HomeMy WebLinkAboutRES NO 51-88RESOLUTION NO. 51-88
A Resolution of the Council of the City of Bakersfield
Approving an Amended Employee's Deferred Compensation
Plan and Authorizing its Implementation.
WHEREAS, the federal rules regarding Deferred Compensation
Plans have been modified over a period of years; and
WHEREAS, the City of Bakersfield's Deferred Compensation Plan
has not been modified to reflect the recent changes in the federal rules; and
WHEREAS, the City of Bakersfield, having previously adopted a Deferred
Compensation Plan for' all employees of the City desirous of implementing an
amended Deferred Compensation Plan consistent with federal guidelines.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Bakersfield that the City of Bakersfield Amended Deferred Compensation Plan
attached to this resolution, marked "Exhibit A," and by reference incorporated
herein, is hereby adopted.
BE IT FURTHER RESOLVED that the City Manager is authorized to imple-
ment said plan, and the City of Bakersfield consents to the plan and assumes the
obligations to be performed on its part as set forth in said plan.
BE IT FURTHER RESOLVED that this resolution shall not diminish any
rights acquired by participants or their beneficiaries under the Deferred
Compensation Plan adopted pursuant to Resolutions No. 21-74, 91-81 and 29-85.
I HEREBY CERTIFY that the foregoing Resolution was
passed and adopted by the Council of the City of Bakersfield at a
regular meeting thereof held on March 30, 1988 , by
the following vote:
~¥E-~: COUNCILMEMOERS: CHILDS. OeMONO. SMtTN.
?~.E~ COUNCILMEMBERS: None M~Y, ~I~ON. MCO~RMOTI aALVAGGIO
L~ ,"~ [: ~OUNCILM~MBERS No~e '--~
ABSTAINING: COUNCILMEMBERS: None
CITY CLERK and E'~ Officio Clerl< of the
Council of the City of Bakersfield
APPROVED March 30, 1988
MAYOR of the City of Bakersfield
APPROVED as to fo~m: .
CITY ATTOR~Y ~~f~Bak~rsfi el d
CITY OF BAKERSFIELD
DEFERRED COMPENSATION PLAN
ARTICLE I
General
Section 1.01 Name. The name of this Plan is the City of Bakersfield
Deferred Compensation--~--~lan (hereinafter referred to as the "Plan"). This
Plan amends in its entirety, the City of Bakersfield Deferred Compensation Plan
adopted on March 18, 1974, and subsequently amended. All participants in the ori-
ginally adopted Plan and the subsequent amendments will be participants in this
plan. This Plan shall not diminish any rights acquired by participants or their
beneficiaries in the City of Bakersfield Deferred Compensation Plan adopted on
March 18, 1974, and subsequently amended.
Section 1.02 Purpose. The purpose of this Plan is to extend to Employees of
the Employer certain benefits which ordinarily accrue from participation in a
Deferred Compensation Plan, and to conform with IRS Code §457. The Plan will per-
mit Employees to provide for deferring current income until death, disability,
retirement or other termination of employment with the City of Bakersfield. The
Employer does not and cannot represent or guarantee that any particular federal or
state income, payroll or other tax consequence will occur by reason of an
Employee's participation in this Plan. The Employee wishing to participate in the
Plan should consult his own attorney or other representative regarding all tax or
other consequences of participation in this Plan.
Section 1.03 Definitions.
For the purposes of this Plan, certain words or phrases used ~erein will
have the following meanings:
(a) "Administrator" means Employer or its duly authorized designee
for that purpose who shall exercise the discretion or other functions given
to the Employer under the terms of the Plan.
(b) "Advisory Committee" shall mean a committee consisting of three
(3) members appointed by the City Manager. Such committee shall operate
according to the guidelines specified in Section 2.05 of the Plan document.
(c) "Annuity Contracts" referred to in this Plan means any annuity
contracts qualified for sale in the State of California and approved by the
Advisory Committee of the City of Bakersfield. Notwithstanding the above
definition, annuity contracts actually used in conjunction with the Plan can
be altered, amended, changed or substituted for from time to time by action
of the Advisory Committee, and such altered, amended, changed or substituted
contracts or contract thereafter may be used in the Plan.
(d) "Amended" refers to amendments to the Deferred Compensation Plan on
December 2, 1981 and February 27, 1985.
(e) "Beneficiary" means any person(s) designated by the Participant to
receive a pension, annuity, death benefit or other benefit under the provi-
sions of this Deferred Compensation Plan.
(f) "City" means the City of Bakersfield, California.
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(g) "Compensalion" means all wages or salaries or other forms of income
to be paid by Employer to an Employee for services rendered. Compensation
also includes lump sum payments made upon termination of services (e.g. sick
leave and/or vacation payoffs).
(h) "Deferred Compensation" means that portion of an Employee's
Compensation which said Employee has elected to defer in accordance with
the provisions of this Deferred Compensation Plan or which the Employee and
the City mutually agree shall be deferred in accordance with the provisions
of this Plan.
(i) "Disability" means the inability of a Participant to engage in his
or her usual occupation by reason of a medically determinable physical or
mental impairment as determined by the Employer on the basis of advice from a
physician or physicians.
(j) "Employee" means any full-time, probationary or permanent employee
or elected official of the Employer.
(k) "Employer" means the City of Bakersfield, California
(1) "Includible Compensation" shall mean Compensation received from the
Employer that is attributable to services performed for the Employer and that
is includible in the Participant's gross income for the taxable year.
Accordingly, a Participant's Includible Compensation for a taxable year does
not include any amount payable by the Employer that is excludable from the
Participant's gross income under Section 457, Section 403 (b), Section 105 (d),
or Section 911 of the Code. A Participant's Includible Compensation for a
taxable year is determined without regard to any community property laws.
(m) "Normal Retirement Age" means any range of ages ending no later
than age 70½ and beginning no earlier than the earliest age at which the Par-
ticipant has the right to retire under the Employer's basic pension plan
without consent of the Employer, and to receive immediate retirement benefits
without actuarial or similar reduction because of retirement before some
later specified age in the Employer's basic pension plan. (For public safety
employees this age is currently set at 50, while the age for miscellaneous
employees is 60.) For a participant who continues in the service of the
Employer after age 70½, normal retirement age shall be the age at which the
Participant separates from service with the Employer.
(n) "Participant" means any Employee who voluntarily elects to partici-
pate in this Deferred Compensation Plan by filing a duly executed
Participation Agreement with the Employer or who previously participated in
the City of Bakersfield Deferred Compensation Plan adopted on March 18, 1974
and subsequently amended.
(o) "Participation Account" means the book account to which there are
credited the Participant's Deferred Compensation, together with any interest,
dividends, gains, losses or the like thereon.
(p) "Participation Agreement" means the contract by which the Employee
and the Employer agree that some of the Employee's Compensation will be
deferred pursuant to the Plan.
(q) "Plan Year" means the calendar year in which the Plan becomes
effective, and each succeeding calendar year during the existence of this
Plan.
(r) "Termination of Employment" shall mean the severance of the
Participant's employment with the Employer prior to Normal Retirement Age.
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ARTICLE 2
Operation of Plan
Section 2.01 Participation. Any Employee may elect to become a
Participant of the Plan and to defer payment of part of his Compensation by exe-
cuting a written Participation Agreement and filing it in the manner set forth
in Article 3 hereof, or by having participated in the City of Bakersfield
Deferred Compensation Plan adopted on March 18, 1974 and subsequently amended. The
dollar amount deferred must be at least Twelve Dollars ($12.00) per pay period or
such larger amount as may be designated by the Employer from time to time. The maxi-
mum amount that may be deferred under the Plan during a calendar year shall not
exceed the lesser of (a) Seven Thousand Five Hundred Dollars ($7,500.00), or (b)
Thirty-three and one-third per cent (33-1/3%) of the Participant's Includible
Compensation as specified in Section 1.03 (1) of this plan document reduced by any
amount excludable from the Participant's gross income for the taxable year under
Section 403 (b) of the Code on account of contributions made by the Employer and
under 414 (hi. If the Employer contributes additional amounts into the Plan, the
maximum amount that may be deferred by the Participant shall be reduced by the amount
of the Employer's additional contribution.
Also, for any one or more of a Participant's last three (3) taxable years
ending before such Participant attains Normal Retirement Age, the maximum amount
that may be deferred under the Plan shall be the lessor of (a) fifteen thousand
dollars ($15,000) or (b) the maximum amount set forth above for each taxable year
year of a Participant, plus so much of the maximum deferral amount as has not been
utilized in any Plan year commencing after January 1, 1979. The maximum deferral
amount shall be reduced by any amount excludable from the Participant's gross
income for the taxable year under Section 403 (b) of the code on account of
contributions made by the Employer. In no event may the amount of Deferred
Compensation for the year exceed the total amount of compensation for the year.
A prior taxable year can be taken into account only if such taxable year began
after December 31, 1978, the Participant was eligible to participate in the Plan
during all or any portion of such taxable year, and the amount of Compensation
deferred under the Plan during such taxable year was subject to a ceiling estab-
lished under Section 457 of the Code and Section 1.457-2 (el (1) of the regula-
tions thereunder. A prior taxable year includes a taxable year in which the
Participant was eligible to participate in an eligible plan sponsored by a dif-
ferent entity, provided that the entities sponsoring the plans are located within
the State of California. The Participant will be responsible for providing the
requried information in taxable years in which he was employed by a different
entity. Distributions must comply with Article 4, Section 4.01(e) of this plan docu-
ment.
If an individual is a Participant in more than one eligible State Deferred
Compensation Plan established pursuant to Section 457 of the Code, the amount of
Compensation deferred under this Plan when added to the Compensation under all
such other Plans, may not exceed the maximum amounts as stated above.
Section 2.02 Deferral of Compensation. Employer and Participant mutually
acknowledge that the Compensation of each Employee is set forth in the salary
schedule adopted by resolution of the Employer and that said Compensation includes
the amount of funds deferred under the terms of this Plan. Employee Compensation
shall be paid bi-weekly or as otherwise provided, except that during each employment
year in which the Employee is a Participant in the Plan, that portion of his said
Compensation which is specified by the Employee in that Participation Agreement shall
be deferred and paid in accordance with the provisions of the Plan.
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Section 2.03 Investment of the Deferred Amount. The deferred amount may be
held by the Employer to be paid to the Employee pursuant to Article 4, and
Employee accounts shall be valued as if such amounts were invested in:
(a) A fixed annuity contract; or
(b) A variable annuity contract; or
(c) A deferred savings account at a savings and
loan or similar banking institution; or
(d) Mutual Fund; or
(el Certificate of Deposits; or
(f) Life insurance; or
(g) Any combination of (a), (b), (c), (d), (el and (f).
The Employee's statement of investment preference shall only require the Employer
to use such preference as. an index for determining the benefits to be paid pursu-
ant to Article 4. The Employer shall be under no obligation to invest the
deferred amount in the manner requested.
Section 2.04 Employer Responsibility. The Employer may, but is not
required to, invest Deferred Compensation held pursuant to agreements between
Participants and the Employer in accordance with the requests made by each
Participant at the time c,f enrollment or change in enrollment. The Employer
retains the right to approve or disapprove requests for a specific investment pre-
ference. Any investment action by the Employer, or approving of any investment
preference, shall not be considered to be an endorsement or guarantee of any
soundness or the suitability of any investment preference for the purpose of
meeting future obligations as provided in Article 4 of this Plan. Further, the
Employer shall not be held responsible for any investment results, either gains or
losses, from any investment preference used to meet future obligations under the
Plan.
Section 2.05 Administration of the Plan. The Plan shall be administered by
an Advisory Committee which shall have the sole authority for the operation of the
Plan in accordance with its terms, and shall rule on all questions arising out of
the administration, interpretation and the application of the Plan, which determi-
nation shall be conclusive and binding on all Participants. Members of the
Advisory Committee may participate in the Plan, but no member of the Advisory
Committee shall be entitled to make decisions solely with respect to his own
participation.
Section 2.06 Ownership of Deferred Amounts. The Employer shall establish
and maintain a fund (hereinafter the "Investment Fund") to provide a conven-
ient method of setting aside sufficient of its assets to meet its future obliga-
tions under the Plan. The employer shall at all times, be the legal and
beneficial owner of all assets in the Investment Fund, and neither the existence
of the Plan nor of the Investment Fund shall be deemed to create a trust or limit
use by the Employer of the funds therein for general Employer purposes. The obli-
gations of the Employer to make payments pursuant to this Plan is contractual only,
and no Participant or Beneficiary shall have a preferred claim or lien on or to
the assets of this Investment Fund, but shall have only the right to receive the
benefits payable under the Plan. Interests of a participant who changes employ-
ment may, under certain prescribed conditions, be transferred to the eligible
Deferred Compensation Plan of a new Employer.
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ARTICLE 3
Administration and Accounting
Section 3.01 Administration by Employer. This Deferred Compensation Plan
shall be administered by the Employer, who shall appoint an Advisory Committee
which will prescribe such forms and adopt such rules and regulations as necessary
to carry out the purposes of the Plan.
Section 3.02 Election to Participate. An Employee's election to partici-
pate in this Deferred Compensation Plan shall be made by filing a duly executed
Participation Agreement with the Employer, and not otherwise.
Section 3.03 Enrollment Periods.
(a) Any person who becomes an Employee after this Plan is first made
available shall have the option, within sixty (60) days after becoming an
Employee, to effect an initial election to participate under this Plan in
the next available bi-weekly pay period after the date on which his
Participation Agreement is filed with the Employer.
(b) Any Employee who does not file an initial election, pursuant to
(a) above, shall have the right to elect participation during enrollment
periods designated by the Deferred Compensation Committee.
Section 3.04 Participation Agreement. The Employer shall establish a
form of Participation Agreement and other enrollment forms which shall contain,
among other provisions, the following:
(a) A provision whereby the Participant specifies the portion of his
Compensation which is to be deferred.
(b) A provision whereby the Participant shall indicate his invest-
ment preference.
(c) A provision whereby the Participant shall designate a
Beneficiary or Beneficiaries, including one or more contingent
Beneficiaries, to receive any benefits which may be payable under this
Plan on death of the Participant.
(d) An acknowledgement by the Participant that his salary, wage or
other compensation is as set forth in any salary schedule adopted by reso-
lution or otherwise, without deductions for amounts deferred under the
provisions of this Plan.
(el A provision whereby the Participant, together with his heirs,
successors and assigns, holds harmless the Employer from any liability
hereunder for all acts performed in good faith, including acts relating to
the investment of deferred amounts and/or the Employee's investment pref-
erence hereunder.
Section 3.05 Amendment of Participation Agreement. The Participant may
revoke his election to participate at any time by filing with the Employer a writ-
ten revocation. He may change the amount of Compensation to be deterred during
a stated enrollment period by signing and filing with the Employer a written
amendment on a form approved by the Employer. (The only exception to this rule
occurs when the Employee receives his final paycheck from the Employer. The
Employee may change the amount of Compensation to be deferred in his final pay-
check as long as the maximum contribution stipulated under Section 2.01 is not
exceeded.) Any such amendment shall be effective prospectively
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only, beginning with the ~lrst enrollment period commencing on or after the amend-
ment. Each Participant may from time to time redirect the investment of amounts
credited to his book account as a result of past deferrals as well as current
deferrals, as applicable, among the different investment options available within
the Plan. The redirection of such amounts may occur before or after payments have
commenced under the Plan. Any such contracts and other evidence of the investment
of all assets under this Plan shall be registered in the name of the Employer
which shall be the owner-beneficiary thereof.
Section 3.06 Participation Accounts. A separate Participation Account
shall be maintained for each Participant. Each Participation Account shall
reflect the monies deferred, as well as that portion, if any, of monies being
transferred from an eligible Deferred Compensation Plan of a prior employer, the
investment of the monies, and all consequences of the investment. For con-
venience, and to facilitate an orderly administration of the Plan, individual
Participation Accounts for all Participants will be maintained by the Employer
and/or its agent showing the Participant's name with all applicable debit and cre-
dit balances. The Participant's Deferred Account shall be credited each month
with the amount deferred from the preceding month. A written report of the status
of the Participation Account shall be furnished to Participants at least annually.
All interest, dividends, charges for premiums, capital or market changes applica-
ble to each Participation Account shall be credited or debited to the account as
they occur. Credits to the Participant's Account shall be subject to the
Participant's then effective investment preference. All reports to the
Participant shall be based on the net fair market value of the assets as of the
reporting date as if the deferred amount had been invested according to the
investment preference.
Section 3.07 Transfer of Value of Participant's Participation Accounts/Plan
to Plan Transfers. In the event a Participant terminates employment with the
Employer and accepts employment with another public agency having an IRS Code 457
Plan, the Employer may purpose to the Participant and/or the new employer that the
funds, assets and accumulations of said Participant's Participation Account be
transferred to the ownership and control of the new employer's eligible deferred
compensation plan.
Transfer of any funds under this section will be subject to the following con-
ditions:
(a) The Employer has no defined current or future need for the
funds, assets and accumulations in the said Participant's Account for the
payment of its general creditors or for any other purpose;
(b) The Plan receiving such amounts provides for the acceptance of
the amounts;
(c) The Plan provides that if the Participant separates from service
in order to accept employment with another such entity, payout will not com-
mence upon separation from service, regardless of any other provision of the
Plan, and amounts previously deferred will be transferred;
(d) That the Employee will agree, in writing, to release the present
Employer from any and all contractual obligations under the provisions of
this Plan upon completion of the transfer of funds to the new employer; and
(el The Employee has satisfied any or all rights subject to Section
5.08 of this plan document.
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The Employer shall a~so accept funds from other elig~ole State Deferred
Compensation Plans established pursuant to Section 457 of the Code to be trans-
ferred and added to the Participant's book account within the Plan provided that
items (a) and (d) as stated above are met.
ARTICLE 4
Benefits
Section 4.01 Benefits Generally. The Participant is entitled to have paid
to him the benefits created by his participating in this Deferred Compensation
Plan in accordance with the provisions of this Article. The benefits payable to
the Participant will be equivalent of the total benefits that have been created
from the deferred amounts invested as specified by the Participant from time to time,
taking into consideration losses and gains where applicable and any deductions
authorized in Section 3.07 above. Amounts paid to a Participant pursuant to this
Article shall be reported to a Participant as wages, subject to withholding for
Federal and State income taxes and reportable on Form W-2. In the event of death of
a Participant prior to the commencement of benefits as called for under the Plan, the
named Beneficiary of a Participant shall have the right to designate the payments to
such Beneficiary in accordance with one of the available options provided under the
Plan. Such selections must be made within thirty (30) days after the end of the year
of the death of a Participant, but in no event shall the selections be made beyond
thrity (30) days following the calendar year the Participant separates from service.
If the Beneficiary fails to make such selection, payments shall be made to the
Beneficiary in accordance with the option previously selected by the Participant if
applicable. In the event of death of a Participant either before or after the com-
mencement of payments, the funds must be passed in accordance with Section 4.01(d).
All actions and determinations of the Employer under this Article 4 shall be made on
a uniform and non-discriminatory basis.
(a) Normal Retirement. Upon the Participant's attaining Normal
Retirement Age, he may retire and receive the benefits provided under this
Plan. Normal Retirement is defined within Section 1.03 (m) of this plan
document. Such benefits shall be paid in accordance with the payment Option
1, 2, 3, 4 or 5 as selected by the Participant pursuant to subsection (g)
of this section. Any credits remaining in the deferred account of a
Participant receiving benefits under this paragraph who dies shall be paid
in accordance with subsection (d) of this section. Prior to January 1, 1989,
distribution must start on or before April 1 of the calendar year following
the later of.
(i) the year in which the employee attains 70½, or
(ii) the calendar year in which the employee retires.
Effective January 1, 1989, the second criterion for determining when benefits
must start will be repealed.
(b) Disability. If, prior to retiring, the Participant becomes disabled
as defined by the disability income provision in the Employer's retirement
program applicable to the Participant, the Employer shall exercise the non-
forfeiture provisions of any contracts and pay any benefits provided and all
other credits, if any, in the Participant's deferred account in accordance
with payment option 1, 2, 3, 4 or 5 as selected by the Participant pursuant
to subsection (g) of this section.
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(c) Termination of Employment. If the Participant terminates his employ-
ment with the Employer (without being disabled or retiring), benefits shall
be paid in accordance with payment option as selected by Participant pursuant
to subsection (g) of this section.
(d) Death.
(1) Before Benefits are Paid for Retirement, Disability or
Termination of Service. In the event of death of a Participant prior to
commencement of benefits as called for under the Plan, the named benefi-
ciary of a Participant's Participation Account shall have the right to
designate that payments to such Beneficiary shall be in accordance with
one of the available options provided under the Plan. Such selection
must be made within 30 days after the end of the year of the death of a
Participant, but in no event shall the selections be made beyond thirty
(30) days following the calendar year the participant separates from
service. If the Beneficiary fails to make such selection, payments
shall be made to the Beneficiary in accordance with the option previ-
ously selected by the Participant if applicable. Effective January 1,
1989 beneficiaries must commence distributions in the calendar year fol-
lowing the year of the Participant's death.
(2) Designated Beneficiary. The Participant has the right to name and
file with the Employer a written Beneficiary or Change of Beneficiary
form, designating the person or persons who shall receive the benefits
payable under this Plan in the event of the Participant's death before
the entire amount deferred is paid to the Participant. The
Participant's spouse must agree in writing if the beneficiary is other
than spouse. The entire amount deferred (or the remaining part of such
deferrals if payment thereof has commenced) must be paid to a benefici-
ary over--
(i) The life of the Beneficiary, (or any shorter period),
if the Beneficiary is the Participant's surviving spouse, or
(ii) A period not in excess of 15 years, if the Beneficiary
is not the Participant's surviving spouse.
(iii) Effective, January 1, 1989, the beneficiary of a par-
ticipant who dies after distribution has started, must have distri-
bution at least as rapidly as the participant had elected.
The form for this purpose shall be provided by the Employer. It is not
binding on the Employer until it is signed, filed with the Employer by
the Participant and accepted by the Employer. If the participant dies
without having a Beneficiary form on file, the payment shall be made to
the properly appointed fiduciary of the Participant's probate estate.
However, if a fiduciary has not been appointed and qualified within one
hundred twenty (120) days after the death, the payment may be made
first to a surviving spouse, second to a surviving child or children,
and third to a surviving parent or parents. The Participant accepts
and acknowledges that he has the burden for executing and filing with
the Employer a proper Beneficiary designation form.
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(e) Commencement of Payment. The selection as co the commencement
date of payments shall be made by the Participant no later than thirty (30) days
into the next calendar year after the occurrence of the event that gives rise to
the beginning of the payment of benefits. Participants who utilized the Catch-up
Provision must begin receiving benefits within sixty days following the year of
separation from service. Effective January 1, 1989, Participants who utilized the
catch-up provision must begin receiving benefits by April 1, following the year of
separation from service.
The selection as to commencement date and terms of payment (if applicable) become
irrevocable thirty (30) days into the next calendar year after separation of ser-
vice.
(f) Short-Term or Lump-Sum Settlement. Notwithstanding anything in
this Article to the contrary, if at any time the amounts held under this Plan in
the account maintained for the Participant, or his Beneficiary, total to a credit
of $3,500 or less, and for any reason the Participant has ceased to be an Employee
of the Employer, the Employer is authorized to deviate from the restrictions imposed
by the paragraphs in this Article and effect a lump sum settlement.
. (?) 0 t?~. All funds credited to the Participant's book account
shall be ois~ributed by any one or more of the following methods:
A. Payment Options. As provided in subsections (a) through (d) of
this section, Participants may select:
Option 1. Lump-Sum Payment. In a lump sum.
Option 2. Payment for a Specified Period. In consecutive
periodic payments (monthly, quarterly, semi-annually or annu-
ally) over a period of years from the date distribution began.
Effective January 1, 1989, at least two-thirds (66-2/3%) of the
total projected actuarial value of the Participant's account
must be distributed by the life expectancy of the Participant.
The projected actuarial value of a Participant's account is
computed based on the life expectancy of the Participant or
the Participant and his spouse. Life expectancy shall be
actuarially determined by the Employer based on the date the
initial distribution shall begin.
Option 3. Life Annuity. An annuity payable during the life-
time of the Participant.
Option 4. Life Annuity with Period Certain Guaranteed. An
annuity payable during the lifetime of the Participant, or his
Beneficiary, with the guarantee that if at Participant's death
payments have not been made for the guaranteed period as
elected, payments will continue to the Beneficiary or
Beneficiaries until payments have been made for the full guar-
anteed period elected. The guaranteed period to be elected
must be either five (5), ten (10), fifteen (15), or twenty
(20) years.
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Option 5. Joint and Survivor Annuity. An annuity payment
during the lifetimes of the Participant and a secondary payee
named by the Participant.
If, at the time of his election to participate in the Plan the
Participant or beneficiary fails to select a payment option for any
event which causes payment of benefits to begin, he shall be deemed
to have elected to have the benefits payable upon occurrence of such
event as if he had elected annual payments for a specified period of ten
(10) years as provided for in Option 2 if balance is greater than
$3,500. If balance is $3,500 or less, Section 4.01(f) prevails.
Section 4.02 Financial Hardship/Emergency Withdrawals. Notwithstanding any
other provision herein, for "financial hardship" a Participant may apply to the
Advisory Committee to withdraw, in whole or in part, from the Plan prior to
retirement or any other termination of his employment with the Employer. If the
application for withdrawal is approved by the Advisory Committee, the withdrawal
shall be effected at the time designated by the Advisory Committee. Benefits to
be paid upon any withdrawal shall be limited strictly to that amount necessary to
meet the unforeseeable emergency situation constituting financial hardship. Any
remaining benefits shall be paid upon retirement, termination of employment, disa-
bility or death, in accordance with Section 4.01 above. Withdrawal for "financial
hardship" shall be limited to real unforeseeable emergencies beyond the control of
the Participant which would cause him great hardship if early withdrawal were not
permitted. An unforeseeable emergency is severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent (as defined in Section 152 (a) of the Code) of the
Participant, loss of the Participant's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events beyond
the control of the Participant.
The circumstances that will constitute an unforeseeable emergency will depend upon
the facts of each case, but, in any case, payment may not be made to the extent
that such hardship is or may be relieved by:
1. Reimbursement or compensation by insurance or otherwise,
Liquidation of the Participant's assets, to the extent the liquidation
of such assets would not itself cause severe financial hardship, or
Cessation of deferrals under the Plan. (The length of the cessations
shall be determined by the Advisory Committee on an individual basis.)
Foreseeable personal expenditures normally budgetable, such as a down payment for
a home, the purchase of an automobile, college or other schooling expenses, etc.,
will not constitute a "financial hardship". The Advisory Committee will require
written request for the withdrawal, stating the nature of the emergency and any
applicable circumstances that will be of benefit to the Committee's decision-
making process. At its discretion, the Advisory Committee may require additional
financial information. The decision of the Advisory Committee concerning
"financial hardship" shall be final as to all Participants.
Section 4.03 De Minimis Participant Account Balances. A Participant with a
total plan balance of $3500 or less may request liquidation of the account (s)
without cause. Having done so, a Participant is ineligible for future participa-
tion in the plan.
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ARTICLE 5
Miscellaneous
Section 5.01 Leave of Absence. If a Participant is on an approved leave of
absence from the Employer with compensation, participation in this Plan will con-
tinue. If a Participant is on an approved leave of absence without compensation
and such leave of absence continues for more than six (6) months, said Participant
will be deemed to have terminated participation in the Plan as of the end of such
six (6) month period. Such termination of participation will not cause distribu-
tion of benefits. Upon return from such leave of absence, the Participant's full
compensation on a non-deferred basis will be thereupon restored. Such Employee
may again become a Participant by meeting the requirements for eligibility as
herein provided.
Section 5.02 Retirement System Integration. Benefits payable to, and deduc-
tions for Employee contributions to, the retirement system of the Employer shall
be computed based upon gross compensation, including any amounts deferred pursuant
to this Deferred Compensation Plan. Total compensation for the purposes of the
retirement system of the Employee shall include all amounts deducted by the
Employee, pursuant to the Deferred Compensation Plan.
Section 5.03 Amendment or Termination of Plan. This Plan may be modified,
amended or terminated in whole or in part (including retroactive amendments) by
the Employer at any time. No amendment or termination of the Plan shall reduce or
impair the rights of any Participant or his Beneficiary which have already
accrued. Upon termination of the Plan, the Employer shall distribute all amounts
credited to each Participation Account in accordance with the Participant's pay-
ment option selected pursuant to Section 4.01. All Participants shall be treated
in the same manner.
Section 5.04 Creditors. A Participant may not assign, transfer, sell,
hypothecate, or otherwise dispose of any or all of his investment account or any
right which he may have under the Plan, and any attempt to do so shall be void.
Section 5.05 Employment. Participation in the Plan shall not be construed
as giving any Participant any right to continue his employment with the Employer.
Section 5.06 Non-Assignability Clause. It is agreed that neither a
Participant nor a beneficiary, nor any other designee, shall have any right to
commute, sell, assign, transfer, or otherwise convey the right to receive any pay-
ments hereunder, which payments and right thereto are expressly declared to be
non-assignable and non-transferable, and in the event of any attempted assignment
or transfer, the Employer shall have no further liability hereunder nor shall any
payments be transferable by operation of law in event of bankruptcy or insolvency,
except to the extent otherwise provide by law, notwithstanding the above clause.
Section 5.07 Written Notice. Any notice or other communication required or
permitted under the Plan shali be in writing, and if directed to the Employer,
shall be sent to the designated officer of the Employer, and, if directed to a
Participant or to a Beneficiary, shall be sent to such Participant or Beneficiary
at either his last known address as it appears on the Employer's record or to his
work site, at the Employer's option.
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Section 5.08 Facility of Payment. If any Participant terminates his employ-
ment with an unpaid debt owing to the Employer and neglects or refuses to liqui-
date the debt by any other means when due and upon demand, the Employer shall be
entitled to collect the amounts due from the deferred compensation owed to the
Participant under the Plan.
Section 5.09 Total Agreement. This Plan and the Participation Agreement,
and any subsequently adopted amendment thereof, shall constitute the total agree-
ment or contract between the Employer and the Participant regarding the Plan. No
oral statement regarding the Plan may be relied upon by the Participant.
Section 5.10 Gender. As used herein, the masculine shall include the neuter
and the feminine where appropriate.
Section 5.11 Controlling Law. This Plan is created and shall be interpreted
under the laws of the State of California as the same shall be at the time any
dispute or issue is raised.
3/04/88
7:ADCP
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