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Home My WebLink AboutAGENDA REPORT 2005 0831 CC SPC ITEM 06BMOORPARK CITY COUNCIL AGENDA REPORT ITEM 6.B. CITY OF MOORPARK, CALIFORNIA City Council Meeting A6TION;.O�.i��d .df.1�t TO: Honorable City Council FROM: Johnny Ea, Finance Director DATE: August 16, 2005 (CC Special Meeting of 08/31/05) SUBJECT: Consider Adoption of Resolution Amending Resolution No. 2004 -2174, the City's ICMA Retirement Corporation Governmental Money Purchase Plan & Trust Adoption Agreement [401 (a) Plan] BACKGROUND In 1992, the City Council approved the establishment of a 457 deferred Compensation program for City Employees with Western Bank (now National Deferred). A second 457 deferred compensation plan, International City /County Management Association Retirement Corporation (ICMA -RC), was approved by the City Council in 1998. Additionally, in 2004, the City Council approved the establishment of a 401 (a) Money Purchase Plan with ICMA -RC for designated employee groups. The proposed amendment to the Plan Agreement will provide more flexibility to staff to contribute into the Plan. DISCUSSION As you will recall, the 401 (a) Plan offers the same investment options as with the 457 Plan with the primary differences being: 1) Employees can withdraw their Plan upon termination of versus with the 401(a) Plan, premature withdrawal penalty over ten (10) years if over least 59 %; and contribution from their 457 employment without penalty, employees will incur a 10% unless they withdraw funds age 55 or unless they are at 000119 Honorable City Council Special Meeting of August 31, 2005 Page 2 2) With the 457 Plan, an employee can increase or decrease a pre -tax contribution at any time (so long as such contribution does not exceed the annual maximum), versus with the 401 (a) Plan, once a participant pre -tax contribution is elected, that percentage of regular wages may not be revised or revoked (with the exceptions being disability leave or termination of employment). Under the current Plan Agreement, only the City Manager, Assistant City Manager and Department Heads are eligible to participate. At the time the plan was offered, there was no consensus from management employees to participate. The Union Representatives were also briefed on the plan and any changes would be subject to meet and confer. The following is a summary of the proposed changes to the current Plan Agreement: 1. Add City Council and Annuitant on eligibility list to participate in the Plan - This will allow the City Council and Annuitants to put the federally mandated 7.5% retirement (City contribution in lieu of social security or PERS) into the Plan. 2. Increase the employer contribution on behalf of each participant up to 12% of earnings for the plan year (currently at 2.5 %). This will allow eligible participants to have their accumulated leave cash out (as described in Resolution No. 2005 -2355) prorated over 26 pay periods to be contributed to his /her 401 (a) Plan in lieu of a one- time payment. 3. Each employee eligible to given the opportunity to in the Mandatory Pre -tax of the Plan by electing to regular wages to be paid Plan year. participate in the Plan shall be irrevocably elect to participate Participant Contribution portion contribute from 1% up to 25 % of into the 401 (a) plan for each 4. Each employee eligible to participate in the Plan shall be given the opportunity to irrevocably elect to contribute up to 100% on a pre -tax basis, of final pay to the Plan. Please refer to "Attachment 1 Amending the City of Moorpark Governmental Money Purchase Plan and Trust Adoption Agreement" for more specific detail on the changes above. 000120 Honorable City Council Special Meeting of August 31, 2005 Page 3 STAFF RECOMMENDATION Adopt Resolution No. 2005- approving an amendment to Resolution No. 2004 -2174, the City's 401(a) Plan, and authorize the City Manager to sign "Attachment 1 Amending the City of Moorpark Governmental Money Purchase Plan and Trust Adoption Agreement ". Attachments: A. Resolution No. 2005- B. "Attachment 1 Amending the City of Moorpark Governmental Money Purchase Plan and Trust Adoption Agreement" 000121L ATTACHMENT A RESOLUTION NO. 2005- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MOORPARK, CALIFORNIA, AMENDING RESOLUTION NO. 2004- 2174, TO INCORPORATE ATTACHEMENT 1 AMENDING THE CITY OF MOORPARK GOVERNMENTAL MONEY PURCHASE PLAN AND TRUST ADOPTION AGREEEMNT [401 (a) Plan] WHEREAS, on March 3, 2004 the City Council adopted Resolution No. 2004 -2174 authorizing the establishment of a 401 (a) Money Purchase Plan and Trust with the ICMA Retirement Corporation for designated employee groups; and WHEREAS, a staff report has been presented to said Council recommending an amendment to the City of Moorpark ICMA Retirement Corporation Governmental Money Purchase Plan & Trust Adoption Agreement; and WHEREAS, "Attachment 1 Amending the City of Moorpark Governmental Money Purchase Plan and Trust Adoption Agreement" describes said amendment. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MOORPARK DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. That Resolution No. 2004 -2174 is hereby amended to incorporate "Attachment 1 Amending to the City of Moorpark Governmental Money Purchase Plan and Trust Adoption Agreement ". SECTION 2. That the City Manager or his /her designee is authorized to execute the attached amendment to the Plan Agreement. SECTION 3. That the City Clerk shall certif t th adoption resolution y o e of this resolution and shall cause a certified to be filed in the book of original Resolutions. 000122 Resolution No. 2005 - Page 2 PASSED AND ADOPTED this 31st day of August, 2005. Patrick Hunter, Mayor ATTEST: Deborah S. Traffenstedt, City Clerk Attachment: "Attachment 1 Amending the City of Moorpark Governmental Money Purchase Plan and Trust Adoption Agreement" 000123 ATTACHMENT B ATTACHMENT 1 AMENDING THE CITY OF MOORPARK GOVERNMENTAL MONEY PURCHASE PLAN AND TRUST ADOPTION AGREEMENT PLAN NUMBER 108573 Section V.1. The following group(s) of Employees are eligible to participate in the Plan: • City Council • City Manager • Assistant City Manager • Department Heads • Annuitant (retiree who is rehired as a part-time employee) Section VI.I. Fixed Employer Contributions With Or Without Mandatory Participant Contributions. A. The Employer shall contribute on behalf of each Participant up to a maximum of 12% of Earnings for the Plan Year (subject to the limitations of Article V of the Plan). Mandatory Participant Contributions F� are required 0 are not required to be eligible for this Employer Contribution. B. Notwithstanding Section 4.03 of the Plan, each Employee eligible to participate in the Plan shall be given the opportunity to irrevocably elect to participate in the Mandatory Pre -tax Participant Contribution portion of the Plan by electing to contribute from I% up to 25% of regular wages to be paid into the 401(a) plan for each Plan Year (subject to the limitations of Article V of the Plan). The Employer shall "pick -up" this contribution in accordance with Code section 414(h)(2). These contributions shall be accounted for in the Participant Contribution Account, and shall be nonforfeitable by the Participant at all times. Newly eligible employees shall be provided an election window of 60 days from the date of initial eligibility during which they may make the election to participate in the Mandatory Participant Contribution portion of the Plan. Participation in the Mandatory Participant Contribution portion of the Plan shall begin the first of the month following the end of the election window. 000124 If the employee does not make an election in the initial year of eligibility, the election to participate in the Mandatory Participant Contribution portion of the Plan ■ may ❑ may not be made in a later year. If a later election is allowed, an annual election window of 60 days shall be provided during which the election may be made. The election window shall run from November 1 to December 30. Participation in the Mandatory Participant Contribution portion of the Plan shall begin the first of the year following the year of the election. Once elected, an Employee's election shall remain in force and may not be revised or revoked with the exceptions being disability leave and termination of employment. In the event of re- employment to an eligible position, the Employee shall be entitled to make a new election under this section. In no event does the Employee have the option of receiving the pick -up contribution amount directly. C. Accrued Leave Notwithstanding Section 4.03 of the Plan, each Employee eligible to participate in the Plan shall be given the opportunity to irrevocably elect to contribute up to 100% on a pre -tax basis, of Final Pay to the Plan (subject to the limitations of Article V of the Plan). Final Pay shall be defined as accrued vacation, accrued annual leave, accrued administrative leave or accrued sick leave that would otherwise be payable to the Employee upon termination. The Employer shall "pick- up" this contribution in accordance with Code section 414(h)(2). These contributions shall be accounted for in the Participant Contribution Account, and shall be non - forfeitable by the Participant at all times. An annual election window of 60 days shall be provided during which the election may be made. The election window shall run from November 1 to December 30. The election may be made no later than the election window in the year prior to the year of the Employee's termination. The contributions shall be made upon the Employee's termination from employment of the Employer. Once elected, an Employee's election shall remain in force and may not be revised or revoked. In the event of re- employment to an eligible position, the Employee shall be entitled to make a new election under this section. In no event does the Employee have the option of receiving the pick -up contribution amount directly. 000125 Employer Signature Date Title Attest: Accepted: ICMA Retirement Corporation By: Title: Attest: