RES-9870 Amending Part Time Employee Deferred Compensation PlanRESOLUTION NO. 9870
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF ORANGE AMENDING
THE PART TIME EMPLOYEE ~457
DEFERRED COMPENSATION PLAN.
WHEREAS, the City of Orange has part time employees currently
participating in a S457 deferred compensation retirement savings plan (hereafter, the
Plan) with record keeping and investment options offered by Great West Life &
Annuity Insurance Company; and
WHEREAS, by Resolution 9048, adopted in 1998, the City of Orange adopted
the Plan and now desires to amend the Plan to enhance employee options within the
Plan; and
WHEREAS, Great West Life & Annuity Insurance Company is able to
perform the record keeping services for, and provide investment options to, the
deferred compensation plan for the City of Orange employees.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Orange as follows:
1, The City of Orange hereby adopts the Amendment to Section 457
Plans attached hereto as Exhibit A,
2. Except as specifically amended in the attached Exhibit A, the
Plan shall remain in full force and effect.
ADOPTED this 25th day of May, 2004.
r, City of Orange
ATTEST:
11
MaryE.fOrange
I, MARY E. MURPHY, City Clerk of the City of Orange, California, do hereby
certify that the foregoing Resolution was duly and regularly adopted by the City
Council of the City of Orange at a regular meeting thereof held on the 25th day of
May, 2004, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
COUNCILMEMBERS: Ambriz, Alvarez, Murphy, Coontz, Cavecche
COUNCILMEMBERS: None
COUNCILMEMBERS: None
COUNCILMEMBERS: None
3
MaryE.
2-
AMENDMENT TO SECTION 457 PLANS
ATTACHED TO AND FORMING PART OF
THE GROUP ANNUITY CONTRACT
WHEREAS, the Group Contractholder/Group Policyholder has entered into a Group Annuity
Contract (the "Contract") with Great-West Life & Annuity Insurance Company (
the
Company"),WHEREAS, the Contract and related riders, endorsements, amendments, and other related
forms,if any, issued under the Contract require this Amendment pursuant to the Economic Growth
and Tax Relief Reconciliation Act of2001 ("
EGTRRA"),WHEREAS, the Contract and related riders, endorsements,amendments, and other related
forms,if any, issued under the Contract require this Amendment pursuant to required
minimum distribution regulations issued by the Federal Department of
Treasury,AND WHEREAS, the provisions of this amendment shall be effective January I, 2002,
unless otherwise indicated below, and shall supercede the provisions of the Contract and related
riders,endorsements or amendments, if any to the extent those provisions are inconsistent with
the provisions of this
amendment.NOW THEREFORE, the following Amendment is hereby made to the Contract and
related riders, endorsements, amendments, or any related forms, if any, issued under the
Contract.I,
EGTRRA a.
Distributions Notwithstanding any distribution provision to the contrary, distributions
made under the Contract shall be made at the time and in the amount and manner allowed
under the terms of the Plan and applicable Internal Revenue Code rules and
regulations promulgated thereunder, as amended from time to time, and will be tax reported under
the applicable rules in effect on the date of
distribution.b.
Rollovers In the event that a Plan has been amended to accept rollovers from other
eligible retirement plans, such rollovers shall be treated as Deposits under the terms of
the Contract. Amounts distributed may be rolled over to an IRA or any other
eligible retirement plan that accepts such rollovers. Amounts directly rolled over will not be
tax reported until
distributed.01
A457 EXHIBIT
A
c. Qualified Domestic Relations Orders (QDROs)
In the event that a Sect~on 457 Deferred Compensation Plan accepts QDROs. the
Company shall process approved Requests to establish a separate account administered
on behalf of the Alternate P,ayee named in such QDRO or make payment to the Alternate
Payee in accordance with the provisions of the Plan. Distributions to an Alternate Payeeshallbetaxreportedundertherulesine/Tect on the date of the distribution. This
provision shall replace any and all provisions related to Conforming EquitableDistributionOrders (CEDOs).
d. Deemed IRAs
In the event that a Plan has been amended to establish Deemed lRA(s), includingtraditional, Roth or both, as part of the Plan effective on or after January I, 2003, all
contributions and rollovers to the Deemed IRA(s) shall be treated as a Deposit under the
terms of the Contract and will be administered pursuant to Internal Revenue Code Section
408(q), as amended from time to time, and any applicable rulings and regulationspromulgatedthereunder.
e. Unforeseeable Emergency Distributions
The terms and provisions of the Plan and the applicable provisions of the Internal
Revenue Code and Treasury regulations promulgated thereunder, as amended from time
to time shall govern all aspects of Unforeseeable Emergency Distributions.
2, Minimum Distribution Requirement Regulations
Required minimum distributions under the Contract shall only be made in a
manner consistent with Internal Revenue Code Section 40 I (a)(9), as amended from time
to lime, and applicable Federal Treasury regulalions promulgated thereunder in effect at
the time of the distribution,
Signed for Great- West Life & Annuity Insurance Company on the Issue Date.
c:? /1'1& C~~_
I~:~
Name:Mark A. Murphy .
W.T McCallum,
Presidenland Chief Executive Officer
AppCv:'r:?;:D., 0 :
BY:~O
Ti tie: C'rl-y ~ If". JofJ'
7 1-
01' A457
f.
c::. >+ BenefitsCorp
TI"'[~""''-..fr'".I''''J.;''9'''Great-
West/BenefitsCorp EGTRRA Implementation Package
Issue #1:Elective Deferral and Catch-up Limits; Repeal of
Coordination Name of Plan Sponsor:CITY OF
ORANGE Name of Plan;PART-TIME EMPLOYEE DEFERRED
COMPENSATION
PLAN Issue EGTRRA pennits the maximum regular deferral limit to be the lesser of
100% of includible compensation or $11,000 in 2002, plus $1,000 per year up to $
15,000 in 2006, then indexed in $500 increments. Catch-up
contributions during the three years prior to normal retirement age may be increased from $
15,000 to twice the regular elective deferral limit. Deferrals to other
types of elective deferral plans, such as 401(k) and 403(b), are no longer required
to reduce the amount that can be contributed
to the
457plan.II. Discussion Adopting these provisions requires the plan to detete "$7,500"
each place it appears and insert "the applicable dollar amount" in section
457(e)(15),Likewise, the catch-up limit would be amended by deleting the $
15,000 cap and inserting "twice the applicable limit set forth in section 457(
e)(15)." Delete all references to the "33 1/3" of includible compensation
limit and insert "100%."Delete all language reducing deferrals to the 457 plan
by amounts contributed to
other elective deferral
plans,III. Great-WesUBenefitsCorp Comments These are favorable changes for participants,
and
allow for greater
account growth,IV. Staff
Recommendation Staff recommends these
changes.V, Board/Committee Decision D Adopt these
provisions effective January 1, 2002 D
Do
not
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Great-West/BenefitsCorp EGTRRA Implementation
Package Issue #2:Additional Contributions for Participants Age 50 and
Over Name of Plan Sponsor:CITY OF
ORANGE Name of Plan:PART-TIME EMPLOYEE DEFERRED
COMPENSATION PLAN
I. Issue EGTRRA permits employees who turn age 50 or over during
the calendar year to contribute an additional amount into the plan for all
plan years except during the three years prior to normal retirement age while
they are utilizing the regular 457 catch-up provision. New Code section
414(v) sets out the additional amount applicable to 457 plans.
The additional amount is $1,000 in 2002, increasing $1,000 each year up to $5,000
in 2006. This additional amount is then indexed in $500 increments
based
upon cost-
of-living,II. Discussion Adopting this provIsion requires an amendment
to the plan document allowing employees age 50 and over to
contribute additional amounts as allowed under new Code section 414(v), subject to section
414(v)(6)(C)which states that the age 50 catch-up is
not available during the three years the participant
is utilizing regular
457 catch-up.III. Great-WestlBenefitsCorp Comments This is a favorable change
for
participants, and allows
for greater account growth.
IV. Staff Recommendation Staff
recommends this change,V. Board/Committee Decision GJ This
provision is adopted effective January 1,
2002.r- ] This provision
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Great-West/BenefitsCorp EGTRRA Implementation
Package Issue #3:Flexible 457 Distributions; Required Minimum
Distributions Name of Plan Sponsor: CITY OF
ORANGE Name of Plan:PART-TIME EMPLOYEE DEFERRED
COMPENSATION PLAN
I. Issue EGTRRA permits 457 plan assets to remain tax deferred until
actually distributed from the plan, Under amended section 457(a), Ihe
participants' account balances are no longer taxable when "made available," The
special distribution rules under 457(d) are repealed such that payments are no longer required
to be paid in substantially non-increasing amounts paid at
least annually, Non-spouse beneficiaries may now take distributions over tife expectancy,
not just
15 years,II. Discussion Adopting these provisions requires deleting plan language
taxing a participant's 457 account balance at separation from service prior to an
amount being paid to the participant or other beneficiary, The
provisions requiring an irrevocable election at separation from service and
requiring annual payments in substantially non-increasing amounts paid at least
annually must be deleted, All current irrevocable elections should be treated as null
and void. Amend the plan to comply with
the new minimum
distribution regulations,III. Great-WestlBenefitsCorp Comments While making this change will provide
participants with greater flexibility, it will involve additional work by
the plan sponsor and Great-WestlBenefitsCorp when participants request changes
to existing irrevocable election dates and/or payment amounts. Great-West will
permit up to two changes in payout amounts per calendar year from
each participant, free of charge, Subsequent changes in the same calendar year may
involve an additional
fee paid by the
participant.IV. Staff Recommendation V. Board/Committee Decision GJ
These provisions are adopted effective January
1, 2002,l~
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rp
Great-West/BenefitsCorp EGTRRA Implementation
Package Issue #4:In-Service Transfers for Purchase of DB Plan
Service Credits Name of Plan Sponsor:CITY
OF ORANGE Name of Plan:PART-TIME EMPLOYEE
DEFERRED COMPENSATION
PLAN I. Issue EGTRRA permits the plan to allow 457 plan participants
to request a trustee-to-trustee transfer of assets from
their 457 account to a governmental defined benefit plan for
the purchase of permissible service credit (as defined in section 415(n)(3)(A)) under
such plan or a repayment to which section 415 does not apply by
reason
of subsection (
k)(3)thereof.II. Discussion Adopting this provIsion requires the plan to
be amended to include a provision allowing trustee-
to-trustee transfers pursuant
to new Code
section 457(e)(17.III. Great-WesUBenefitsCorp Comments This is a
favorable change for participants, allowing them to transfer assets from their
457 plan account to purchase permissible service credit as allowed under new
Code section 457(
e)(17) with
pre-tax dollars,IV. Staff Recommendation V. Board
Decision Q Adopt this provision effective
January 1, 2002.
D
fl!.?S?-rp
Great-West/BenefitsCorp EGTRRA Implementation
Package Issue #5:Rollovers From Employer-Sponsored Plans
and IRAs Name of Plan Sponsor:CITY
Of ORANGE Name of Plan:PART-TIME EMPLOYEE
DEfERRED COMPENSATION
PLAN I. Issue EGTRRA permits the plan to accept rollover contributions from
other types of employer-sponsored plans, including 401(a), 401(k), and 403(
b) plans, and IRAs pursuant to new Code section 457(e)(16) and revised section
402(c)(8)(B)
defining eligible
retirement plan.II. Discussion Adopting this provision requires the plan to be amended
to separately account for the dollars rolled into the plan and to determine when
participants will be allowed to take distributions from their rollover accounts, Rollovers into
the 457 plan from a 401(a). 401(k), 403(b) or an IRA are subject to
the 10% premature distribution penalty tax if distributed from the 457 plan prior
to age 59
y,III. Great-WesUBenefitsCorp Comments This change allows participants to consolidate
assets from plans of previous employers and personallRAs, and allows for
greater account growth within the 457 plan. While this is generally regarded as a
favorable provision, there may be additional fees for record keeping
services to accommodate rollovers from multiple sources other
than IRC Section
457 Plans.IV.
Staff Recommendation V. BoardlCommittee Decision GJ Adopt this provision effective
January 1, 2002 and allow participants to
request distributions from their rollover account (1) ~
at any time, or (2)D
Do not
adopt