HomeMy WebLinkAboutres2004-034H HATCOM COUNTY COUNCIL AGENDA BILL NO. 2004 -1
CLEARANCES
Initial
Date
Date Received in Council Office
A ends Date
Assi ned ro:
Originator:
Karen S Corns
(
) Yes
Iz�fef,M;�®
APR 13 2004
WHATGOM COUNTY
COUNCIL
April 20, 2004
Finance /Council — Consent Agenda
Division Head:
�
�1►
(
X
Dept. Head:.
Derve G. Disler
Requested Date:
Prosecutor
Daniel L. Gibson
Pnrchadiu/Rudgec
E`ee11""
Pete Kron en
TIC
SUBJECT: Amendment to Whatcom C unty's Hartford 457 Deferred Compensation Plan
A11ACHMC/V15: NeSmntum with two Attachments
SEPA review required?
(
) Yes
(
X
) NO
Should Clerk schedule a hearing ?
(
) Yes
(
X
) NO
SEPA review completed?
(
) Yes
(
X
) NO
Requested Date:
SU4IMARYSTATEMENT: Distribution Request
Amendments to the Internal Revenue Code require changes to the Indicate those who should reeeme a copy ymr Council ticnon-
Q $ List specie names to the right .
structure of deferred compensation plans. This resolution amends
Whatcom County's Hartford 457 Deferred Compensation Plan to AS Facilities Management
bring the Plan into compliance with IRS regulations. ASFinance Brad Bennett
AS Human Resources Karen S. Goens
AS info Services
Assessor
Auditor
Cooperative Extension
District Court
Executive
Health
Hearing Rxaminer
Jail
COUNCIL ACTION TAKEN: Juvenile
2004-169 412012004: Approved 7 -0, Res. #2004 -034 Parks
Planning
Prosecutor
Public Works
Sheriff
Superior Court
Treasurer
Related County Contract #: 9703012 Other
Ordinance or Res lu ' n Nuumb�r r�
Related File Numbers: (this item): � .4f 2C[Y ' D34'
PROPOSED BY: County Executive
INTRODUCTION DATE: April 20 2004
RESOLUTION NO. 2004 -034
WHATCOM COUNTY HARTFORD 457 DEFERRED COMPENSATION PLAN
WHEREAS, Whatcom County (the "County") has employees rendering valuable services; and
WHEREAS, the County has established a deferred compensation plan for such employees that
serves the interest of the County 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 County has determined that the continuance of the deferred compensation plan
will serve these objectives, and
WHEREAS, amendments to the Internal Revenue Code have been enacted that require changes to
the structure of, and allow enhancements of, the benefits of the deferred compensation plan:
NOW, THEREFORE BE IT RESOLVED by the Whatcom County Council that the County hereby
amends the deferred compensation plan (the `Plan ") in the form of:
❑ Attachments "A" and `B" to this Resolution.
APPROVED this 20" day of April ,2004.
p� II �' ��',','' WHATCOM COUNTY COUNCIL
ATTEST: ���� C 'J WH TCOM COUNTY, WASHINGTON
BHIN ,
TO Fn r
Daniel L. Gibson, Senior Civil Deputy Prosecutor
WHATCOV, COUNTY
CONTRACT NO.
WHATCOM COUNTY HARTFORD 457 DEFERRED COMPENS -
RESOLUTION NO. 20C4 -034
Attachment A
PART 1- Plan Document Amendment - Section 4.7 of the Plan is replaced in its entirety with the
following:
"Section 4.7 Minimum Distribution Requirements.
(a) General Rules
(i) Effective Date. Unless an earlier effective date is specified in Part H below, the provisions of
this article will apply for purposes of determining required minimum distributions for calendar
years beginning with the 2003 calendar year.
(ii) Coordination with Minimum Distribution Requirements Previously in Effect. If the Plan
specifies an effective date of this article that is earlier than calendar years beginning with the
2003 calendar year, required minimum distributions for 2002 under this article will be
determined as follows. If the total amount of 2002 required minimum distributions under the
plan made to the distributee prior to the effective date of this article equals or exceeds the
required minimum distributions determined under this article, then no additional distributions
will be required to be made for 2002 on or after such date to the distributee. If the total amount
of 2002 required minimum distributions under the plan made to the distributee prior to the
effective date of this article is less than the amount determined under this article, then required
minimum distributions for 2002 on and after such date will be determined so that the total
amount of required minimum distributions for 2002 made to the distributee will be the amount
determined under this article.
(III) Precedence. The requirements of this article will take precedence over any inconsistent
provisions of the plan.
(iv) Requirements of Treasury Regulations Incorporated. All distributions required under this
article will be determined and made in accordance with the Treasury regulations under section
401(a)(9) of the Internal Revenue Code.
(v) TEFRA Section 242(b)(2) Elections. Notwithstanding the other provisions of this article,
distributions may be made under a designation made before January 1, 1984, in accordance
with section 242(6)(2) of the Tax Equity and Fiscal Responsibility Act ( TEFRA) and the
provisions of the plan that relate to section 242(b)(2) of TETRA.
(b) Time and Manner of Distribution.
(i) Required Beginning Date. The participant's entire interest will be distributed, or begin
to be distributed, to the participant no later than the participant's required beginning
date.
(ii) Death of Participant Before Distributions Begin. If the participant dies before distributions
begin, the participant's entire interest will be distributed, or begin to be distributed, no later than
as follows:
(1) If the participant's surviving spouse is the participant's sole designated beneficiary, then,
-I -
except as provided in the adoption agreement, distributions to the surviving spouse will
begin by December 31 of the calendar year immediately following the calendar year in
which the participant died, or by December 31 of the calendar year in which the
participant would have attained age 70%, if later.
(2) If the participant's surviving spouse is not the participant's sole designated beneficiary,
then, except as provided in the adoption agreement, distributions to the designated
beneficiary will begin by December 31 of the calendar year immediately following the
calendar year in which the participant died.
(3) If there is no designated beneficiary as of September 30 of the year following the year of
the participant's death, the participant's entire interest will be distributed by December 31
of the calendar year containing the fifth anniversary of the participant's death.
(4) If the participant's surviving spouse is the participant's sole designated beneficiary and the
surviving spouse dies after the participant but before distributions to the surviving spouse
begin, this section 4.7(b)(ii), other than section 4.7(b )(ii)(1), will apply as if the surviving
spouse were the participant.
For purposes of this section 47(b)(ii) and section 4.7(d), unless section 4.7(b)(ii)(4) applies,
distributions are considered to begin on the participant's required beginning date. If section
4.7(b)(n)(4) applies, distributions are considered to begin on the date distributions are required
to begin to the surviving spouse under section 4.7(b)(ii)(1). If distributions under an annuity
purchased from an insurance company irrevocably commence to the participant before the
participant's required beginning date (or to the participant's surviving spouse before the date
distributions are required to begin to the surviving spouse under section 4.7(b)(ii)(1)), the date
distributions are considered to begin is the date distributions actually commence.
(iii) Forms of Distribution. Unless the participant's interest is distributed in the form of an annuity
purchased from an insurance company or in a single sum on or before the required beginning
date, as of the first distribution calendar year distributions will be made in accordance with
sections 4.7(e) and 4.7(d) of this article. If the participant's interest is distributed in the form of
an annuity purchased from an insurance company, distributions thereunder will be made in
accordance with the requirements of section 401(a)(9) of the Code and the Treasury
regulations.
(c) Required Minimum Distributions During Participant's Lifetime.
(i) Amount of Required Minimum Distribution For Each Distribution Calendar Year.
During the participant's lifetime, the minimum amount that will be distributed for each
distribution calendar year is the lesser of.
(1) the quotient obtained by dividing the participant's account balance by the distribution
period in the Uniform Lifetime Table set forth in section 1.401(a)(9) -9 of the Treasury
regulations, using the participant's age as of the participant's birthday in the distribution
calendar year; or
(2) if the participant's sole designated beneficiary for the distribution calendar year is the
participant's spouse, the quotient obtained by dividing the participant's account balance by
the number in the Joint and Last Survivor Table set forth in section 1.401(a)(9) -9 of the
Treasury regulations, using the participant's and spouse's attained ages as of the
participant's and spouse's birthdays in the distribution calendar year.
-2-
(ii) Lifetime Required Minimum Distributions Continue Through Year of Participant's
Death. Required minimum distributions will be determined under this section 4.7(c)
beginning with the first distribution calendar year and up to and including the distribution
calendar year that includes the participant's date of death.
(d) Required Minimum Distributions After Participant's Death.
(i) Death On or After Date Distributions Begin.
(1) Participant Survived by Designated Beneficiary. If the participant dies on or after the
date distributions begin and there is a designated beneficiary, the minimum amount that
will be distributed for each distribution calendar year after the year of the participant's
death is the quotient obtained by dividing the participant's account balance by the longer
of the remaining life expectancy of the participant or the remaining life expectancy of the
participant's designated beneficiary, determined as follows:
(1) The participant's remaining life expectancy is calculated using the age of the
participant in the year of death, reduced by one for each subsequent year.
(I1) If the participant's surviving spouse is the participant's sole designated beneficiary,
the remaining life expectancy of the surviving spouse is calculated for each
distribution calendar year after the year of the participant's death using the surviving
spouse's age as of the spouse's birthday in that year. For distribution calendar years
after the year of the surviving spouse's death, the remaining life expectancy of the
surviving spouse is calculated using the age of the surviving spouse as of the
spouse's birthday in the calendar year of the spouse's death, reduced by one for each
subsequent calendar year.
(III) If the participant's surviving spouse is not the participant's sole designated
beneficiary, the designated beneficiary's remaining life expectancy is calculated
using the age of the beneficiary in the year following the year of the participant's
death, reduced by one for each subsequent year.
(2) No Designated Beneficiary. If the participant dies on or after the date distributions begin
and there is no designated beneficiary as of September 30 of the year after the year of the
participant's death, the minimum amount that will be distributed for each distribution
calendar year after the year of the participant's death is the quotient obtained by dividing
the participant's account balance by the participant's remaining life expectancy calculated
using the age of the participant in the year of death, reduced by one for each subsequent
year.
di) Death Before Date Distributions Begin.
(1) Participant Survived by Designated Beneficiary. Except as provided in this section 4.7,
if the participant dies before the date distributions begin and there is a designated
beneficiary, the minimum amount that will be distributed for each distribution calendar
year after the year of the participant's death is the quotient obtained by dividing the
participant's account balance by the remaining life expectancy of the participant's
designated beneficiary, determined as provided in section 4.7(d)(i).
(2) No Designated Beneficiary. If the participant dies before the date distributions begin and
-3-
there is no designated beneficiary as of September 30 of the year following the year of
the participant's death, distribution of the participant's entire interest will be completed by
December 31 of the calendar year containing the fifth anniversary of the participant's
death.
(3) Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required to
Begin. If the participant dies before the date distributions begin, the participant's
surviving spouse is the participant's sole designated beneficiary, and the surviving spouse
dies before distributions are required to begin to the surviving spouse under section
4.7(b)(h)(1), this section 4.7(d)(ti) will apply as if the surviving spouse were the
participant.
(e) 5 -Year Rule
(i) If the participant dies before distributions begin and there is a designated beneficiary,
distribution to the designated beneficiary is not required to begin by the date specified in
section 4.7(b)(ii) of the plan, but the participant's entire interest will be distributed to the
designated beneficiary by December 31 of the calendar year containing the fifth anniversary
of the participant's death. If the participant's surviving spouse is the participant's sole
designated beneficiary and the surviving spouse dies after the participant but before
distributions to either the participant or the surviving spouse begin, this section will apply as
if the surviving spouse were the participant.
(ii) Participants or beneficiaries may elect on an individual basis whether the 5 -year rule in
section 4.7(e)(i) or the life expectancy rule in sections 4.7(b)(ii) and 4.7(d)(ii) of the plan
applies to distributions after the death of a participant who has a designated beneficiary. The
election must be made no later than the earlier of September 30 of the calendar year in which
distribution would be required to begin under section 4.7(b)(ii) of the plan, or by
September 30 of the calendar year which contains the fifth anniversary of the participant's
(or, if applicable, surviving spouse's) death. If neither the participant nor beneficiary makes
an election under this paragraph, distributions will be made in accordance with sections
4.7(b)(ii), 4.7(d)(ii) and 4.7(e)(i) of the plan.
(iii) A designated beneficiary who is receiving payments under the 5 -year rule in section 4.7(e)(i)
may make a new election to receive payments under the life expectancy rule until
December 31, 2003, provided that all amounts that would have been required to be
distributed under the life expectancy rule for all distribution calendar years before 2004 are
distributed by the earlier of December 31, 2003 or the end of the 5 -year period.
(f) Definitions.
(i) Designated beneficiary. The individual who is designated as the beneficiary under section
5.1 of the plan and is the designated beneficiary under section 401 (a)(9) of the Internal
Revenue Code and section 1.401(a)(9) -1, Q &A -4, of the Treasury regulations.
(it) Distribution calendar year. A calendar year for which a minimum distribution is required.
For distributions beginning before the participant's death, the first distribution calendar year
is the calendar year immediately preceding the calendar year which contains the participant's
required beginning date. For distributions beginning after the participant's death, the first
distribution calendar year is the calendar year in which distributions are required to begin
under section 4.7(b)(ii). The required minimum distribution for the participant's first
distribution calendar year will be made on or before the participant's required beginning date.
-4-
The required minimum distribution for other distribution calendar years, including the
required minimum distribution for the distribution calendar year in which the participant's
required beginning date occurs, will be made on or before December 31 of that distribution
calendar year.
(iii) Life expectancy. Life expectancy as computed by use of the Single Life Table in
section 1.401(a)(9) -9 of the Treasury regulations.
(iv) Participant's account balance. The account balance as of the last valuation date in the
calendar year immediately preceding the distribution calendar year (valuation calendar year),
increased by the amount of any contributions made and allocated or forfeitures allocated to
the account balance as of dates in the valuation calendar year after the valuation date and
decreased by distributions made in the valuation calendar year after the valuation date. The
account balance for the valuation calendar year includes any amounts rolled over or
transferred to the plan either in the valuation calendar year or in the distribution calendar year
if distributed or transferred in the valuation calendar year.
(v) Required beginning date. The require beginning date means the April Ist following the later
of (i) the calendar year in which the Participant attains age 70'/2 or (ii) the calendar year in
which the Participant retires.
PART 11- Plan Amendment Optional Effective Date
Section 1. Effective Date of Plan Amendment for Section 401(a)(9) Final and Temporary Treasury
Regulations.
If elected below, the provisions of this amendment will apply as well for purposes of determining
required minimum distributions for the 2002 distribution calendar year.
Option 1: ❑ Yes, this amendment will apply to the 2002 distribution calendar year for
distributions that are made on or after .2002.
Option 2: R1 No, this amendment will not apply to the 2002 distribution calendar year.
IJne option is selected, Option 2 shall be deemed to be selected. ".
-5-
WHATCOM COUNTY 457 HARTFORD DEFERRED COMPENSATION PLAN
RESOLUTION NO. 2004 -034
Attachment B
The Plan is amended by:
A. replacing section 2.3 with the following:
"2.3 Agreement Effective Date
In general, an Employee must complete and file with the Employer a Participation Agreement prior to
the month deferrals begin. Notwithstanding this requirement, the Employer may establish a cutoff
date for receiving Participation Agreements as long as the cutoff is no later than the deadline provided
in section 1.457 -4(b) of the final 457 regulations and the cutoff date is applied in a nondiscriminatory
manner. Thereafter, during each month in which the Employee is a Participant in the Plan, that
portion of his said Compensation which is specified by the Employee in the Participation Agreement,
shall be deferred and paid in accordance with the provisions of this Plan."
B. deleting the following portion of section 2.6 and renumbering section 2.6(d) and 2.6(e) as 2.6(c) and
2.6(d) respectively:
"(c) The pre- retirement catch -up provision may not be used during the calendar year that the
Participant ceases to be an Employee."
C. replacing section 4.2, 7.1 and 7.2 with the following:
"4.2 Unforeseeable Emergency Distribution
A Participant may apply for a lump sum withdrawal of funds from the Plan in the event of an
unforeseeable emergency. The Employer will evaluate the request for conformity with its
interpretation of the applicable regulations. The decision of the Employer concerning whether an
unforeseen emergency exists shall be final.
An unforeseeable emergency is a severe financial hardship of the Participant or Beneficiary resulting
from an illness or accident of the Participant or Beneficiary, the Participant's or Beneficiary's spouse,
or the Participant's or Beneficiary's dependent (as defined in Code section 152(a)); loss of the
Participant's or Beneficiary's property due to casualty (including the need to rebuild a home following
damage to a home not otherwise covered by homeowner's insurance, e.g., as a result of a natural
disaster); or other similar extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the participant or the beneficiary.
Examples of unforeseeable emergencies include (1) imminent foreclosure of or eviction from the
Participant's or Beneficiary's primary residence, (2) the need to pay for medical expenses (including
nonrefundable deductibles), as well as for the cost of prescription drug medication and (3) the need to
pay for the funeral expenses of a spouse or a dependent (as defined in Code section 152(a)). Note that
the purchase of a home and the payment of college tuition are typically not unforeseeable
emergencies.
-6-
The Participant must satisfy the Employer that the facts and circumstances of his or her situation fall
within the definition of unforeseeable emergency. A distribution on account of an unforeseeable
emergency may not be made to the extent the emergency is or may be relieved through
reimbursement or compensation from insurance or otherwise by liquidation of the Participant's assets
(to the extent liquidation would not itself cause severe financial hardship) or by cessation of deferrals
under the Plan."
"7.1 Transfers In
All or a portion of an Employee's benefit may be transferred from an Eligible Deferred Compensation
Plan maintained by another eligible tax - exempt employer and credited to the Participant's Account
under this Plan as long as the transferor plan provides that such transfer can be made and the
Employee has severed employment with such other employer.
As it deems necessary, the Employer may require such documentation from the transferor plan to
effect the transfer, to confirm that such plan is an Eligible Deferred Compensation Plan within the
meaning of Code Section 457(b) and to ensure that transfers are provided for under such plan.
The Employer may refuse to accept a transfer in the form of assets other than cash, unless the
Employer agrees to hold such other assets in trust under the Plan.
Any amounts transferred that have been deferred during the current calendar year will be considered
deferrals subject to current calendar year deferral limitation."
7.2 Transfers Out
All or a portion of a Participant Account may be transferred to an Eligible Deferred Compensation
Plan maintained by another eligible tax - exempt employer as long as the transferee plan provides that
such transfer can be made and the Employee has severed employment.
Upon the completion of such transfer, the Plan and Employer are discharged of any liability to the
Participant to pay amounts so transferred.
As it deems necessary, the Employer may require such documentation from the other plan to effect
the transfer, to confirm that such plan is an Eligible Deferred Compensation Plan within the meaning
of Code Section 457(b) and to assure that transfers are provided for under such plan. Such transfers
shall be made only under such circumstances as are permitted under Code Section 457 and the
applicable regulations."
-7-