96-020 RESOLUTION NO. 96-20
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
AVENTURA, FLORIDA, ESTABLISHING A DEFERRED
COMPENSATION PLAN BY ADOPTING THE ICMA
RETIREMENT CORPORATION DEFERRED COMPENSATION
PLAN, A COPY OF WHICH IS ATTACHED HERETO AND
MADE A PART HEREOF AS EXHIBIT A; ADOPTING THE
DECLARATION OF TRUST OF THE ICMA RETIREMENT
CORPORATION ATTACHED HERETO AND MADE A PART
HEREOF AS EXHIBIT B, AUTHORIZING THE CITY MANAGER
TO EXECUTE THE ADMINISTRATIVE SERVICES
AGREEMENT ATTACHED HERETO AS EXHIBIT "C"
AUTHORIZING THE CITY MANAGER TO TAKE ALL ACTIONS
NECESSARY TO IMPLEMENT THE PLANS; AND PROVIDING
AN EFFECTIVE DATE.
WHEREAS, the City of Aventura has employees rendering valuable services;
and
WHEREAS, the establishment of a deferred compensation plan for such
employees serves the interests of the City 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 City has determined that the establishment of a deferred
compensation plan to be administered by the ICMA Retirement Corporation is in the
best interests of the City; and
WHEREAS, the City desires that its deferred compensation plan be
administered by the ICMA Retirement Corporation, and that the funds held under
such plans be invested in the ICMA Retirement Trust, a trust established by public
employem for the collective investment of funds held under their money purchase
retirement plans and deferred compensation plans.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF AVENTURA, FLORIDA, AS FOLLOWS:
Section 1: That the City hereby adopts the deferred compensation plan in
the form of the ICMA Retirement Corporation Deferred Compensation Plan, attached
hereto and made a part hereof.
Section 2: That the City hereby acknowledges and adopts the Declaration
of Trust of ICMA Retirement Corporation attached hereto and made a part hereof as
Exhibit 'B' intending the execution to be operative with respect to any retirement or
deferred compensation plan subsequently established by the City, if the assets are to
be invested in the ICMA Retirement Trust.
Section 3: That the City Manager is hereby authorized to execute the
Administrative Services Agreement attached hereto as Exhibit C.
Section 4: That the Director of Finance Support Services shall be the
coordinator for this program and shall receive necessary reports, notices, etc., from
the ICMA Retirement Corporation or the ICMA Retirement Trust; and shall cast, on
behalf of the City, as directed by the City Council or the City Manager, as the case
may be, any required votes under the program. Administrative duties to carry out the
program may be assigned to the appropriate departments by the City Manager.
Section 5: That the City Manager is hereby authorized to execute all
necessary documents on behalf of the City.
Section 6: That the City Manager is authorized to take all action necessary
to implement the Plan and this Resolution.
Section 7: That this Resolution shall become effective immediately upon its
adoption.
Adopted this 18th day of June, 1996, .... on a motion by Vice Mayor
Roqers-Libe?t and seconded by Councilmember Cohen.
Attest: ~
Acting City Clerk
Cohcn y'~-~
Berger yes
~n yes
Vic~ Mayor Rogcrs-L~bert yes
Mayor Snydcr yes
yes
Perlow
yes
Holzberg
USING THE 457 DEFERRED For assistance
Please contact your 457 plan analyst at 1-800-326-7272.
COMPENSATION PLAN
RETAIN BOOKLET
This is one of t~vo booklets containing information to
establish your 457 deferred compensation plan with the
ICMA Retirement Corporation.
This booklet includes: · Plan Document
· Declaration of Trust of the ICMA Retirement Trast
· Private Letter Ruling
Please read the information and retain it for your files.
Attachment A
DEFERRED COMPENSATION Participant and the Employer mutually agree to defer
PLAN DOCUMENT hereunder, any amount credited to a Participant's Account by
reason of a transfer under section 6.03, or any other a~nount
Article I. Introduction which the Employer agrees to credit to a Participant's
The Employe~ hereby establishes the Employer's Deferred Account.
Compensation Plan, hereafter referred to as the "Plan." The
Plan comists of the provisions set forth in this document. 2.05 Employee: Any individual who provides services for the
The primary purpose of this Plan is to provide retirement Employer, whether as an employee of the Employer or as an
income and other deferred benefits to the Employees of the independent contractor, and who has been designated by the
Employer in accordance wdth the provisions of Section 457 of Empinyer as eligible to participate in the Plan.
the Intemal Revenue Code of 1986, as amended (the
"Code"). 2.06 Includible Compensation: The anmunt of an
This Plan shall be an agreement solely between the Employee's compensation from the Employer for a taxable
Employer and participating Employees. year that is attributable to sen'ices performed for the Employer
and that is includible in the Employee's gross income for the
Article Il. Definitions taxable year for federal income tax purposes; such tema does
2.01 Account: The bookkeeping account maintained for each not include any anaount excludable fi.om gross income under
Participant reflecting the cumulative anaount of the this Plan or any other plan described in Section 457C0) of the
Participant's Deferred Compemation, including any income, Code or any other amount excludable from gross income for
gains, losses, or increases or decreases in market value federal income tax purposes, lnchidible Compensation shall be
attributable to the Employer's im'estment of the Participant's determined without regard to any communit3., property Iaws.
Deferred Compensation, and further reflecting any
distributions to the Participant or the Participant's Beneficiary 2.07 Joinder Agreement: An agreement entered into
and any fees or expenses charged against such Participant's between an Employee and the Employer, including any
Deferred Compensation. amendments or modifications thereof. Such agreement shall fix
the anaount of Deferred Compeusation, specie, a preference
2.02 Administrator: The person or persons named to carry among the investment alternatives designated by the E nployer,
out certain nondiscretionary administrative functions under the designate the Employee's Beneficiary or Beueficiafies, and
Plan, as hereinafter described. The Employer naa3, remove any incorporate the terms, conditious, and provisions of the Plan
person as Administrator upon 60 days' advance notice in by reference.
writing to such person, in which case the Employer shall name
another person or persons to act as Administrator. The 2.08 Normal Compensation: The amount of compensatior~
Administrator may resign upon 60 days' advance notice in which would be payable to a Participant by the Employer for a
writing to the Employer, in which case the Employer shall taxable year if no Joinder Agreement were in effect to defer
name another person or persons to act as Administrator. compensation under this Plan.
2.03 Beneficiary: The person or persom designated by the 2.09 Normal Retirement Age: Age 70-1/2, unless the
Participant in his Joinder Agreement who shall receive any Participant has elected an alternate Normal Retirement Age by
benefits payable hereunder in the event of the Participant's written instrument delivered to the Administrator prior to
death. In the event that the Participant names m,o or more Separation from Sen, ice. A Participant's Normal Retirement
Beneficiaries, each Beneficiary shall be entitled to equal shares Age determines the period during which a Participant may
of the benefits payable at the Pardcipant's death, unless utilize the catch-up linfitation of Section 5.02 hereunder.
otherwise provided in the Parficipa.fft's Joinder Agreement. If Once a Participant has to any extent utilized the catch-up
no beneficiary is designated in the Joinder Agreement, ffthe limitation of Section 5.02, his Normal Retirement Age may
Designated Beneficiary predeceases the Participant, or if the not be changed.
designated Beneficiary does not survive the Participant for a A Participant's alternate Normal R. efirement Age may not
period of fifteen (15) days, then the estate of the Participant be earlier than the earliest date that the Participant w/il become
shall be the Beneficiary. eligible to retire and receive un.reduced retirement benefits
under the Employer's basic retirement plan covering the
2.04 Deferred Compensation: The amount of Normal Participant and may not be hter than the date the Participant
Compemation otherwise payable to the Participant which the will attain age 70-1/2. Ifa Participant continues employment
· -~er nttaining age 70-1/2, not having previously elected Article IV. Participation in the Plan
alternate Normal g. etirement Age, the Participant's alternate 4.01 Initial Pardcipation: An Employee may become a
Normal lq. efirement Age shall not be later than the mandatory Participant by entering into a Joinder Agreement ptior to the
retirement age, if any, established by the Employer, or the age beginning of the calendar month in which theJoinder
at which the Participant actually separates bom sen, ice if the Agreement is to become effective to defer compemation not
Employer has no mandatory' retirement age. If the Participant yet earned.
will not become eligible to receive benefits under a basic
retirement plan maintained by the Employer, the Participant's 4.02 Amendment of Joinder Agreement: A Participant
alternate Normal Retirement Age may not be earlier than age may amend an executed Joinder Agreement to change the
55 and may not be later than age 70-1/2. amount of compensati0n not yet earned wliich is to be
deferred (including the reduction of such future deferrals to
2.10 Participant: Any Employee who has joined the Plan zero) or to change his investment preference (subject to such
pursuant to the requirements of Article IV. restrictions as may result from the nature of terms of any
invesm~ent made by the Employer). Such amendment shall
2.11 Plan Year: The calendar year. become effective as of the beginning of the calendar month
commencing after the date the amendment is executed. A
2.12 Retirement: The first date upon which both of the Participant may at any time amend hisJoinder Agreement to
following shall have occurred with respect to a participant: change the designated Beneficiary, and such amendment shall
Separation from Sen,ice and attainment of age 65. become effective immediately.
2.13 Separation From Service: Severance of the Article V. Limitations on Deferrals
Participant's employment with the Employer which constitutes 5.01 Normal Limitation: Except as provided m section 5.02
a "separation fom~ ser,,ice" with the meaning of Section the maximum amount of Deferred Compensation for auy
402(d)(4)(A)(iii) of the Code. In geueral, a Participant shall be Participant for any taxable year shill not exceed the lesser of
deemed to have severed his employment with the Employer $7,500.00 or 33-1/3 percent of the Participant's Includible
for purposes of this Plan when, in accordance with the Compensation for the taxable year. This lin~itation will
-stablished practices of the Employer, the employment ordinarily be equivalent to the lesser ofS7,500.00 or 25
.elarionship is considered to have actually tem~inated. In the percent of the Participant's Non,roi Compensation.
case ora Participant who is an independent contractor of the
Employer, Separation from Service shall be deemed to have 5.02 Catch-Up Limitation: For each of the last three (3)
occurred when the Participant's contract under which sen'ices taxable years ora Participant ending before his attainment of
are perfomaed has completely expired and temtinated, there is Normal l~.etiremeut Age, the maximuna anaount of Deferred
no foreseeable possibility that the Employer will renew the Compensation shall be the lesser o~. (1) $15,000 or (2) the sum
contract or enter into a new contract for the Participant's of(i) the Normal Limitation for the taxable year, and (ii) the
services, and is not anticipated that the Participant will become Normal Limitation for each prior taxable year of the
an Employee of the Employer. Participant commencing after 1978 less the amount of the
Participant's Deferred Compensation for such prior taxable
Article Ill. Administration years. A prior taxable year shall be taken into account under
3.01 Duties of the Employer: The Employer shall have the the preceding sentence m~ly if (i) the Participant was eligible to
authority to make all discretionary decisions affecting the rights participate in the Plan for such year (or in any other eligible
or benefits of Participants which may be required in the deferred compensation plan established under Section 457 of
administration of this Plan. the Code which is properly taken into account pursuant to
regulations under section 457), and (ii) compensation (if any)
3.02 Duties of Administrator: The Administrator, as agent deferred under the Plan (or such other plan) was subject to the
for the Employer, shall perform nondiscrefionary deferral limitations set forth in Section 5.01
administrative functions in connection with the Plan, including
the maintenance of Participants' Accounts, the provision of 5.03 Other Plans: The amount excludable from a
periodic reports of the stares of each Account, and the Pasdcipant's gross income under this Plan or any other eligible
disbursement of benefits on behalf of the Employer in deferred compemation plan under section 457 of the Code
~cordance with the provisions of this Plan. shall not exceed $7,500.00 (or such greater amount allowed
under Section 5.02 of the Plan), less any amount excluded
DeJcrred Compcr~s*~ion Plan Dotumcnt, Frbru,~ry IYYb
from gross income under section 403CO), 402(a)(8), or deferred under this Plan during such taxable year and
402CO)(1)(B) of the Code, or any amount with respect to compensation pa/d by the transferor employer shall be treated
which a deduction is allowable by reason of a contribution to as if it had been paid by the Employer.
an organization described in section 501 (c)(18) of the Code. Co) Outgoing Tramfers: An amount may be transferred to
an eligible deferred compensation plan maintained by another
Article VI. Investments and Account Values employer, and charged to a Participant's Account under this
6.01 Investment of Deferred Compensation: All Plan, fi(i) the Partidpant has separated from service with the
investments of Participant's Defeired Compensation made by Employer and become an employee oftl{e other employer, (ii
the Employer, including all property and rights purchased with the other emp]oyerls plan provides that ~uch transfer will be
such amounts and all income attributable thereto, shall be the accepted, and (iii) the Participant and the employers have
sole properS.? of the Employer and shall not be held in trust for signed such agreements as are necessary to assure that the
Participants or as collateral security for the fulfillment of the Employer's liability to pay benefits to the Participant has been
Employer's obligations under the Plan. Such properv), shall be discharged and assumed by the other employer. The Employe~
subject to the claims of general creditors of the Employer, and may require such documentation from the other plan as it
no Participant or BeneficiaD, shall have any vested interest or deems necessary to etTecmate the transfer, to confirm that such
secured or preferred position with respect to such property or plan is an eligible deferred compensation plan within the
have any claim against the Employer except as a general meaning of section 457 of the Code, and to assure that
creditor, transfers are provided for under such plan. Such transfers shall
be made only under such circumstances as are permitted unde~
6.02 Crediting of Accounts: The Participant's Account shall section 457 of the Code and the regulations thereunder.
reflect the amount and va]ue of the investments or other
propertT obtained by the Employer through the im'estment of 6.04 Employer Liability: In no evem shall the Employer's
the Participant's Deferred Compensation. It is anticipated that liability to pay benefits to a Participant under Article VI excee~
the Employer's nivestments with respect to a Participant will the value of the amounts credited to the Participant's Account:
confom~ to the investment preference specified ni the the Employer shall not be liable for losses arising from
Participant's Joinder Agreement. but nothing herein shall be depreciation or shrinkage in the value of any nivestments
construed to require the Employer to make any particular acquired under this Plan.
investment ora Participant's Deferred Compensation. Each
Partfcipant shall receive periodic reports, not less frequently Article VII. Benefits
than annually, showing the then current value of his Accoum. 7.01 Retirement Benefits and Election on Separation
from Serx4ce: Except as otherwise provided in this Article
6.03 Transfers: VII, the distribution of a Participant's Account shall commenct
(a) Incoming Transfers: A transfer may be accepted from as of April 1 of the calendar year after the Plan Year of the
an eligible deferred compensation plan maintained by another Participant's P..etirement, and the distribution of such
employer and credited to a Participant's Account under the Retirement benefits shall be made in accordance with one of
Plan if(i) the Participant has separated from service w/th that the payment options described in Section 7.02.
employer and become an Employee of the Employer, and (ii) Nov, vithstanding the foregoing, the Participant may
the other employer's plan provides that such transfer x~5]l be irrevocably elect within 60 days following Separation from
made. The Employer may require such documentation from Sec'ice to have the distribution of benefits commence on a
the predecessor plan as it deems necessary to effectuate the fixed determinable date other than that described in the
transfer, to confirm that such plan is an eligible deferred preceding sentence which is at least 61 days after Separation
compensation plan within the mear~ng of Section 457 of the from Service, but not later than April 1 of the year following
Code, and to assure that transfers are proxfided for under such the year of the Participant's Retirement or attainment of age
plan. The Employer may refuse to accept a transfer in the form 70-1/2, whichever is later.
of assets other than cash, unless the Employer and the
Administrator agree to hold such other assets under the Plan. 7.02 Payment Options: As provided in Sections 7.01, 7.04
Any such transferred amount shall be treated as a deferral and 7;05, 'a Participant or Beneficiary may elect to have value
subject to the limitations of Ar'dele V, except that, for purposes of the Participant's Account distributed in accordance xvith one
of applying the hmitations of Sections 5.01 and 5.02, an of thc folloxving payment options, provided that such option is
amount deferred during any taxable ),ear under the plan from consistent with the lirrfitations set forth in Section 7.03.
· which thc transfer is accepted shall be treated as if it has been
Three
(a) Equal monthly, quarterly, semi-annual or annual a payment option selected under Section 7.02 shall not be
payments in an amount chosen by the Participant, continuing considered to fail to satisfy the requirement under section
until his Account is exhausted; 457(d)(2)lb) that any distribution made over a period of more
(b) One lump-sum payment; than 1 year can only be made in substantially nonincreasing
(c) Approximately equal monthly, quarterly, semi-annual amounts. Unless otherwise elected by the Panidpant, all
or annual payments, calculated to continue for a period certain determinations under Section 401(a)(9) shall be made without
chosen by the Participant. recalculation of life expectancies.
(d) Annual Payments equal to the minimum distributions
required under Section 401(a)(9) of the Code over the life 7.04 Post-retirement Death Benefits:
expectancy of the Participant or over the life expectancies of (a) Should the Participant die after he has begun to receive
the Participant and his Beneficiary. benefits under a payment option, the remaining payments, if
(e) Payments equal to payments made by the issuer of a any, under the payment option shall be payable to the
retirement annuity policy acquired by the Employer. Participant's Beneficiary within the 30-day period
(0 A split distribution under which payments under commencing with the 61st day ager the Part'c'pant's death,
options (a), (b), (c) or (e) conm~ence or are made at the same unless the Beneficiary elect4 payment under a different
time, as elected by the Participant under Section 7.0L payment option that is available under Section 7.02 within 60
provided that ali payments commence (or are made) by the days of the Participant's death. Any different payment option
latest benefit conmaencement date under Section 7.01 and that elected by a Beneficiary under this section must provide for
once a payment is made subsequent payments will be made in payments at a rate that is at least as rapid under the payment
substantially nonincreasing amounts, option that was applicable to the Participant. In no event shall
(g) Any payment option elected by the Participant and the Employer or Adn~nistrator be liable to the Beneficiary for
agreed to by the Employer and Adnmtistrator, provided that the anaount of an), payment made in the name of the
such option nust provide for substantial]), nonincreasing Participant before the Administrator receives proof of death of
payments for any period after the benefit conmaencement date the Participant.
under Section 7.01. (b) If the desigmated Beneficiary does not continue to live
A Participant's or Beneficia%,'s selection of a payment for the remaining period of payments under the payment
~fion made after December 31, 1995, under Subsections (a), option, then the commuted value of any remaining payments
.~c), or (g) above naa)' include the selection of an automatic under the payment option shall be paid in a lump sum to the
annual cost-of-living increase. Such increase will be based on estate of the Beneficia%,. In the event that the Participant's
the rise in the Consumer Price Index for All Urban Consumers estate is the t3eneficiary, the commuted value of any remaining
(CPI-U) from the third quarter of the last year in which a cost- payments under the payment option shall be paid to the estate
of-living increase was provided to the third quarter of the in a lump sum.
current ),ear. Any increase will be made in petiodic payment
checks beginning the followingJanua~'. The first cost-of- 7.05 Pre-retirement Death Benefits:
living increase will be based on the rise in the CPI-U 13om the (a) Should the Participant die before he has begun to
third quarter of 1995 to the third quarter of 1996, and will be receive the benefits provided by Section 7.01, the value of the
applied to amounts paid beginning January 1997. Participant's Account shall be payable to the Beneficiary
A Participant's or Beneficiary's election of a payment contmencing within the 30-day period commencing on the
option must be made at least 30 days before the payment of 91st da), after the Participant's death, un]ess the Beneficiary
benefits is to conunence. If a Participant or Beneficial, falls to elects a different fixed or determinable benefit commencement
make a timely election of a payment option, benefits shall be date xx4thin 90 days of the Participant's death. Such benefit
paid monthly under option (c) above for a period of five years commencement date shall be not later than the later of (i)
without the inclusion of a cost-of-living increase. December 31 of the ),ear following the year of the Participant's
death, or (ii) if the Beneficiary is the Participant's spouse,
7.03 Limitation on Options: No payment option may be December 31 of the 3,ear in which the Participant would have
selected by a Participant or Beneficiary under Sections 7.02, attained age 70-1/2.
7.04, or 7.05 unless it satisfies the requirements of Sections
401(a)(9) and 457(d)(2) of the Code, including that payments (b) Unless a Beneficiary elects a different payment option
commencing before the death of the Participant shall satisfy the prior to the benefit commencement date, death benefits under
'idental death benefits requirement under section this Section shall be paid in approximately equal annual
~,7(d)(2)(B)(i)(l). A cost-of-lix4ng increase included as part of installments over five years, or over such shorter period as may
be necess.xry to ~ssure that the ~umount o£~ny annual Article VIII. Non-AsslgnabilJ~
im~ent is not l~ ~ $3,5~. A Bene~d~ sh~ be 8.01 ~ Gene~l: ~cept ~ prodded in Secton 8.02, no
~ted ~ ~he were a P~dpmt for pu~os~ ofdete~ng P~dp~t or Benefid~ sh~ have ~y Hght to co--ute,
~e pn~ent optom av~able under Section 7.02, pro~ded, sell, ~i~, ple~, ~ter or o&e~e convey or encumber
however, &at ~e pa~enr op~on chosen by ~e Benefici~ &e fight to receive any pn~en~ hereunder, w~ch pa~en~
must pro~gde for p~)~en~ to ~e Benefici~ over a period no ~d g~ are ex~r~sly decl~ed to be non-~si~able and non-
longer &~ &e ~fe ex~ec~ of &e Benefida~, and ~fe~ble.
prodded ~at such period may not exceed (15) yeah if~e
8.02 Domestic Relafion~ Orders:
Beneficia~ is not ~e Pa~cipant's spouse.
(c) In ~e event ~at ~e Beneficia~ ~es before the (a) ~owance of Tr~sfen: To ~e extent required under
payment of death benefi~ has co~enced or been completed, fin~ judgement, decree, or order (including approv~ ora
· e retaking v~ue of the Pa~cipant's Account sh~ be paid prope~ se~ement a~eement) made punuant to a state
to ~e es~te of the Beneficia~ in a lump sum. In the event domestic relations law, any po~on ora Pa~cipant's Account
· at ~e Pa~cipant's es~te is ~e Beneficial, payment sha~ be may be paid or set aside for payment to a spouse, foyer
made to the es~te in a lump sum. spouse, or ch~d of the Pa~cipant. Where necessa~ to ca~
out the tern of such an order, a separate Account sh~ be
7.06 U~oreseeable Emergencies: es~b~shed with respect to the spouse, foyer spouse, or child
who sh~ be entitled to make investment selections with
(a) In the event an unforeseeable emergen%, occur, a
Pa~cipant may apply to the Employer to receive that pa~ of respect thereto in the same manner as the Pa~cipant; any
the v~ue of his Account that is reasonably needed ~o satis~ the amount so set aside for a spouse, foyer spouse, or child sh~
emergen%' need. If such an app~cafion is approved by the be p~d out in a lump sum at the ear'est date that benefits may
Employer, the Participant sh~ be paid o~y such ~mount as be p~d to the Pa=icipant, u~ess the order ~rects a different
· e Employer dee~ necessa~, to meet the emergency need, time or fo~ of payment. Nothing in this Section sh~ be
but pa~ent sh~ not be made to the extent that the financial cons~ed to authorize any amount to be dist~buted under the
har~Np may be re,eyed through cessation ofdefe~ under Plan at a time or in a fo~ that is not pem~tted under Section
the Plan, insurance or other reimbu~ement, or ~quidation of 457 of the Code. Any Payment made to a person other than
o~er assets to the extent such ~quidation would not itse~ the Pa~cipant punuant to this Section sha~ be reduced by
cause severe financi~ hardship, required income trax withholding; the fict that payment is
(b) ~ unforeseeable emergency sha~ be deemed to made to a pe~on other ~an the Participant may not prevent
involve o~y circu~tances of severe financial hardship to the such payment from being includible in the ~oss income of the
Pa~cipant resulting from a sudden unexpected ~ess, Pa~cipant for withholding and income tax reporting pu~oses.
accident, or ~sab~ of the Pa~cipant or ora dependent (as (b) Release ~om Liabfli~, to Paniclpant: The Employer's,
defined in section 152(a) of the Code) of the Pa~cipam, loss liable' to pay benefin to a Pa~cipant sh~ be reduced to the
of ~e Pa~cipant's prope~ due to casuals, or other si~lar extent that amounts have been paid or set aside for payment to
and e~aor~na~ unforeseeable circums~nces arising as a a *pouse, foyer spouse, or c~d pu~uant to para.apb (a) of
reset ofeven~ beyond the control of the Pa~cipant. The ~e Section. No such =ansfer sh~ be effectuated u~ess the
need to send a Pa~cipant's ch~d to co~ege or to purchase a Employer or Ad~strator has been prodded with sa6sficto~
new home sh~ not be considered unforeseeable emergencies, e~dence that the Employer and the Ad~Ns=ator are released
The dete~nation a~ to whether such an unforeseeable ~om any ~nher claim by the Participant x~Sth respect to such
emergen~ e~sn sh~ be based on the me~= of each amounts. The Pa~cipant sh~ be deemed to have rele~ed the
~di~du~ case. Employer and the Ad~Ns=ator ~om any claim with respect
to such amount, in any case in wNch (i) the Employer or
7.07 Transitional R~e for Pre-1989 Benefit Electlons: A~Nstntor has been se~ed ~th legfl process or othenvise
In ~e event that, prior toJanu~ 1, 1989, a Pa~cipant or joNed in a proceeding relating to such tnmfer, (fi) the
P~cipant ha~ been notified of the p enden~ of such
Benefid~ h~ co~enced receixqng benefi~ under a
procee~ng in the ma~er prescribed by ~e law of~e
pa~ent option or has i~evocably elected a pa3~ent option or
benefit co~encement ~te, ~en that payment option or jufis~cfion in wNch ~e proceeding is pen~ng for se~ce of
ele~on ~h~ rem in effect non, Staining any o~er proc~ N such action or by m~ ~om ~e Employer or
A~s~tor to ~e Pa~dp~t's l~t ~o~ m~ng address,
pro.ion of&e Plm. md (~) the Pa~cipmt ~ to ob~n an order of&e court in
&e procee~g re~e~g &e Employer or A~smtor ~om
&e oblation to comply x~4& the ju~ent, decree, or order.
Five
(c) Participation in Legal Proceedings: The Employer and acting as Administrator hereunder. If this Plan document
Administrator shall not be obligated to defend against or set comtimtes an amendment and reltatement of the Plan as
aside any judgement, decree, or order described in paragraph previously adopted by the Emplo},er, the amendments
) any legal order relating to the garnishment ora Participant's contained herein shall become effective on January 1, 1996,
.~.,enefits, unless the full expeme of such legal action is borne by and the terms of the preceding PI}an document shall remain in
the Participant. In the event that the Participant's action (or effect through December 31, 1995.
inaction) nonetheless causes the Employer or Administrator to Except as may be required to maintain the status of the
incur such expense, the amount of the expense may be charged Plan as an eligible deferred compensation plan under section
against the Participant's Account and thereby reduce the 457 of the Code or to comply with other applicable laws, no
Employer's obIigation to pay benefits to the Participant. In the amendment or termination of the Plan shall divest any
course of any proceeding relating to divorce, separation, or Participant of any rights with respect to compensation deferred
child support, the Employer and Administrator shall be before the date of the amendment or termination.
authorized to disclose information relating to the Participant's
Account to the Participant's spouse, former spouse, or child Article XI. Applicable Law
(including the legal representatives of the spouse, fomaer This Plan shall be construed under the laws of the state where
spouse, or child), or to a court, the Employer is located and is established with the intent that
it meet the requirements of an "eligible deferred compensation
plan" under Section 457 of the Code, as amended. The
Article IX. Relationship to Other Plans and provisions of this Plan shall be interpreted wherever possible in
Employment Agreements conformity with the requirements of that section.
This plan sen'es in addition to any other retirement, pension,
or benefit plan or system presently ii'~ existence or hereinafter Artlcle Xll. Gender and Number
established for the benefit of the Employer's employees, and The masculine pronoun, whenever used herein, shall include
participation hereunder shall not affect benefits receivable the femirfine pronoun, and the singular shall include the plural,
under any such plan or system. Nothing contained in this Plan except where the context requires other~cise.
,hall be deemed to constitute an employment contract or
'cement bet~veen any Participant a~d the Employer or to
~,ve any Participant the right to be retained in the employ of
the Employer. Nor shall anything herein be construed to
modify the terms of any employment contract or agreement
bet~veen a Participant and the Employer.
Article X. Amendment or Termlnation of Plan
The Employer may at any time amend this Plan provided that
it trammits such amendment in writing to the Administrator at
least 30 days prior to the effective date of the amendment. The
consent of the Administrator shall not be required in order for
such amendment to become effective, but the Administrator
shall be under no obligation to continue acting as
Administrator hereunder if it disapproves of such amendment.
The Employer may at any time terminate this Plan.
The Administrator may at any time propose an
amendment to the Plan by an instrument in writing
transmitted to the Employer at least 30 days before the
effective date of the amendment. Such amendment shall
become effective unless, within such 30-day period, the
Employer notifies the Administrator in writing that it
,~:~approves such amendment, in which case such amendment
1 not become effective. In the event of such disapproval,
~: Administrator shall be under no obligation to continue
Attachment B
DECLARATION OF TRUST (k) Public Employer Trustees. Public Employers who set
OF 1CMA RETIREMENT TRUST as trustees of the Qualified Plans.
Article I. Name and Definitions (I) Public Employer. A unit of state or local government, c
any agency or imtrumentality thereof, that has adopted a
Section I. ! Name: The Name of the Trust created hereby is Deferred Compensation Plan or a Qualified Plan and has
the ICMA Retirement Trust. executed this Declaration of Trust.
Section 1.2 Definitions: Wherever they are used herein, the (m) Qualified Plan. A plan sponsored by a Public Employe:
following terms shall have the following respective meanings: for the purpose of providing retirement income to its
(a) By-laws. The By-laws referred to in Section 4.1 hereof, as employees which satisfies the qualification requirements of
amended fi'om time to time. Section 401 of the Internal Revenue Code, as amended.
(b) Deferred Compensation Plan. A deferred (n) RC. The International City Management Association
compensation plan established and n~aintained by a Public Retirement Corporation.
Employer for the purpose of providing retirement income and (o) Retirement Trust. The Trust created by this Declaratio~
other deferred benefits to its employees in accordance with the of Trust.
provision of section 457 of the Internal Revenue Code of
1986, as amended. (p) Trust Property. The amounts held in the Retirement Trus
on behalf of the Public Employers in cormection with Deferred
(c) Employees. Those employees who participate in Compensation Plans and on behalf of the Public Employer
Qualified Plans. Trustees for the exclusive benefit of Employees pursuaut to
(d) Employer Trust. A trust created pursuant to an Qualified Plans. The Trust Property shall include any income
agreemeut ber, veen RC and a Public Employer. or au resulting from the investment to the amounts so held.
agreement between KC and a Public Employer for (q) Trustees. The Public Employee Trustees and ICMA/R(
: administrative sen'ices that is not a trust, in either case for the Trustees elected by the Public Employers to serve as members
purpose of investing and adntinistering the funds set aside by of the Board of Trustees of the Retirement Trust.
such Employer in com~ection with its Deferred Compensation
agreements with its employees or in connection with its
Quahfied Plan. Article II. Creation and Purpose of the Trust;
(e) Investment Contract. A non-negotiable contract . Ownership of Trust Property
entered into by the iKetiremeut Trust with a financial Section 2.1 Creation: The Retirement Trust was created b5
institution that provides for a fixed rate of return on the execution of this Declaration of Trust by the initial
invesmwnt. Trustees and Public Employers and is established with respect,
(0 ICMA. The Interuational City/County Management to each participating Public Employer by adoption of this
Association. Declaration of Trust.
(g) IC/~Lex/RC Trustees. Those Trustees elected by the Section 2.2 Purpose: The purpose of the Retirement Trust
Public Employers who, in accordance with the proxSsions of is to prox4de for the cormningled investment of funds held by
Section 3.1 (a) hereof, are also members of the Board of the Public Employers in connection with their Deferred
Directors oflCMA or RC (or in the case of iRC, fom~er Compensation and Qualified Plans. The Trust Property shall
members of the KC Board). be invested in the Portfolios, in Investment Contracts, and in
(la) Investment Adviser. The Investment Adviser that enters other investments recommended by the Investment Adviser
into a contract with the Retirement Trust to provide advice under the supervision of the Board of Trustees. No part of the
with respect to investment of the Trust Prupem,,. Trust Property will be invested in securities issued by Public
(i) Portfolios. The separate conm'~ingled accounts of Employers.
investment established by the Investnsent Adx5ser to the Section 2.3 Ownership of Trust Property: The Trustees
Retirement Trust, under the supervision of the Trustees, for shall have legal fide to the Trust Property. The Public Em-
the ~urpose of providing investments for the Trust Property. ployers shall be the beneficial owners of the portion of the
Trust Property allocable to the Deferred Compensation Plans.
(j) Public Employee Trustees. Those Trustees elected by The portion of the Trust Property allocable to the Qualified
the Public Employers who, in accordance with the pro~4sion Plans shall be held for the Public Employer Trustees for the
of Section 3.1 (a) hereof, are full-rime employees of Public
exclusive benefit of the Employees.
Employers.
Article IlL Trustees unexpired portion of the term of the Trustee who has resigned
Section 3.1 Number and Quali~cation of Trustees: or otherwise ceased to be a Trustee. The appoinmaent shall be
)The Board of Trustees shall comist of nlne Trustees. Five of made by a written instrument signed by a majority of the
: Trustees shall be full-time employees of a Public Employer Trustees. The person appointed must be the same type of
(the Public Employee Trustees) who are authorized by such Trustee (i.e., Public Employee Trustee or ICMA/R.C Trustee)
Public Employer to serve as Trustee. The remaining four as the person who has ceased to be a Trustee. An appointment
Trustees shall comist of two persons who, at the time of of a Trustee may be made in anticipation ora vacancy to occur
election to the Board of Trustees, are members of the Board of at a later date by reason of retirement or resignation, provided
Directors of ICMA and two persons who, at the time of that such appointment shall not become effective prior to such
election, are members or former members of the Board of retirement or resignation. Whenever a vacancy shall occur,
Directors oflLC (the ICMA/TLC Trustees). One of the until such vacancy is filled as prox~ded in this Section 3.5, the
Trustees who is a director oflCMA, and one of the Trustees Trustees in office, regard]ess of their number, shall have all the
who is a director of I~.C, shall, at the time of election, be full- powers granted to the Trustees and shall discharge all the duties
time employees of Public Employers. Co) No person may imposed upon the Trustees by this Declaration. A written
serve as a Trustee for more than two terms in any ten-year instrument certi~,ing the existence of a vacancy signed by a
period, majority of the Trustees shall be conclusive ex~dence of the
existence of such vacancy.
Section 3.2 Election and Term: (a) Except for the Trust-
ees appointed to fill vacancies pursuant to Section 3.5 hereof, Section 3.6 Trustees Serve in Representative Capacity:
the Trustees sh~11 be elected by a vote ora naajoriry of the By executing this Declaration, each Public Employer agrees
voting Public Employers in accordance with the procedures set that the Public Employee Trustees elected by the Public
forth in the By-Laws. (b) At the first election of Trustees. Employers are authorized to act as agents and representatives of
three Trustees shall be elected for a term of three )'ears, three the Public Employers collecth'ely.
Trustees shall be elected for a tema of two years and three
Trustees shall be elected for a tema of one )'ear. At each
Article IV. Powers of Trustees
subsequent election, three Trustees shall be elected, each to
7e for a term of three ),ears and uutll his or her successor is Section 4.1 General Powers: The Trustees shall have the
:ted and qualified, power to conduct the business of the Trust and to carry on its
Section 3.3 Nominations: The Trustees who are full-eLme operations. Such power shall include, but shall not be limited
employees of Public Employers shall serve as the Nonzinating to, the power to:
Committee for the Public Employee Trustees. The Non'finating (a) receive the Trust Property from the Public Employers,
Committee shall choose candidates for Public Employee Tmstee Public Employer Trustees or the trustee or administrator
in accordance with the procedures set forth in the By-Laws. under any Employer Trust;
Section 3.4 Resignation and Removal: (a) Any Trustee (b) enter into a contract with an Investment Adviser
may resign as Trustee (without need for prior or subsequent providing, among other things, for the establishment and
accounting) by an instrument in writing signed by the Trustee operation of the Portfolios, selection of the Investment
and delivered to the other Trustees and such resignation shall Contracts in which the Trust Property may be invested,
be effective upon such delivery, or at a later date according to selection of the other investments for the Trust Property
the terms of the instrument. Any of the Trustees may be and the payment of reasonable fees to the Investment
removed for cause, by a vote ora majority of the Public Adx4ser and to any sub-investment adviser retained by
Employers. (b) Each Public Employee Trustee shall resign his the Investment Adviser;
or her position as Trustee xvithin sixty, days of the date on (e) rex4ew annually the performance of the Investment
which he or she ceases to be a full-time employee of a Public Adviser and approve annually the contract with such
Employer. Investment Adviser;
Section 3.5 Vacancies: The term of office of a Trustee shall (d) invest and reinvest the Trust Property in the Portfolios,
terminate and a vacancy shall occur in the event his or her the Investment Contracts and in any other investment
death, resignation, removal, adjudicated incompetence or other recommended by the Investment Adviser, but not
incapacity to perform the duties of the office of a Trustee. In including securities issued by Public Employers,
~se ora vacancy, the remaining Trustees shall appoint provided that ifa Public Employer has directed that its
person as they in their discretion shall see fit (subject to monies be invested in one or more specified Portfolios
th~ limitations set forth in this Section), to serve for the or in an Investment Contract, the Trustees of the
Eight
Trust o.[ the ICM.~ Rttireme.t Truest, January 1995
Retirement Trust shall invest such monies in accordance expenses from of the Trust Property;
with such directiom; (re)pay expenses properly allocable to the Trust Property
(e) keep such portion of the Trust Property in cash or cash incurred in connection with the Deferred
balances as the Trustees, fi.om time to time, may deem Compensation Plans, Qualified Plans, or the Employ(
to be in the best interest of the Retirement Trust created Trusts and deduct such expenses from that portion of
hereby without l/abil/ty for interest thereon; the Trust Property to which such expenses are prope~
(f) accept and retain for such time as they may deem allocable;
ad'v/sable any securities or other property, received or (n) pay out of the Trust Propen'y all real and personal
acquired by them as Trustees hereunder, whether or not property taxes, income taxes and other taxes of any an
such securities or other property would normally be all kinds which, in the opin/on of the Trustees, are
purchased as investment hereunder; properly lexfed, or assessed under e.'cisting or future
(g) cause any securities or other property held as part of the upon, or in respect of, the Trust Property and allocate
Trust Property to be reg/stered in the name of the any such taxes to the appropriate accounts;
Retirement Trust or in the name ora nom/nee, and to (o) adopt, amend and repeal the By-laws, prox4ded that
hold any investments in bearer form, but the books and such By-laws are at all times consistent w/th the terms
records of the Trustees shall at aL! times show that all this Declaration of Trust;
such investments are a part of the Trust Prop~rr),; (p) employ persons to make available interests in the
(h) make, execute, ac ~knowledge, and deliver any and all Retirement Trust to employers ehg/ble to maintain a
documents of transfer and com'eyance and an5, and all Deferred Compensation Plan under Section 457 or a
other instruments that may be necessary or appropriate Qualified Plan under Section 401 of the Internal
· to carry out the powers herein granted; Revenue Code. as amended;
(i) vote upon any stock, bonds, or other securities; give (q) issue the Annual Report of the Retirement Trust, and
general or special proxies or powers of attorney w/th or the disclosure documents and other hterature used by
without power of substitution; exercise any conversion the Retirement Trust;
prixdleges, subscription rights, or other options, and (r) in addition to conducting the im'estment program
make any payments incidental thereto oppose, or authorized in Section 4.1 (d), make loans, including the
consent to, or otherwise participate in, corporate put(rase of&bt obligations, proxSded that all such loan
reorganizations or to other changes affecting corporate shall bear interest at the current market rate;
securities, and delegate discretionary powers and pay any
assessments or charges in connection therewith; and (s) contract for, and delegate any powers granted hereund,e~
genera~y exercise any of the powers of an owner with to, such officers, agents, employees, auditors and
attorneys as the Trustees may select, provided that the
respect to stocks, bonds, securities or other property
held as part of the Trust Property.; Trustees may not delegate the powers set forth in
paragraphs (b), (c) and (o) of this Section 4.1 and may
(j) enter into contracts or arrangements for goods or not delegate any powers if such delegation would violate
sen'ices required in connection with the operation of their fiduciary duties;
the Retirement Trust, including, but not l/mited to,
contracts with custodians and contracts for the provision (t) provide for the indemnification of the OflScers and
ofadmini, strative services; Trustees of the Retirement Trust and purchase fiduciary
insurance;
(k) borrow or raise money for the purposes of the
Retirement Trust in such amgunt, and upon such terms (u) maintain books and records, including separate accounts
for each Public Employer, Public Employer Trustee or
and conditions, as the Trustees shall deem advisable,
provided that the aggregate amount of such borrowings Employer Trust and such additional separate accounts as
shall not exceed 30% of the value of the Trust Property. are required under, and consistent ,xfth, the Deferred
No person lending money to the Trustees shall be Compensation or Qualified Plan of each Public
bound to see the application of the money lent or to Employer; and
inquire into its validity, expediency or propriety or any (v) do all such acts, take all such proceedings, and exercise
such borrowing; all such rights and privileges, although not specifically
(I) incur reasonable expenses as required for the mentioned herein, as the Trustees may deem necessary
' operation of the Retirement Trust and deduct such or appropriate to administer the Trust Property and to
carry out the purposes of the Retirement Trust.
1CMA RETIREMENT CORPORATION
Section 4.2 Distr/bution of Trnst Property: Distributiom Article VI. Annual Report to Shareholders
fthe Trust property shall be made to, or on behalf of,, the The Trustees shall annually submit to the Public Employers
Public Employer or Public Employer Trustee, in accordance and Public Employer Trustees a written report of the transac-
with the terms of the Deferred Compensation Plans, Qualified tions of the Retirement Trust, including finandal statements
Plato or Employer Trusts. The Trustees of the B. etirement which shall be certified by independent public accountants
Trust shall be fully protected in making payments in actor- chosen by the Trustees.
dance with the directions of the Public Employers, Public
Employer Trustees or trustees or administrators of any Em- Artlc[e ¥IL Duration or Amendment
ployer Trust without ascertaining whether such payments are of Retirement Trust
in compliance with the provisions of the applicable Deferred
Compensation or Qualified Plan or Employer Trust. Section 7.1 Withdrawal: A Public Employer or Public
Section 4.3 Execution of Instruments: The Trustees may Employer Trustee may, at any time, withdraw from this
unanimously designate any one or more of the Trustees to Retirement Trust by delivering to the Board of Trustees a
written statement of withdrawal. In such statement, the Public
execute any instrument or document on behalf of all, including
but not limited to the signing or endorsement of any check Employer or Public Employer Trustee shall acknowledge that
and the signing of any applications, insurance and other the Trust Property allocable to the Public Employer is derived
contracts, and the action of such designated Trustee or Trust- from compensation deferred by employees of such Public
ecs shall have the same force and effect as if taken by all the Employer pursuant to its Deferred Compensation Plan or from
· contributions to the accouuts of Employees pursuant to a
Trustees. Qualified Plan, and shall designate the financial institution to
Article V. Duty of Care and Liability of Trustees xvhich such property shall be transferred by the Trustees of the
Section 5.1 Duty of Care: In exercising the powers herein- R. etirement Trust or by the trustee or administrator under an
before granted to the Trustees, the Trustees shall perform all Employer Trust.
,cts within their authoriW for the exclusive purpose ofprovid- Section 7.2 Duration: The P..etiremeut Trust shall continue
; benefits for the Public Employers in connection with until tem~inated by the vote ora majority of the Publid
Oeferred Compensation Plans and Public Employer Trustees Employers. each casting one vote. Upon tem~ination, all of
pursuant to Qualified Plans, and shall perform such acts with the Trust Property shall be paid out to the Public Employers,
the care, skill, prudence and diligence in the circumstances Public Employer Trustees or the trustees or adn'finistrators of
then prevailing that a prudent person acting in a like capaci~' the Employer Trusts, as appropriate.
and familiar with such matters would use in the conduct of an Section 7.3 Amendment: The Retirement Trust may be
enterprise ora like character and with like aims. amended by the vote of a majority of the Public Employers,
Section 5.2 Liability: The Trustees shall not be hable for any each casting one vote.
mistake ofjudgnaent or other action taken in good faith, and Section 7.4 Procedure: A resolution to temfinate or amend
for any action taken or omitted in reliance in good faith upon the P,.erirement Trust or to remove a Trustee shall be submit-
the books of account or other records of the lq. etirement Trust, ted to a vote of the Public Employers iff (i) a majority of the
upon the opinion of counsel, or upon reports made to the Trustees so direct, or; (ii) a petition requesting a vote signed by
Retirement Trust by any of its ofiqcers, employees or agents or not less that 25 percent of the Public Employers, is submitted
by the Investment Adviser or any sub-investment adviser, to the Trustees.
accountant, appraiser or other expert or consultant selected
with reasonable care by the Trustees, officers or employees of
the Ketirement Trust. The Trustees shall also not be liable for Article VIII. ~tllscellaneous
any loss sustained by the Trust Property by reason of any Section 8.1 Governing Law: Except as otherwise required
investment made in good faith and in accordance with the
by state or local law, this Declaration of Trust and the P,.etire-
standard of care set forth in Section 5.1.
ment Trust hereby created shall be construed and regulated by
Section 5.3 Bond: No Trustee shall be obligated to give any the laws of the District of Columbia.
bond or other security for the performance of any of his or her Section 8.2 Counterparts: This Declaration may be
!es hereunder, executed by the Public Employers and Trustees in two or
more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and
the same instrument.
Internal Revenue Service DepaAment of the Treasu~
"This document may not be
Index No. 457.07-00 used or cited as precedent.
Washington DC 20224 Section 6110~)(3) of the
Internal Revenue Code."
Person to Contact:
Refer Replyto: FEB 2 1996
Date: TR-31-1704 95
This replies to your request for a ruling submitted on behalf of X, an eligible
employer within the meaning of section 457(e) (1) (A), with respect to proposed amendments
to X's deferred compensation plan that covers its employees and individuals who contract
independently with X.
x has previously received favorable letter rulings concluding that the Plan is an
eligible plan for purposes of section 457 of the Internal Revenue Code ("Code") . X now
proposes to amend the Plan to provide participants with more flexible distribution op-
tions. One such amendment will provide participants or beneficiaries with the option of
electing certain forms of payment that include an automatic annual cost-of-living adjust-
ment based on an identified and nationally recognized cost-of living index. A second
amendment will permit participants to split the method for payout among the various dis-
tribution options offered under the plan, so long as the minimum distribution require-
ments of section 457(d) (2) are not violated. The effect of the amendments will allow
participants to elect inter alia to have amounts paid to them first as a large lump sum
followed by periodic payments of a lesser annual amount and then to have those periodic
payments reduced to reflect the commencement of social security payments or increased to
reflect an increase in the cost-of-living.
Section 457(a) of the Internal Revenue Code provides that in the case of a partici-
pant in an eligible deferred compensation plan, any amount of compensation deferred under
the plan and any income attributable to the amounts so deferred shall be includable in
gross income only for the taxable year in which such compensation or other income is paid
or otherwise made available to the participant or beneficiary.
Section 457(b) of the Code and section 1.457-2 of the Income Tax Regulations define
the term "eligible deferred compensation plan." Those provisions contain the various
requirements for an eligible plan, including rules for participation, deferral of compen-
sation, and payment of benefits.
Section 457(d) of the Code provides explicit distribution recf~irements for an eli-
gible plan and section 457(d) (2) of the Code sets out the minimum distribution require-
ments. Section 457(d) (2) (C) requires that, with respect to an eligible plan, any distri-
bution payable over a period of more than 1 year can only be made in substantially non-
increasing amounts (paid not less frequently than annually).
No regulations define the term '~substantially non-increasing amounts." Under the plain
meaning of that term, amounts distributed need not be equal but they also should not be
radically or unexplainably dissimilar. A specified and generally recognized cost-of-
living index used to provide an inflation adjustment to payments that would not otherwise
2
be made in substantially increasing amounts will not create radically or unexplainably
dissimilar increasing payments. Additionally, we note that the economic reality of a
reasonable adjustment for inflation does not provide participants wiun increased purchas-
ing power that could cause the new payout amounts to be construed as substantially in
creasing a participant's prior purchasing power. Thus, the Plan's provision to permit
cost of-living indexing of payout amounts will not cause the indexed payments to violate
the "substantially non-increasing" requirement of section 457(d) (2) (C).
Section 457 does not prohibit a plan from making distributions in decreasing
amounts. For example, a participant may be allowed to elect payment of a lump sum upon
separation from service with the remainder of the benefit to be paid out in substantially
non-increasing periodic payments of a lesser amount (calculated on an annual basis).
Similarly, prior to the time any amounts become payable, a participant may be allowed to
elect a payment option that provides for a reduction in the amount of substantially non-
increasing periodic payments, where the reduction is scheduled to take effect once the
participant attains social security retirement age.
With respect to a split distribution from an eligible plan, however, section 457
does not permit a lapse of time between the time of commencement of payment of various
payout options that may be available to participants. For purposes of section 457(d) (2),
a split distribution is a single distribution system made up of several different payment
options. There can be only one benefit payout commencement date. Accordingly, to avoid
violating the requirement of section 457(d) (2) (C) that any distribution payable over a
period of more than 1 year can only be made in amounts paid not less frequently than
annually, there can be no time lapse between payments that equals or exceeds two years.
Thus, if a participant elects to have a series of periodic payments follow the distribu-
tion of a partial lump sum payment, the first payment of the series must be made no later
than within the first year after the year in which the initial lump sum was paid.
Because the proposed amended Plan limits the flexibility in distribution options
provided so as not to violate the requirements of section 457(d) (2) of the Code and be-
cause the cost-of-living adjustment option does not violate the substantially non-in-
creasing rule of section 457(d) (2) (C), we conclude that the amendments to the Plan will
not cause the Plan to become other than an eligible plan for purposes of section 457.
This ruling is contingent on the adoption of the proposed amended Plan in the form
submitted with your letter dated January 23, 1996. It is directed only to X, to X's em-
ployees, and to individuals who contract independently with X. Section 6110(J) (3) of the
Code provides that it may not be used or cited as precedent. If the Plan is subsequently
modified, this ruling will not necessarily remain applicable.
- 3 -
Temporary or final regulations pertaining to one or more of the issues addressed in
this ruling have not yet been adopted. Therefore, this ruling may be modified or revoked
if the adopted temporary or final regulations are inconsistent with any conclusion in the
ruling. See section 11.04 of Rev. Proc. 96-1, 1996-1 I.R.B. 39. However, when the crite-
ria in section 11.05 of Rev. Proc. 96-1, 1996-1 I.R.B. 40, are satisfied, a ruling is not
revoked or modified retroactively except in rare or unusual circumstances.
Sincerely yours,
~ROBE/~RT D~ATC m 1
Chief Counsel
(Employee Benefits and
Exempt Organizations)
Enclosure:
Copy of section 6110 purposes.
Thirteen
RETIREMENT
CORPORATION
ADMINISTRATIVE SERVICES AGREEMENT
Type: 457
Account Number: 4326
ICMA
Plan # 4326 RF:rIR~;.~IF~Yr
CORPORATION
ADMINISTRATIVE SERVICES AGREEMENT
This Agreement, made as of the ~?~'~//~ day of ~T~,q~_~.
, 199/~ (herein referred to as the "Inception Date"), between The International
City Management Association Retirement Corporation ("RC"), a nonprofit corporation
organized and existing under the laws of the State of Delaware; and the City of
Aventura ("Employer") a City organized and existing under the laws of the State of
Florida with an office at 2750 NE 187th Street, Aventura, Florida 33180.
Recitals
Employer acts as a public plan sponsor for a retirement plan ("Plan") with
responsibility to obtain investment alternatives and services for employees
participating in that Plan;
The ICMA Retirement Trust (the "Trust") is a common law trust governed
by an elected Board of Trustees for the commingled investment of retirement funds
held by state and local governmental units for their employees;
RC acts as investment adviser to the Trust; RC has designed, and the
Trust offers, a series of separate funds (the "Funds") for the investment of plan
assets as referenced in the Trust's principal disclosure documents, "Making Sound
Investment Decisions: A Retirement Investment Guide" and "A Retirement Investment
Guide for the Mutual Fund Series." The Funds are available only to public employers
and only through the Trust and RC.
In addition to serving as investment adviser to the Trust, RC provides a
complete offering of services to public employers for the operation of employee
retirement plans including, but not limited to, communications concerning investment
alternatives, account maintenance, account record-keeping, investment and tax
reporting, form processing, benefit disbursement and asset management.
-2-
Plan # 4326
CORPORATION
Agreements
1. A.n.nnlntm~.nt nf R~
Employer hereby designates RC as Administrator of the Plan to perform
all non-discretionary functions necessary for the administration of the Plan with
respect to assets in the Plan deposited with the Trust. The functions to be performed
by RC include:
(a) allocation in accordance with participant direction of individual
accounts to investment Funds offered by the Trust;
(b) maintenance of individual accounts for participants reflecting
amounts deferred; income, gain, or loss credited, and amounts disbursed as benefits;
(c) provision of periodic reports to the Employer and participants of the
status of Plan investments and individual accounts;
(d) communication to participants of information regarding their rights
and elections under the Plan; and
(e) disbursement of benefits as agent for the Employer in accordance
with terms of the Plan.
2. Adnptinn nf TrH~t
Employer has adopted the Declaration of Trust of the ICMA Retirement
Trust and agrees to the commingled investment of assets of the Plan within the Trust.
Employer agrees that operation of the Plan and investment, management and
disbursement of amounts deposited in the Trust shall be subject to the Declaration
of Trust, as it may be amended from time to time and shall also be subject to terms
and conditions set forth in disclosure documents (such as the Retirement Investment
Guide or Employer Bulletins) as those terms and conditions may be adjusted from time
to time. It is understood that the term "Employer Trust" as it is used in the
Declaration of Trust shall mean this Administrative Services Agreement.
3. Empln¥~r DHty tn Furnish Infnrm~tinn
Employer agrees to furnish to RC on a timely basis such information as
is necessary for RC to carry out its responsibilities as Administrator of the Plan,
including information needed to allocate individual participant accounts to Funds in
the Trust, and information as to the employment status of participants, and
participant ages, addresses and other identifying information (including tax
Plala # 432(5 RETIREME,N'I'
CORPORATION
identification numbers). RC shall be entitled to rely upon the accuracy of any
information that is furnished to it by a responsible official of the Employer or any
information relating to an individual participant or beneficiary that is furnished by such
participant or beneficiary, and RC shall not be responsible for any error arising from
its reliance on such information. RC will provide account information in reports,
statements or accountings. All account discrepancies must be reported to RC within
120 days of the close of the quarter in which the discrepancy occurs. After that
time the report, statement, or accounting shall be deemed to have been accepted by
the Employer and the participants
4. C:P. rtRin Rp..nrP..~ntRtinn~: WRrrRnl'i~: Rncl ~nv~nRnt~
RC represents and warrants to Employer that:
(a) RC is a non-profit corporation with full power and authority to enter
into this Agreement and to perform its obligations under this Agreement. The ability
of RC to serve as investment adviser to the Trust is dependent upon the continued
willingness of the Trust for RC to serve in that capacity.
(b) RC is an investment adviser registered as such with the Securities
and Exchange Commission under the Investment Advisers Act of 1940, as amended.
ICMA-RC Services, Inc. (a wholly owned subsidiary of RC) is registered as a broker-
dealer with the Securities and Exchange Commission (SEC) and is a member in good
standing of the National Association of Securities Dealers, Inc.
RC covenants with employer that:
(c) RC shall maintain and administer the Plan in compliance with the
requirements for eligible deferred compensation plans under Section 457 of the
Internal Revenue Code; provided, however, RC shall not be responsible for the eligible
status of the Plan in the event that the Employer directs RC to administer the Plan or
disburse assets in a manner inconsistent with the requirements of Section 457 or
otherwise causes the Plan not to be carried out in accordance with its terms;
provided, further, that if the plan document used by the Employer contains terms that
differ from the terms of RC's standardized plan document, RC shall not be responsible
for the eligible status of the Plan to the extent affected by the differing terms in the
Employer's plan document.
Employer represents and warrants to RC that:
(d) Employer is organized in the form and manner recited in the opening
paragraph of this Agreement with full power and authority to enter into and perform
its obligations under this Agreement and to act for the Plan and participants in the
Plan # 4326 RETIREMENT
CORPORATIO.~
manner contemplated in this Agreement. Execution, delivery, and performance of this
Agreement will not conflict with any law, rule, regulation or contract by which the
Employer is bound or to which it is a party.
5. Pnrtini.nntinn in ~rtnin Prnn~din.n~
The Employer hereby authorizes RC to act as agent, to appear on its
behalf, and to join the Employer as a necessary party in all legal proceedings involving
the garnishment of benefits or the transfer of benefits pursuant to the divorce or
separation of participants in the Employer Plan. The Employer consents to the
disbursement by RC of benefits that have been garnished or transferred to a former
spouse, spouse or child pursuant to a domestic relations order.
6. ~nmpRn.~atinn nnd Pnyment
(a) Plan Administration Fee. The amount to be paid for plan
administration services under this Agreement shall be 0.75% per annum of the
amount of Plan assets invested in the Trust. Such fee shall be computed based on
average daily net Plan assets in the Trust.
(b) Account Maintenance Fee. There shall be an annual account
maintenance fee of $18.00. The account maintenance fee is payable in full on
January 1 of each year on each account in existence on that date. For accounts
established after January 1, the fee is payable on the first day of the calendar quarter
following establishment and is prorated by reference to the number of calendar
quarters remaining on the day of payment.
(c) Compensation for Management Services to the Trust. Employer
acknowledges that in addition to amounts payable under this Agreement, RC receives
fees from the Trust for investment management services furnished to the Trust,
except that this fee is not assessed in the Mutual Fund Series
(d) Mutual Fund Services Fee. There is an annual charge of 0.25% of
assets under management that are held in the Trust's Mutual Fund Series.
(e) Model Portfolio Fund Fee. There is an annual charge of 0.10% of
assets under management that are held in the Trust's Model Portfolio Funds.
(f) Payment Procedures. All payments to RC pursuant to this Section
6 shall be paid out of the Plan Assets held by the Trust and shall be paid by the Trust.
The amount of Plan Assets held in the Trust shall be adjusted by the Trust as required
to reflect such payments.
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Plan # 4326 ~£T~£~£~'T
CORPORATION
Employer understands that amounts invested in the Trust are to be
remitted directly to the Trust in accordance with instructions provided to Employer
by RC and are not to be remitted to RC. In the event that any check or wire transfer
is incorrectly labeled or transferred to RC, RC is authorized, acting on behalf of the
transferor, to transfer such check or wire transfer to the Trust.
RC shall not be responsible for any acts or omissions of any person other
than RC in connection with the administration or operation of the Plan.
9. T~rm
This Agreement may be terminated without penalty by either party on
sixty days advance notice in writing to the other.
10. Arn~ndm~nt.~ ~nd Ad]lmtmc. nts
(a) This Agreement may not be amended except by written instrument
signed by the parties.
(b) The parties agree that compensation for services under this
Agreement and administrative and operational arrangements may be adjusted as
follows:
RC may propose an adjustment by written notice to the Employer given
at least 60 days before the effective date of the adjustment and the notice may
appear in disclosure documents such as Employer Bulletins and the Retirement
Investment Guide. Such adjustment shall become effective unless, within the 60 day
period before the effective date the Employer notifies RC in writing that it does not
accept such adjustment, in which event the parties will negotiate with respect to the
adjustment.
(c) No failure to exercise and no delay in exercising any right, remedy,
power or privilege hereunder shall operate as a waiver of such right, remedy, power
or privilege.
All notices required to be delivered under Section 10 of this Agreement
shall be delivered personally or by registered or certified mail, postage prepaid, return
Plan # 432b RETIREMENT
CORPORATION
receipt requested, to (i) Legal Department, ICMA Retirement Corporation, 777 North
Capitol Street, N.E., Suite 600, Washington, D.C, 20002-4240; (ii) Employer at the
office set forth in the first paragraph hereof, or to any other address designated by
the party to receive the same by written notice similarly given.
12. Co m.nlc, t~.
This Agreement shall constitute the sole agreement between RC and
Employer relating to the object of this Agreement and Correctly sets forth the
complete rights, duties and obligations of each party to the other as of its date. Any
prior agreements, promises, negotiations or representations, verbal or otherwise, not
expressly set forth in this Agreement are of no force and effect.
13. Gnv~rnin0 I nw
This agreement shall be.governed by and construed in accordance with
the laws of the State of Florida applicable to contracts made in that jurisdiction
without reference to its conflicts of laws provisions.
In Witness Whereof, the parties hereto have executed this Agreement
; as of the Inception Date first above written.
CITY OF AVENTURA
by:
Signature/Date
Name and Title (Please Print)
INTERNATIONAL CITY MANAGEMENT
ASSOCIATION RETIREMENT
CORPORATION
by:
Stephen Wm. Nordholt/Date
Corporate Secretary
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