HomeMy WebLinkAboutCC AG PKT 2009-11-09 #FAGENDA STAFF REPORT
DATE: November 9, 2009
TO: Honorable Mayor and City Council
THRU: David Carmany, City Manager ,
FROM: Robbeyn Bird, CPA
Director of Administrative Services/Treasurer
SUBJECT: MODIFICATION OF PARS ALTERNATE RETIREMENT
SYSTEM (ARS) RETIREMENT PLAN AGREEMENT
AND SERVICE AGREEMENT TERMS
SUMMARY OF REQUEST:
It is recommended that the City Council adopt Resolution No. 5932 modifying the
existing agreement between Public Agency Retirement Services (PARS) and the
City and amending the service agreement between the two entities.
BACKGROUND:
The United States Congress adopted the Omnibus Budget Reconciliation Act
(OBRA) in 1990. OBRA mandated that employees not covered by Social
Security at the time be enrolled in Social Security or an alternate retirement
system effective January 1, 1992. Congress specifically provided alternatives
with statutory language spelling out the minimum requirements for alternate
systems. PARS offers an alternate retirement system (ARS) that meets the
statutory requirements as specified by Congress and has been serving the City
of Seal Beach since 1993.
On a periodic basis, the Internal Revenue Service (IRS) requires that the Plan
and Trust be amended and restated to comply with new federal rules and
regulations. The City's plan has not been amended since inception of this
agreement. The required changes reflect the 2002 EGTRRA provisions made
permanent by the Pension Protection Act of 2006.
In addition, the service agreement has never been amended. Modification of this
document proposes the following:
Agenda Item F
Page 2
No change to the current term of the agreement.
The addition of a 2 % annual cost of living adjustment to the PARS
minimum monthly fee of $300 starting July 1, 2010.
An increase in the Distribution Fee that is charged against a participant's
account upon their termination, retirement or another distributable event
from $12 to $20. This fee has remained unchanged since inception of the
contract in 1993. The fee increase is requested due to substantial
increases in the cost of labor, materials and postage.
This program provides benefits to both the City and the employees. The City
experiences lower costs because it is no longer required to match the 6.2%
Social Security contribution. Since inception of this program, the City's
contribution has been 1.3 %. This is a reduction of 4.9% in the contribution rate.
The benefits to the employees are listed below:
a PARS plan participants are fully vested in their individual accounts.
When employment with the City terminates, assets in the participants
account may be (1) distributed as a lump sum to the participant, (2) rolled
over to an IRA or other qualified retirement plan that accepts rollovers or
(3) used to purchase PERS service credits (if the employee is eligible).
PARS contributions are pre -tax. Social Security contributions are
deducted after taxes are paid. The result is additional take home pay for
the employee.
FINANCIAL IMPACT:
The financial impact is minimal and will not take effect until July 1, 2010.
RECOMMENDATION:
Adopt Resolution No. 5932 modifying the existing plan agreement between
Public Agency Retirement Services (PARS) and the City and amending the
service agreement between the two entities.
SUBMITTED BY: NOTED AND APPROVED:
Robbeyn gird, CPA David Carman;
Director of Administrative Services City Manager
Attachments:
A. Resolution No. 5932
B. Plan Document
C. Administrative Services Agreement
RESOLUTION NUMBER 5932
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEAL
BEACH, CALIFORNIA AMENDING THE PLAN AGREEMENT
AND ADMINISTRATIVE SERVICES AGREEMENT WITH PUBLIC
AGENCY RETIREMENT SERVICES (PARS)
WHEREAS, the City of Seal Beach adopted Resolution No. 4278 in 1993
in conjunction with the PARS Trust Agreement (Trust) with PARS, as Trust
Administrator to the Trust to provide administrative services on ; and
WHEREAS, it is necessary to amend and restate the terms of the original
agreement to provide administrative services and clarify certain terms and
conditions thereof; and
WHEREAS, the City has the right to amend the Plan in accordance with
Section 8.3 of the Plan; and
WHEREAS, the City deems it to be in the best interest of the City and the
Plan to amend the Plan to comply with the final Regulations under Section 415
of the Internal Revenue Code; and
WHEREAS, the City has designated the City Manager to act on its behalf
in all matters relating to the Plan pursuant to the PARS Trust Program ( "Plan
Administrator "); and
WHEREAS, the City has the power to delegate certain duties related to
the Plan, and PARS accepts those duties pursuant to the terms contained in this
Agreement, and that this Agreement represents the entire delegation of duties to
PARS from the City with regards to the Plan; and
WHEREAS, PARS accepts the terms of this Agreement with the
understanding by the City and Plan Administrator that PARS does not hold
custody of any assets of the Plan, and does not have any independent authority
or discretion for the investment, distribution or escheatment of Plan assets
without the express consent of, and direction from, the Plan Administrator.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SEAL BEACH
DOES HEREBY RESOLVE:
Section 1. Appendix A of the Plan is hereby amended to comply with the
final Regulations under Section 415 of the Internal Revenue Code;
Section 2. Appendix A, Section A.2 (d) shall be deleted from the Plan;
Section 3. PARS will provide the services pertaining to the Plan as
described in Exhibit 1A in a timely manner, subject to the further provisions of the
Administrative Services Agreement;
Section 4. PARS will be compensated for performance of the Services as
described in the exhibit attached hereto as Exhibit 1 B.
Resolution Number 5932
PASSED, APPROVED and ADOPTED by the City Council of the City of Seal
Beach at a regular meeting held on the 9th day of November , 2009 by the
following vote:
AYES: Council Members
NOES: Council Members
ABSENT: Council Members
ABSTAIN: Council Members
Mayor
ATTEST:
City Clerk
STATE OF CALIFORNIA }
COUNTY OF ORANGE } SS
CITY OF SEAL BEACH }
I, Linda Devine, City Clerk of the City of Seal Beach, do hereby certify that the
foregoing resolution is the original copy of Resolution Number 5932 on file in
the office of the City Clerk, passed, approved, and adopted by the City Council at
a regular meeting held on the 9th day of November , 2009.
City Clerk
PUBLIC i
AGENCY
RETIREMENT
SERVICES
Making retirement work for you.
October 16, 2009
Mr. David Carmany
City Manager
City of Seal Beach
211 Eighth Street
Seal Beach, CA 90740
RECEIVED
OCT 19 2009
City Ali anagpr'r. Officg
Subject: Modification of PARS Alternate Retirement System (ARS)
Retirement Plan Agreement and Terms
Dear Mr.
PARS has had the privilege of serving your City since 1993. We are
committed to providing the highest quality trust administrative services to
you and your part-time employees.
On a periodic basis the IRS requires that your Plan and Trust be amended
and restated to comply with new federal rules and regulations. We have
just completed an IRS required restatement of your Plan and those
documents are included in this package.
In conjunction with our review of the plan documents we have reviewed the
terms of our current service agreement. The format of that agreement is a
letter agreement generally describing our services and fees. Since 1999 we
have used a more comprehensive Administrative Services Agreement signed
by both parties for all our new plans. It lays out more formally the roles and
responsibilities of the parties, the term of the agreement and our fees.
Thus, we are proposing that we also amend and restate our service
agreement in conjunction with our plan document restatement process. We
have enclosed for your information both the current agreement in place
today and the proposed Amended and Restated Agreement for Administrative
Services.
In the body of the agreement we have proposed the following:
No change to the current term of the agreement.
O The addition of a 2% annual cost of living adjustment to our minimum
monthly fee of $300 starting July 1, 2010. 5141 California Ave., Ste. 150
Irvine, CA 92617 -3069
800.540.6369
fax 949.823.9900
www.pars.org
An increase in our Distribution Fee that is charged against a
participant's account upon their termination, retirement or another
distributable event from $12 to $20. This fee has never been
increased since your adoption of our program in 1993 and the cost of
labor, materials and postage have substantially increased during the
intervening period.
Currently, our fees are paid directly by the City and the enclosed Agreement
reflects that. If you wish to make a change to this payment arrangement,
please contact us.
Enclosed are two copies of the Amended and Restated Agreement for
Administrative Services. Please sign, date and return both originals.
We will return a fully executed original to your attention.
Again we very much appreciate your business and look forward to continuing
to serve you in the future. I'm sure you may have questions on the
enclosed materials. Please direct your questions to Jackie Hinsche in our
office at 800 - 540 -6369 x148 or Shauna Volcan at x132.
Sincerely,
r vi J. rph
ief 0 erating Officer
PARS
enclosures
PUBUC
AGEN(y
I MREMEtfr
wmcES
Making rebremenf work foryou.
Irvine, CA
Austin, TX June 13, 2006
Dublin, OH John Bahorski
City Manager
City of Seal Beach
211 Eighth Street
Seal Beach, CA 90740 -6379
Subject: PARS Alternate Retirement System (ARS) Retirement Plan
Fee Structure Simplification
Dear Mr.
We appreciate serving your City since 1993. We are committed to providing the
highest quality of trust administrative services to you and your part-time employees.
Since 2000 we have not adjusted our fees for the services rendered to you and your
employees. In order to continue providing the highest quality service, we now need
to adjust our current fee arrangements.
Our existing fee arrangement includes a Consulting Fee, -Monthly Base Fee, and a
Monthly Service Fee, the latter of which is based on the number of actively
contributing participants. We are replacing this complicated fee structure in its
entirety, and simplifying it by charging our fee based on the assets in the plan at the
end of each month. An asset -based fee is a more common fee structure in the trust
administration industry and this fee structure has been used on all new PARS ARS
plans since 2001. Your new fee structure is on the enclosed Attachment. All the
other provisions of our current agreement with the City remain unchanged with the
exception of the Attachment, which replaces the section in our current agreement
regarding Fees. Our fees in 2005 were $5,211 and it is projected that in 2007,
under this new simplified arrangement, our fees will be $6,059.
The new fee arrangement becomes effective July 1, 2006. Currently, all our fees are
paid directly by the City and the new fee structure will be reflected on your invoice
for the period beginning July 1, 2006, and thus no further action on this matter is
required on your part.
If you have questions please don't hesitate to contact me at 800.540.6369 ext. 128
at your convenience. We greatly appreciate your business!
Sincerely,
Kevin urp
Senior Vice - President
Public Agency Retirement Services (PARS)
5141 California Ave., Ste. 150
Irvine, CA.92617 -3069
800.540.6369
fax 949.823.9900
www.parsinfo.org
City of Seal Beach
PARS Alternate Retirement System (ARS) Retirement Plan
3une 13, 2006
FEES
1. Phase Systems, dba Public Agency Retirement Services ( "PARS "), will be compensated
for performance of Services effective July 1, 2006, based on the following schedule:
(A) An annual asset fee paid by the City based on the following schedule ( "Asset
Fee "):
For Plan Assets from:
Annual Rate:
$1 to $2,500,000
1.50%
$2,500,001 to $5,000,000
1.25%
$5,000,001 to $10,000,000
1.00%
$10,000,001 to $15,000,000
0.75%
$15,000,001 to $20,000,000
0.50%
$20,000,001 and above
0.30%
Annual rates are prorated and paid monthly. The annual Asset Fee shall be
calculated by the following formula [Annual Rate divided by 12 (months of the
year) multiplied by the Plan asset balance at the end of the month within each
asset range]. Asset Fees are subject to a $300.00 monthly minimum. The
total asset fees due in a given month shall be allocated proportionately among
participants of the City's plan in that month, based on account balance. PARS
fees are exclusive of Trustee and Investment Management Fees.
(B) A distribution fee equal to $12.00 per Participant ("Distribution Fee") which
shall be paid by the City for all distributions from the plan.
(C) A fee equal to the out of pocket costs charged to PARS by an outside
contractor for formatting contribution data on a suitable magnetic media,
charged only if the contribution data received by PARS from the City is not on
readable magnetic media ( "Data Processing Fee ").
13k. Phase II Systems
P ARS Trust A dministrator
PUBLIC• AGENCY• RETIREMENT• SYSTEM
Creative Solutions for Public Agencies-
April 20, 2000
Keith Till
City Manager
City of Seal Beach
211 Eighth Street
Seal Beach', CA 90740
Subject: PARS Alternate Retirement System (ARS) retirement plan for Part-time, Seasonal, and
Temporary Employees dated December 1, 1993
Dear Mr. Till:
We are pleased to have the opportunity to serve as your consultants. We are committed to providing
efficient and responsive services to our client agencies in a professional relationship based on mutual
trust, confidentiality, and prompt and candid communication. In that spirit, this letter sets forth our
agreement with you regarding the services we will provide and our billing practices under this
engagement.
Services
We will provide the services necessary for the installation and administration of the subject plan.
Installation
In the installation phase, the necessary services include:
1. Meeting with appropriate City personnel to discuss plan provisions, implementation timelines,
benefit communication strategies and data reporting and contribution requirements;
2. Providing the necessary analysis and advisory services to finalize these elements of the plan;
3. Providing for review by City legal counsel the documentation needed to establish the plan; and
4. Upon your authorization, preparing and submitting application to the Internal Revenue Service
for a determination that the plan is qualified (the application fee for which shall be paid by the
City).
Administration
In the administration phase, the necessary services include:
1. Monitoring the receipt by the trustee of plan contributions remitted by the City;
3961 MacArthur Blvd. a Suite 200 a Newport Beach a California a 92660 o (800) 540.6369 o WWW.PARSINFO.ORG a Fax (949) 250.1250
Keith Till
City of Seal Beach
April 20, 2000
Page 2 of 4
2. Coordinating distribution payments to participants (which shall be made by the trustee at the
direction of the City), including the provision of required tax filings in regard to these payments,
and acting as on -going liaison (via toll -free telephone) between the participant and the City in
regard to these distribution payments;
3. Performing periodic accounting of contributions, distributions, expenses and investment earnings;
4. Preparing and submitting periodic reports of non - contributing participants to the City;
5. Preparing and submitting an annual report to the City;
6. Preparing and submitting the annual report to the State Controller's Office including the required
certified trust -wide audit; and
7. Advising the City of on -going compliance and qualification requirements.
Phase II Systems is not licensed to provide and does not offer tax, accounting, legal or actuarial advice.
In providing the services specified above, we will retain qualified professional service providers at our cost
as we deem necessary if the service lies outside our area of expertise.
Fees
Our fees for the services specified above will be as follows:
2
4.
1. Setup Fee (one -time) $750.00
Consulting Fee 2% of contributions
3. Monthly Base Charge $50.00
Monthly Service Fee (per Contributing Participant)
0-49
$4.00
50 -99
$3.33
100 -149
$2.50
150 -199
$2.00
200 -249
$1.83
250 -349
$1.67
350 -499
$1.50
500 -749
$1.42
750 -1499
$1.33
1500 -1999
$1.25
2000 -4999
$1.00
5000 plus
ne otiable
Termination Fee (per terminated participant)
$12.00
*For total account balances of less than $50.00, the fee shall be the lesser of $12.00 or
total account balance minus the employee contribution account.
For purposes of this agreement, a participant of the subject plan shall not be considered a
"Contributing Participant" for a given month unless contributions have been credited to
his or her account at some time within the twelve -month period ending with that month.
Keith Till
City of Seal Beach
April 20, 2000
Page 3 of 4
No Plan expenses shall be paid out of plan assets. Rather, Plan expenses shall be paid directly by the
Employer upon receipt of periodic billing for such expenses. Fees not paid within thirty (30) days of billing
shall bear interest at the rate of 1.5% per month.
The fees specified above represent all customary and usual expenses relating to the operation of the
subject plan, with the exception of fees charged by the trustee and the Investment Manager.
Trustee fees are currently 0.12% of contributions and are guaranteed through June 30, 1997
In the Event of Suspension of Contributions
Our fees are determined on the understanding that the City will make continuous contributions to the plan
on a regular basis no less frequently than annually. In the event annual contributions are suspended,
either temporarily or permanently, prior to the complete discharge of all obligations to provide payments to
participants in the subject plan, we reserve the right to bill the City for our services at the rates indicated in
our standard fee schedule in effect at the time the services are provided. It shall be the responsibility of
the City to pay such billings upon receipt. Fees not paid within thirty (30) days of billing shall bear interest
at the rate of 1.5% per month. Before any such services are performed, we will provide the City with
written notice of the services to be rendered and an estimate of the fees we will charge.
Fees for Services Beyond Scope
Charges for services beyond those specified in this letter will be billed to the City at the rates indicated in
our standard fee schedule in effect at the time the services are provided. Before any such services are
performed, we will provide the City with written notice of the services to be rendered and an estimate of
the fees we will charge.
Information Furnished to Phase II Systems
It shall be the responsibility of the City to certify the accuracy and completeness of the periodic information
required by us in the course of providing our services under this agreement, and Phase II Systems shall
rely on such information without further audit.
It shall further be the responsibility of the City to deliver the required periodic information to us in such a
manner that we have a reasonable amount of time to perform the services provided for in this agreement.
In the event that the City fails to provide the required periodic information in a complete, accurate and
timely manner, we reserve the right, notwithstanding the further provisions of this agreement, to terminate
this agreement upon written notice of thirty (30) days.
Confidential!ty
Because of the proprietary nature of the services provided, it is the policy that the City and its employees
and representatives not disclose any information relating to the subject plan to individuals who are not
employed by the City without the prior written consent of Phase II Systems. This restriction is made a part
of this agreement.
Keith Till
City of Seal Beach
April 20, 2000
Page 4 of 4
Term of Agreement
This agreement shall remain in effect for a one -year period beginning July 1, 1996 and ending June 30,
1997. This agreement will continue unchanged for successive twelve month periods beginning on July 1,
1997 unless either party gives written notice to the other party of the intent to terminate prior to April 1 of
the year in which the agreement is to terminate.
Our billing practices reflect our commitment to deal fairly with our client agencies in this as in all other
aspects of our relationship. We are pleased to be retained as your consultants, and we look forward to
providing our services to you on a basis that is mutually satisfactory. Please sign and return the enclosed
extra copy of this letter to signify your agreement regarding the matters covered by this letter.
Sincerely yours,
/12S
Dan �;Phase
Presid II Systems
PARS Trust Administrator
The foregoing letter fully describes the services required and is in accordance with our understanding of
the services to be provided and the fees to be billed by Phase II Systems.
By: Date: �, 02000
Keith Till
City of Seal Beach
pl
cl � / e AMENDED AND RESTATED AGREEMENT FOR ADMINISTRATIVE SERVICES
This Amended and Restated Agreement for Administrative Services ( "Agreement ") is made this
day of , 2009, between Phase II Systems, a corporation organized and existing
under the laws of the State of California, doing business as Public Agency Retirement Services
(hereinafter "PARS ") and City of Seal Beach ( "Agency ").
WHEREAS, the Agency adopted the City of Seal Beach PARS Alternate Retirement System
(the "Plan") effective December 1, 1993 in conjunction with the PARS Trust Agreement
( "Trust "), with PARS, as Trust Administrator to the Trust to provide administrative services on
or about November 30, 1993 ( "Initial Date ");
WHEREAS, it is necessary to amend and restate the terms of the original agreement to provide
administrative services and clarify certain terms and conditions thereof, including but not limited
to Plan Distributions, Non - Contribution Reports and Escheatment of Unclaimed Accounts;
WHEREAS, pursuant to Sections 3.4 and 3.5 of the Trust, the Agency has designated the City
Manager to act on its behalf in all matters relating to the Plan pursuant to the PARS Trust
Program ( "Plan Administrator ");
WHEREAS, pursuant to Section 3.6 of the PARS Trust Agreement, the Agency has the power to
delegate certain duties related to the Plan, and PARS accepts those duties pursuant to the terms
contained in this Agreement, and that this Agreement represents the entire delegation of duties to
PARS from the Agency with regards to the Plan;
WHEREAS, PARS accepts the terms of this Agreement with the understanding by the Agency
and Plan Administrator that PARS does not hold custody of any assets of the Plan, and does not
have any independent authority or discretion for the investment, distribution or escheatment of
Plan assets without the express consent of, and direction from, the Plan Administrator.
NOW THEREFORE, the parties agree:
1. Services. PARS will provide the services pertaining to the Plan as described in the
exhibit attached hereto as "Exhibit IA" ( "Services ") in a timely manner, subject to the
further provisions of this Agreement.
2. Fees for Services. PARS will be compensated for performance of the Services as
described in the exhibit attached hereto as "Exhibit 1 B ".
Payment 'Perms. Payment for the Services will be remitted directly from Plan assets
unless the Agency chooses to make payment directly to PARS. In the event that the
Agency chooses to make payment directly to PARS, it shall be the responsibility of the
Agency to remit payment directly to PARS based upon an invoice prepared by PARS and
delivered to the Agency. If payment is not received by PARS within thirty (30) days of
the invoice delivery date, the balance due shall bear interest at the rate of 1.5% per
month. If payment is not received from the Agency within sixty (60) days of the invoice
delivery date, payment plus accrued interest will be remitted directly from Plan assets, _
Page 1
unless PARS has previously received written communication disputing the subject
invoice that is signed by a duly authorized representative of the Agency.
4. Fees for Services Beyond Scope. Fees for services beyond those specified in this
Agreement will be billed to the Agency at the rates indicated in the PARS standard fee
schedule in effect at the time the services are provided and shall be payable as described
in Section 3 of this Agreement. Before any such services are performed, PARS will
obtain Agency authorization and provide the Agency with written notice of the subject
services, terms, and an estimate of the fees therefore.
5. Information Furnished to PARS. PARS will provide the Services contingent upon the
Agency providing PARS the information specified in the exhibit attached hereto as
"Exhibit 1 C" ( "Data "). It shall be the responsibility of the Agency to certify the
accuracy, content and completeness of the Data so that PARS may rely on such
information without further audit. It shall further be the responsibility of the Agency to
deliver the Data to PARS in such a manner that allows for a reasonable amount of time
for the Services to be performed. Unless specified in Exhibit IA, PARS shall be under
no duty to question Data received from the Agency, to compute contributions made to the
Plan, to determine or inquire whether contributions are adequate to meet and discharge
liabilities under the Plan, or to determine or inquire whether contributions made to the
Plan are in compliance with the Plan or applicable law. In addition, PARS shall not be
liable for non performance of Services if such non performance is caused by or results
from erroneous and/or late delivery of Data from the Agency. In the event that the
Agency fails to provide Data in a complete, accurate and timely manner and pursuant to
the specifications in Exhibit IC, PARS reserves the right, notwithstanding the further
provisions of this Agreement, to terminate this Agreement upon no less than ninety (90)
days written notice to the Agency.
6. Suspension of Contributions. In the event contributions are suspended, either
temporarily or permanently, prior to the complete discharge of PARS' obligations under
this Agreement, PARS reserves the right to bill the Agency for Services under this
Agreement at the rates indicated in PARS' standard fee schedule in effect at the time the
services are provided, subject to the terms established in Section 3 of this Agreement.
Before any such services are performed, PARS will provide the Agency with written
notice of the subject services, terms, and an estimate of the fees therefore.
7. Plan Distributions. The Plan Administrator is responsible for notifying PARS of any
Participant's eligibility for a distribution, and PARS accepts the Plan Administrator's
contractual delegation of distribution processing and certain escheatment responsibilities.
PARS is entitled to rely on, and is under no duty whatsoever to audit the efficacy of the
Agency's procedures for identifying an employee's change -in- status or eligibility for a
distribution.
8. Non - Contribution Reports. PARS prepares and submits a periodic Non - Contribution
report to the Plan Administrator which includes all Participants who have received no
new contributions for a period of time, as specified by the Plan Administrator. PARS is
not obligated by law or otherwise to provide a Non - Contribution report and this report in
Page 2
no way obligates PARS to generate distributions without specific instruction from the
Agency's Plan Administrator as outlined in Section 7.
9. Escheatment of Unclaimed Accounts. PARS will administer the escheatment of
Participant accounts which are deemed unclaimed pursuant to applicable state and federal
laws, under the conditions further described in the provisions of this Agreement. It is
acknowledged by the Agency and Plan Administrator that any escheatment duties that
PARS has arise only as a result of contractual, not statutory, obligations that PARS
accepts as a delegatee of the Plan Administrator, as contained in this Agreement. For the
purposes of determining the timing of distributability under any unclaimed property law,
a Participant account becomes "payable or distributable" as of the date on which the Plan
Administrator notifies PARS, in an acceptable form of notification, of a change -in- status
together with the proper authorization to commence the distribution process.
10. Records. Throughout the duration of this Agreement, and for a period of five (5) years
after termination of this Agreement, PARS shall provide duly authorized representatives
of Agency access to all records and material relating to calculation of PARS' fees under
this Agreement. Such access shall include the right to inspect, audit and reproduce such
records and material and to verify reports furnished in compliance with the provisions of
this Agreement. All information so obtained shall be accorded confidential treatment as
provided under applicable law.
11. Confidentiality. Without the Agency's consent, PARS shall not disclose any
information relating to the Plan except to duly authorized officials of the Agency, subject
to applicable law, and to parties retained by PARS to perform specific services within
this Agreement. The Agency shall not disclose any information relating to the Plan to
individuals not employed by the Agency without the prior written consent of PARS,
except as such disclosures may be required by applicable law.
12. Independent Contractor. PARS is and at all times hereunder shall be an independent
contractor. As such, neither the Agency nor any of its officers, employees or agents shall
have the power to control the conduct of PARS, its officers, employees or agents, except
as specifically set forth and provided for herein. PARS shall pay all wages, salaries and
other amounts due its employees in connection with this Agreement and shall be
responsible for all reports and obligations respecting them, such as social security,
income tax withholding, unemployment compensation, workers' compensation and
similar matters.
13. Indemnification. PARS and Agency hereby indemnify each other and hold the other
harmless, including their respective officers, directors, employees, agents and attorneys,
from any claim, loss, demand, liability, or expense, including reasonable attorneys' fees
and costs, incurred by the other as a consequence of PARS' or Agency's, as the case may
be, acts, errors or omissions with respect to the performance of their respective duties
hereunder.
14. Compliance with Applicable Law. The Agency shall observe and comply with federal,
state and local laws in effect when this Agreement is executed, or which may come into
effect during the term of this Agreement, regarding the administration of the Plan. -
Page 3
PARS shall observe and comply with federal, state and local laws in effect when this
Agreement is executed, or which may come into effect during the term of this
Agreement, regarding Plan administrative services provided under this Agreement.
15. Applicable Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of California. In the event any party institutes legal
proceedings to enforce or interpret this Agreement, venue and jurisdiction shall be in any
state court of competent jurisdiction.
16. Force MMajeure. When a party's nonperformance hereunder was beyond the control and
not due to the fault of the party not performing, a party shall be excused from performing
its obligations under this Agreement during the time and to the extent that it is prevented
from performing by such cause, including but not limited to: any incidence of fire, flood,
acts of God, acts of terrorism or war, commandeering of material, products, plants or
facilities by the federal, state or local government, or a material act or omission by the
other party.
17. Ownership of Reports and (Documents. The originals of all letters, documents, reports,
and data produced for the purposes of this Agreement shall be delivered to, and become
the property of the Agency. Copies may be made for PARS but shall not be furnished to
others without written authorization from Agency.
18. (Designees. The Plan Administrator of the Agency, or their designee, shall have the
authority to act for and exercise any of the rights of the Agency as set forth in this
Agreement, subsequent to and in accordance with the written authority granted by the
Governing Body of the Agency, a copy of which writing shall be delivered to PARS.
Any officer of PARS, or his or her designees, shall have the authority to act for and
exercise any of the rights of PARS as set forth in this Agreement.
19. Notices. All notices hereunder and communications regarding the interpretation of the
terms of this Agreement, or changes thereto, shall be effected by delivery of the notices
in person or by depositing the notices in the U.S. mail, registered or certified mail, return
receipt requested, postage prepaid and addressed as follows:
(A) To PARS: PARS; 5141 California Avenue, Ste. 150; Irvine, CA 92617; Attention:
President
(B) To Agency: City of Seal Beach; 211 Eighth Street, Seal Beach, CA 90740;
Attention: City Manager
Notices shall be deemed given on the date received by the addressee.
20. Term of Agreement. This Agreement will continue unchanged for successive twelve
month periods from the date first above written, unless either party gives written notice to
the other party of the intent to terminate upon ninety (90) days written notice.
21. Amendment. This Agreement may not be amended orally, but only by a written
instrument executed by the parties hereto.
22. Entire Agreement. This Agreement, including exhibits, contains the entire
understanding of the parties with respect to the subject matter set forth in this Agreement.
Page 4
In the event a conflict arises between the parties with respect to any term, condition or
provision of this Agreement, the remaining terms, conditions and provisions shall remain
in full force and legal effect. No waiver of any term or condition of this Agreement by
any party shall be construed by the other as a continuing waiver of such term or
condition.
23. Attorneys Fees. In the event any action is taken by a party hereto to enforce the teams of
this Agreement the prevailing party herein shall be entitled to receive its reasonable
attorney's fees.
24. Counterparts. This Agreement may be executed in any number of counterparts, and in
that event, each counterpart shall be deemed a complete original and be enforceable
without reference to any other counterpart.
25. Headings. Headings in this Agreement are for convenience only and shall not be used to
interpret or construe its provisions.
26. Effective Date. This Agreement shall be effective and control the obligations and duties
of the parties hereto as of the Initial Date.
AGENCY:
TITLE: City Manager
DATE:
PARS: /f
TITLE: Chief Financial Officer
DATE: November 3, 2009
Page 5
EXHIBIT IA
SERVICES
PARS will provide the following services for the City of Seal Beach Plan:
1. Plan Installation Services:
(A) Meeting with appropriate Agency personnel to discuss plan provisions, implementation
timelines, benefit communication strategies, data reporting and contribution submission
requirements;
(B) Providing the necessary analysis and advisory services to finalize these elements of the
Plan;
(C) Providing the documentation needed to establish the Plan for review by Agency legal
counsel, which must be reviewed and approved by the Agency, as demonstrated by the
execution of this Agreement prior to the commencement of PARS services;
(D) Upon Agency authorization, preparing and submitting application to the Internal
Revenue Service for a determination that the Plan is qualified (the application fee for
which shall be paid by the Agency).
2. Plan Administration Services:
(A) Monitoring the receipt of Plan contributions made by the Agency to the trustee of the
PARS Trust Program ( "Trustee "), based upon information received from the Agency and
the Trustee;
(B) Performing periodic accounting of Plan assets, including the allocation of employer and
employee contributions, distributions, investment activity and expenses (if applicable) to
individual Participant ( "Participant ") accounts, based upon information received from the
Agency and/or Trustee;
(C) Acting as ongoing liaison between the Participant and the Agency in regard to
distribution payments, which shall include use by the Participants of toll -free telephone
communication to PARS;
(D) Coordinating the processing of Participant distribution payments pursuant to authorized
written Agency certification of distribution eligibility, authorized direction by the
Agency, the provisions further contained in this Agreement, and the provisions of the
Plan;
(E) Directing Trustee to make Participant distribution payments, pursuant to the Agency
authorization provisions in this Agreement, and producing required tax filings regarding
said distribution payments;
(F) Notifying the Trustee of the amount of Plan assets available for further investment and
management, or, the amount of Plan assets necessary to be liquidated in order to fund
Participant distribution payments;
(G) Coordinating actions with the Trustee as directed by the Plan Administrator within the
scope this Agreement;
Page 6
(H) Preparing and submitting a periodic Non - Contribution report which includes all
Participants who have received no new contributions for a period of time as specified by
the Plan Administrator, unless directed by the Agency otherwise. PARS is not obligated
by law or otherwise to provide a Non - Contribution report and this. report in no way
obligates PARS to generate distributions without specific instruction from the Agency
Plan Administrator as outlined in Section 7 of this Agreement;
(I) Preparing and submitting a monthly report of Plan activity to the Agency, unless directed
by the Agency otherwise;
(J) Preparing and submitting an annual report of Plan activity to the Agency; .
(K) Preparing individual annual statements and mailing in bulk to the Agency, unless directed
by the Agency otherwise;
(L) Preparing and submitting the Annual Report of Financial Transactions to the California
State Controller, as required by law, for the PARS Trust Program, including the required
certified audit of the PARS Trust.
3. Plan Compliance Services: Coordinating and preparing changes to the Trust, Plan and other
associated legal documents required by federal and state agencies to keep the plan in
compliance.
4. PARS is not licensed to provide and does not offer tax, accounting, legal, investment or
actuarial advice.
Page 7
EXHIBIT 1B
FEES FOR SERVICES
PARS will be compensated for performance of Services, as described in Exhibit IA based
upon the following schedule:
(A) A fee equal to the stated IRS application' fees and legal fees related to any ongoing
federal and/or state required Plan compliance changes. Such fees will not be charged to
the Agency without prior authorization by the Plan Administrator.
(B) A distribution fee equal to $20.00 per terminated Participant ( "Distribution Fee "), which
shall be deducted solely from the terminating Participant's account or paid by the
Agency. Such fee will be effective January 1, 2010.
(Distribution Fee Payment Option (Please select one option below):
❑ Distribution Fee shall be paid solely from the terminating Participant's account.
Q Distribution Fee shall be paid by the Agency.
(C) An annual asset fee paid from Plan Assets or paid by the Agency based on the following
schedule ( "Asset Fee "):
For Plan Assets from:
Annual Rate:
$1 to $2,500,000
1.50%
$2,500,001 to $5,000,000
1.25%
$5,000,001 to $10,000,000
1.00%
$10,000,001 to $15,000,000
0.75%
$15,000,001 to $20,000,000
0.50%
$20,000,001 and above
0.30%
Annual rates are prorated and paid monthly. The annual Asset Fee shall be calculated
by the following formula [Annual Rate divided by 12 (months of the year) multiplied by
the Plan asset balance at the end of the month within each asset range]. Asset based fees
are subject to a $300.00 monthly minimum. If the Asset Fee is taken from Plan Assets,
the total Asset Fees due in a given month shall be allocated proportionately among
Participants of the Agency's Plan in that month, based on account balance. Trustee and
Investment Management Fees are not included. The monthly minimum is subject to an
automatic cost -of- living increase of 2% per year effective July 1, 2010.
Annual Asset Fee Payment Option (Please select one option below):
Q Annual Asset Fee shall be paid by the Agency.
❑ Annual Asset Fee shall be paid from Plan Assets.
(D) A fee equal to the out of pocket costs charged to PARS by an outside contractor for
formatting contribution data on to a suitable magnetic media, charged only if the
contribution data received by PARS from the Agency is not on readable magnetic
media ( "Data Processing Fee ").
Page 8
EXHIBIT 1 C
DATA REQUIREMENTS
PARS will provide the Services under this Agreement contingent upon receiving the following
information:
1. Contribution Data — readable magnetic media containing the following items of employee
information related to the covered payroll period:
(A) Agency name
(B) Employee's legal name
(C) Employee's social security number
(D) Payroll date
(E) Employer contribution amount
(F) Employee contribution amount
2. Distribution Data — written Plan Administrator's (or authorized Designee's) direction to
commence distribution processing, which contains the following items of Participant
information:
(A) Agency name
(B) Participant's legal name
(C) Participant's social security number
(D) Participant's address
(E) Participant's phone number
(F) Participant's birth date
(G) Participant's condition of eligibility
(H) Participant's effective date of eligibility
(I) Signed certification of distribution eligibility from the Plan Administrator, or authorized
Designee
3. Executed Legal Documents:
(A) Certified Resolution
(B) Adoption Agreement
(C) Plan Document
(D) Trustee Investment Forms
4. Other information requested by PARS
Page 9
rueuc '
AGENCY
RETIREMENT
SERVICES
p�s
CES LJ /$
Making retirement work for you.
October 16, 2009
Mr. David Carmany
City Manager
City of Seal Beach
211 Eighth Street
Seal Beach, CA 90740
Subject: IRS Required Restatement of the PARS -ARS Plan
Dear Mr. Carmany:
RECE IVED
OCT 19 2009
Mana-gees Office
The Internal Revenue Service has developed a new cyclical system for amending
plans and obtaining determination letters. The new system requires employers to
amend and restate their qualified retirement plans every five or six years, depending
on the plan type. Volume submitter plan documents, like your City of Seal Beach
PARS Alternate Retirement System (PARS -ARS) plan document, have been
placed on a six year amendment cycle. The IRS window for amending and restating
your plan document and reapplying for an updated IRS Letter of Determination is
now open.
In response to the required IRS restatement process, we have worked together with
our legal counsel, O'Melveny and Myers, LLP, to amend and restate the PARS -ARS
volume submitter plan document. Many of the required changes reflect the 2002
EGTRRA provisions made permanent by the Pension Protection Act of 2006. Our
PARS -ARS volume submitter plan document has recently been approved by the IRS
and received an Advisory Letter issued on March 31, 2008 (enclosed). After
receiving the approval letter, the IRS issued an additional amendment which we
have enclosed.
Please take the time to review the enclosed plan document with your legal counsel.
We have enclosed two copies of the plan document and two copies of the plan
amendment. Please sign and date each of the enclosed documents and
return one original of the plan document and plan amendment in the
enclosed envelope no later than November 30, 2009.
The advantage of a volume submitter plan format is that your agency can, for most
purposes, rely on the Advisory Letter instead of applying for an individual Letter of
Determination. However, we strongly recommend that your agency request an IRS
Letter of Determination in order to obtain the maximum assurance of your Plan's
qualified status.
At your discretion and request, PARS and O'Melveny and Myers will prepare and file
an application for an individual Letter of Determination for your agency. Volume
submitter applications for Letters of Determination are processed on an expedited
basis and for a significantly reduced IRS filing fee.
5141 California Ave., Ste. 150
Irvine, CA 92617 -3069
800.540.6369
fax 949.823.9900
www.pars.org
Mr. Carmany
City Manager
October 16, 2009
Page Two
The cost to process an individual request for a Letter of Determination, which
includes the IRS filing fees and Power of Attorney services, is $750. If you would
like to apply, please let us know by initialing the last page of the enclosed
Plan document. PAILS will prepare the application and forward it to you
along with the corresponding invoice. .
We understand that every minute of your time is valuable; therefore, we have taken
many steps to facilitate this IRS - required task for you and your staff. If you have
any questions about this restatement process, please feel free to contact me at
(800) 540 -6369 x132 or by email at svolcan @pars.org.
Sincerely,
JL-5 . VB "�
Shauna Volcan
Senior Manager, Plan Implementation
Enclosure(s)
cc: Kevin Murphy, PARS
Public Agency Retirement Services is not licensed to provide tax, accounting or legal advice. We submit
these documents with the understanding that they will receive proper review by the appropriate legal
counsel.
00
za °ar
' DEPARTMENT OF THE TREASURY
z' w
INTERNAL REVENUE SERVICE
�Pyc T♦ WASHINGTON, D.C. 20224
4 8VENV
TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION
Plan Description: Volume Submitter Profit Sharing Plan
FFN: 315DO050001 -000 Case: 200600128 EIN: 33- 0542454
Letter Serial No: M579920a
Date of Submission: 01/23/2006
Contact Person:
PHASE II SYSTEMS Janell Hayes /Letitia Young
5141 CALIFORNIA AVENUE SUITE 150 Telephone Number:
C/O ANDREA BIVENS 513 -263- 3602/513- 263 -3584
IRVINE, CA 92617 In Reference To:
TEGE:EP:7521
Date: 03/31/2008
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under section 401 of the Internal Revenue
Code for use by employers for the benefit of their employees. This opinion relates only to the acceptability of
the form of the plan under the Internal Revenue Code. It is not an opinion of the effect of other Federal or local
statutes.
You must furnish a copy of this letter, a copy of the approved plan, and copies of any subsequent amendments to
adopting employers if the practitioner is authorized to amend the plan on their behalf, to each employer who adopts
this plan.
This letter considers the changes in qualification requirements contained in the 2004 Cumulative List of Notice
2004 -84, 2004 -2 C.B. 1030.
Our opinion on the acceptability of the form of the plan is not a ruling or determination as to whether an
employer's plan qualifies under Code section 401(a). However, an employer that adopts this plan may rely on this
letter with respect to the qualification of its plan under Code section 401(a), as provided for in Rev. Proc.
2005 -16, 2005 -1 C.H. 674 and outlined below. Please review Announcement 2008 -23 I.R.S. 2008 -14 to determine
the items necessary for filing an application for a determination letter if one is required for reliance, or is
otherwise desired. The terms of the plan must be followed in operation. Generally, the employer may request a
determination letter by filing an application with Employee Plans Determinations on Form 5307, Application
for Determination for Adopters of Master or Prototype or Volume Submitter Plans.
Except as provided below, our opinion does not apply with respect to the requirements of: (a) Code sections
401(a)(4), 401(1), 410(b) and 414(s). Our opinion does not apply for purposes of Code section 401(a)(10)(S)
and section 401(a)(16) if an employer ever maintained another qualified plan for one or more employees who
are covered by this plan. For this purpose, the employer will not be considered to have maintained another plan
merely because the employer has maintained another defined contribution plan(s), provided such other plan(s)
has been terminated prior to the effective date of this plan and no annual additions have been credited to the
account of any participant under such other plan(s) as of any date within the limitation year of this plan. See
section 19.02(1) of Rev. Proc. 2005 -16, 2005 -1 C.B. 674 regarding volume submitter defined contribution plans and
the repeal of Code section 415(e). Our opinion also does not apply for purposes of Code section 401(a)(16) .if,
after December 31, 1985, the employer maintains a welfare benefit fund defined in Code section 419(e), which
provides postretirement medical benefits allocated to separate accounts for key employees as defined in Code
section 419A(d)(3), or an individual medical account as defined in Code section 415(1)(2).
Letter 4335
PHASE II SYSTEMS
FFN: 315D0050001 -000
Page 2
Our opinion applies with respect to the requirement of Code section 410(b) if 100 percent of all nonexcludable
employees benefit under the plan. Employers that elect a safe harbor allocation formula and a safe harbor
compensation definition can also rely on an advisory letter with respect to the nondiscriminatory amounts
requirement under Code section 401(a)(4).
This letter is not a ruling with respect to the tax treatment to be accorded contributions which are picked up by
the governmental employing unit within the meaning of section 414(h)(2) of the Internal Revenue Code.
If you, the volume submitter practitioner, have any questions concerning the IRS processing of this case, please
call the above telephone number. This number is only for use of the practitioner. Individual participants and /or
adopting employers with questions concerning the plan should contact the volume submitter practitioner. The plan's
adoption agreement, if applicable, must include the practitioner's address and telephone number for inquiries by
adopting employers.
If you write to the IRS regarding this plan, please provide your telephone number and the most convenient time
for us to call in case we need more information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you modify or discontinue sponsorship of
this plan.
Sincerely yours,
0 ,,Q — 2, < � -- - (�- -
Andrew Zuckerman
Director,
Employee Plans Rulings and Agreements
Letter 4335
THE CITY OF SEAL BEACH
PUBLIC AGENCY RETIREMENT SYSTEM
ALTERNATE RETIREMENT SYSTEM
(PARS -ARS)
AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 2002
TABLE OF CONTENTS
Page
INTRODUCTION.............................................................................................. ..............................2
DEFINITIONS................................................................................................... ..............................4
ELIGIBILITY REQUIREMENTS FOR PARTICIPATION ............................. ..............................7
2.1
Time of Participation ............................................................................... ..............................7
2.2
Termination of Participation ................................................................... ..............................7
,
2.3
Effect of Transfer to Ineligible Employment .......................................... ..............................7
2.4
In Service Distributions .......................................................................... ..............................7
CONTRIBUTIONS............................................................................................ ..............................8
3.1
Amount of Employer Contributions ....................................................... ..............................8
3.2
Amount of Employee Contributions ....................................................... ..............................8
3.3
Administrative Expenses ........................................................................ ..............................8
3.4
Allocation of Administrative Expenses .................................................. ..............................8
3.5
Limits on Annual Additions .................................................................... ..............................8
3.6
Vesting .................................................................................................... ..............................9
3.7
Investment in Accordance With Act ....................................................... ..............................9
3.8
Reversions ............................................................................................... ..............................9
FUNDINGAND VALUATION ....................................................................... .............................10
4.1
Funding .................................................................................................. .............................10
4.2
Valuation ................................................................................................ .............................10
4.3
Type and Nature of Plan and Trust ........................................................ .............................10
VESTING.......................................................................................................... .............................11
5.1
Vesting in Employer Contribution Account .......................................... .............................11
5.2
Vesting in Employee Contribution Account ........................................ ...............................
11
5.3
Full or Partial Termination ................................................................... ...............................
11
DISTRIBUTIONOF BENEFITS ...................................................................... .............................12
6.1
Incidental Death Benefits ....................................................................... .............................12
6.2
Amount of Distribution .......................................................................... .............................12
6.3
Lump Sum Distributions ........................................................................ .............................12
6.4
Time of Distribution .............................................................................. .............................13
6.5
Participant's Rights Not Subject To Execution ...................................... .............................13
NB 1:664952.7 _i_
TABLE OF CONTENTS
(continued)
Page
6.6
Unclaimed Benefits ................................................................................ .............................13
6.7
Direct Rollovers ..................................................................................... .............................13
6.8
Military Service ..................................................................................... .............................14
DEATHBENEFITS .......................................................:.................................. .............................15
7.1
Designation of Beneficiary ................................................. ............................... ............15
7.2
Married Participant ................................................................................ .............................15
7.3
Spouse's Signature ................................................................................. .............................15
7.4
Default Beneficiary ................................................................................ .............................15
7.5
Domestic Partners .................................................................................. .............................15
ADMINISTRATION AND AMENDMENT OF PLAN ................................... .............................17
8.1
Designation of Plan Administrator ........................................................ .............................17
8.2
Rules and Regulations ............................................................................ .............................17
8.3
Amendment and Termination ................................................................ .............................17
APPENDIX A ANNUAL ADDITION LIMITS ..................................... .............................18
NB 1:664952.7 -ii-
INTRODUCTION
The City of Seal Beach (the "Employer ") has adopted this tax qualified governmental
volume submitter profit sharing plan for the benefit of its Eligible Employees. This document
is a full and complete amendment and restatement of the City of Seal Beach PARS Alternate
Retirement System Plan.
It is intended that this Plan and the Trust established to hold the assets of the Plan
shall be qualified under Section 401(a) and tax - exempt under Section 501(a) of the Internal
Revenue Code of 1986, together with any amendments thereto ( "Code "). It is also intended
that this Plan and the Trust established hereunder shall meet the requirements of a pension
trust under California Government Code sections 53215 - 53224, or their successor sections.
At any time prior to the satisfaction of all liabilities with respect to Participants
and their Beneficiaries under the Trust created pursuant to this Plan, the Trust assets shall
not be used for, or diverted to, purposes other than the exclusive benefit of Participants or
their Beneficiaries, as prescribed in Section 401(a)(2) of the Code.
It is intended that the Plan satisfy the requirements of the applicable provisions of the
Uruguay Round Agreements Act, the Small Business Job Protection Act, the Taxpayer Relief
Act of 1997, and the Uniformed Service Employment and Reemployment Rights Act of 1994
(commonly referred to as the "GUST" amendments) and that the provisions of this restated
Plan reflecting the GUST amendments are hereby made effective as of the dates required by
the legislation referred to in this sentence.
It is further intended that the Plan satisfy the requirements of the applicable
provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 and the
related requirements of the revisions to Section 401(a)(9) of the Code (commonly referred to
2
NB 1:664952.7
as "EGTRRA ") and that the provisions of this restated Plan reflecting EGTRRA are hereby
made effective as of the dates required by the legislation referred to in this sentence.
NB 1:664952.7
ARTICLE I
DEFINITI ®NS
1.1 "Act" means California Government Code Sections 53215 - 53224.
1.2 "Aggregate Account" means, with respect to each Participant, the value of all
accounts maintained on behalf of the Participant, whether attributable to Employer or
Employee contributions.
1.3 "Amended Effective Date" means January 1, 2002.
1.4 "Beneficiary" means the person, trust or other entity to whom a share of a deceased
Participant's Aggregate Account is payable.
1.5 "Code" means the Internal Revenue Code of 1986 as amended from time to time.
1.6 "Compensation" means all compensation for that portion of the Plan Year during
which the Employee was a Participant, paid in cash by the Employer to the
Participant for personal services. Further, the Employer as defined in Section 1.12
hereof, defines compensation as base salary. Compensation in excess of $150,000
shall be disregarded. Such amount shall be adjusted for increases in the cost of living
in accordance with Code Section 401(a)(17)(B) except that the dollar increase in
effect on January 1 of any calendar year shall be effective for the Plan Year beginning
with or within such calendar year. For any short Plan Year, the compensation limit
shall be an amount equal to the compensation limit for the calendar year in which the
Plan Year begins multiplied by a ratio obtained by dividing the number of full months
in the short Plan Year by twelve (12). The limitation on the maximum amount of
compensation that may be taken into account under the Plan, as set forth in this
definition of compensation, shall apply for Plan Years beginning after December 31,
1995, or 90 days after the opening of the first legislature session on or after January 1,
1996. The annual compensation of each Participant, as defined above by the
Employer, taken into account in determining allocations for any Plan Year beginning
after December 31, 2001, shall not exceed $200,000, as adjusted for cost -of- living
increases in accordance with Section 401(a)(17)(B) of the Code. The preceding
sentence shall not apply to any Participant eligible for a higher limit on annual
compensation under the transition rule described in Section 1.401 (a)(1 7)-1 (d)(4)(ii) of
the Treasury Regulations.
1.7 "Effective Date" means December 1, 1993.
1.8 "Eligible Class of Employees" means the eligible class of employees as provided
herein and in the applicable governing board policies and regulations promulgated
thereunder by the Employer.
4
NB I :664952.7
1.9 "Eligible Employee" means all of those Employees of the Employer whose
Participation in this Plan is not prohibited or restricted by the provisions of a
collective bargaining agreement or another plan or retirement system maintained by
the Employer. Employees who are exempt from coverage under Social
Security by federal law or regulation shall not be eligible employees.
1.10 "Employee" means an employee of the Employer.
1.11 "Employee Contribution Account" means the account by that name established
pursuant to Section 3.2 hereof.
1.12 "Employer" means the City of Seal Beach that has adopted this Plan.
1.13 "Employer Contribution Account" means the account by that name established
pursuant to Section 3.1 hereof.
1.14 "Inactive Participant" means a Participant who is no longer eligible to participate
because he is no longer in a class of Employees eligible to participate in this Plan but
is still employed by the Employer.
1.15 "Ineligible Employee" means all of those Employees of the Employer whose
Participation in this Plan is prohibited or restricted by the provisions of a collective
bargaining agreement, another plan or retirement system maintained by the Employer,
or exempt from coverage under Social Security by federal law or regulation.
1.16 "Investment Manager" means the entity appointed by the Employer as the
investment manager under the Plan.
1.17 "Limitation Year" means the limitation year under Section 3.5 hereof and shall
mean the Plan Year.
1.18 "Normal Retirement Age" means sixty (60) years of age.
1.19 "Normal Retirement Date" means the first day of the month coincident with or next
following the date on which the Participant attains Normal Retirement Age.
1.20 "Participant" means a Participant under Article II hereof.
1.21 "Participant Aggregate Accounts" means the accounts by that name established
pursuant to Article III hereof.
1.22 "Participant Contributions" means contributions made on behalf of the Participant
by the Employer as Pick Up Contributions.
1.23 "Participant Contribution Account" means the value of the Participant's interest in
this Plan that is attributable to Pick Up Contributions and/or Participant after tax
Contributions.
F
NB1:664952.7
1.24 "PERS" means the California Public Employees' Retirement System.
1.25 "Pick Up Contributions" means Participant contributions made by the Employer on
behalf of the Participant pursuant to Section 414(h) of the Internal Revenue Code.
Pick Up Contributions shall not under any circumstances be paid to the. Participant or
be directed by the Participant for any purpose except as Pick Up Contributions to this
Plan. The Employer may make Pick Up Contributions through a reduction in salary,
an offset against future salary increases, or a combination of the two.
1.26 "Plan" means the City of Seal Beach PARS Alternate Retirement System.
1.27 "Plan Administrator" means the individual or position designated by the Employer
to act on behalf of the Employer in matters relating to this Plan. If no designation is
made, the Employer shall be the Plan Administrator. If a Plan
Administrator has been appointed, the word "Employer" as used in this Plan shall
mean Plan Administrator unless the context indicates a different meaning is intended.
1.28 "Plan Year" means the consecutive twelve month period beginning on January 1
and ending on December 31.
1.29 "Public Agency" means an employer authorized under California Government Code
Article 1.5, Sections 53215 through 53224 to establish a pension trust.
1.30 "Regulations" means the regulations adopted or proposed by the Department of
Treasury from time to time pursuant to the Code.
1.31 "Retirement System" means any plan that meets the requirements for a
retirement system under Section 3121(b)(7)(F) of the Code and the final
regulations thereunder.
1.32 "Social Security" means the Social Security program as set forth in Title 42 of the
United States Code, Section 301 et sea.
1.33 "STRS" means the California State Teachers' Retirement System.
1.34 "Trust" means the trust established as part of the Public Agency Retirement Trust
to hold the assets of the Plan.
1.35 "Trustee" means the trustee of the Trust.
1.36 "Valuation Date" means the last day of the Plan Year or such other day on which
the assets of the Trust are valued and the value of each Participant's Aggregate
Account is determined.
1.37 "Vested" means the nonforfeitable portion of any account maintained on behalf of a
Participant.
6
NB 1:664952.7
ARTICLE II
ELIGIBILITY REQUIREMENTS FOR PARTICIPATI ®N
2.1 Time of Participation
An Eligible Employee shall participate in this Plan on each day during which the Employee
is not accruing a benefit under Social Security or another Retirement System provided and
maintained by the Employer.
2.2 Termination of Participation
A Participant shall cease to be a Participant on the date on which the Participant begins to
participate in another Retirement System or the date of his termination of employment as
determined by the Employer.
2.3 Effect of Transfer to Ineligible Employment
If a Participant is no longer an Eligible Employee and becomes an Ineligible Employee, such
Employee will participate immediately upon returning to the Eligible Class of Employees.
Such participation shall commence as of the first day of such eligible employment.
2.4 In Service (Distributions
A Participant who is no longer eligible to participate because he is no longer in the class of
eligible employees, but who has not terminated employment with the Employer, shall
become an Inactive Participant and shall remain such for twenty -four (24) months after
which his interest in the Plan will be distributed to him.
7
NB 1:664952.7
ARTICLE III
CONTRIBUTIONS
3.1 Amount of Employer Contributions
There is hereby created and established and shall be maintained by the Plan Administrator
the Employer Contribution Account. For each day,that an Employee remains a Participant
under this Plan, the Employer shall make a contribution of one and three tenths percent
(1.3 %) of Compensation. Such contribution shall be made no later than the close of the Plan
Year. This amount shall be credited to the Employer Contribution Account. Employer
Contributions will be allocated to each Participant in the ratio that such Participant's
compensation bears to the compensation of all Participants.
3.2 Amount of Employee Contributions
There is hereby created and established and shall be maintained by the Plan Administrator
the Employee Contribution Account. Prior to March 5, 1997, for each day that an Employee
remains a Participant under this Plan, the Employee shall make a contribution of six and two
tenths percent (6.2 %) of Compensation. Such contributions shall be after -tax contributions
and shall be credited to the Employee Contribution Account. After March 5, 1997, for each
day that an Employee remains a Participant under this Plan, the Employee shall make a
contribution of six and two tenths percent (6.2 %) of Compensation. Such contributions shall
be pre -tax contributions and shall be credited to the Employee Contribution Account. In
accordance with Section 414(h) of the Code and Sections 1.22 and 1.25 of this Plan, the
contributions required under this Section 3.2 shall be Pick Up Contributions.
3.3 Administrative Expenses
In accordance with Section 53217 of the Act the Employer may make contributions to the
Trust sufficient to defray all or part of the expenses of administering the Plan or may pay
such expenses directly.
3.4 Allocation of Administrative Expenses
If the Employer chooses not to pay the expenses of administering this Plan, such expenses
shall be charged ratably against the Participants' Aggregate Accounts.
3.5 Limits on Annual Additions
(a) Notwithstanding anything else to the contrary, annual additions credited to a
Participant's Account during a Limitation Year (i.e. Plan Year) shall not exceed the lesser of
$30,000 (adjusted as permitted by Section 415(d)(1) of the Code and Regulations issued
thereunder) or 25 percent of the Participant's Compensation. This Section 3.5 shall be
construed and interpreted in accordance with the provisions of Appendix A attached hereto.
8
NB l :664952.7
(b) Effective for the Plan Years beginning after December 31, 2001, annual additions
credited to a Participant's Account during a Limitation Year shall not exceed the lesser of
$40,000 (adjusted as permitted by Section 415(d) of the Code and Regulations issued
thereunder) or 100 percent of Section 415 Compensation (provided that such 100 percent
limitation shall not apply to any contributions for medical benefits after separation from
service, within the meaning of Section 401(h) or Section 419A(f)(2) of the Code) including
compensation not includible in the Participant's taxable income by reason of Code Sections
125, 132(f)(4) or 457.
3.6 Vesting
A Participant will be fully vested in his Aggregate Account at all times. If the Plan's vesting
schedule is amended or the Plan is amended in any way that directly or indirectly affects the
computation of a Participant's nonforfeitable percentage, or if the Plan is deemed amended
by an automatic change to or from a top -heavy vesting schedule, each Participant with at
least three years of service with the Employer may elect within a reasonable period of time
after the adoption of the amendment or change to have his nonforfeitable percentage
computed under the Plan without regard to the amendment or change.
3.7 Investment in Accordance With Act
All contributions, interest earned, and any assets of the Plan shall at all times be invested
and managed in accordance with the requirements of the Act.
3.8 Reversions
The Employer shall have the right to a reversion of assets from this Plan if (1) a contribution
is conditioned upon the initial qualification of the Plan, a timely determination letter request
is filed, and the Plan receives an adverse determination, or (2) the reversion is due to a good
faith mistake of fact, or (3) the contribution is conditioned on its deductibility under Section
404 of the Code.
E
NB1:664952.7
ARTICLE IV
FUNDING AND VALUATION
4.1 Funding
In accordance with Section 53216 of the Act, the assets of the Plan shall be held in a trust or
invested in an insurance contract which may or may not be held in a trust. Subject to Sections
53216.1, 53216.5 and 53216.6 of the Act for the purpose of finding this Plan, the Employer
shall provide the Trustee or investment manager with written direction on how to, invest the
assets of the Plan. Notwithstanding anything to the contrary contained in the trust agreement,
in -kind contributions shall not be permissible under the Plan.
4.2 Valuation
The value of a Participant's Employer Contribution Account and Employee Contribution
Account shall be determined annually on a date hereafter referred to as a Valuation Date. As
of each Valuation Date there shall be determined the amount of the investment gain or loss to
be credited to the total of all assets held for Employer Contribution Accounts and Employee
Contribution Accounts during the period since the preceding Valuation Date. The total
adjustment shall be allocated among all of the individual Participant and Inactive Participant
Accounts as of the current Valuation Date. The assets of the Trust shall be valued annually at
fair market value. On the Valuation Date, the earnings and losses of the Trust will be
allocated to each Participant and Inactive Participant.
4.3 Type and Nature of Plan and Trust
Neither the faith and credit nor the taxing power of the Employer, the State of California or
any other political subdivision thereof other than the Employer is pledged to the distribution
of benefits hereunder. Except for contributions and other amounts hereunder, no other
amounts are pledged to the distribution of benefits hereunder. Distributions of benefits are
neither general nor special obligations of the Employer, but are payable solely from
contributions, as more fully described herein. No Employee or Beneficiary may compel the
exercise of the taxing power by the Employer. Distributions of benefits are not a debt of the
Employer, the State of California or any of its political subdivisions within the meaning of
any constitutional or statutory limitation or restriction. Distributions are not a legal or
equitable pledge, charge, lien or encumbrance, upon any of the Employer's property, or upon
any of its income, receipts or revenues, except amounts in the accounts which are, under the
terms of this Plan and the Act, set aside for distributions of benefits. Neither the Participants
of the legislative body of the Employer nor its officers, employees, agents or volunteers are
liable hereunder. Benefits under the Plan may not be assigned or alienated except to the
extent allowable under IRC Sections 401(a)(13) and 414(p).
10
NB 1:664952.7
ARTICLE V
VESTING
5.1 Vesting in Employer Contribution Account
Each Participant shall be one hundred percent (100 %) Vested in his Employer Contribution
Account at all times.
5.2 Vesting in Employee Contribution Account
Each Participant shall be one hundred percent (100 %) Vested in his Employee Contribution
Account at all times.
5.3 ]Full or Partial Termination
Notwithstanding the vesting schedule in 5.1 and 5.2, upon the complete discontinuance of
Employer contributions to the Plan or upon any full or partial termination of the Plan, all
amounts credited to the account of any affected Participant shall become one hundred percent
(100 %) Vested and shall not thereafter be subject to forfeiture for any reason.
11
NB 1:664952.7
ARTICLE VI
DISTRIBUTI ®N OF BENEFITS
6.1 Incidental Death Benefits
(a) Distributions from the Plan shall be made in accordance with Section 401(a)(9) of the
IRC, including the incidental death benefits under Section 401(a)(9)(G) and the regulations
thereunder. The required beginning date of benefit payments that represent the entire interest
of the Participant shall be as follows:
(b) Effective January 1, 1997, a Participant shall have the option of commencing
distributions by April 1 following age 70%2 or deferring payment until actual retirement.
(c) Except as otherwise provided, this Section 6.1 shall apply for purposes of determining
required minimum distributions for calendar years beginning with the 2003 calendar year.
All distributions required under this Section 6.1(c) will be determined and made in
accordance with the Treasury Regulations promulgated under Section 401(a)(9) of the Code.
(i) Time and Manner of Distribution
(A) Required Beginning Date. The Participant's entire interest will be distributed
to the Participant no later than the Participant's Required Beginning Date.
(B) Death of Participant Before Distributions Begin. If the Participant dies before
distributions begin, the Participant's entire interest will be distributed no later than December
31 of the calendar year immediately following the calendar year in which the Participant
died.
(C) Forms of Distribution. The Participant's interest shall be distributed in the
form of a single sum on or before the Required Beginning Date.
(D) Required Beginning Da
calendar year in which the Participant
payment until retirement, the April 1
which the Participant actually retires.
Dal
The April 1 of the calendar year following the
attains age 70'/2 or, if the Participant opts to defer
of the calendar year following the calendar year in
6.2 Amount of Distribution
A Participant who terminates employment for any reason shall be entitled to one hundred
percent (100 %) of the value of his Aggregate Account determined as of the most current
Valuation Date.
6.3 Lump Sum Distributions
All distributions shall be made in a lump sum payment in cash constituting the entire value of
the distributee's Aggregate Account.
12
NB 1:664952.7
6.4 Time of Distribution
Unless otherwise specified herein, benefits shall become distributable to a Participant (or the
Participant's Beneficiary in any case of the Participant's death) upon any termination of the
Participant's employment by reason of resignation, discharge, retirement, disability, or death.
This Plan does not provide for mandatory distributions of any amount. Therefore, no
distribution is made (regardless of the amount of the distribution) without the consent of the
Participant (or the Participant's Beneficiary in any case of the Participant's death).
6.5 Participant's Rights Not Subject To Execution
The right of a Participant to a benefit under this Plan is not subject to execution or any other
process whatsoever, except to the extent permitted by Section 704.110 of the Code of Civil
Procedure of the State of California and is unassignable.
6.6 Unclaimed Benefits
Each Participant and Beneficiary of a deceased Participant shall file with the Plan
Administrator from time to time in writing, his or her home address and each change of
home address. Any communication shall be addressed to the Participant or the Beneficiary
at his or her last home address filed with the Plan Administrator, or if no such address was
filed, then at his or her last home address as shown on the Agency's records, shall be binding
on the Participant or Beneficiary for all purposes of the Plan. The Plan Administrator shall
not be obligated to search for or ascertain the whereabouts of any Participant or Beneficiary,
and the Participant's Accrued Benefit shall be subject to the abandoned property law of the
applicable jurisdiction.
6.7 Direct Rollovers
This section applies to all distributions made on or after January 1, 1993. Notwithstanding
any provision of the Plan to the contrary that would otherwise limit a distributee's election
under this Plan, a distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct rollover.
(a) Definitions
(i) Eligible Rollover Distribution
An eligible rollover distribution is any distribution of all or any portion of the balance to the
credit of the distributee including hardship amounts received after December 31, 1998,
except that an eligible rollover distribution does not include: any distribution that is one of a
series of substantially equal periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of
the distributee and the distributee's designated Beneficiary, or for a specified period of ten
(10) years or more; any distribution to the extent such distribution is required under Section
13
NB 1:664952.7
401(a)(9) of the Internal Revenue Code, any hardship distribution, and the portion of any
distribution that is not includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer securities).
(ii) Eligible Retirement Plan
An eligible retirement plan is an individual retirement account described in Section 408(a)
of the Code, an individual retirement annuity described in Section 408(b) of the Code, or a
qualified trust described in Section 401(a) of the Code that accepts the distributee's eligible
rollover distribution. An eligible retirement plan shall also mean an annuity contract
described in Section 403(b) of the Code and an eligible plan under Section 457(b) of the
Code which is maintained by a state, political subdivision of a state, or any agency or
instrumentality of a state or political subdivision of a state and which agrees to separately
account for amounts transferred into such plan from this Plan.
(iii) Distributee
A distributee includes an Employee or former Employee, the Employee's or former
Employee's surviving spouse, and the Employee's or former Employee's spouse or former
spouse who is the alternate payee under a qualified domestic relations order, as defined in
Section 414(p) of the Code, are distributees with regard to the interest of the spouse or
former spouse.
(iv) Direct Rollover
A direct rollover is a payment by the Plan to the eligible retirement plan specified by the
distributee.
6.8 Military Service
Notwithstanding any provision of this Plan to the contrary, contributions, benefits and
service credit with respect to qualified military service will be provided in accordance with
Section 414(u) of the Code.
14
NB1:664952.7
ARTICLE VII
DEATH BENEFITS
7.1 Designation of Beneficiary
Each Participant and Inactive Participant shall have the right to designate a Beneficiary to
receive the death benefits that are payable from this Plan. Such designation must be
evidenced by a written instrument filed with the Employer on a form prescribed by the
Employer and signed by the Participant.
7.2 Married Participant
The Beneficiary for a married Participant shall at all times be the Participant's spouse and
may not be changed to someone other than such spouse unless the consent of such spouse is
provided upon a written form witnessed by a duly authorized Plan representative or a notary
public and acceptable to the Employer. If no such designation is on file with the Employer
at the time of the death of the Participant, or if for any reason at the sole discretion of the
Employer such designation is defective, then the spouse of such Participant shall be
conclusively deemed to be the Beneficiary designated to receive such benefit.
7.3 Spouse's Signature
The signature of the Participant's spouse shall be required on a designation of beneficiary
form if the spouse is not the Beneficiary, unless the Participant declares in writing that one
of the following conditions exists:
(a) The Participant is not married;
(b) The Participant does not know and has taken all reasonable steps to determine the
whereabouts of the spouse;
(c) The spouse is incapable of executing the acknowledgement because of an
incapacitating mental or physical condition.
7.4 Default Beneficiary
In the event the Participant dies and is not survived by a spouse, the Aggregate Account shall
pass by the laws of intestacy.
7.5 Domestic Partners
Effective as of January 1, 2005, for purposes of this Article VII only: (1) all references to
'marriage' shall also include 'registered domestic partnerships,' (2) individuals in a 'registered
domestic partnership' shall be considered `married,' and (3) all references to a 'spouse' shall
15
NB I :664952.7
also include a registered domestic partner. A `registered domestic partner' and a `registered
domestic partnership' refer to persons and partnerships satisfying the requirements of the
California Family Code and officially registered as of the date of death with the Secretary of
State as such in accordance with Section 298.5 of the California Family Code.
NB 1:664952.7
16
ARTICLE VIII
ADMINISTRATION AND AMENDMENT OF PLAN
8.1 Designation of Plan Administrator
The Employer is the Plan Administrator under this Plan unless an individual employed by, or
a position within the Employer, has been appointed the Employer as Plan Administrator.
In addition to a Plan Administrator the Employer may designate a delegatee to perform those
activities relating to the Plan as specified in the written appointment of such delegatee. The
term "Employer" as used in this Article shall mean the Plan Administrator or delegatee
where responsibility for administration of the Plan has been given to such parties.
8.2 Rules and Regulations
The Employer shall supervise and control the operation of this Plan in accordance with its
terms and may make rules and regulations for the administration of this Plan that are not
inconsistent with the terms and provisions hereof. The Employer shall determine any
questions arising in connection with the interpretation, application or administration of the
Plan (including any question of fact relating to age, employment, compensation or eligibility
of Employees) and its decisions or actions in respect thereof shall be conclusive and binding
upon any and all persons and parties. The Employer's interpretations, determinations and
actions taken under the Plan shall in all cases result in like treatment for Employees who are
similarly situated.
8.3 Amendment and 'Termination
The Employer shall have the right to amend, modify or terminate this Plan at any time. In the
event of the complete discontinuance of this Plan, the entire interest of each Participant
affected thereby shall immediately become 100% Vested. The Employer shall not be liable
for the payment of any benefits under this Plan and all benefits hereunder shall be payable
solely from the assets of the Trust.
17
NB I :664952.7
APPENDIX A
ANNUAL ADDITION LIMITS
Section 3.5 of the Plan shall be construed in accordance with this Appendix A. Unless the
context clearly requires otherwise, words and phrases used in this Appendix A shall have the same
meanings that are assigned to them under the Plan.
A.1 Definitions
As used in this Appendix A, the following terms shall have the meanings specified below.
"Annual Additions" shall mean the sum credited to a Participant's Accounts for any Plan
Year of (i) Employer contributions, (ii) Employee contributions, (iii) forfeitures, and (iv) amounts
credited after March 31, 1984, to an individual medical account, as defined in Section 415(1)(2) of
the Code which is part of a pension and annuity maintained by the Employer.
"Defined Benefit Plan" means a plan described in Section 4140) and 414(k)(2) of the
Code.
"Defined Contribution Plan" means a plan described in Section 414(1) and 414(k)(2) of
the Code.
"Defined Benefit Plan Fraction" shall mean a fraction, the numerator of which is the
projected annual benefit (determined as of the close of the relevant Plan Year) of the Participant
under all Defined Benefit Plans maintained by the Employer, and the denominator of which is the
lesser of (i) the product of 1.25 multiplied by the dollar limitation in effect under Section
415(b)(1)(A) of the Code for the Plan Year, or (ii) the product of 1.4 multiplied by the amount
which may be taken into account under Section 415(b)(1)(B) of the Code with respect to the
Participant for the Plan Year.
"Defined Contribution Plan Fraction" shall mean a fraction, the numerator of which is
the sum of the annual additions to a Participant's accounts under all Defined Contribution Plans
maintained by the Employer, and the denominator of which is the sum of the lesser of (i) or (ii) for
such Plan Year and for each prior Plan Year of service with the Employer, where (i) is the product
of 1.25 multiplied by the dollar limitation in effect under Section 415(c)(1)(A) of the Code for the
Plan Year (determined without regard to Section 415(c)(6) of the Code), and (ii) is the product of
1.4 multiplied by the amount which may be taken into account under Section 415(c)(1)(B) of the
Code (or Section 415(c)(7) of the Code, if applicable) with respect to the Participant for the Plan
Year. Solely for purposes of this definition, contributions made directly by an Employee to a
Defined Benefit Plan which maintains a qualified cost -of- living arrangement as such term is
defined in Section 415(k)(2) shall be treated as Annual Additions. Notwithstanding the foregoing,
the numerator of the Defined Contribution Plan Fraction shall be adjusted pursuant to Regulation
Section 1.415- 7(d)(1), Questions T -6 and T -7 of Internal Revenue Service Notice 83 -10, and
Questions Q -3 and Q -14 of Internal Revenue Service Notice 87 -21.
18
NB 1:664952.7
"Section 415 Compensation" shall mean a Participant's wages within the meaning of
Code Section 3401(a) and all other payments of compensation to the Participant by the Employer
(in the course of the Employer's business) for which the Employer is required to provide the
Participant a written statement under Code Sections 6041(d), 6051(a)(3) and 6052. Section 415
Compensation shall be determined without regard to any rules under Code Section 3401(a) that
limit the remuneration included in wages based on the nature or location of the employment or the
services performed. Compensation for any limitation year is the compensation actually paid or
includible in gross income during such year. Effective January 1, 1998, "Section 415
Compensation" shall include elective deferrals as defined in Section 402(g)(3) of the Code and
any amount which is contributed or deferred by the Employer at the election of an Employee and
which is not includible in the gross income of the Employee by reason of Code Section 125,
132(f)(4) or 457.
A.2 Annual Addition Limitations
(a) The compensation limitation of Section 3.5 of the Plan shall not apply to any
contribution for medical benefits (within the meaning of Section 419A(f)(2)) after separation from
service which is treated as an Annual Addition. In the event that Annual Additions to all the
accounts of a Participant would exceed the limitations of Section 3.5 of the Plan, they shall be
reduced in the following priority: (i) return of Employee contributions to the Participant; (ii)
reduction of Employer contributions.
(b) If any Employer contributes amounts on behalf of Participants covered by the Plan
to other Defined Contribution Plans, the limitation on Annual Additions provided in Article III of
the Plan shall be applied to Annual Additions in the aggregate to the Plan and such other plans.
Reduction of Annual Additions, where required, shall be accomplished by reducing contributions
under such other plans pursuant to the directions of the fiduciary for administration of such other
plans or under priorities, if any, established by the terms of such other plans, and then, if
necessary, by reducing contributions under the Plan.
(c) In any case where a Participant under the Plan is also a participant under a Defined
Benefit Plan or a Defined Benefit Plan and other Defined Contribution Plans maintained by the
Employer, the sum of the Defined Benefit Plan Fraction and the Defined Contribution Plan
Fraction shall not exceed 1.0. Reduction of contributions to or benefits from all plans, where
required, shall be accomplished by first reducing benefits under such other Defined Benefit Plan
or plans, then by allocating any excess in the manner set out above with respect to the Plan, and
finally by reducing contributions or allocating any excess contributions with respect to other
Defined Contribution Plans, if any; provided, however, that adjustments necessary under this or
the next preceding paragraph may be made in a different manner and priority pursuant to the
agreement of the Employer and the administrators of all other plans covering such Participant,
provided such adjustments are consistent with procedures and priorities prescribed by the
Regulations under Section 415 of the Code. This Section A.2(c) shall not apply to Participants
who are Employees on or after January 1, 2000.
(d) In the event the limitations of Section 3.5 of the Plan or subsections (a) or (b) of
this Appendix A are exceeded and the conditions specified in Treasury Regulations §1.415-
6(b)(6) are met, the Employer may elect to (i) allocate the excess amount to other Participants in
19
NB 1:664952.7
the Plan for that Limitation Year, (ii) use the excess amount to reduce employer contributions for
the Participant for future Limitation Years (to the extent the Participant remains covered by the
Plan), or (iii) hold the excess amount unallocated for the Limitation Year and allocate it to all
Participants in the following Limitation Year(s).
NB t :664952.7
20
ADOPTI ®N OF THE AMENDED AND RESTATED
CITY OF SEAL BEACH
PARS ALTERNATE RETIREMENT SYSTEM
The Amended and Restated City of Seal Beach PARS Alternate Retirement System is hereby
adopted effective January 1, 2002.
IM
TITLE: City Manager
DATE:
PLAN SUBMISSI ®N TO THE IRS FOR A LETTER OF DETERMINATI ®N
pSE SIGN
&D
A'TTc
The decision to submit the foregoing Plan to the IRS shall be determined by the Plan
Administrator pursuant to his/her initials below:
Yes, please submit the Plan to the IRS for an individual Letter of Determination.
_ No, do not submit the Plan to the IRS for a Letter of Determination. �9
If answered Yes, please provide the following information:
Employer Tax ID# Tax Year End
List all other qualified retirement plans offered by City of Seal Beach (e.g. PERS, STRS)
Name of Qualified Plan I Defined Benefit or Defined Contribution
PERS Defined Benefit
21
NB 1:664952.7
AMENDMENT
TO
THE CITY OF SEAL BEACH
PARS ALTERNATE RETIREMENT SYSTEM
WHEREAS, City of Seal Beach (the "Agency ") has previously adopted the City of
Seal Beach PARS Alternate Retirement System (the "Plan"); and
WHEREAS, the Agency has the right to amend that Plan in accordance with Section
8.3 of the Plan; and
WHEREAS, the Agency deems it to be in the best interest of the Agency and the Plan
to amend the Plan to comply with the final Regulations under Section 415 of the Internal Revenue
Code.
NOW, THEREFORE, BE IT RESOLVED, that Appendix A of the Plan is hereby
amended to comply with the final Regulations under Section 415 of the Internal Revenue Code as
follows:
1. The definition of "Section 415 Compensation" is amended as follows, effective as of January 1,
2009:
"Section 415 Compensation" shall mean a Participant's wages within the meaning of Code
Section 3401(a) and all other payments of compensation to the Participant by the Employer (in the
course of the Employer's business) for which the Employer is required to provide the Participant a
written statement under Code Sections 6041(d), 6051(a)(3) and 6052. Section 415 Compensation shall
be determined without regard " to any rules under Code Section 3401(a) that limit the remuneration
included in wages based on the nature or location of the employment or the services performed.
Compensation for any limitation year is the compensation actually paid or includible in gross income
during such year. Effective January 1, 1998, "Section 415 Compensation" shall include elective
deferrals as defined in Section 402(g)(3) of the Code and any amount which is contributed or deferred
by the Employer at the election of an Employee and which is not includible in the gross income of the
Employee by reason of Code Section 125, 132(f)(4) or 457. "Section 415 Compensation" does not
include any amounts paid following a severance from employment, except amounts paid or includible
in gross income by the later of 2 -1/2 months after a severance from employment or the end of the Plan
Year that includes the severance from employment shall be included if, absent the severance from
employment, such compensation would have been paid to the Participant while the Participant
continued in employment with the Employer, and such payments represent regular compensation for
services during the Participant's regular working hours (or compensation for services outside the
Participant's regular working hours, such as overtime or shift differential), commissions, bonuses or
similar compensation.
t
2. Appendix A, Section A.2 (d) shall be deleted from the Plan. �,�
Executed this day of , 2009. 4
City of Seal Beach
Title: CitesManager
NB 1:649331.1