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HomeMy WebLinkAboutItem 4.04 AmendDeferCompICMA-RC CITY CLERK File # D[1][zJ[Q]-[3l[Q] _:,. AGENDA STATEMENT CITY COUNCIL MEETING DATE: (February 18,1997) SUBJECT: Amendment of City's Deferred Compensation Plan with International City ~anagement Association - Retirement Corporation (ICMA-RC) ~- (Prepared By: Paul S. Rankin, Assistant City Manager) EXHIBITS ATTACHED: Exhibit 1 - Overview of 457 Law C~anges Exhibit 2 - Resolution Amending and Restating the City's Deferred Compensation Plan in the Form of the ICMA Retirement Corporation Deferred Compensation Plan and Trust RECOMMENDATION: Exhibit 3 - ICMA 457 Plan and Trust Document V/ ~ Adopt the resolution. FINANCIAL STATEME1\'T: There is no cost to the City. The amendments will result in excluding the assets of the Plan as property of the City, and the assets will no longer be included as part of the City's quarterly investment report. ::. DESCRIPTION: The current employee benefit plan allows employees to participate in a Deferred Compensation Plan. Currently City employees may defer a portion of their compensation under a City sponsored plan, which was created in accordance with Internal Revenue Code Section 457. The deferral is not taxed until the funds are withdrawn and there are limitations as to when funds can be withdrawn. All assets contributed to date consist of employee contributions. The plan is administered by the International City Management Association - Retirement Corporation (ICMA-RC);' The Plan offers employees the opportunity to set aside tax deferred contributions, which can be used to supplement retirement income. Back.oround - Reason For Changes Private sector employees frequently establish retirement savings plans under IRS Code section 401 (k). Public sector employers are allowed to establish plans under IRS Code section 457. Although the retirement savings concepts related to the two plans are similar, the administration and rules governing them are different. Congress recently passed legislation which resulted in several changes to the laws governing Section 457 Deferred Compensation Plans, which in most cases became effective on January I, 1997. The changes were in part a response to the Orange County bankruptcy, which jeopardized the status of deferred compensation contributions made by Orange County employees. ;',. .' ------------------------------------------------------------------- COPIES TO: ITEM NO. 4.4 Hlcc-forms/agdastmt.doc r Outline of Major Changes Associated With New Legislation Although a major purpose of the revised Plan will be to place the deferred compensation assets into a trust, there are also other changes affecting the administration of the Plan. A brief summary of the changes of most significance are outlined below and discussed in more detail in Exhibit 1. 1. With the new legislation, all amounts deferred under a Section 457 plan are considered to be held in trust for the employees. This means that they are no longer considered to be the property of the City, nor are they or subject to the claims of the City's general creditors. As a result of this change, the deferred plan assets will no longer be included as part of the City's quarterly investment reports. .: 2. The new legislation includes a provision in which an employer may elect to allow employees to take out loans, against the funds held in their trust account. The U.S. Treasury has yet to issue any guidelines for issuing loans from a Section 457 plan, and ICMA-RC indicates that many administrative issues will result for Plans offering loans. Therefore, Staff does not recommend implementation of this provision at this time. 3. The current annual maximum contribution into the plan will be indexed. Currently the maximum is the lesser of 1) 25% of your annual earnings; or, 2) $7,500 per year. These limits are below the amount established for private sector retirement accounts. The new law allows the maximum contribution to increase in $500 increments, based upon changes in the U.S. Consumer Price Index. It is anticipated that this will allow for an increase in the maximum contribution to $8,000 effective January 1, 1998. 4. The new rules also allow employers to issue refunds to accounts with small balances (less than $3,500), which have not received a contribution for at least two years. Under the prior laws withdrawals were limited to IRS defined emergency situations, or when the employee was no longer employed with the agency. . 5. The revised trust will also address changes affecting the administrative rules affecting selection of a "pay-out" schedule after the employee is no longer employed by the agency. Adoption of Trust The changes recommended will not have any material effect on how Staff administers this benefit. By adopting the new document prepared by ICMA-RC, the City Council is establishing the status of deferred compensation funds as controlled within a Trust Fund. The monies are therefore designated for the exclusive benefit of the Plan participants and their beneficiaries and may not be diverted to any other pUIpose. Although the City shall serve as the Trustee, ICMA-RC would continue serving as the Plan Administrator. ICMA-RC has significant assets under management and offers employees a number of investment choices along with providing educational materials. The use of an established Plan Administrator, such as ICMA-RC, is intended to respond in a reasonable manner to fiduciary responsibilities the City may incur as the Trustee. The issues related to the Trust have been reviewed by the City Attorney and the proposed document was found to be in accordance with applicable laws. Recommendation . Staff has prepared a Draft Resolution (Exhibit 2) which will adopt the amended Trust as discussed above. Further, the Resolution states that the Plan will not permit employee loans. Staff recommends that the City Council adopt the Resolution. . n i. " Issue 457 I'IJll level Trust 457 lOJlls 457 Annual Contribution Maximum 457 Postponement of neginning Payment DaLe Election 457 Small-nabnce Account Distributions / ATTACHMENT A: OVERVIEW OF 457 LAW CHANGES Current Law 457 Jssels tllUSt remain solely the property of the employer, subject to the c1<1i illS of the employer's gener<11 creuitors. Bec<1use 457 plan assets are the sole properly of the employer, a 457 plan cannot include a loan provision. The annual contribution maximum is the lesser of (1) $7,500 or (2) 33 1/3 percent of includible compensation. Upon separation-from-service, the participant must irrevocably elect a beginning payment date for plan clistributions. 457 withdrawals are permilled under the following situations: (1) separation from service (including retirement, termina- tion, or death) and (2) unfore- seeable emergency. New Law All amounts deferred under a Section 457 plan must be helt! in trust for the exclusive benefit of pl<ln p<lrticip<1nts <IndiaI' benefici<lries. As acknowledget! in an official Congressional report, once 457 plan assets are helt! in a trust, a pi<1I1 Ill")' permit 10<lns under the provisions of section 72(p) of the Internal Revenue Code. The annual contribution maximum of $7,500 will be indexed to increase in $500 increments (rounded down) based on changes in the Consumer Price Index. The first incre<lse will likely not occur until 1998. Allows a one-time postpone- ment of beginning payment date elections. For example, a participant could postpone his/her ::Jriginal beginning payment date election of March 31, 1997, to Septem- ber 30, 1998. Allows one-time employer- or employee-initiated distributions of 457 accounts with balances of $3,500 or less that have been inactive (have not received contribu- tions) for at least two years. If a small-balance distribu- tion is taken from a plan, a participant can participate in that plan again. However, this participant cannot receive another small- balance uistribution from the plan. Employer Action Reference Guide Employers with a 457 plan in existence on August 20, 1996 must establish a plan level trust prior to January 1, , 999. (However, until the trust is established, assets will retn<lin unprolcclet!.) The plan level trust may be established by adopting the revised RC 457 plan documcnt or by illnentling yuur own plan document with ilPpliGlble language. such as language fount! in the RC plan t!ocument. See the Implementation Checklist for more details. Employers must decide whether ofiering loans would be desirable. If it is decided th<ltloans will be offered, a plan level trust must firsl be established. A loan option is available in the revised RC 457 plan document. loans may be elected by adopting the RC plan document and electing to olfer loans or by amending your own plan document with applicable language, such as language from the RC plan document. See Implementation Checklist for more details. Adopt revised RC 457 pi all document or amend your own plan document with applicable annual conlribution maximum langu<lge, such as language from the RC plan document. See hnplemcntation Checklist for marc details. Adopt revised RC 457 plan document or amend your own plan document with applicable distribution date change language, such as language from the RC plan document. See Implementation Checklist for more details. Adopt revised RC 457 plan document or amend your own plan document with applicable small-balance account distribution language, such as language from the RC plan document. See Implementation Checklist for more de,ails. RESOLUTION NO. - 97 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN * * * * * * * * * . AMENDING AND RESTATING THE CITY'S DEFERRED COMPENSATION PLAN IN THE FORM OF THE ICMA RETIREMENT CORPORATION DEFERRED COMPENSATION PLAN AND TRUST WHEREAS, the City of Dublin (EMPLOYER) has employees rendering valuable services; and WHEREAS, the Employer has established a deferred compensation plan for such employees that serves the interest of the Employer by enabling it to provide reasonable retirement security for its employees, by providing increased flexibility in its personnel management system, and by assisting in the attraction and retention of competent personnel; and WHEREAS; the Employer has detennined that the continuance of the deferred compensation plan will serve these objectives; and WHEREAS, amendments to the Internal Revenue Code have been enacted that require changes to the structure of and allow enhancements of the benefits of the deferred compensation plan: NOW, THEREFORE, BE IT RESOLVED that the Employer hereby amends and restates the deferred compensation plan (the "Plan") in the form of the leMA Retirement Corporation Deferred Compensation Plan and Trust (Trust). BE IT FURTHER RESOLVED that the assets of the Plan shall be held in trust, with the Employer serving as trustee, for the exclusive benefit of the Plan participants and their beneficiaries, and the assets shall not be diverted to any other purpose. The trustee's beneficial ownership of Plan assets held in the Trust shall be held for the further exclusive benefit of the Plan participants and their beneficiaries. :. BE IT FURTHER RESOLVED that the Plan will not permit loans BE IT FURTI-fER RESOLVED that the Employer hereby agrees to serve as trustee under the plan PASSED, APPROVED AND ADOPTED this 21st day of February, 1997. AYES: NOES: ABSENT: ABSTAIN: Mayor ATTEST: .. City Clerk g:\agenda\resos\defcomp.doc EXHffiIT 2 ), :3 , ' 457 DcfcrrcII COlllpCl/latioll PIal/ al/d Trult DOCUIIICllt No" C III I, C r 1 9 9 6 DEFERRED COMPENSATION PLAN &. TRUST ARTICLE I. PURPOSE The Employer hereby establishes the Employer's De- ferred Compensation Phn :ll1d Trust, hereafter referred to :IS the" Phn," The Phn consists of the provisions set forth in this document. The primary purpose of this Plan is to provide retirement income :\Ild other deferred benefits to the Employees of the Employer :llJd the Employees' l3cneficiaries in aCCOrd:lllCe with thc provisions of Section 457 of the Internal Rev- enue Code of 1986, as :lmcnucd (thc "Code"), This Plan shall be :111 :1gI-celllcnt solely bctween thc Employer ;lnd p:1rticipating Employccs. The Pbn ;lnd Tnlst forming a p:1rt hereof :1re est:1blished alld shall be maintained for the exclusive bellefit of eligible Employ- ees and their Bcneflciaries, No part of the corpus or income of the Trust shall revert to the Employer or be used for or diverted to purposed other dun the exclu- sive benefit of Participants and their Beneficiaries. ARTICLE II. DEFINITIONS 2,0 I Account: The bookkeeping account maintained for each Participant reflecting the cumulative amount of tbe P:irticip:mt's Deferred Compensation, including any income, gains, losses, or increases or decreases in nurket value attributable to the Employer's investment of the Participant's Deferred Compensation, and further reflecting any distributions to the Participant or the Participant's Beneficiary and any fees or expenses charged against such Participant's Deferred Compensa- tion. 2,02 Accounting Date: Each business day that the New York Stock Exchange is open for trading, as provided in Section (l.O(l for valuing the Trust's assets. 2,03 Administrator: The person or persollS named to carry out certain nondiscretionary administrative func- tions under the Plan, as hereinafter described. The Employer may remove any persoll as Administrator upon (lO days' advancc llotice in writing to such pcrson, . in which case the Employer shrill nari-le another person or persons to act as Administrator. The Administrator may rcsign upon 60 days' advance notice in writing to the Employer, in which case the Employer shall name another person or persons to act as Administrator. 'I 2.04 13cnefici:ny: The person or persollS designate~ the P:nticipant in his Joinder Agreemcn.t who sha:" recel\'e any benefits payable hereunder 111 the event' ot the Participant's death. In the event tbat the Participant names tWO or more Beneficiaries, each Beneficiary shall be entitled to equal shares of the benefits payable at the Participant's death, unless otherwise provided in the Particip:l1lt's Joinder Agreement. If no beneficiary is dcsignated in the Joinder Agreement, if the Designatcl. Bencficiary predeceases the Participant, or if the desig- nated Beneficiary does not survive the Participant for a pcriod of fifteen (15) days. then the estate of the Par- ticipant shall be the Beneficiary, 2,05 Deferred CompcllSation: The anlOunt of Normal Compensation otherwise payable to the Participant which the Participant and the Employer lllutualIy agrc~ to defer hereunder, allY amount credited to a Participant's Account by reason of a transfer under scction 6,OY, or any other alllount which the Employcr agrees to credjt to a Participant's Account. 2,06 Employee: Any individual who provides service for the Employer, whether as an employee of the. Employc.r or as an independent contra~t~r, and :,-:, been deSignated by the Employer as eligible to p~._:.:;. pate in the Plan, 2,07 Includible Compensation: The amount of an Employce's compensation from the Employer for a .. taxable year that is attributable to services performed :- ':: the Employer and that is includible in the Employee' , gross income for the taxable year for federal income pur})oses; such term does not include allY amount excludable from gross income under this Plan or any other plan described in Section 457(b) of the Code 0: any other amount excludable fro111 gross income for federal income tax purposes. Includible Compensatior :', shall be determined without regard to any communi~ property laws, 2.08 Joinder Agreement: An agreement cntered int( between an Employee and the Employer, including amendments or modifications thereof. Such agreem~ shall fIx the amount of Deferred Compensation, spec. a prcference among the investment alternatives desig~ ":- nateO by the Employer, designate the EmPlOye.' BenefIciary or Beneficiaries, and incorporate r\ conditions, and provisions of the Plall by refel~:'::: .."...,...."......."..,.....,.....,..,..,."....".,....,...,....."....,.........."...,..,.. . f \ leMA RETIREMENT CORPORATION . 2.UY Normal Compensation: The amount of compensa- tion \\'hich would be payable to a Participam by the Employer for a taxable year if no Joinder Agreemcnt were in effect to defer compcnsation under this Plan. 2.10 Normal Retirement Age: Agc 70-1/2, unless thc Participant has elected an altcrIl;ltc NOl"lnalll..etircmcnt Age by written ill5trllment delivered to the Administra- tor prior to Scpar;ltion from Scrvicc. A Particip;lnt's NOrlllJI Rctiremcnt Age determincs the pcriou during which J P:uticipaIlt may utilizc the catch-liP limitJtion of Section 5.02 hercunder. Once a ParticipJnt hJS to any cxtcnt utilizcd the cltch-lIp limitation of Section 5,02, his Normal Retirement Age Illay not be chJnged. . A PJrticipJnt's ;lltern:lte Normal Retiremcnt Age IllJY llot be eJrlier than the earliest dJtc that the P;lrticipJnt will becomc eligible to retire and receive lIllteduced retirement bcnefits under the Employer's basic n'tire- mcnt plan covering the PJrticipant and mJY not be later than the d;}te the Participant will attain age 70-1/2. If a P;lrticip:lllt continucs emplo)'meIlt aftcr :lttaining :lge 70-1/2, not having previously electcd alternate Norma] Retircment Age, the ParticipJnt's alternate NormJI Retirement Age shall not be !Jter than thc m;lndatory retiremcnt age, if an)', cstablished by the Employer, or the age at which the P:lrticipallt actually separates frolll scrvicc if thc Employcr has no mandJtory retirelllcnt ;lgC. ]f the PJrticipJnt will not becollle eligible to reccive bellcfits unuer a basic retircmcnt pbn main- tained by the Employer, the P:lrticipJnt's JlternJte NormJI Retirement Age may not be carlier than age 55 and may not be later th;ln Jge 70-1/2. 2.11 Participant: Any Employee who has joined the Pbn pursuant to the requirements of Article IV. 2.12 Pbn Year: The calcndar year. 2.13 Retirement: The first dJtc upon which both of the following shall have occurred with respect to a partici- pant: Separ:ltion from Service :llld attainment of age 65. . 2.14 Separation From Service: Severancc of the Participant's employment with the Employer which constitutes :l "scparation from service" within thc meaning of Section 402(d)(4)(A)(iii) of the Code. In general, a Participant shall be deemed to have scvcred his employment with the Employer for purposes of this Pbn whcll, in accordJllce with the established practices of the Employer, the employment relationship is considered (; to hJve JctllJlly termin:ltcd. In thc case of a Participant who is In illdcpendent cOlltractor of thc Employer, ScpJrJtion from SCr\'ice shall be deemed to hJve oc- curred when the ParticipJnt's COlltrJct under which sCl'vices Jre performeu has completely expired Jnd tCl'minJted, then;, is no foresecJble possibility thJt the Employn will renew the contract or enter into a nc\\' contract for thc l'Jrticipant's services, Jlle! is not antici- pJted thJt the l'JrticipJllt will become In Employee of the Employcr. 2.15 Trust; The Trmt cre:ltcd under Article VI of the Plan which sh;dl consist of JII COlllp<':IlSJtion deferrcd ulldcr the l'!Jn, plus any incomc and gains thereon, less any losscs, expcllSCS and distributions to PJrticipants and 13eneficiaries. ARTICLE III. ADMINISTRATION :'>,() I Duties of the Employer: The Employer shall have the autlllJrity to make all uiscretionary decisions affect- ing the rights or bcnefits of Particip:lnts which may be relluired in the :l(lministration of this Pbn. The Employer's decisions shall be afforded the 111:lximUlll deference permitted by Jpplicable law. 3,02 Duties of Administrator: Thc Administr;ltor, as agcnt for the Employer, shall perform nondiscretionJry auministrJtive functions in cOllllection with the Plan, including the mainten:lIlcc of PJrticip;lllts' Accounts, the provision of periodic reports of the status of each Accoullt, ;lnu the disbursement of benefits on bchalf of the Employer in accordance with the pro\'isions of this Plan. ARTICLE IV. PARTICIPATION IN THE PLAN 4.01 Initial Participation: An Employee m:lY become a Participant by clltering into a Joinder Agreement prior to the beginning of the calendar month in which the Joinder Agreemcnt is to become effective to defer compcnsation not yet e:lrned. 4.02 Amendment of Joinder Agreemcnt: A ParticipJnt may Jmend an executed Joinder Agreement to change thc amount of compensation llot yet earned which is to be deferred (including the reduction of such future deferrals to zcro) or to change his illvestmcnt prefercnce (subject r;; such rcstrictions :IS may result fro III the nature ~ terms of any investment made by the' Em- ployer). Such amendmcnt shall become effective as of ............................................................................................................ . T" r r r 4 5 7 D r.r (' r r r ,/ C ~ III l' C /I .< a I j 0 /I l' / ,,1/ ,,1/ d T r " .< IDa ( II III C /I I N"I'(IIIbrr /9')(, the beginnillg of thc c:-.1clldar Illollth cOllllllencing aftcr the date the ;llllendmcllt is executcd. A Particip:lllt IIl:lY at :lny time amend his Joinder Agreement to change the desigllated 13encfici:lry, alld sllch :1l11endmcnt shall become e ffecti ve imllledi:\ tel y. ARTICLE V. LIMITATIONS ON DEFERRALS 5,01 Noml:ll Limit:ltion: Except as provided ill section 5,02, the maxilllum amount of Deferred Compensatioll for any Participallt for any t:lxable ye:lr shall not exceed the lesser of $7.5()O.(}O, :lS :ldjllsted for the cost-of-living in accordance \-\lith Codc section 457(1.')(15) for taxable years beginning after Dccember 31, II)I)(] (the "dolbr limit:ltion"), or 33-1/3 percent of the P:lrticipant's Includible Conlpellsation for the t:Jx:Jbk ye:n. This lillliLltioll will ordill:lrily be equiv:llcnt to the lesser of the dollar limitation in effect for the t:!X:lble ye:lr or 25 percent of the Participallt's Nonll:ll CompellS:ltion. 5.02 Catch-Up Limit:ltion: For each of the bst three (3) t:lx:lblc )'e:lrs of:l P:lrticip:lnt ending before his :ltt:lin- l1Jellt of Norm:J1 Retirement Age, the m:lximum amount of Deferred Compens:ltion sh;1Il be the lesser of: (1) $.15,()(}(J or (2) the snm of (i) the Norm:ll Limit:ltion for the t:lx:lble ye:lr, :lnd (ii) the Normal Limit:ltion fOr e:lch prior taxable year of the P:lrticip:lIlt commencing after 11)78 less the :lmount of the Participant's Deferred Compensation for snch prior uxable ye:lrs. A prior taxable year sh:1I1 be taken into acconnt under the preceding sentence only if (i) the Participant W:lS eli- gible to participate in the Plan for such year (or in :lIIY other eligible deferred compensation pl:lII establisheo unde-r Section 457 of the Code which is properly t:Jkcn illto :ICCOUllt pursu:lnt to regulatiollS under section 457), and (ii) compens:Jtion (if any) deferred under the Plan (or such other plall) "\'a5 subject to the deferr:JI limit:l- tions set forth in Section 5.Ul 5.U3 Other Plans: The amount excludable from a Participant's gross income under this Plan or ;1ny other eligible deferred compcnsation plan under section 457 of the Code shall not exceed $7,500.00 (or such gre:lter alnount allowed under Sections 5.01 or 5.02 of the Plan), less allY amount excluded from gross income under section 403(b), 402(a)(8), or 402(h)(1)(B) of the Code, or an)' amount with respect to which a deduction is allo\""able by reason of:J contribution to an organiza- tion described in section 501(c)(18) of the Code. b ARTICLE VI. TRUST AND INVESTMENT OF ACCOUNTS . (>.lJ I Investmellt of Deferred CompellS:ltion: A Trust is hereby cre:lted to hold :lll the assets of the P!:Jn for the exclusive benefit of Participants :1lI0 Belleficiaries, except that expenses and taxes IlI:lY be p:lid (rom the Trust :lS provjded in Sectioll (,.a3. The trllstee shall be the Employer or such other person which :lgrees to act ill th:\t c:lpacity hereullder. ('.U2 Investment Powers: The trustee or the Plan Ao- ministr:ltor. :lcting :lS :lgent for the trustee, shall have the powers listed in this Section with respect to invest- ment of Trust assets, except to the extent that the investment of Trust assets is directed by P:lrticipants, pursuallt to Section (l.US. (:1) T~) ill vest :Ind n: invest the Trnst wi tli ou t d is- tinction bl'tween princip:lI :lnd incomc in :In)' form of tangible or intangible property, real. personal, or mixed, and ,,,,,hercver situateo, including, but not by W:lY of limitation. common or preferred stocks, sh:lres of regulateo investment companies anO other nllJtual funds, bonds, 10allS, notes, debentures.-' mortgages, certificates of deposit, interest, or . ticipation, equipment trust certificates, commercial paper including but lIot limited to participation in pooled cOlllJllercial paper accounts, contr;lctS with insur:lnce compallies including but not limited to illSurance, individual or group annuity, deposit :Juministration, and guaranteed interest contr:Jcts, deposits at reasonable rates of interest at banking iIlStitl1tiollS including but not limited to S:lvings :lccounts and certific:ltes of deposit, and other forms ::_ of securities or investments of any kind, class, or ch:lr:lcrer whatsoever and represellting interests in any form of emerprise, wherever it lIIay be located, org:lnized or operated within or without the United States of Amcrica, whether such investments are income producing or not, without being limited ill :In)' respect by statute or court rule or decision of all)' jurisdiction now or hereafter in force purport- ing to limit or otherwise affect such investmentS. Assets of the Trust ma)' be investeo in securities or new ventures that involve a higher degree of risk th:J11 investments that have demonstrated their investment performance over all extended pc. of time.... .......4.............................................. I..................................................... F ~ 1/ r , f' . . . '7' I C M ^ It 12 T I It E MEN T COlt I' 0 It ^ T JON (b) To invest :lIld reillvl'st all or allY part of the assets of the Trust in allY common, collective or commi ngled trust fun d th:l t is 11I:lin t:lined by :l ban k or other institution alld th:lt is :l\':libble to Em- ployee plans dt:scribed under sectiolls 457 or 401 of the Code, or :lny successor provisiollS thereto, and durillg the period of tillle that an ill\'estllll'llt through allY su<.:h Illediulll sh:dl exist, to tht: t'xtt'llt u ( pa rti <.: i p:1 ti on u( till' I' Ia Il, th l' dec Ia r:lli Oil u ( trUSl uf such <.:ommon, collective, or cOlllmingled trust fund sh:1Il cOllstitute a P:lrt of this Phil. (c) To ill V cst and I' e ill\' t: S l a II u I' a II Y p:1 rl 0 ( l h e assets of the Trust ill any group anlluity, deposit :Illlllillistr:ltiull or gU;lr;llltt'nl inlerest cOlltract issued bY:lIl insoranct' COlllp;\ny or other fillall<.:ial illstitu- tiun Oil a cOllllllingkd or collective basis with the aSSt'ts of allY other 457 phil or trust qualified under secti on '10 I (:1) 0 ( l h e Cod c ur :111)' 01 h t:r pia n de- s<.:ri bed in st'cti on 40 I (:1)(2'1) 0 ( lh e Code, :111 d such UJlltr:lct ilIa)' be held or issued ill the Ilame of the Phil Admillistrator, or stich ctlstodi:lll as the I'bll AdminiSlr:ltor m;lY :lppoillt, as agent alld Ilominee for the Employer, During the period th;lt :lll ill vest- ment through any such contract shall exist, to the extent of participation of the 1>bn, the terms and conditions of stich contract shall constittlte a part of the Pbn, (d) To purch:lSt. part interests ill rt:al property or III mortgages on real property, \vhe-rever such re:1I property may be situated, :lIld to delegate to a property mallager or the holder or holuers of 0 Ill:ljority interest in sueh rca] property or mortgagc Oil real property the mallagement alld operation of allY part interest ill such re:d property or Illortgages. (c) To hold clsh ;1 \va i till gill Ve:Stlllt~1I t and tu keep such portion of the: Trust ill clsh or <.:ash ba!allce:s, without li:,bilily for illterest, ill sllcll allloullts ;IS 111:IY from tillle to tillle be dt:e:1l1l'd to be reaSOll:lble alld lIe<.:essary to lIIeet obligatiolls Ullde:r the: Plall or otherwise to be in the be:st inte:rests of the 1'l:1n, ([) To rctaill, lII:Jn:lge, oper:lte, ;ldminister, diviue, subdivide, partition, mortgage, pledge, improve, olter, demolish, remodel. repoir, ond develop in :IllY mallner allY property, or allY p:Jrt of or partial illterest ill allY property, real or pcrsonal, held in the Trust, to IC:lsC such property for ;lny pcriou of timc, :lnd to gr:lnt options to sell, exchange, le:lse, or otherwise dispose of :lIlY such property. without regard to restrictions :Jpplic:lble to fiduciaries or others and without the appro va] of allY court. (g) To sdl for cash or credit, redeem. exchange lor other property, COllVe)'. tr;lllsfer, or otherwise disposl' of any property Ill'ld ill the Trust ill any 11I;Jllller ;llId at allY time, by private culltract or at public ;luctioll or otherwise, alld IIU other persoll sh:Jll be boulld to see to the :lpplic:ltion of the purchase 1nOIl('y or to illtjuire illtu the \'aIidity, l:xpl'diell<':Y, or propriety of allY such salt' or otht'!" dispositioll, (11) To elltl:r illtu COlltr;ll'tS for or to Illake commit- Illl'lItS either alolle ur ill compallY with others to purcll:Jsc or scll at allY future date ally property ;lcquired for thc Trust, (i) To ,'ott' or to refr:lin from votillg ally stocks. bonds, or other securities held ill thl: Trust, to exercise allY other right :Jppurtcllallt to all)' securi- tit'S or other property held ill the Trust, to gi,'e general or special proxies or powers ot attorney witl or without power of substitution with respect to such securities and other property, to exercIse allY conversion privileges, subscriptioll rights, or other options or privileges with respect to such securitics and other property alld m:tke any p;l)'lllellts illciden- tal thereto, and generally to exercise, person:llly or by geneta] or limited power of attomey, allY of the powers of:lll owner with rcspect to stocks. bOllds, securities, or other property held in thc Trust :It any tillie, (j) To oppose or to cOllscnt to :lnd pntlClpate 111 allY org:llliz:ltioll, reorganization, consolidation, merger, <.:ombillatioll, rcadjustlllcnt of finallces, or similar arrangelllcllt with respect to all)' corpor:Jtioll. UlIlIP:IIlY, or assuciation, :lilY of the securities of which art: held ill the Trust, to do allY oct with referell<.:e thneto, illcluuillg the exercise of optiolls, the makiug of agreemellts or subscriptions and the p:lyment of expcllses, ossessments, or subscriptions that m:l)' be uecmed llecess:try or au"iS:lble ill cOllllection thcrewith, alld to accept, hold, :llld ret:lin :lny securities or other property that may be so acquireu, Fi I' (' 457 D,{rllcr! Com/lCIIJalioll Plall dllr! T'llsl DOlumC1I1 N 0 /' r m " r I 1 9 9 (j (k) To deposit :lny property held in the Trust with ally protective, reorganization, or simihr commit~ tCl.'. and to delegate discretionary power thereto Jnd to pay and agree to pay part of its expenses and COlllpl.'nsation :llld any assessllIents levicd with respect to any sut:h property so lit-posited, (I) To hold, to authorize the holding of, :lnd to register :IllY investJnellt to the Trust in the nallle of the Phn, the Employer, or allY nominee or agellt of any of the foregoing, illcluding the Pbll Administra- tor. or in Ul':lrcr fOI"ln, to lit-posit or arrange for the deposit of securities in a lIu:dified celltr:tl depository even though, when so deposited, sut:h securities m:!y be merged :llld held in bulk ill the n:lllle of the llominee of such depository with other sl'curities deposited therein by :lllY other person, :!nd to org:!nize corporations or trusts under the bws of any jurisdit:tion for the purpose of acquiring or holding titk to :lilY property for the Trust, JII with or without the addition of words or other action to iudicatC' th:lt property is held in a fiduci:try or representative capacity but the books and records of the Pbll shall at all times show that all such invest- mellts arc part of the Trust. (m) Upon such terms as m:'ly be deemed Jdvisable by the Employer or the Pbu AdllliuistrJtor, :lS the case Ill:lY be, for the protection of the intercsts of the p!Jn or for the preserV:ltioll of the V:dllC of an ill\'cstmellt, to exercise Jnd ellforce by suit for legal or equit:tble remedies or by other action, or to waive :lllY right or chim 011 beh;llf of the Phn or . :mydefault in any obligation owing to the Pbn, to rt'llew, cxtend the time for pJyment of, ;lgree to :l reduction ill the rJte of illterest on, or agree to Jny other modifiCation or ch:lllge in the terms of any obligation owing to the Phn, to settle, compromise, adjust, or submit to arbitration any claim or right in favor of or against the Plan, to exercise and enforce any :lnd ;Ill rights of foreclosure, bid for property in foreclosure, :lnd t:lke a deed ill liell of foreclosure with or without paying consideration therefor, to commence or defcnd suits or other legJI proceedings whenever :lny interest of the Plan requires it, and to represent the Plan in all suits or legal proceedings in an)' COllrt of bw or--equity or before any body or tribunal. (n) To employ suitable consult:lnts, depositories, :lgents, :lnd leg:ll counsel on behalf of the Phn. S" (0) To m:Ike, execme, acknowledge, and deli,... -,' Jny :Ind :Ill deeds, leases, mortgages, couveyanc COlltr:IctS, waivers, rele::tses, or other instruments III writing uL'cessary or proper for the :lccomplishment of all)' of the foregoing powers. (p) To open and maintain :Iny bank :lCCOUllt or JCCOllnts in the name of the Pbn, the Employer, or an)' llo1nineL' or agent of the foregoing, including -. the Phn /\dminisrr:ltor, in :lilY bank or banks. (q) To do any Jnd :III other acts thJt m:IY be deemed llecessary to CJrry out any of the powers set forth hc-rein. (dJ3 TJXL's :lnd ExpcllSes: All taxes of :'Iny and a]l kiuds wh:ltsoe\'er that may be levied or assessed under existing or future laws upou, or ill respect to the Trust, or the int:olne then"of, :Ind all commissions or aelJuisitiollS or dispositions of securities amI similar expenses of invest- ment :Ind reinvestment of the Trust, shall be paid from the Trust. Such reasonable compensation of the Plan Administr:ttor, as may be agreed upon from time to t.ime by the Employer and the Plan Administrator, and '.-:;....:.- reimbursement for reasonable expenses incurred by" -_ .'- Plan AdmillistrJtor ill performallce of its duties hereun- der (including but not limited to fees for legal, account- ing, iuvestment and custodial services) shall also be paid from the Trust. ;, ().04 PaymC'nt of Benefits: The payment of bellefits from the Trust in accordance with the terms of the Piau I1l:IY be mJde by the Pbu Administrator, or by ;lllY custodian or other person so Juthorized by the Em- ployer to make such disbursement. The Piau Adminis- trator, custodian or other person shall uot be liable with respect to :lny distribution of Trust assets made at the direction of the Employer. (i.OS Investment Funds: In accordance with uniform and uoudiscrimill:ltory rules established by the Employer and the Plan Administrator, the Participant m:!y direct his/ her Accounts to be invested in olle (1) or more invest- mellt funds available under the Pbn; provided, how- ever, th:tt the Participallt's investment directions shall not violate an)' ill vestment restrictions established by the Employer. Neither the Emplo?,er, the Administrate'.:." .. nor any other person shall be hable for any losses'.. '. iucurred by virtue of following such directions or with :lny reasouablc administrative delay in illlPlcmcuting such directions. ............................................................................................................ . Sio: F I C M ^ Il E Till E 1\1 E N T COil I' 0 Il ^ T I () N . (l.U() V:duation of AccoulJ[s: As of each Accounting D:1te, the Plan assets held ill each in\'t:stmcnt fund offered shall be v:1lucd at fair market valuc and thc investment income and gains or losses (or cach fund shall be determined. Such invcstment income and g:1ins or losses shall be allocated proportionately among al1 Account balances on a fund-by-fund basis. The alloca- tion shall be in the proportion that each such Account b;dancc as of the immcdiately prcceding Accounting D:lte bears to the total of:1ll such AccoulJ[ b:1lances as of thJt Accounting Date. For purposes of this :\rticlc, all AccoUIJ[ balallces include thc Account balances of all Participants :llld Bencficiaries. 1 (d)7 Particip:lnt LO:ln Acco\lnts: l';lrticipant Loan Accounts shall bc invested in accordallCl' with Section 'H.()] of the Pbll. Such Accounts shall llot share in any investment incollle and gains or losses of thc Investlllent funds described in SectiollS (d):> and (d)(l. . (J.!)f! Crediting of Accounts: Tht' 1';1rticipant's Aceount shall rd1cct the amount and value of the investments or other property obtained by the Employcr through thc investment of the Participant's Deferred Compensation pursu:lnt to Scctions (),OS and ().()(l. It is alJ[icipated that the Employer's illvcstmellts with respcct to ;\ Particip:lnt \vill conform to the investment preference specified in the Particip:lnt's Joinder Agrcelllcnt, but nothing hercin shall be cOlIStrued to require the Employer to make any particular illvestlllellt of a P:lrticip:lnt's Deferred COlll- pensation. Each Participant shall receive periodic reports, not less frequently than annll:llly, showing the then current value of his/her Account. 6.09 Transfers: \ J (a) Incoming Transfers: A transfcr may be accepted from an eligible deferred compensation plan main- tained by :lnother employer and credited to a Participallt's Account under the Plan if (I) the Particip:lllt has sepJrated from service with that employer and become an Employee of the Em- ployer, and (ii) the other employer's plan provides that such transfer will be made. The Employer may require such documentation from the predecessor plan :1S it deems necess;Jry to effectuate the transfer, . -to confirm th:1t such plan is an eligible deferred compensation plall within the mcaning of Section 457 of the Code, and to assure that transfers are proyided (or under such plan. The Employer m:lY refuse to Jccept a transfer in the form of assets other . CJ than C:lsh, unless the Employer :lnd the l\dministra- tor agree to hold such other assets under the Plan. AllY such tr:1llSferred amount shall be treated as a deferral subject to the limitations of Article V, except that, for pnrposes of applying the limitations of SectiollS 5.0 I and 5.02, all alllOUllt deferred durillg :lll)' taxable year under the plan from which the tDlls(er is :lccepted sh:lll be tre:lted as if it has beell deferred under this Plan during such t:lXJblc year :llld compensatioll p:lid by the tr:lllsferor em- ployer sh:11l be treated as if it had bccn p:lid by the Employer. (b) Outgoing Transfers: An amollnt may be trans- ferred to all eligiblc deferrcd compensation pIon l\J;Jint:lilled by another employer, :llld ch:lrged to ;J Participal\t's Accoullt under this Plan, if (I) the Particip:ll\t has separated from service with the Employer and become all employee of the other clllpJoycr, (ii) tl\l~ other employer's plall provides th;lt such tr;lllSfcr will be accepted, and (iii) the P:lrticipallt and the employers have signed such agreements as are necessary to assure that the Employer's liability to p:lY bcnefits to the Particj~ pallt has beell discharged :llld assumed by the other cmployer. The Employer may requirc such docu- mclltation from the other plan as it deems ueceSS:1ry to effectu:lte the transfer, to confirm that such piau is :lll eligible deferred compensation plan within the me:llling of section 457 of the Code, :lnd to :lssure that tr:tllsfers are provided for under such plan. Such trJllSfcrs sh:tll be made only under such circum- stances as are permitted under section 457 of the Code :lnd the regulations thereunder. 6.10 Employer Li:tbility: In no event shall the Employer's liability to p:t)' benefits to a P:lrticip:lnt under this Pbn exceed the value of the amounts cred- ited to the Particip:lllt's Account; l\cither tin: Employer 1101' the Admillistrator sb:tll be liable for losses arising from depreciation or shrinkage in the value of allY investmellts acquired under this Plan. 5 (' I' r If ............................................................................................................. . 4 5 7 J) r f r r r r ,I C 0 11/ l' r II 5 0 I i 0 11 J! I II 11 II 11 d T I If 5 I D 0 [ II 11/ rill !\' " " r 11/ II r r J 9 9 G ARTICLE VII. BENEFITS 7.{) I Retirelllent 13endits :lIld Ele<.:tion OIl Separation frolll Service: Except as otherwise provided in this Anide Vll, the distribution of a P:uticipant's Account sh:lI I C()llllll~'ll r.::~~ as () f ^ pri 1 I () r t1l C CdCll dar )"C;1 l' a fte r the l'lall Year of the l'artir.::ip:lllt's RetirclllL'llt, and thc distribution of such Rl'tirclllcnl benefits shall be lllalk in :\cconlance with one of the p:\ymcnt optiollS de- scribed in Section 7.02. Notwithst:\nding the foregoing, but subject to the following p:\r:\gr:\ph of this Section 7.0 I. the 1':lrticip:1l1t Ill:\Y irrcvocably elect within ()U lbys following Sep:\r:\tion from Service to have the distribution of benefits cOlllmence on :\ fixed determin- able d:\te other th:\n th:\t described in the preceding scntence vvhich is at lc:\st () 1 days after Sep:\r:\tioll from Service, but not bter th:\n April 1 of the year following the )'e:\r of the Particip:\nt's Retircmcnt or :\tt:\inlllellt of age 70-1/2, whichever is later. Norwithstamling the foregoing provisions of this Section 7.0 I, no election to defer the commencement of benefits after a separation from service shall operate to defer the distribution of allY :\ll1ount in the Participant's LO:lIl Account in the eHIlt of a default of the Participant's loaIl. Effective on or after JaIluary ], 1 '3'37, the Participant Ill:!y elect to defer thc commencement of distribution of bt:llefits to a fixed determill:\blc d:\te later th:\ll the d:\te described abovc, but Hot bter th:lIl April 1 of the yc,lr following the year of the Participant's retirement or attainment of age 70-1/2, whichevcr is later, provided (:\) such clection is made after the () 1 st day following Sep:\ration from Service and before commencement of distributions and (b) the Particip~nt may make only one (]) such election, Notwithst:\lIding the forcgoing, the Administrator, in order to ensure the orderly adlllinis- [[:\tion of this provision, m:\y establish a deadline after which such election to defer the commencement of distribution of benefits shall not be allowed. 7.02 Payment Options: As provided ill Sections 7.01, '7.04 and 7.05, a Participant or Beneficiary may elect to have value of the Participant's Account distributed in accordance with one of the following payment options, provided that such option is consistent with the limita- tions set forth in Section 7,03. (;i) Equal mOIlthly, quarterly, semi-annual or annual p:lymcllts ill .In amoullt chosclI by the P:\rticip:\lIt, continuing until his/her Account is exhausted; /0 (b) Onc lUlllp-sum paYlnellt; - . (c) Approximately equ:\lmonthly, quarterlY.; :\llllllal or :lllIlU:\] p:\yments, calcubted to cO/Hilll,_ for:l pcr}od certain chosell by the Participant. (d) Annu;d Paymcnts cqu:l1 to thc nlinilllllm distri- butiollS required under Sectioll 4U I (a)(<J) of the Codc OVCf the life cxpectallcy of the Participant 0: OVCf the life expectancies of the Participant and hj, Bencficiary. (c) Payments L'lIU:d to payments made by the issuer of:J retircmcnt annuity policy acquired by the Employer. (f) A split distribution ullder which p:\)'ments unde options (:1), (b), (c) or (e) commence or are made a_ the sanle tinlt', as elected by the Participallt under Section 7.01, provided that all paymellts commellC' (or arc made) by the latest benefit commencement date under Section 7..01 and that once a payme:): m:lde subsequcnt payments will be lllade in subs~. tially noninCteasing amounts. ,""" (g) Any p'yme'" option elected by the poct.", :\nd agreed to by the Employer and Adlllinistrator, ~ provided that such option must provide for substal;' ti:\lI)' nOllincre;lsing payments for any period after the benefit commencement date under Section 7" A Participant's or Beneficiary's selection of a payment option made after December 31, 1 '3'35, under Subsec- tions (a), (c), Or (g) :Jbove may include the selection ot an automatic annual cost-of-living inCfe:Jse. Such increase will be based on the rise in the Consumer Pri Index for All Urban Consumers (CPI-U) from the thi: quarter of the last year in which a cost-of-living in- crease was provided to the third quarter of the cunCl' year. An)' increase will be made in periodic payment checks beginning the following January. The first cc of-living inCfe:Jse will be based on the rise in the CPI- from the third quarter of 1 '3Y5 to the tbird qUJrter of 1996, and will be applied to amounts paid beginning January 1'3'i? A Participant's or Beneficiary's election of a pav.lt option must be made at lea.st 30 days before th. ment of benefits is to commence. If a Participant or Beneficiary fails to make a timely election of a payme: option, benefits shall be p:Jid monthly llnder option (c ......................................................................................................... . E i ,C Ii I r I C M A It E T I It E MEN T COlt I' 0 It A T ION . abon~ for a pcriod of five ycars or such shortcr period of time necessary to ensure that the amOUIlt of an)' illSt;'\lI- mellt is llot lcss than $1,200 per )'ear, without the inclllsiOll uf a cost-of-livillg increase. . 7 .():') Limitation on Optiom: No paYlllellt optiun ilia)' be sekctcd by a Participallt undn subsectio!lS 7,02(:1) or (c) ullless the allluunt of allY installment is llOt less th:ln S 1.200 per ycar. No P:1Ylllt'lIt optioll 111;1)' be sckctcd by a P:Jrticipallt or BClleficiary ullder Scctions 7.02, 7,04. or 7,05 unless it s:Jtisfics till' requircmcllts of SectiOllS 40 I (a)(<)) :llld 457(d)(2) of thc Code, illcludillg lh;lt paynlcnls COlllllll'ncillg befort' the Lk:llh o( tht' ParticipaIlt shall satisfy the illcidental death bencfits requirl'1I1cllt undl'( sectioll 457(d)(2)(B)(i)(I). A COSI-o[- livillg illcrease included as part o[ a paymcllt option selected ullder Sectioll 7,lJ2 shall llot be comidered to (IiI to satisfy the rcquin.'IllclIt ullder sectioll 457(d)(2)(b) t h:1 ( ;111 y d i S IT i [, ul i 0 II Ill;1L '" <> V l' I' :1 p l' I' i <> d 0 ( 1110 n' I h :111 I yt'ar c:m Ollly bc made ill substalltially Ilunincreasing amounts. Unless otherwise t'Jccted by the ParticipaIlt (or spouse, in the case of distributions described in Section 7.05 below) by the time distributiolls arc relluired to begill, life expect:Jllcies sh:JII be recalculated allllu:dly, Such electiOll sh:JII be irrevocable as to the P:Jrticipant (or spouse) alld shall :Jpply to ;'\11 subset]uellt years, The lifc expectallcy of a llonspouse lJeneficiary ma)' not be recalculatcd, 7,04 Post-retiremcnt Death Benefits: . (a) Should the Participant die ;Ifter he/she has begllll to reccive benefits untkr a p:l)'mellt option, the rl'lIIainillg paynlcllts, i( ;,\IlY, IIIlder the paymellt opli 0 n sha II be pa Y:I bk to I h e I 'a rti ci pa III 's Ikll di- ci;lry withill the 3()-day period commellcillg with the (, I st lby :1 ftcI' thl' 1':1 rti c i P;ll1l' s dea th, 1111 kss tht. UCllcfici;lry t'lccts paYllll'llt lIllder a dilrerellt pay- mellt upti Oil th;\ t is ;1 V;I ib ble ulldcr Sl'cti Oil 7,02 within ()() days or the I'articipant's de:lth. AllY different payment option elected by a BCllcfici:Jry undcr this scction must provide for poymellts at ;'\ rate that is at least as rapid ullder the p:JYlllcllt option that was :lpplioble to the Participallt. III 110 cvellt shall lhe Employer or Admillistr:ltor be li:lble to the Belleficiary for the :lmOUllt of any p;'\ynlent lllad~ in the llame of the Participallt before the Administrator rcccivcs proof of death of the P:Jrticipant. /I (b) If the designated Bencficiary docs lIot continuc to live for thc rem:lining pcriod of payments under the payment option, then the commutcd valuc of :lllY remaining paymcnts under the p:Jyment option shall bc paid in 0 lump sum to the estate of the Belleficiary, In the event that the Participallt's estatl is the lh~lleflciary, the commuted ,'alue or allY ITll1;'\inillg p;lylllelltS under thc payment option shall bl' paid to the l'stale ill a IUlllp SUlll. 7.oS Prc-r('tiremellt Death Bellefits: (:1) S h 0 uld th e Pa rtic i pa II t d j e befort, h L' has begull to receive the benetlts provided by Sectiul) 7.01, till' ,.;t!ue uf thc l':lrticipallt's Accuunt shall be p:Jyable to thl' Bcneficiary cOlllmellcing withill the 30-day period commencillg on the I)] st lhy :Jfter the Participallt's dcath, unless the Bellellciary elects a diITL'/"l'lll fixed or dncl"lnill;lble bl'lIdll <':OlllllleJIL"l'~ JIlent date 'within I)U days ur the P:lrticip:Jllt's death. Such bCllefit comlllellcelllcllt date shall be llot later thall the later of (I) Deccmber 31 of the year fol- lowing the year of the Participallt's death, or (ii) if the Bcneficiary is thc Participallt's spouse, Dccem- bel' 31 or thc year ill which the Particip:lIlt wonld havc att:Jined age 70-] /2. (b) Unless a lkncficiary elects :l different payment option prior to the bCllcflt commenccmellt date, death benefits under this Section shall be paid in ;'\pproxim;ltely equal annual installments over five YC:Jrs,or over such shorter period as may be neces- sary to assurc th:1t the amount of any anllual install- mellt is not less thall $3,500, A Beneficiary shall be treated as if hc/she were a l'articip:lIlt [or purpoSt'S of dClel"lllillillg lhe paYlIlell1 optiolls ;lvail:tble ullder Sectiun 7.02, providcd, huwever. that the p:lymellt option chosen by the BClleflci:ny must provide for p:lymcnts to the lJencflciary over :J perioJ 110 lungeI' lhan the life expectancy uf the lJenefici:lry, and provided that such period mol' not exceed (15) years if the Benefici:lry is not the P:Jrticip:Jnt's spouse, (c) III the evcnt that the Beneficiary dies before the payment of death benefits h:Js cummenced or been cOlllplcted, the !"l'lIlaining valuc of the Participant's Accoullt shall be paid to the estatc of the Bcncfi- ciary ill a lump sum, In the event that the Participant's estate is the Beneficiary, payment sholl be made to the estate in :J IUlllp sum, 1\' j I' r ............................................................................................................ . " J 7 J) r.r r , , r /1 C" 11/ l' r II .1 " Ii,. II l' 1 ,I II "" ,I T, II ,I t/)o , /I '/I r II I N,'I'CII/V'"199(, 7 .Oll Ullfore~eeablc Elllergellcie~: (:\) III the evellt all ull(un:~eeablc elllergellCY occurs, :I P:lrticip:lllt Ill:ty _:\ppIy to the Employer to receive tll:lt P;lI't of the value u( his/her Account th:\t i~ ro~ollably needed to s:lti~fy the emergency need. If ~uch :In :tpplic:\tion is :lpprovl'd by the Employer, th~' P:trticip:\nt shall be p:\id ollly such :tlllOUIlt :ts the Employer decms neCl'ssary to llleet the emergency nt'cd, but p;1yment shall Ilot be m;1de to the extent th;lt the finallcial h:lI'dship may be relieved through l.'l.'ssatioll of dl.'(erral under the Pbll, ill~ur;1nce or other reilllbursement. or lillUid:\tion of other :\ssets to the extent such liquid;Hion would not it~clf cause ~cvere fin:tnci:,j h:\l'llship. (b) An ullful'l'see:tble emngency shall be tlet'llH:d to in\'ulvl.' only circum~t:\llces of ~evt're fin:lllci:\l h:\l'd~hip to the Participant resulting from a Slldden ullexpt'ctt'd ilIlless. accidellt, or di~;lbiIity of the P:\rticip:\llt or of a depelldellt (as defilled ill section 152(a) of the Code) of the Participallt, loss of the P:\nicipant's property due to c:\sll:ilty, or other similar :\nd extrJordin:\ry 1Illforesee:lble circum- stallces arising ;IS ;1 result of events beyond the control of the Particip;1llt. The need to send ;1 P:\rticipant's child to college or to purchase a Ilew ht)l1\e shall not be cOllsidered unforeseeable ell1er- ~ellcie~. The Jctcflllin:\tion as to whether such an unforeseeable emergency exists shall be based on the merits of e;'lcll indiviJu;1] case. 7.ll/ Tr:\llsition:\1 Rule for Pre-l ')8Y Benefit Elections: In the event th;'lt, prior to jallu;1ry I, 1 ')8'), :\ Participant or Beneficiary has commcllced recciving bellcfits under :\ p;1yment option or has irrl'vocably clected a payment option or benefit commcncement lbte, thell th:\t pay- mellt optiOll or election sh:tll remain in effect notwith- standing any other provision of the Plan. 7.0S Dc Minimis Accoullts: Notwithstanding the fore- going provisiolH of this Article, if the value of a Participant's Account does not exceed $3,500 and (a) no amount has been deferred under the Plan with respect to the Participant during the 2-ye;1r period ending on the date of the distributioll and (b) there has been lIO prior distribution under the Plan to the Participant -plirsU<lllt to this Section 7.08, the Participant m;!y elect to receive or the Employer may distribute the Participant's emirI.' Account without the cOllsellt of the Participallt. Such distribution shall be llude in a lump sum. /1- ARTICLE VIII. LOANS TO PARTICIPANTS -. S.O 1 /\v:\ibbiJity of LoallS to P:trticipants: (a) Effective .l:\llllary 1,1')')7, the Employer may elect to make loam available to Particip:tnts in t!lis Pbll. If the Employer h:ls elected to m:tke loans :\\';1ibble to Particip;'lllts, a Particip;'lllt Illay apply for' a loall from the Pbn subject to the limit:ttiollS ;'lnJ other pr()\"isions of this Article. (b) The Employer shall est:lblish written guidelines'- !-':(l\"Cming thc gr:tnting of 10;'llls, provideJ that such !-,:lIidclilles arc approveJ by the Pbll AJministrator ;!lld art' not incollsistellt with the provisions of this Article, alld that 10:\lls arc made :1\"aiJablc to all I'articip:\llts Oil :\ re:\~onably t'quiv:\lcllt basis. :~.()2 TerlllS ;llld COllditiolls of Loalls to P:lfticip:tlltS: AllY loall by the Pl:1n to a 1':lfticipallt ullder Section tl.U 1 tlf the Pbll shall satisfy the following requircmcnts' (a) A\"Jilability. LO;'ln's shall be made available to al!i Participants Oil a reasonably elJuivalcllt b;'lsis. (b) Inturst Rate. Loans must be adelJUatcI/.Cl~-- allJ bear a reasonable illterest rate. (c) Lo:\n Limit. No Particip:\nt loall shall exceed tI : present value of the Participant's Account. " (d) Foreclosure. In thc event of default on ;'lny inst:\lIment payment, the outst;'lnding balance of the:: loan shall be a deemed distribution. III such event, -; an actual Ji-stribution of J plan loan offset alnount will not occur until a distributable event occurs in the Plan, (e) Reduction of Account. Notwithstanding any other provision of this Plan, the portion of the Participant's Account babnce used as ;1 security interest held by the Plan by reason of a loan out- standing to the Participallt shall be t;'lken into account for purposes of determining the amoullt of:. the Account balance p;1yable at the time of death 01- distribution, but only if the reduction is used as repaymcllt of the loan. :. -' ........................................................................................................... " T r 11 '. ". . ICMA RETIREMENT CORPORATION (1) AtlluulJt uf Luall. At the titlle the ]0;111 is Ill:lJe, the principal :Jmount of the loan plus the outstanJ- ing balance (principal plus accrued interest) due on any other outstallding loans to the P:Hticipant from the Plan and from all other pbns of the Employer that are qualified employer plans under section 72(p)(4) of the Code shall not exceed the least of: (1) S50,000, reduced by the excess (if any) of (a) The highest outstanding balance of loans from the J>!;Jn during the aile (1) year periud ending on the day before the date on which the loan is made, over (b) The outstanding b:ll:1ncc of loans from the Plan on the date on which such loan is made; or (2) One-half of the va]ue of the P:trticipant's interest in all of his/ber Accounts under this Phn. (g) Application for Loan. The Participant must give the Emp]oyer adequate written notice, as determined by the Employer, o[ the :lll1ount and desired time [or receiving a loan. No more than one (1) loan may be m:Jde by the Pbll to :J Partici- pant in any calendar ye:Jr. No loan shall be ap- proved if an existing loan from the Plan to the Participant is ill de[ault to any extent. (h) Length of Loan. Any 10Jn issued shall require the PJrticipant to repay the loan in substantially equal installments of principJI and interest, at least monthly, over a period that docs not exceed five (5) years from the date of the loan; provided, however, that if the proceeds of the Joan arc applied by the PJrticipant to acquire any dwelling unit that is to be used within a reasonable time (determined at the time the Joan is made) J[ter the 10:ln is made as the principJI residence of the Participant, the five (5) year limit shall Ilot apply. In this event, the period of repJyment shall not exceed a reasonable period determined by the Employer. Principal installments and interest payments otherwise due m:JY be sus- pended for up to one (1) year during an authorized leave. of absence, if the promissory note so provides, but not beyond the original term permitted ullder this Subsection (h), with a revised payment schedule /~ (within slIch term) instituted at the elld uf such period of suspension. (i) Prepayment. The Participant shall be permitted to repay the loan in whole or in part at any time prior to maturity, without penalty. (j) Promissory Note. The loan shall be evidenced by a promissory note executed by the Participant and deliycred to the Employer, :lIld shall bear interest at :I reasonable rate determined by the Employer. (k) Security. The loan sh:dl be secured by an :Issignment of the Participant's right, title and interest in :lnd to his/her Account. (I) Assignment or Pledge. For the purposes of p:lragr:lphs (f) and (g), assignmellt or pledge o[ any portion of the Participallt's interest ill the Pbn aIH] :I loan, pledge, or assignment with respect to any insurance colltract purchased under the Pbn, will be treated as a loan. (m) Other Terms and Conditions. The Employer shall fix such other terllls and conditions of the loan as it deems necessary to comply with legal require- ments, to maintain the qualification of the Plan and Trust under section 457 of the Cooe, or to prevent the treatment of the loan [or t:JX purposes :IS a distribution to the Participant. The Employer, in its discretion for any re:Ison, Illay fix other terms and conditions of the loan, not inconsistent with the provisions of this Article and section 72(p) of the Code. 8.03 Participant Loan Accoullts: (a) Upon approval of a loan to a P:lrticipallt by the Employer, an amount not in excess of the loan shall be transferred [rom the Participant's other invest- ment fund(s), described in Section 6.05 of the Plan, to the Participant's Loan Account as of the Account- ing Date immediately preceding the agreed upon date on which the loan is to be made. (b) The assets of a Particip:Int's Loan Account may be invested and reinvested only in promissory notes leceived by the Plan from the Participant :IS consid- erJtion for a loan permitted by Section 8.01 of the Plan or in cash. Uninvested cash balances in a E I r I' r " 1\' f' It r III Il r , 4 J 7 J)" f r r r r de,. 1/' J' r 1/ " d I i ~ 1/ I' 1 II 1/ ,I 1/ d T r II J I [)" ( II //I r 1/ I I I) ') (, l'arLicipanl's Loan AL'cuunl shall nol bear inlerest. Neither the Employer, the Administrator, nor any uthn person sh:dl be liable (or any loss. or by reason o( any breach, that results from the l'articipallt's exercise of such control. (c) Repayment o( princip:d and paylllelll of illtl'l't:st sh:dl bt: 1ll:1de by payroll deductiOn or, where repayment cannot bt: lnade by payroll dt:duction, by check, and shall be invested in onc (1) or more other investment funds, in accord:lIlce with Section (>.\lS of the 1>l:1n, as of the next Accoullting D:lte aftn payment thereof to the Trust. The amount so invested shall be deducted from the Participallt's Loan Account, (<I) The Employer shall have the authority to t:st:lblish other reasonable rules, not incollSistellt with the provisious of the Plan, goveming the cst;lblishlllent and mainlenance of Participant Loan Accollnts, ARTICLE IX NON~ASSIGNABILITY 1}.01 In General: Except as provided in Article VIII and Section Y.02, no Participallt or Beneficiary shall have any right to commute, sell, assign, pledge, transfer or otherwise conveyor encumber the right to receive any payments hereunder, which p:,ymcnts and rights are expressly declared to be nOll-assignable and n on-transferabl e. Y,02 Domestic Relations Orders: (a) Allowanct: of Transfers: To the extent required under final jlldgement, decree, or order (including approval of a property settlemellt :1greement) made pursu:mt to a state domestic relations law, any portion of a Participant's Account may be paid or set aside for payment to a spouse, former spouse, or child of the Participant. Where necessary to carry out the terms of such an order, a separate Account sh:111 be established with respect to the spouse, former spouse, or child who shall be entitled to make investment selections with respect thereto in the same manner as the Participant; any amount so set aside for a spouse, former spouse, or child shall , be pa.id out in a lump sum at the earliest date that bellefits may be paid to the Participant, unless the order directs :l different time or form of payment. 1'/ Nothillg ill this S<.:ction ~h:tll be cOllstrued tu.- "Ill! rize any amount to be distributed under the i t a tilll<.: or ill a form that is not permitted until'[ Section 457 of the Code, Any P:l)'mellt made to a person other than the Participant pursuant to this Section shall be reduced by required income tax withholding; the Elet th:ll paynlent is lII:lde to a persun other lhan the Participant may not prevellt such p:l)'ment (rom being includible in the gross ill come of the )Ja rtici pan t for wi lhhold ing an d Incomc tax reporting purposes. (b) R<.:lcase from Liability to Participant: The Employer's liability to pay benefits to a P:lrticipant shall be reduced to the extent that amounts have bcen paid or set aside for payment to a spouse, (ormer Sponsc, or child pursuant to paragr3ph (a) of tht: Section. No such transfer shall be eff<.:ctuated UllleSS the Employer or Administrator has been provided with s:ltisfacrory evidence tb:lt the Em- ployer and the Administrator are relcased from any further claim by the Par~icipant with respect to sllch amounts, The Participant 5h311 be deemed to have release~ the Employer and the Administrator f. any clallll With respect to such amoullts, III al. ' in which (i) the Employer or Administrator bas oeen served with legal process or otherwise joined in a proceeding relating to such transfer, (ii) the Partici- p3nt has been notified uf the pcndency uf such proceeding in the manner prescribed by the law of the jurisdiction in which the proceeding is pending for service of process in such actiOIl or by mail from the Employer or Administrator to the Participant's last known mailing address, and (iii) the Participant fails to obtain an order of the court in the proceed~ ing relieving the Employer or Administrator from the obligation to comply with the judgment, decree, or order. (c) Participation in Legal Proceedillgs: The Em- ployer and Administrator shall not be obligated to defcnd against or set aside any judgement, decree, or order described in paragraph (a) any legal order relating to the garnishment of a Participant's ben- efits, unless the full expense of such legal action is borne by the Participant. In tbe evcnt that the Participant's action (or inaction) nonetheless c.' , the Erilployer or Administrator to incur such ( pense, the amount of tbe expense may be chargl.':'" against the Participant's Account and thereby redut the Employer's obligation to pay benefits to the T u' r I.. r ............................................................................................................ . If;" i:"" . . -. ICMA RETIREMENT CORPORATION P;lrticip:mt. III the course of ;lilY proceeding rc!ating to divorce, sep:lration, or child support, the Em- ployer and Administrator shall be authorized to disclose inforlllation relating to the Participant's Accoullt to the Participant's spollse, former spOllse, or child (including the legal represent:1tives of the spOllse, former spouse, or lhild), or to a COllrt. ARTICLE X. RElATIONSHIP TO OTHER PLANS AND EMPLOYMENT AGREEMENTS This l'l:1n serves in :lllditioll to ;IIlY other retiremellt, PL'llSioll, or bL~lleCit plall or SystL:1l1 prL:sL:lltly ill existellcL: or hereinafter est:lblishcd for the benefit of the Employer's employees, and participation hereunder shall not affect benefits receiv:Jblc under :Jny such pbn or system. Nothing cOllt:lined in this Plan sh:dl be deemed to constitute :In employmellt contract or agreement between any Participant and the Employer or to give any P:lrticipant the right to be retained in the employ of the Employer. Nor shall anything herein be construed to modify the terms of any employment contr:lct or agreement between :l Participant and the Employer. ARTICLE XI. AMENDMENT OR TERMINATION OF PLAN The Employer may at any time :lmend this Pl:1n pro- vided tint it tr:111$mits such amendment in writing to the Administr:ltor :It least 30 d:lYs prior to the effective d:lte of the amendment. The consent of the Administr:ltor shall not be required in order for such amendment to become effective, but the Administrator shall be under no oblip;:1tioll to continue actinp; :lS Administr:ltor hereunder if it disapproves of such amendment. The Employer lll:Jy ;It ;IllY time terminate this 1>b11. The Administr:ltor 1ll;IY at any time propose an amelld- ment to the Plan by an instrument in writing transmit- ted to the Employer :It least 30 d:lYs before the effective d:lte of the :lmendment. Such :lmendment sh:lll become effective unless, within such 30~day period, the Em- ployer notifies the Administrator in writing that it disapproves such amendment, in which case such :lmendment shall not become effective. In the event of such disapproval, the Administr:ltor shall be under no obligation to cOlltinue acting as Admiuistr:ltor her,eunder. 15 T" i r t r r " Except :lS m:lY be required to n1:lint:lin the status of the PIau as an eligible deferred compensation pIau under section 457 of the Code or to comply with other :ipplioble I:1ws, no amendment or termin:itiou of the Phn sh:ill divest any P:irticip:int of :IllY rights with respt'(t to compensation deferred before the Lbte of the anlelldllll:llt or termination. ARTICLE XII. APPLICABLE lAW This Pl:1n :lnd Trust shall be construed under the bws of thl: state where the Employer is 10cateJ :illd is est:Jb- lished with the intent that it lllel:t the requirements of all "eligible deferred compcns:ltiou pl:1n" under Section 457 of the Code, :lS :lmended. The provisiollS of this Phn alld Trust sh:lIl be interpreted wherever possible in conformity with the requirements of th:lt section. ARTICLE XIII. GENDER AND NUMBER The m:lsculinc pronoun, whenever used herein, sh:lll include the feminine pronoun, and the singular sh:lIl include the plural, except where the context requires otherwise.