unforeseeable emergencies include the wish to finance a child’s college education or the desire to purchase a home.
8.7 Qualified Domestic Relations Orders – General. Parties to a divorce or termination of registered domestic partnership will be required to file a joinder with the Plan, notifying the Plan that a divorce or termination of registered domestic partnership is pending. Upon receipt of the final judgment, decree or order which is made pursuant to a state domestic relations and/or community property law ("Court Order"), the Trustee, within a reasonable period after receipt of such Court Order will make the appropriate changes on the Plan data base in accordance with such Order as a Qualified Domestic Relations Order ("QDRO"). (a) Segregation of Account/Payment. The Tr ustee, upon receipt of instructions from the Deferred Compensation Board, will segregate in a separate account in the Plan, the amounts which are payable to the alternate payee pursuant to the QDRO. (b) Status, Rights and Privileges of Alternate Payee. Except as otherwise provided herein, an alternate payee shall have the status and rights of a Beneficiary under this Plan to the exclusion of all other rights associated with Participants under this Plan.
(c) Exceptions to General Rule . Notwithstanding the provisions of Section 0807(b), the alternate payee shall have the following rights and privileges under this Plan:
(i) The right to receive payment under the terms of the qualified domestic relations order at the time and manner specified in the QDRO; provided, however, that such payment may not be made in a form which is not available to Participants under the Plan; and
(ii) The right to direct the manner in which Plan amounts allocated to such alternate payee are invested.
DEFERRED COMPENSATION PLAN DOCUMENT
31 (d) Qualified Domestic Relations Order Expenses. Any expense related to the administration of a QDRO shall be assessed against the Participant's account and the alternate payee's account in percentages equal to the percentage split of assets in the QDRO.
ARTICLE IXARTICLE I
LOANS TO PARTICIPANTS
9.1 Loans to Participants. A Participant may take a loan from his/her Participation Account subject to the terms and conditions of this Section 9.1 and the IRC. Subject to subsection (a), the maximum amount that the Plan can permit as a loan is the lesser of (1) $50,000 or (2) 50% of the vested Participation Account balance.
(a)
Amount That Can Be Borrowed. If no othe r Plan loan is outstanding (or has been outstanding at any time during the prior one-year period), a Participant may borrow up to the following amounts:
Vested Participation Account
Balance
Maximum Loan Amount
Less than $2,000 No Loan Available
$2,000 - $100,000 50% of Vested Participation Account
Balance
Over $100,000 $50,000
If another Plan loan has been outstanding at any time during the prior one-year period, the maximum loan amount shall be the lesser of: (a) $50,000 reduced by the highest outstanding balance of any other loan from the Plan during the one-year period ending the day before the newest loan is made; or (b) 50% of the vested Participation Account balance amount in the Plan, reduced by the current outstanding balance of a ny other loan from the Plan. However, no loan is available if the resulting tentative maximum loan amount is less than $1,000.
A loan that has defaulted and is “deemed distributed” will be considered an outstanding loan for the purpose of calculating loan availability and the loan currently outstanding. (b) Equality of Borrowing Opportunity. Loans shall be made available on a reasonably equivalent basis to all Participants who are active City Employees who have a minimum balance of $2,000 in their Participation Account. A loan may not be made to a Participant after his/her separation from City service. If a Participant’s date of separation from City service occurs after he/she has requested a loan but before the loan is actually made to the Participant, the Participant’s request for a loan shall automatically be cancelled. No loans may be made to a Beneficiary or an alternate payee as named by QDRO.
DEFERRED COMPENSATION PLAN DOCUMENT
32 (c) Pledge of Security. Each loan to a Participant shall be secured by the pledge of the amounts allocated to his/her Participation Account equal to initial outstanding balance of such loan.
(d) Loan Forms. The Participant shall complete al l forms required by the Deferred Compensation Board in order to process the loan including, but not limited to:
pledge of security, spousal consent, and acknowledgement of loan terms.
Participants shall submit paperwork for automatic electronic payments (ACH) from a personal bank account directly to the Plan administrator. (e) Interest Rate. Interest shall be charged at prime plus 1%, designed to provide the Plan with a return commensurate with interest rates charged by persons in the business of lending money under similar circumstances.
(f) Loan Term. Loans shall be for terms not to exceed five (5) years from the date of the loan, except that loans taken for the purpose of acquiring any dwelling unit which is to be used as a principal residence of the Participant may be for periods not to exceed fifteen (15) years. Loan payments may continue after the Employee leaves City service until such time as the loan is paid in full or until such time as a payment is in default, at which time the loan becomes payable in full. Loans shall be non-renewable and non-extendable.
(g) Amortization. Loans shall provide for substantially level amortization of principal and interest by monthly automatic deduction (ACH) from the Participant’s personal bank account.
(h)(a) Prepayment. The Participant shall be permitted to repay the loan in whole or in part at any time prior to maturity, without penalty.
(i) Defaults and Remedies. During the term of the loan, if no portion of a loan payment is made within 60 days of the date such payment is due, or if any balance remains outstanding 60 days after the end of the term of the loan, the loan shall be considered in default. In the event of default by a Participant, the outstanding balance of the loan shall be reported to the Internal Revenue Service as a deemed distribution. Interest accrued from the date of the last loan repayment to the deemed distribution date is also reported to the Internal Revenue Service. Once a Participant defaults on a loan, no future Plan loans will be allowed. (j) Loan Procedures. All Plan loans shall be made and administered by the Deferred Compensation Board in accordance with the rules and procedures that the Deferred Compensation Board may establish from time to time, which are hereby incorporated into the Plan by reference.
(k) Outstanding Loans. A Participant may have no more than one loan outstanding at any time. Issuance of a new loan will be permitted 60 days after the full repayment of the prior loan.
DEFERRED COMPENSATION PLAN DOCUMENT
33 (l) Payment of Fees. The Participant shall be responsible for the payment of fees to cover the cost of administering his/her loan. Payment shall be made by deduction from the Participant’s Participation Account.
(i) Suspension of Repayment. Military Service and Disaster Relief. Loan repayment shall be suspended by Fidelity without penalty for any period during which a Participant is serving on active duty in the uniformed services of the United States or fo r periods specified by the IRC for any given disaster relief efforts.
(ii) Other Leaves of Absence. In the event of an employer approved unpaid leave of absence for any other reason, the Participant may suspend principal installments and interest payments otherwise due for the duration of the leave or one year, whichever is shorter.
(iii)(i) Upon termination of a repayment suspension, the Participant may either: (1) make a one-time payment equal to the total amount that accumulated during the suspension, or (2) reamortize the loan.
(m) Other Terms and Conditions. The Deferred Compensation Board shall fix such other terms and conditions of the loan as it deems necessary to comply with the applicable laws, including maintaining the qualification of the Plan under IRC Section 457, and any applicable regulations.
ARTICLE XARTICLE I
MISCELLANEOUS PROVISIONS
10.1 Leave of Absence . If a Participant is on an approved leave of absence from the Employer, participation in this Plan shall continue.
Termination of Plan. The City of Fresno may, by appropriate action of the City Council, terminate this Plan. No such termination shall deprive a Participant or Beneficiary of any benefits to which the Participant or Beneficiary is entitled under this Plan immediately prior to the effective date of such termination.
10.2 Amendment of Plan. The City of Fresno may, by ac tion of the City Council, amend this Plan. No amendment shall deprive any Participant or Beneficiary of any right or benefit to which the Participant or Beneficiary is entitled under this Plan immediately prior to the effective date of such amendment. To the extent there are legislative changes affecting IRC Section 457, this Plan shall be interpreted to allow implementation of mandatory changes.
10.3 Non alienation of Benefits - Attachment. Except as set forth in Section 8.7 with regard to Qualified Domestic Relations Orders, no Participant or Beneficiary shall have the right to alienate, anticipate, commute, pledge, encumber or assign any of the benefits or payments under this Plan, except the right to designate a Benefi ciary as hereinabove provided. The rights of the Participant under this Plan shall not be subject to creditors of the Participant and shall be exempt from execution, attachment, prior assignment, or an y other judicial relief or order for the benefit of any creditors or other third persons having claims against the Participant.
DEFERRED COMPENSATION PLAN DOCUMENT
34 10.4 Plan Assets. All amounts of Compensation deferred under the Plan, all property and rights to property (including right as a be neficiary of a contract providing life insurance protection) purchased with such amounts, property or rights to property shall be held in trust for the exclusive benefit of Participants and their Beneficiaries under the Plan and shall not be subject to the claims of general creditors of the Employer. No part of the assets and income of the Plan shall be used for, or diverted to, purposes other than for the exclusive benefit of Participants and their Beneficiaries and for defraying reasonable expenses of the Plan.
10.5 Participation by Deferred Compensation Board Members . Members of the Deferred Compensation Board, who are otherwise el igible, may participate in the Plan under the same terms and conditions as apply to other Participants, but an individual member shall not participate in any Deferred Compensation Board action taken with respect to that member's participation.
Employer Contributions. The Employer may add additional deferred Compensation for services to be rendered by the Employee to the Employer during any calendar month, provided:
(a) The Employee has elected to have such additional Compensation deferred, invested, and distributed, pursuant to this Plan, prior to the calendar month in which the Compensation is earned; and
(b) Such additional Deferred Compensation, when added to all other Deferred Compensation under the Plan, does not exceed the maximum deferral permitted under Article VI.
10.6 Controlling Law. This Plan shall be construed and enforced according to state law, applicable local law and the IRC, and shall be interpreted in a manner consistent with the maintenance of its status as an "eligible defe rred compensation plan" as defined in IRC Section 457(b). Reference to any section of the IRC, state law, or local law shall be deemed to incorporate any required amendments of such section as necessary to maintain the status of this Plan as an eligible deferred compensation plan. The Employer reserves the right to take such action and do such things as are required to make the Plan, as administered, consistent with IRC Section 457.
10.7 Suspension of Contributions. The Trustee may temporarily suspend the acceptance of Deferred Compensation as necessary to facilitate appropriate administration of this Plan or to comply with any federal, state or local law. Written notice of such suspension shall be provided to all Participants and may accompa ny the distribution of payroll check. No such suspension shall deprive a Participant or Beneficiary of any right or benefit to which the Participant or Beneficiary is entitled under this Plan immediately prior to the effective date of such suspension.
No Contract of Employment. Neither the establishment of the Plan, nor the participation in the Plan, shall be construed as giving any Participant the right to be retained in the service of the City of Fresno.
10.8 Severability of Provisions. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provisions had not been included.
DEFERRED COMPENSATION PLAN DOCUMENT
35 Heirs, Assigns and Personal Representatives. This Plan shall be binding upon the heirs, executors, administrators, success ors and assigns of the parties; including each Participant and Beneficiary, present and future.
10.9 Payments to Minors, Etc. Any benefit payable to or for the benefit of a minor, an incompetent person or other person incapable of receipting therefore shall be deemed paid when paid to such person's guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall full y discharge the City of Fresno and the Deferred Compensation Board with respect thereto.
10.10 Reliance on Data and Consents. The Deferred Compensation Board, and all other persons or entities associated with the operation of the Plan, the administration, management of its assets, and the provision of benefits there ma y reasonably rely on the truth, accuracy and completeness of all data provided by a Particip ant, and/or Beneficiary, including, without limitation, data with respect to age, health and marital status. Furthermore, the Deferred Compensation Board, and all persons identified above may reasonably rely on all consents, elections and designations filed with the Plan or those associated with the operation of the Plan by any Participant or Beneficiary, or the representatives of such persons without duty to inquire into the genuineness of any such consent, election or designation.
None of the aforementioned persons or entities associated with the administration operation of the Plan, its assets and the benefits provided under the Plan shall have any duty to inquire into any such data, and all may rely on such data being current to the date of reference. It shall be the duty of the Participant or Beneficiary to advise the appropriate parties of any change in such data. The Deferred Compensation Board shall not be liable for the consequences of such change in data.
10.11 Equal Access to Benefits, Rights and Features. Any determination made by the Deferred Compensation Board with respect to the availability of benefits, rights and features under this Plan shall apply on a non-discriminatory basis allowing equal access for all Participants; provided, however, that such access may be limited by the terms of a collective bargaining agreement or individual employment contract.
10.12 Claim Procedures. Any dispute over payment from Participation Accounts under the Plan shall be resolved by the Deferred Compensation Board pursuant to its written claims procedures. Such claims procedures shall comply with applicable state laws including, but not limited to, civil service rules and applicable collective bargaining agreements.
10.13 Gender and Number. The masculine pronoun, whenever used herein, shall include the feminine pronoun, and the singular shall include the plural, except where the context requires otherwise.
10.14 Qualified Military Service. This Plan will be administered in accordance with IRC Section 414(u) for Eligible Employees who re turn to work after absences from employment due to qualified military service. This includes make-up contributions that were not made during the Eligible Employee’s period of qualified military service. Contributions made up will be subject to the annual deferral limitations for the year in which they relate, rather than the year they are made.
DEFERRED COMPENSATION PLAN DOCUMENT
36 10.15 Entire Agreement. This Plan and the Particip ation Agreement, and any subsequently adopted amendment thereof, shall constitute the total agreement or contract between the Employer and the Participant regarding the Plan. No other communication or statement of any sort shall modify this Plan in any way or be relied upon by the parties to this Agreement.
END OF DOCUMENT
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