Ord 91-118
ORDINANCE NO. 91-118
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF FEDERAL WAY, WASHINGTON, RELATING TO SOCIAL
SECURITY, AMENDING THE CITY OF FEDERAL WAY
EMPLOYEES I RETIREMENT SYSTEM AS REQUIRED BY
INTERNAL REVENUE SERVICE. (AMENDING
ORDINANCE 90-74).
WHEREAS, under the Federal Social Security Act (42 USCA,
§418(g), the city council had previously established an employee
retirement system in lieu of employee and employer contributions to
the Federal Social Security Program; and
WHEREAS, such a system was established by creating a Plan
and a Trust to provide a defined contribution plan providing
retirement and other related benefits for the employees of the city
eligible to participate; and
WHEREAS,
the
adopted
Plan,
as
a
social
Security
alternative program, provides employees of the city of Federal Way
with benefits that equal or exceed the current or future Social
security benefits system; and
WHEREAS, it is the intent of the council that the Plan
qualify for approval under sections 401 and 410 through 417 of the
Internal Revenue code; and
WHEREAS,
on September 23,
1991,
the Internal Revenue
Service issued a favorable determination on the Plan, conditioned
upon the City council adoption of certain amendments thereto;
NOW,
THEREFORE,
THE CITY COUNCIL OF THE CITY OF FEDERAL WAY, WASHINGTON,
DOES HEREBY ORDAIN AS FOLLOWS:
f~
section 1.
The City council hereby amends the City of
Federal Way Employees'
Retirement system as is set forth more
particularly in "City of Federal Way Employees' Retirement System"
attached hereto and by this reference incorporated herein.
section 2.
All prior acts and actions of employees and
the city prior to the effective date of this ordinance that are in
compliance with such plan are hereby ratified.
section 3.
The amendments to the Plan are specifically
enacted with the intent that the Plan qualify for approval under
sections 401 and 410 through 417 of the Internal Revenue Code and
that the Trust qualify for approval under §501 of the Internal
Revenue Code now or as hereinafter enacted.
section 4.
Should any section, sentence, clause, phrase,
or subsection of this ordinance or the Plan adopted herein or the
application of the ordinance or Plan to a specific person or set of
circumstances be declared unconstitutional
or
invalid for any
reason,
such
decision
shall
not
affect
the
validity
or
constitutionality of any other section, sentence, clause or phrase
of this ordinance, this plan or their application to any other
person or set of circumstances.
section 5.
Effective Date.
This ordinance shall be
effective
five
(5)
days
after passage
and publication
of
an
approved summary consisting of the title to this ordinance.
this
PASSED by the city Council of the City of Federal Way
/1~ day of d)/(1ßmh.J , 1991.
- 2 -
CITY OF FEDERAL WAY
f1. ~ ¿~ f9g¡
MAYO, DEBRA ERT L
~f~~ ~C
FILED WITH THE CITY CLERK: 12/17/91
PASSED BY THE CITY COUNCIL: 12/17/91
PUBLISHED: 12/20/91
EFFECTIVE DATE: 12/25/91
ORDINANCE NO. 91-118
LA\EF\ORD\91-0318.RET
- 3 -
CITY OF FEDERAL WAY
EMPLOYEES' RETIREMENT SYSTEM
FEDJOOO2,DDC
3333FED141~1
PREAMBLE
The purpose of this System, consisting of a Plan and Trust, is to provide a defined
contribution plan providing retirement and other related benefits for those
Employees of the Employer who are eligible to participate hereunder.
The Plan has been created with the intent that it qualify for approval under Sections
401 and 410 through 417 of the Internal Revenue Code. The Trust has been
created with the intent that it qualify for approval under Section 501 of the Code. In
case of any ambiguity in the Plan's language, it will be interpreted to accomplish the
Plan's intent of qualifying under the Code.
This System is created exclusively for the benefit of the eligible Employees and their
Beneficiaries. Neither the Employer, the Plan Administrator nor the Trustee will
apply or interpret the terms of the Plan in any manner that permits discrimination in
favor of Highly Compensated Employees. All Employees under similar
circumstances will be treated alike.
The undersigned Employer and Trustees hereby adopt this Plan and Trust to be
effective as of and for Plan Years beginning on and after June 1, 1990, and agree to
be bound by the terms and conditions of this document.
FEDJOOO2.DOC
3333FEDl4I~1
TABLE OF CONTENTS
PAGE NO.
ARTICLE 1 - DEFINITIONS...............................................................................1-1
1.01 -Account.........................................................................,...............1-1
1.02 - Accounting Period, Valuation Period............................................. 1-1
1.03 - Accrued Benefit..............................................,..............................1-1
1.04 - Beneficiary -....................................................................................11
1.05 - Cash-Out Distribution....................................................................1-1
1.06 - Code..............................................................................................1-1
1.07 - Reserved..,....................................................................................1-2
1.08 - Compensation Definitions .............................................................1-2
1.09 - Date Definitions.............................................................................1-3
1.10 - Eligible Employee Classification....................................................1-4
1.11 - Employee Definitions.....................................................................1-4
1.12 -Employer Definitions.............................................................. .......1-6
1.13 - Forfeiture.......................................................................................1-6
1.14 - Highly Compensated Definitions ...................................................1-7
1.15 - Reserved........,............................................................................1-10
1.16 - Leave of Absence .......................................................................1-10
1.17 - Nondi3crimination Dcfinition3Reserved.......................................1-11
1.18 -Optional Benefit Form................................................................. 1-17
1.19 - Participant Definitions..................................................................1-17
1.20 - Payroll Withholding Agreement...................................................1-18
1.21 - Plan.............................................................................................1-19
1.22 - Plan Administrator .......................................................................1-20
1.23 - Plan Assets, Trust Fund..............................................................1-20
1,24 - Reserved.....................................................................................1-20
1.25 - Reserved.....................................................................................1-20
1.26 - Qualified Election ........................................................................1-20
1.27 - Retirement Age Definitions..........................................................1-21
1.28 - Service Definitions.......................................................................1-21
1.29 - Spouse, Surviving Spouse ..........................................................1-23
1.30 - Reserved.....................................................................................1-24
1.31 - Trust Definitions ..........................................................................1-24
1.32 - Reserved.....................................................................................1-24
1.33 - Vested Accrued Benefit...............................................................1-24
1.34 - Written Resolution .......................................................................1-25
1.35 - Year Definitions........................................................................... 1-2 5
ARTICLE 2 - PARTICIPATION..........................................................................2-1
2.01 - Participation -..................................................................................21
2.02 - Participation After Reemployment.................................................2-1
FEDJOOO2.DOC
3333FED141~1
2.03 - Change in Employment Classification...........................................2-1
ARTICLE 3 - PARTICIPANT ACCOUNTS ........................................................3-1
3.01 - Participant Contribution Accoun....................................................3-1
3.02 - Voluntary Contribution Account.....................................................3-1
3.03 - Employer Contribution Account.....................................................3-2
3.04 - Rollover Account ...........................................................................3-3
3.05 ÞJondi3erimination ncquircmont3 ..................................................3 3
ARTICLE 4 - ACCOUNTING AND VALUATION...............................................4-1
4.01 - General Powers of the Plan Administrator ....................................4-1
4.02 - Accounting Procedure...................................................................4-1
ARTICLE 5 - RETIREMENT BENEFITS............................................................5-1
5.01 - Valuation of Accounts....................................................................5-1
5.02 - Normal Retirement........................................................................5-1
5.03 - Disability Retirement .....................................................................5-1
5.04 - Termination of Employment ..........................................................5-1
5.05 - Form of Benefit Payment ..............................................................5-2
5.06 - Commencement of Benefit............................................................5-3
ARTICLE 6 - DEATH BENEFIT.........................................................................6-1
6.01 - Valuation of Accounts....................................................................6-1
6.02 - Pre-Retirement Death Benefit .......................................................6-1
6.03 - Post-Retirement Death Benefit......................................................6-1
6.04 - Designation of Beneficiary.............................................................6-1
ARTICLE 7 - LIMITATIONS ON BENEFITS .....................................................7-1
7.01 - Limitation on Annual Additions......................................................7-1
7.02 - Where Employer Maintains Another Qualified Plan ......................7-2
7.03 - Definitions Applicable to Article 7..................................................7-3
ARTICLE 8 - MISCELLANEOUS ......................................................................8-1
8.01 - Employment Rights of Parties Not Restricted ...............................8-1
8.02 - Alienation -......................................................................................81
8.03 - Qualification of Plan ......................................................................8-2
8.04 - Construction -..................................................................................82
8.05 - Fiduciaries.....................................................................................8-2
8.06 - Reserved.......................................................................................8-3
8.07 - Adoption and Withdrawal by Other Organizations ........................8-3
8.08 - Employer Contributions.................................................................8-5
ARTICLE 9 - ADMINISTRATION ......................................................................9-1
9.01 - Plan Adminstrator..........................................................................9-1
FEDJOOO2,DOC
33'" FED 14/~1
9.02 - Powers and Duties of the Plan Administrator................................9-1
9.03 - Actions of the Plan Administrator ..................................................9-1
9.04 - Reliance on Plan Administrator and Employer..............................9-2
9.05 - Reserved....................................,..................................................9-2
9.06 - Bond.............................,................................................................9-2
9.07 - Compensation of Plan Administrator.............................................9-2
9.08 - Claims Procedure..........................................................................9-3
9.09 - Liability of Fiduciaries....................................................................9-3
9.10 - Expenses of Administration...........................................................9-4
9.11 - Distribution Authority .....................................................................9-5
ARTICLE 10 - AMENDMENT OR TERMINATION OF PLAN ..........................10-1
10.01 - Right of Employer To Amend or Terminate...............................10-1
10.02 - Allocation of Assets Upon Termination of Plan ....................,....10-1
10.03 - Exclusive Benefit.......................................................................10-1
10.04 - Failure To Qualify......................................................................10-1
10.05 - Mergers. Consolidations or Transfers of Plan Assets ...............10-2
10.06 - Effect of Plan Amendment on Vesting Schedule....................... 10-2
ARTICLE 11 - TRUSTEE AND TRUST FUND ................................................11-1
11.01 -Acceptance of Trust.................................................................. 11-1
11.02 --TrustFund.................................................................................111
11.03 - Receipt of Contributions............................................................11-2
11.04 - Powers of the Trustee...............................................................11-2
11.05 - Investment in Common or Collective Trust Funds ....................11-4
11.06 - Investment in Insurance Company Contracts ...........................11-5
11.07 - Fees and Expenses from Fund .................................................11-6
11.08 - Records and Accounting ...........................................................11-6
11.09 - Distribution Directions ...............................................................11-7
11.10 -Third Party................................................................................ .11-7
11.11 -Professional Agents................................................................. .11-7
11.12 -Valuation of Trust..................................................................... .11-7
11.13 -Liability of Trustee..................................................................... 11-7
11.14 -No Bond................................................................................. ...11-8
11.15 -Ancillary Trustee.................................................................... ...11-8
11.16 - Removal or Resignation and Successor Trustee......................11-8
11.17 - Appointment of Investment Manager ........................................11-9
FEDJOOO2.DOC
33 33FED "I<yl
ARTICLE 1
DEFINITIONS
As used in this document, unless otherwise defined or required by the context, the
following terms have the meanings set forth in this Article 1. Some of the terms used
in the Plan and Trust are not defined in this Article 1, but for convenience are
defined as they are introduced in the text.
1.01
Account
Account means one or more separate accounts maintained for each
Participant reflecting applicable contributions, applicable forfeitures,
investment income (loss) allocated thereto and distributions.
1.02 Accountina Period. Valuation Period
The terms Accounting Period and Valuation Period are used interchangeably
and mean each Plan Year.
1.03 Accrued Benefit
A Participant's Accrued Benefit as of a given date is equal to the total value of
his Accounts determined as of the Valuation Date immediately before the
date of determination plus any other amounts withheld from the Participant's
Compensation after the Valuation Date. A Participant's Accrued Benefit will
not be reduced solely on account of any increase in the Participant's age or
service or on account of an amendment to the Plan.
A Participant's Vested Accrued Benefit is equal to his Vested Percentage of
his Employer Contribution Account plus 100% of his other Accounts.
1.04 Beneficiary
Beneficiary means the person, persons, trust or other entity who is
designated to receive any amount payable upon the death of a Participant.
1.05 Cash-Out Distribution
Cash-Out Distribution means a distribution to a Participant, as described in
Article 5, upon termination of employment of the portion of his Vested
Accrued Benefit which is subject to the Vesting Schedule.
1,06 Code
Code means the Internal Revenue Code of 1986, as it may be amended from
time to time, and regulations issued thereunder. Reference to a section of the
Code includes that section and any comparable section or sections of any
FEDJOOO2.DOC
3333FED141~1
1-1
future legislation that amends, supplements or supersedes such section and
any regulations issued thereunder.
1.07 Reserved
1.08 Compensation Definitions
(a)
(b)
FEDJOOO2,DOC
3333FED141~1
Aggregate Compensation
Aggregate Compensation means a Participant's wages as defined in
Code Section 3121 (a) for purposes of calculating social security taxes,
but determined without regard to the wage base limitation in Code
Section 3121(a)(1), the special rules in Code Section 3121(v)
(applicable to certain elective contributions and nonqualified deferred
compensation), any rules that limit covered employment based on the
type or location of the Employer, and any rules that limit wages based
on family relationship or based on the nature or location of the
employment or the services performed (such as the exceptions to the
definition of employment in Code Section 3121 (b)(1) through (20)).
Compensation
Unless otherwise specifically provided in this Plan, Compensation
means that portion of the Participant's Aggregate Compensation that
does not exceed the Social Security taxable wage base under Code
Section 3121 (a)(1) in effect at the beginning of the Plan Year, reduced
by all of the following items (even if includable in gross income):
Reimbursements or other expense allowances;
Fringe benefits (cash and noncash);
Moving expenses;
Deferred compensation;
Welfare benefits.
Compensation also includes Withheld Compensation.
If a Leased Employee is treated as an Employee, Compensation
includes Compensation received from the leasing organization which
is attributable to services performed for the Employer.
1-2
(c)
(d)
Withheld ComDensatio!1
Withheld Compensation means any amount withheld from a
Participant's Compensation under a Payroll Withholding Agreement
and contributed to the Plan by the Employer or any Related Employer
that is not includable in the Participant's gross income due to:
Code Section 125 (relating to cafeteria plans);
Code Section 402(a)(8) (relating to cash-or-deferred
arrangements under Code Section 401 (k));
Code Section 402(h) (relating to simplified employee pensions);
Code Section 403(b) (relating to tax-sheltered annuities);
Code Section 457(b) (relating to deferred compensation plans
of state and local governments and tax-exempt organizations);
and
Code Section 414(h)(2) (relating to employee contributions
under governmental plans that are picked up by the employing
unit and thus treated as employer contributions).
Limitation
Notwithstanding the foregoing, for all purposes under this Plan except
determining the limitations on allocations or benefits under Article 7,
Compensation in excess of $200,000 (as adjusted by the Secretary of
the Treasury under Code Section 415(d)) will be disregarded. In
determining the Compensation of a Participant for purposes of this
limitation, the rules of Code Section 414(q)(6) apply, except that the
term "family" includes only the spouse of the Participant and any lineal
descendants of the Participant who have not attained age 19 before
the close of the Plan Year. If, as a result of the application of such
rules the adjusted $200,000 limitation is exceeded, then the limitation
will be prorated among the affected individuals in proportion to each
individual's compensation as determined under this section before the
application of this limitation.
1.09 Date Definitions
FEDJOW2,DDC
33 33 FED "hyl
(a)
Accounting Date. Valuation Date
The terms Accounting Date and Valuation Date are used
interchangeably and mean the last day of each Accounting Period.
1-3
(b)
(c)
(d)
(e)
(f)
(g)
Annuity StartinQ Date
Annuity Starting Date means the first day on which all events have
occurred that entitle the Participant to receive a benefit.
Effective Date
The Effective Date of the Plan is June 1, 1990.
Emoloyment Commencement Date
The date an Employee first performs an Hour of Service for the
Employer is his Employment Commencement Date.
An "adjusted" Employment Commencement Date may be used to
reflect Periods of Severance so that all Periods of Service can be
aggregated unless such periods can be disregarded under the break-
in-service rules.
Entrv Date
Entry Date means an Employee's Employment Commencement Date.
Normal Retirement Date
A Participant's Normal Retirement Date is the date on which the
Participant attains Normal Retirement Age.
Required BeginninQ Date
Required Beginning Date means the later of:
April 1 of the first calendar year following the Participant's
attaining age 70 1/2; or
April 1 of the first calendar year following his retirement.
1.10 EIiQibie Emoloyee Classification
An Eligible Employee Classification is a classification of Employees, the
members of which are eligible to participate in the Plan. All classifications are
Eligible Employee Classifications other than members of the City Council.
1.11
FEDJOOO2.DOC
33 33 FED ""yl
Emolovee Definitions
(a)
Emolovee
An Employee means:
(1)
Any person who is employed by the Employer or a Related or
Adopting Employer; and
1-4
(b)
(c)
FEDJOCO2,DDC
3333FED"'~1
(2)
Any Leased Employee deemed to be an Employee of any
Employer described in clause (1) as provided in Code Section
414(n) or (0).
The term does not include any person who is a nonresident alien and
who receives no earned income from the Employer which constitutes
income from sources within the United States.
Highly Compensated Employee
Highly Compensated Employee means any individual who is a Highly
Compensated Active Employee or a Highly Compensated Former
Employee within the meaning of Code Section 414(q) and the
regulations under that section.
Leased Employee
A Leased Employee means any person who, pursuant to an
agreement between the Employer or any Related Employer
("Recipient Employer") and any other person ("Leasing Organization"),
has performed services for the Recipient Employer on a substantially
full-time basis for a period of at least one year and such services are
of a type historically performed by employees in the business field of
the Recipient Employer. The term also includes any person treated as
a Leased Employee as provided in Code Section 414(0) and the
regulations thereunder. Contributions or benefits provided by the
Leasing Organization which are attributable to the services performed
for the Recipient Employer will be treated as provided by the Recipient
Employer.
If all Leased Employees constitute less than 20% of the Employer's
non-highly-compensated work force within the meaning of Code
Section 414(n)(1 )(C)(ii), then the preceding sentence will not apply to
any Leased Employee if such Employee is covered by a money
purchase pension plan ("Safe Harbor Plan") which provides:
(1 )
a nonintegrated employer contribution rate of at least 10% of
Aggregate Compensation, but including Withheld
Compensation;
(2)
(3)
immediate participation; and
full and immediate vesting.
Years of Eligibility Service for purposes of eligibility to participate in the
Plan and Years of Vesting Service for purposes of determining a
1-5
Participant's Vested Accrued Benefit include service by an Employee
as a Leased Employee.
1.12 Employer Definitions
(a)
(b)
(c)
(d)
Employer
The Employer and Plan Sponsor is CITY OF FEDERAL WAY.
Adöptina Emplover
An Adopting Employer is any organization which has adopted this Plan
and Trust in accordance with Section 8.07.
Predecessor Employer
The term Predecessor Employer means any prior employer to which
the Employer is the successor, including any Predecessor Employer
for which the Employer maintains the obligations of a Predecessor
Plan established by the Predecessor Employer and the
preincorporation local governing authority to which the CITY OF
FEDERAL WAY is the successor,
Related Emplover
The term Related Employer means any other corporation, association,
company or entity on or after the Effective Date that is, along with the
Employer, a member of
a controlled group of corporations (as defined in Code Section
414(b)),
a group of trades or businesses which are under common
control (as defined in Code Section 414(c)),
an affiliated service group (as defined in Code Section 414(m)),
or
any organization or arrangement required to be aggregated with
the Employer by Treasury Regulations issued under Code
Section 414(0).
1.13 Forfeiture
The term Forfeiture refers to that portion, if any, of a Participant's Accrued
Benefit which is in excess of his Vested Accrued Benefit following the
termination of the Participant's employment.
FEDJOOO2.DOC
33 33 FED "I<yl
1-6
A Forfeiture is considered to occur as of the earlier of (a) the date of the
occurrence of the fifth of 5 consecutive One Year Breaks-in-Service or (b) the
dElte Q Co3h Out Di3tribution occur3 in accordance with the provi3ion3 of
AffieJe-5.
1.14 Highly Compensated Definitions
(a)
Compensation
For purposes of this section, Compensation means Aggregate
Compensation increased by Withheld Compensation.
(b)
Determination Year
Determination Year means the Plan Year.
(c)
Family Member
Family Member means an Employee who is the spouse, a lineal
ascendant or descendant, or the spouse of a lineal ascendant or
descendant of
a 5-percent owner (within the meaning of Code Section 416(i))
of the Employer or any Related Employer who is an active or
former Employee; or
a Highly Compensated Employee who is one of the 10 most
highly compensated employees ranked on the basis of
compensation paid by the Employer during the Determination
Year or the Lookback Year.
For purposes of this section the Family Member and the Highly
Compensated Employee will be considered one Employee. A Family
Member's Compensation and benefits will be aggregated with those of
the Highly Compensated Employee whether or not
the Family Member is in a category of Employees that may be
excluded in determining the number of Employees in the Top-
Paid Group; or
the Family Member would otherwise be treated as a Highly-
Compensated Employee.
If an Employee is required to be aggregated as a member of more
than one family group, all eligible employees who are members of
those family groups that include that employee will be aggregated as
one family group.
FEDJOO02,DOC
""FED ""y'
1-7
(d)
(e)
FEDJOO02.DOC
3333FED14/~1
Highly Compensated Emplovee
Highly Compensated Employee means any individual who is a Highly
Compensated Active Employee or a Highly Compensated Former
Employee within the meaning of Code Section 414(q) and the
regulations under that section.
Highly Compensated Active Employee
Highly Compensated Active Employee means any individual who
during the Determination Year or the Lookback Year:
(1 )
was at any time a 5-percent Owner (within the meaning of Code
Section 416(i)) of the Employer or any Related Employer;
(2)
received Compensation from the Employer and all Related
Employers in excess of $75,000 (or any greater amount
determined by regulations issued by the Secretary of the
Treasury under Code Section 415(d));
(3)
received Compensation from the Employer and all Related
Employers in excess of $50,000 (or any greater amount
determined by regulations issued by the Secretary of the
Treasury under Code Section 415(d)) and was in the Top-Paid
Group of Employees; or
(4)
was an Officer of the Employer or any Related Employer (as
that term is defined in the regulations under Code section
416(i)) having annual Compensation greater than 50 percent of
the Defined Benefit Dollar Limit described in Section 7.03(d) for
the applicable year. For this purpose, if no Officer received
enough Compensation to be a Highly Compensated Employee
under the preceding sentence, the highest-paid Officer will be
treated as a Highly Compensated Employee regardless of
whether or not that Employee is included in any other category
of Highly Compensated Employees. If the number of Officers
who satisfy the foregoing definitions exceeds 3, the number of
Officers treated as Highly Compensated Active Employees will
not exceed the lesser of 50 Employees or the greater of 3
Employees or 10% of all Employees determined without regard
to statutory or other exclusions.
No individual described in subparagraphs (2), (3) or (4) above will be
treated as a Highly Compensated Active Employee for the
Determination Year unless he was a Highly Compensated Active
1-8
(f)
(g)
(h)
(i)
(j)
(k)
FEDJOOO2.DOC
3333FED141~1
Employee for the Lookback Year or was among the 100 most highly
compensated Employees of the Employer and all Related Employers
for the Determination Year.
Highly Comoensated Former Emoloyee
Highly Compensated Former Employee means any Former Employee
who had a Separation Year (within the meaning of Treasury
Regulation Section 1.414(q)-1T Q&A-5) and was a Highly
Compensated Active Employee for either the Separation Year or any
Determination Year ending on or after the Employee's 55th birthday.
Highlv Comoensated Grouo
Highly Compensated Group means all Highly Compensated
Employees.
Lookback Year
Lookback Year means the 12-month period immediately preceding the
Determination Year.
Non-Hiahly Comoensated Emoloyee
Non-Highly Compensated Employee means an Employee who is
neither a Highiy Compensated Employee nor a Family Member.
Non-Highly Comoensated Grouo
Non-Highly Compensated Group means all Non-Highly Compensated
Employees.
Too-Paid Grouo
Top-Paid Group means those individuals who are among the top 20
percent of Employees of the Employer and all Related Employers
when ranked on the basis of Compensation received during the year.
In determining the number of individuals in the Top-Paid Group (but
not the identity of those individuals), the following individuals shall be
excluded:
(1 )
Employees who have not completed 6 months of Service by the
end of the year. For this purpose, an Employee who has
completed One Hour of Service in any calendar month will be
credited with one month of Service;
(2)
(3)
Employees who normally work less than 171/2 hours per week;
Employees who normally work fewer than 6 months during any
year. For this purpose, an Employee who has worked on one
1-9
day of a month is treated as having worked for the whole
month;
(4)
Employees who have not reached age 21 by the end of the
year;
(5)
Nonresident aliens who received no earned income (which
constitutes income from sources within the United States) within
the year from the Employer or any Related Employer; and
(6)
Employees covered by a Collective Bargaining Agreement if
90% or more of all Employees of the Employer and all
Related Employers are covered by Collective Bargaining
Agreements; and
this Plan covers only Employees who are not covered
under a Collective Bargaining Agreement.
1.15 Reserved
1.16 Leave of Absence
(a)
FEDJOOO2DOC
33 33 FED "I<yl
Authorized Leave of Absence
An Authorized Leave of Absence means a period of time of one year
or less granted to an Employee by the Employer due to illness, injury,
temporary reduction in work force, educational leave or other
appropriate cause or due to military service during which the
Employee's reemployment rights are protected by law, provided the
Employee returns to the service of the Employer on or before the
expiration of such leave, or in the case of military service, within the
time his reemployment rights are so protected. All Authorized Leaves
of Absence are granted or denied by the Employer in a uniform and
nondiscriminatory manner, treating Employees in similar
circumstances in a like manner.
(b)
Maternitv or Paternitv Leave of Absence A Maternitv or Paternitv
Leave of Absence means an absence from work for any period by
reason of the Employee's pregnancy, birth of the Employee's child,
placement of a child with the Employee in connection with the adoption
of such child, or any absence for the purpose of caring for such child
for a period immediately following such birth or placement. The Hours
of Service credited for a Maternity or Paternity Leave of Absence are
those which would normally have been credited but for such absence;
1-10
in any case in which the Plan Administrator is unable to determine
such hours normally credited, 8 Hours of Service per day will be
credited.
(c)
Break in Service
. Solely for purposes of determining whether a One Year Break-in-
Service has occurred, a Participant who is absent from work on an
Authorized Leave of Absence or a Maternity or Paternity Leave of
Absence will receive credit for the Hours of Service which otherwise
would have been credited to the Participant but for such absence.
The Date of Severance for a Participant who is absent from work on a
Maternity or Paternity Leave of Absence is the second anniversary of
the date on which the absence begins. The period between the initial
date of absence and the first anniversary of the initial date of absence
is deemed to be a period of Service. The period between the first and
second anniversaries of the initial date of absence is neither a period
of service nor a period of severance.
1.17 ReservedNondiGcrimination DcfinitionG
FEDJOOO2,DOC
3333FED"'~1
far
Aggregate Limit
'Nith re3pect to a gi'¡en Plan Year, A¡¡¡¡regate Limit mean3 the 3um of
(^) I (8). However, '""ith re3pect to r'JaR Year:> which begiR before
JaF1uary 1, 1 QQ2, Aggregate Limit meaF13 the 3um of (C) I (D) if
greater than the Gum of (A) I (8) '""here:
tAr
tBt
i3 oqual to 125% of tAe greater of Dr' or cr;
iG equal to 2 percentage poiRt3 plU3 the leGGer of Dr' or Cr'. Rot
to exceed 2 time3 the le33er of Dr or Cr';
tG1
f97
i3 equal to 125% of the leGGer of Dr' or cr;
iG equal to 2 percentage point3 pluG tAe greater of Dr or cr.
not to exceed 2 time3 the greater of Dr or cr;
Dr repreGentG tho Deferral Percentage for the Non highly
Compcn3ated Croup eligible uF1der the CaGA or Deferred
ArraRgement for the rlaR Year; and
cr repre3ent3 the Contribution Percentage fòr the Non highly
CompeR3ated Croup eligible uF1der the plan providing for the
employee CoF1tribution3 or Matching CoF1tribution3 for the Plan
1-11
fer
te}
fer
FEDJOOO2,DOC
33 33 FED 141~1
Year beginning '.vith or within thc Plan Yoar of thc Cash or
Deferred t.rrangement.
CasR or Deferred Arranacfficnt (CODA)
Cash or Deferred Arrangcfficnt ffiean3 an arrangcffient which i3 part of
a plan satisfying tRC requirements of Code Section 401 (a) and the
additional rcquircfficnts of Code Section 401 (1<) and regulations i3sucd
under that Section,
Comocnsation
for purp03c3 of this Section, Coffipen3ation ffican3 Aggregate
Compensation plus WitRheld Coffipcnsation. Coffipensation received
while an effiployee is not eligible to participatc in the Plan i3
disregarded,
Contribution Percentage
Contribution Percentage means, for any specified group, the average
of tRe ratios calculated (to the nearest one RundretR of one pefccnt)
separately for eacR Participant in thc group, of thc affiount of
effiployec Contributions and Matching Contributions 'whicR arc mado
by or on behalf of each f"articipant for a f"lan Year to cach
Participant's Compensation for the Plan Year.
for purposes of deterffiining thc ContriBution Percentage, cach
employee who is cligiblc undcr thc tcrffi3 of thc Plan to ffialcc or to
havc contributions ffiade on his beRalf is tfeatcd as a Participant. The
Contribution f"crccntagc of an eligible effiployec v/ho ffial(c3 no
employee Contribution and receives no Matching ContriBution is zero,
for purposc3 of dotcfffiining tRC ContriBution Percentage of a
Participant who i3 a Highly Coffipensated effiployee, tRe f"articipant's
Coffipcnsation includes tRc Compcnsation of any faffiily Mcffibcr of
thc Participant. Lilccwi3e, thc Participant's effiploycc ContriButions and
Matching Contributions include thc effiploycc Contributions and
Matching Contributions for any faffiily Member of tlge Participant.
Subscction (c) of tRC la3t scction of Article 3 will bc applied according
to the previsions of this paragraph.
Thc Contribution Percentage of a Participant wl9o is a Highly
Compensated effiployee for the Plan Year and '....he is eligible to ffialcc
employee Contributions or receive an allocation of Matching
Contributions (including elective Contributions and Non elccti'v'c
Contributions ....hich arc treated as employee or Matching
Contributions for purposcs of the Contribution Percentage Tc3t)
1-12
fe}
FEDJOO02,DOC
3333FED141~1
allocated to hi3 aeeounts under hvo or fRore plElns which Elre
sponsored by the [fRployer ',vill Be deterfRined El3 if thc [fRployee Elnd
MEltching Contributions were mElde under El 3inglc plan, for purpose3
of tAis paragragA, if a ¡¡igAly CofRpensatmj [fRployce participatcs iR
two or more such plElns which hElle different PIEln YeElr3, all plElns
eneJing '",ith or within thc 3Elme eEllendflr yeElr will be treElted ElS El single
3Iefr.
Contribution PercentfléIC Test
TAc Contribution Percentage Te3t is a test Elpplied on El PIEln Year
basis to determine whether a plan fReets the requirefRents of Code
oeetjon 401 (fR). The Contribution Percentage Test mElY be fRet by
either satisfying the Ccneral ContriBution PercentElge Test or tAe
AlterRElti','e Contribution PercentElge Te3t.
The Ceneral Contribution Percentage Test is satisfied if the
Contribution Percentage for the HigAly Compensated Croup docs not
exceed 125% of the Contribution Percentage for the Non highly
CofRpensElted Croup,
The Alternati'Je Contribution Percentage Test is 3atisfied if the
Contribution Percentage for the Highly CofRpensated Croup docs not
exeeed the lesGer of:
the Contribution Percentage for the Non highly CofRpensated
Croup plus 2 percentElge points, or
the ContriBution Percentage for the NOR highly CofRpeRGated
Croup fRultiplied by 2.0.
With re3pect to Plan Years whjcA begin on or after January 1, 1080, if
one or fRore Highly CofRpen3ated [m¡>loyee3 of tAe [fRployer or any
nciElted [fR¡>loyer arc eligible botA in a CaGh or Deferred J\rrangefRent
Elnd in a plan 'which ¡>roJides for [fRployee Contributions or Matching
Contribution3, tAD ContriBution PerceRtage TeGt is satiGficd only if the
SUfR of thc Deferral Percentage and tAe ContriBution Percentage for
the Highly Compen3Elted Croup dee3 not exceed the Aggregate Limit.
tft
Deferral Percentage
Deferral Percentage means, for any 3pecified group, the average of
the ratios caleulated (to the nearest one hundreth of one percent)
3cparately for each Pflrtici¡>ant in the group, of the afRount of elective
Contribution3 wl9ieh arc fRade on behalf of each Participant for a Plan
Year to each PaFticipant'3 CofRpen3ation for the Plan Year,
1-13
FEDJOOO2.DOC
3333FED1<J~1
for purposes of determiRing thc Deferral Percentage, each Lm '3loyee
who is eligible under thc terms of the Plan to hf1'.'c contributions made
OR his bchalf is trcatcd as a Participant. The Deferral Percentage of aR
eligible employee ....ho makes no elective ContriButioR is zero.
ror '3urposes of determiRiRg the Deferral PerceRtage of a Participant
.....ho is a Highly Compensated employee, the CompeRsatioR of and
elective CoAtributioRS for the ParticipaRt iRclude, iR Ðccordance with
the provisions of subsoctioR (d) of the last section of J\rtiele 3, the
CompeRsation Dnd all elective CoRtriButions for any family Member of
the PartieipaRt.
TAe Deferral Percentage of a PartieipaRt .vho is a liighly
Compensated [m '3loyee for the Plan Year and Vlho is eligible to have
elective CoRtributions (incll:ldiRg Non elective COfì!ribulioRS or
Matcl9iRg CoRtributions which are treated as elective Contributions for
purposes of the Doferral Percentage Test) allocated to his aecounts
uRder two or morc Cash or Deferred ArraRgement3 ,....hieh arc
maintained by the employer will be determined as if the [Iectivo
CoRtributioRS wore made under a single ArraRgemeRt. ror purposes of
thi3 paragragh, if 0. '¡ighly Compen3ated [mplo}ee po.rticipatcs in tv,¡o
or more Cash or Deferred AmmgemeRts which have different Plo.R
Years, all Cash or Deferred /\rrangemeRls eAding witl9 or "",¡lhiR tlge
3ame calenE o.r year will Be treated as a 3ingle Armngemont.
ffi7
Deforral Percentaae Test
The Deferral PerceRtage Test is 0. test applied OR a PlaA Year basis to
determine ."",hether 0. plan meets the requirements of Code SectioR
401 (I(). The Deferral Percentage Test may be met by either satisfying
the Cencral Deferral PerccRto.ge Tc3t or the Altemati...e Defcrral
Percentago Te3t.
The Ccneral Deferml Pereento.ge Teat i3 30.tisfied if the Deferral
PercentDge for the Highly CompeRsated Crol:Jp doe3 not exceed 125%
of the Deferral PerceRto.ge for the Non highl} Compensated Croup.
The J\lterno.ti...e Deferml Percontage Test is 30.tisfied if the Deferral
Percentage for the llighly Compen3ated Croup doe3 not exceed the
lesser of:
the Deferral Percentage for the NoR highly Compensated
Croup plus 2 perceRtage point3, or
1-14
w
FEDJOO02.DOC
3333FED141~1
the Deferral Percentage for the ~Jon highly Compen3ated
Croup ffiultiplied by 2.0.
'Nith rÐ3pect to Plan Yeam which begin on or after January 1, 1080, if
one or more Highly Compensated [mployee3 of the employer or any
nelated Employer are eligible both in a Ca3h or Deferrocl Arrangement
and in a plan which provide3 for employee Contribution3 or Matching
Contributions, the Deferral Percentage Test i3 3ati3fied only if tho sum
of Deferral Pereentage and the Contribution Percentage for thc Ilighly
Compensated Croup doe3 not excecs the Aggregate Limit.
[Ieetive Contribution
[Iectl'o'e Contribution meanG any contribution made BY the employer to
a Ca3h or Deferred Arrangement on behalf of ana at the election of an
[co. An [Iecti'..e Contribution '.viii be taken into account for a given
Plan Year only if:
ne elective Contribution iG allocatccl to the Participant'3
Account a3 of a date .....ithin the Plan Year to .....hich it relateG;
The allocation i3 not contingent upon th'e [ffi 3loyee'3
participation in the Plan or performance ef 3ervice3 on any date
aftar tAe allocation clate;
The [Iecti'.'e Contribution is actually paid to the trust no later
than 12 montAs after tAG cAd of the Plan Year to which the
elective Contribution relates; and
Tho Elective ContriBution relates to Compensation whicA Dither
(i) but for the Partieipant'3 election to defer, ',""ould Aave been
receivecl by the Participant in HìÐ Plan Year or (ii) 13 attributable
to 3cr'o'ice3 perform cd BY the Participant in the Plan Year and,
but for the Participant's election to clefer, would have been
received by the Partieipant '..,ithin two and onc half months after
the close of the Plan Year.
fi7
elective Deferral
elective Deferral means the 3um of the following:
Any elective Contribution to any Ca3h or Deferred Arrangement
to the extent it is not includable in the Participant'3 gr033
income for the taxable year of contribution;
1-15
ffi
w
f!1
fm7
w
FEDJODO',DDC
3333 FED "hyl
Any employer contribution to a 3implified employee pension as
defined in Code Section 408(1() to the extent not includablo in
the f"artieipant's gro33 income for the taxable year of
contribution;
.0.
An) employer contribution to an annuity contract under Code
Section 403(13) under a 3alary reduction a!;lreement to the
extent not includable in the Participant's groSG income for the
taxable year of contribution; plus
!\ny employee eoAtribution desigAated as deductible under a
trust eleseribed in Code Section 501 (e)(18) for the taxable year
of eontributien.
[molovee Contribution
employee Contribution means any contribution made by an employee
to any plaA maintained by the employer or any nelated employer
wAieA is other than aA elective Contribution and WAich is designated or
treated at the tiffie of contribution as an [ffiployee CoAtribution.
employee Contribution3 include amount:> attributable to [xee33
ContributionG which arc reeAaracterized aG [ffiployee ContributionG.
[xceGG Contribution
[xces3 Contrieution meanG, for each meffiber of tAc I Hghly
Compensated Croup, the affiount of elective CoAtribution 'Nhich
exceedG the maximum contribution v,hich could be made if the
Deferral Percentage Te3t were to be satiGfied.
[xcess Aegregate Cof1tribution
[xces3 /\ggregate ContributioA means, for each member of the Higl9ly
CompoAsated Croup, the amount of [mployoe and Matel9ing
Contributions ,...hich exceeds the ffiaximum whieA could be made if the
Centribution f"erceAtage Test were to be satisfied.
[xceGs Deferral
[XCESS Deferral means, for a !;liven calendar year, tl9at amount by
which each Participant's total [Iectivo Deferrals under all plans of all
effip!oyefG exceed the dollar limit in ef/eet under Code Section 402(g)
for tAe calendar year.
MatchinG Contribution
Matching Contribution ffiean3 any contribution made by the employer
to any plan maintained by the employer or any nelated employer
which is bases on an [Ieetive Contribution or an employee
1-16
Contribution together ,....ith any forfeiture allocated to the Participant's
Account on the basis of elective Contributions, [fRl3loyee
Contributions or Matching Contributions, ^ Matching Contribution '.viii
be taken into account for a given Plan Year only if:
The Matching Contribution is allocated to the Participant's
Account as of a dEite ,....ithin the Plan Year to which it relates;
The allocation is not contingent upon the [fRployee's
participation in the PlEIn or perforfREince of services on any date
after the allocation dElte;
The Matching Contribution is actually paid te the Trustee no
later than 12 fROAths after the end of the Plan Year to which the
Matching Contribution relates; and
The Matching Contribution is based on an [Ioetive or [fRployee
Contribution for the Plan Year.
ror Plan Years beginning after 1088, a contribution or allocation on
behalf of a Non Key [fRployee used to meet tAD fRinifRufR contribution
or benefit requirefRoAt of Codo Lection 416 is Rot treated as being
based on [Iecti'~e Contributions or [fRl3loyee Contributions and
thorefore is Rot treatod as a MEitching CoAtribution,
fer
Non elective Contribution
Non elective CoRtributioR fReans aRr [fRploror CoRtribution, other
than a MEitching Contribution, which is 100% vested, fRay only be
witAdrown or distributed uAder the conditions described iA Code
SootieR 401 (k)(2)(B)(i) (oxcept 0la1:lse (VI)), and with fospect to which
the [fRployee fRay not elect to have the contribution paid in cash iR
lieu of being contributod to the rlaR.
1,18 OptioRal Benefit Form
Any Optional Benefit Form which is provided under the PlaR is described in
SectioR 5.05.
1,19 Participant DefiRitions
The term ParticipaRt meaRS aR Employee or former Employee who is eligible
to participate in this Plan and who is or who may become eligible to receive a
beRefit of any type from this Plan or whose Beneficiary may be eligible to
receive any such beRefit.
FEOJOO02,OOC
3333 FEO 14/0)'1
1-17
(a)
(b)
(c)
(d)
(e)
(f)
Active Participant means a Participant who is currently an Employee in
an Eligible Employee Classification.
Disabled Participant means a Participant who has terminated his
employment with the Employer due to his Disability and who is
receiving or is entitled to receive benefits from the Plan.
Retired Participant means a Participant who has terminated his
employment with the Employer after meeting the requirements for his
Normal Retirement Date and who is receiving or is entitled to receive
benefits from the Plan.
Vested Terminated Participant means a Participant who has
terminated his employment with the Employer and who has a
nonforfeitable right to all or a portion of his or her Accrued Benefit and
who has not received a distribution of the value of his or her Vested
Accrued Benefit.
Inactive Participant means a Participant who has (i) interrupted his
status as an Active Participant without becoming a Disabled, Retired
or Vested Terminated Participant and (ii) has a non-forfeitable right to
all or a portion of his Accrued Benefit and has not received a complete
distribution of his benefit.
Former Participant means a Participant who has terminated his
employment with the Employer and who currently has no
nonforfeitable right to any portion of his or her Accrued Benefit.
(g)
Eligible Particioant
All Participants are Eligible Participants.
1.20 Payroll Withholdina Aareement
If a written Payroll Withholding Agreement is required pursuant to the
provisions of Article 3, then each Participant who elects to participate in the
Plan will file such agreement on or before the first day of the Contribution
Period for which the agreement is applicable (or at some other time as
specified by the Plan Administrator). The agreement will be effective for each
Contribution Period thereafter until modified or amended.
FEDJOOO2,DOC
3333FEDi4I~1
The terms of the agreement will provide that the Participant agrees to have
the Employer withhold any whole percentage of his Compensation per payroll
period (or some other amount as allowed by the Plan Administrator under
rules applied on a uniform and nondiscriminatory basis), not to exceed the
limitations of Article 7. In consideration of such agreement, the Employer will
1-18
make a contribution to the Participant's proper Account(s) on behalf of the
Participant for each Contribution Period in an amount equal to the total
amount by which the Participant's Compensation from the Employer was
reduced during the Contribution Period pursuant to the Payroll Withholding
Agreement.
However, Payroll Witholding Agreements are governed by the following
general guidelines:
(a)
(b)
(c)
1.21
FEDJOOO2.DOC
33 33 FED "I<yl
A Payroll Withholding Agreement will apply to each payroll period
during which an effective agreement is on file with the Employer. Upon
termination of employment, the agreement will become void.
The Plan Administrator will establish and apply guidelines concerning
the frequency and timing of amendments or changes to Payroll
Withholding Agreements. Notwithstanding the foregoing, a Participant
may revoke his Payroll Withholding Agreement at any time and
discontinue all future withholding during the remainder of the
Contribution Period.
The Employer may amend or revoke its Payroll Withholding
Agreement with any Participant at any time, if the Employer
determines that such revocation or amendment is necessary to insure
that
a Participant's Annual Additions for any Plan Year will not
exceed the limitations of Article 7;
no part of the Participant's Elective Deferrals are excess
deferrals; and
the requirements of Code Sections 401 (k) and 401 (m) have
been satisfied with respect to the amount which may be
withheld and contributed on behalf of the Highly Compensated
Group.
Except as provided above, no Payroll Withholding Agreement for any given
Contribution Period may be revoked or amended by either the Participant or
the Employer once it has been made.
Plan
Plan means CITY OF FEDERAL WAY EMPLOYEES' RETIREMENT
SYSTEM, the terms of which are established by this Plan document. The
1-19
Plan Identification Number assigned for use by the Internal Revenue Service
is 001. This Plan is a Profit Sharing Plan.
The term Predecessor Plan means any qualified plan previously established
and maintained by the Employer and to which this Plan is the successor.
1.22 Plan Administrator
The Plan Administrator is the individual or corporation appointed in the
manner described in Section 9.01. On the date of adoption of this document
the Plan Administrator is CITY OF FEDERAL WAY.
1.23 Plan Assets. Trust Fund
The terms Plan Assets and Trust Fund are used interchangeably and mean
the total cash, securities, real property, insurance contracts and any other
property held by the Trustee.
1.24 Reserved
1.25 Reserved
1.26 Qualified Election
Qualified Election means the designation of a Beneficiary other than the
Participant's Surviving Spouse. The Qualified Election must be in writing and
must be consented to by the Participant's spouse. The spouse's consent to a
Qualified Election must
be in writing,
acknowledge the effect of the consent, and
be witnessed by a representative of the Plan Administrator or a notary
public.
Both the waiver and the spouse's consent must include the designation of a
specific Beneficiary which may not be changed without the consent of the
spouse. However, the spouse may execute a general consent which permits
the Participant to execute a waiver and change the designated Beneficiary
without the further consent of the spouse. The general consent will be invalid
unless it acknowledges that the spouse has the right to limit consent to a
specific Beneficiary and that the spouse voluntarily elects to relinquish that
right. The spouse's consent will not be required if the Participant establishes
to the satisfaction of the Plan Administrator that written consent cannot be
obtained because there is no spouse, the spouse cannot be located or other
circumstances that may be prescribed by Treasury Regulations. Any consent
FEDJOOO2.DOC
33 33 FED "I<yl
1-20
necessary under this provision will be valid only with respect to the spouse
who signs the consent (or in the event of a deemed Qualified Election, the
designated spouse). Additionally, a revocation of a prior Qualified Election
may be made by a Participant without the consent of the spouse at any time
before the commencement of benefits; however, any Qualified Election which
follows such revocation must be in writing and must be consented to by the
Participant's spouse. The number of Qualified Elections or revocations of
such Qualified Elections will not be limited.
1.27 Retirement Aae Definitions
(a)
(b)
(c)
Earliest Retirement Age
The Earliest Retirement Age under this Plan is the earliest age at
which a Participant could terminate his employment and receive a
distribution. Death and retirement of a Participant are both treated as a
termination of employment. If a Participant terminates his employment
before the Earliest Retirement Age, only his actual Years of Service at
the time of his termination of employment are taken into account.
Normal Retirement Aae
A Participant's Normal Retirement Age is his attained age on the date
which he satisfies the following requirements:
(a)
(b)
Attainment of age 65, and
Attainment of the fifth anniversary of the Participant's
Employment Commencement Date.
Social Securitv Retirement Aae
Social Security Retirement Age means age 65 for a Participant born
before January 1, 1938, 66 for a Participant born between December
31, 1937, and January 1, 1955, and 67 for a Participant born after
December 31, 1954.
1.28 Service Definitions
(a)
FEDJOO02.DOC
33 33 FED ""yl
Hour of Service
An Hour of Service means:
(1)
Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer. These
hours will be credited to the Employee for the computation
period in which the duties are performed;
1-21
(2)
(3)
Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during
which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), layoff, jury duty,
military duty or leave of absence. No more than 501 Hours of
Service will be credited under this paragraph for any 12-month
period. Hours under this paragraph will be calculated and
credited pursuant to Section 2530.200b-2 of the Department of
labor Regulations which are incorporated herein by this
reference; and
Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The
same Hours of Service will not be credited both under
paragraph (1) or (2), as the case may be, and under this
paragraph (3). These hours will be credited to the Employee for
the computation period or periods to which the award or
agreement pertains rather than the computation period in which
the award, agreement or payment is made.
Hours of Service for all Employees will be determined on the basis of actual
hours for which an Employee is paid or is entitled to payment. Hours of
Service will be credited for employment with any Related Employer or any
Predecessor Employer. Hours of Service will be credited for any leased
Employee.
Hours of Service for all Employees will be determined on the basis of actual
hours for which an Employee is paid or is entitled to payment.
(b)
(c)
FEDJODO',DDC
33 33 FED ""1"
One Year Break-in-Service
One Year Break-in-Service means any 365-day period following a
Participant's Date of Severance in which an Employee does not
perform at least one Hour of Service.
Years of Service
Years of Service are determined under the Elapsed Time Method.
Under the Elapsed Time Method, Years of Service are based upon an
Employee's Elapsed Time of employment irrespective of the number of
hours actually worked during such period; a Year of Service (including
a fraction thereof) will be credited for each completed 365 days of
Elapsed Time which need not be consecutive. The following terms are
used in determining Years of Service under the Elapsed Time Method:
1-22
(1)
(2)
(3)
Date of Severance (Termination) - means the earlier of (A) the
actual date an Employee resigns, is discharged, dies or retires,
or (B) the first anniversary of the date an Employee is absent
from work (with or without pay) for any other reason, e.g.,
disability, vacation, leave of absence, layoff, etc.
Elapsed Time - means the total period of service which has
elapsed between a Participant's Employment Commencement
Date and Date of Termination including Periods of Severance
where a One Year Break-in-Service does not occur.
Period of Severance - is the time between the actual Date of
Severance as defined above and the subsequent date, if any,
on which the Employee performs an Hour of Service.
All periods of employment will be aggregated including Periods of
Severance unless there is a One Year Break-in-Service.
Years of Eligibility Service for purposes of determining eligibility to
participate in the Plan and Years of Vesting Service for purposes of
determining a Participant's Vested Percentage include service with
any Related Employer.
Years of Service for Eligibility
Years of Service for purposes of eligibility to participate in the Plan are
referred to as Years of Eligibility Service and are determined using the
Elapsed Time Method.
(d)
All of an Employee's Years of Eligibility Service are taken into account
for purposes of determining his eligibility to participate.
Years of Service for Vesting Years of Service for purposes of
computing a Participant's Vested Percentage are referred to as Years
of Vesting Service and are determined using the Elapsed Time
Method.
(e)
All of a Participant's Years of Vesting Service are taken into account in
determining his Vested Percentage.
1.29 Spouse. Survivina Spouse
Before a Participant's Annuity Starting Date, Spouse means the person who
is married to the Participant at the time of the determination. On or after the
Participant's Annuity Starting Date, Spouse means the person who was
married to the Participant on his Annuity Starting Date. Surviving Spouse
FEDJOO02,DOC
3333 FED 141~1
1-23
means the person who was married to the Participant on the Participant's
date of death before his Annuity Starting Date. The Plan Fiduciaries may rely
conclusively on a Participant's written statement of his marital status. No Plan
Fiduciary is required at any time to inquire into the validity of any marriage,
the effectiveness of a common-law relationship or the claim of any alleged
spouse which is inconsistent with the Participant's report of his marital status
and the identity of his spouse.
1.30 Reserved
1.31
Trust Definitions
(a)
(b)
(c)
Trust
This term means the Trust established by Article 11 of this Plan that
governs the management of Plan Assets for the exclusive benefit of
Participants and their beneficiaries.
Trust Fund
This term means the same as Plan Assets.
Trustee
The Trustees are the City Manager, the Finance Director, and the
Personnel Director.
1.32 Reserved
1.33 Vested Accrued Benefit
(a)
(b)
(c)
FEDJOOO2,DOC
3333 FED 14I~1
In General
A Participant's Vested Accrued Benefit as of a given date is equal to
the product of his Accrued Benefit multiplied by his Vested Percentage
as of that same date.
Vested Percentage
A Participant's Vested Percentage as of a given date is the percentage
determined according to the Vesting Schedule. However, a Participant
is 100% vested upon reaching his Normal Retirement Age.
Vestina Schedule
A Participant's Vested Percentage is determined according to the
following table:
1-24
Years of Vesting Service
Vested Percentaae
Less than 3 Years
3 Years
4 Years
5 Years
6 Years
7 Years or more
0%
20%
40%
60%
80%
100%
1.34 Written Resolution
The terms Written Resolution and Written Consent are used interchangeably
and reflect ordinances, resolutions, decisions, authorizations, and other
actions by the City Council. A Written Resolution will be evidenced by a
written consent signed by the officer or officers duly authorized by the City
Council.
1.35 Year Definitions
(a)
(b)
(c)
(d)
FEDJOO02.DOC
33 33 FED 141~1
Fiscal Year
Fiscal Year means the taxable year of the Plan Sponsor. The Fiscal
Year of the Plan Sponsor is the 12 month period beginning January
1 st and ending December 31 sl.
Plan Year
The Plan Year is the 12 month period beginning January 1st and
ending December 31st.
Limitation Year
The Limitation Year coincides with the Plan Year.
Year of Service
Years of Service are determined in the manner described in Section
1.28.
1-25
ARTICLE 2
PARTICIPATION
2.01
Participation
An Employee who is a member of an Eligible Employee Classification will
automatically participate in the Plan on the later of the Effective Date and his
or her Employment Commencement Date.
An Employee who is eligible to participate as of the Effective Date or as of a
given Entry Date will automatically become a Participant as of that date.
2.02 Participation After Reemplovment
A Participant or Former Participant who has terminated employment will
participate as an Active Participant in the Plan immediately upon returning to
the employ of the Employer.
2.03 Change in Employment Classification
If a Participant becomes ineligible to participate because he is no longer a
member of an Eligible Employee Classification but does not incur a One Year
Break-in-Service, the Participant will participate immediately upon his return
to an Eligible Employee Classification. If the Participant incurs a One Year
Break-in-Service, participation will be determined under Section 2.02.
If an Employee who is not a member of an Eligible Employee Classification
becomes a member of such a classification, the Employee will begin to
participate immediately.
FEDJOO02,DOC
3333 FED W~I
2-1
ARTICLE 3
ACCOUNTS
Particicant Contribution
Participant Contribution means an annuity contract described in Code
Section 403(b) purchased by the Employer on behalf of a Participant. A
Participant's Participant Contribution is 100% vested at all times.
3.01
(a)
(b)
(c)
Particicant Contributions
Each Contribution Period, the Employer will reduce each Participant's
Compensation by an amount equal to 6.2% of the Participant's
Compensation and will assume and contribute (pick up) the same
amount to the Participant's Participant Contribution in the manner
described in Code Section 414(h)(2). The City Council may by Written
Resolution change the above percentage for the following Plan Year at
any time before the beginning of that Plan Year.
Contribution Period
The Contribution Period for Participant Contributions is each payroll
period.
Withdrawals
A Participant may not withdraw any portion of his Participant
Contribution before his benefits otherwise become payable under
Article 5.
3.02 Voluntary Contribution Account
Voluntary Contribution Account means the Account of a Participant reflecting
applicable contributions, investment income or loss allocated thereto and
distributions. A Participant's Voluntary Contribution Account is 100% vested
at all times.
(a)
FEDJOOO2,DOC
""FED 141<yl
Voluntarv Contributions
Each Participant will be entitled to make a Voluntary Contribution each
Contribution Period equal to a minimum of 1 % of the Participant's
Compensation not to exceed 14% of the Participant's Compensation.
Such contribution will be designated as a percentage of Compensation
and will be equal to an even multiple of 1% or such other amount as
allowed by the Plan Administrator.
3-1
(b)
(c)
All Voluntary Contributions will be made pursuant to a Payroll
Withholding Agreement.
All Voluntary Contributions to the Participant's Voluntary contributijo. n L (L..... "
Account are Employee Contributions and must satisfy the ~
Nondiscrimination Requirements of the last section of this Article 3. ~
Contribution Period . ~
The Contribution Period for Voluntary Contributions is each payroll ~
period.
Withdrawals
A Participant may not withdraw any portion of his Voluntary
Contribution Account before his benefits otherwise become payable in
accordance with the provisions of Article 5.
3.03 Employer Contribution Account
Employer Contribution Account means the Account of a Participant reflecting
applicable contributions, forfeitures, investment income or loss allocated
thereto and distributions. A Participant's Employer Contribution Account is
subject to the Vesting Schedule.
(a)
FEDJaOO2,DDC
3333FED"'~
Emplover Contributions
Each Contribution Period, the Employer will make an Employer
Contribution to each Eligible Participant's Employer Contribution
Account in an amount determined in the manner described in this
Section subject to the limitations of Article 7.
The amount of employer Contribution made to an eligible Participant's
employer Contribution I\ccount for the first Plan Year is equal to 5.2%
of the Partieipant's Compensation. For a given Plan Year, the total
Employer Contribution made by the Employer will be equal to 5.2% of
the total Compensation of all Eliqible Participants. The City Council
will by Written Resolution establish a new Employer Contribution
percentage for each Plan Year no later than the beginning of that Plan
Year. In the absence of a Written Resolution. the Employer
Contribution Percentage will remain unchanqed.
Ib)
Allocation of Contribution
The total Employer Contribution made by the Employer will be
allocated in the ratio that each Eligible Participant's Compensation
bears to the total Compensation of all Eligible Participants.
3-2
(çb)
(.cte)
(~è)
Contribution Period
The Contribution Period for Employer Contributions is each payroll
period.
Application of Forfeitures
Forfeitures from a Participant's Employer Contribution Account will be
added to and allocated along with Employer Contributions in the Plan
Year in which the Forfeitures are determined to occur.
Withdrawals
A Participant may not withdraw any portion of his Employer
Contribution Account before his benefits otherwise become payable
under Article 5.
3.04 Rollover Account
Rollover Account means the Account of a Participant reflecting applicable
contributions, investment income or loss allocated thereto and distributions, A
Participant's Rollover Account is 100% vested at all times.
(a)
(b)
Rollover Contributions
Rollover Contribution means a contribution to the Plan by a Participant
where such contribution is the result of a prior distribution from an
Individual Retirement Account, an Individual Retirement Annuity or
another qualified plan, Such prior distribution must be a rollover
amount described in Section 402(a)(5) of the Code or a contribution
described in Section 408(d)(3) of the Code,
Withdrawals A Participant may not withdraw any portion of his Rollover
Account before his benefits otherwise become payable under Article 5.
&B5 Nondi3crimination nequircment3
tat
tÐ1
FEDJODO2.DOC
33 33 FED 14/')"
ne3erved
Contribution Percentage Te3t
employee Contributions and Matching Contribution3 (to other plan3)
mu3t 3ati3fy tho Contribution Percentago Test. The Plan Administrator
will determine a3 300n a3 adffiini3tratively fea3ible after the end of the
Plan Year '.vhethcr the Contribution Te3t ha3 beon 3atisfied. If the
Contribution Percentage Te3t i3 not satisfied, the effiployer ffiay eloct
to ffialcc an additional contribution to the Plan on account of tho Nor,
Highly Coffipensated Croup. The additional contribution will be troated
a3 a Non elective Contribution,
3-3
w
tat
FEDJOOO2.DOC
3333FEDl4I~1
If the Contribution Percentage Test is not sati3fied after any Non
elective Contributions, tRen OR or before the close of tRe follo.....ing Plan
Year (but preferably no later than the 15th day of the third month
follo'Ning the:: end of the PlaR Ye::ar), the Plan :\dministrator will forfeit
the nonvC3te::d portion of the excess Aggregate Contribution and
distribute the vcstcd portion, togothcr with the income allocable to it, to
the affectcd Participant3 of the Ilighl:1 Compen3ated Croup to tho
extent necessary to satisfy the Contribution Te3t.
Prioritv of neductions
The excess Aggregate Contribution will be reduced in a manner so
that tho Contribution Percentage of the affected Partioipant(s) with the
highest Contribution Percentage will fir3t be lowered to a point not less
than the level of the:: afkcted Partieipant(s) with the no,'{ highest
Contribl:ltion Pe::rce::ntage. If further overall reductions arc required to
satisfy the Contribution Percentage Test, each of the above
Participants' (or groups of Participants') Contribution Percentage 'Nil I
be lo'uered to a point not less tRan the level of the affected
Participant(s) with the Rex! highe3t Contribution Percentage, aRE:! so on
continuing until sufficient total re::ductions 19ave occurred to achicve
satisfaction of the Contribution Percentage Te3t.
fftæme
The income allocable to any excess Aggregate Contribution made:: to a
gi',en Account for a given Plan Year vlill be eEjual to the total income
allocated to the Account for the Plan Year, multiplied by a fraction, the
numerator of which is the amount of the excess Aggregate
Contribution and tRe denominator of "..hieh is the closing balance of
the ACCOURt decreased (or increased) by the amount of eamiRgs (or
losses) allocated to the Account for the Plan Year. The income
allocable to the excess Aggregate Contribution for the period between
the:: end of the Plan Year for which the determination is be::ing made
and the date on which tlge excess Aggre§ate Contribution is
di"tributed to the Participant will be equal to 1 0% of the iRcome
allocaBle to the exce"s A§§re§ate ContributioR for the Plan Year,
de::termined in tlge manner describm:! in the prccediRg se::ntence,
multiplied by the number of calendar months whicR Rave e::Iapsed
since the end of the Plan Year for which the àetermination is being
made, for the purpose of de::termining the number of calendar months
wRich have:: elapsed, a di"tribution occurring on or before tRe 15th day
of the month will be treated as having beeR made on the la"t day of
the preceding month and a distribution occurring afte::r the 15th day of
the month will bc treated as having been made on the first day of the
next month, Income includes all earnings and appreciation, including
3-4
w
ffl
ffi7
FEDJOOO2,DDC
3333FED1"~1
intem:>t, dividend:>, rents, royalties, gain:> from the sale ef property,
and appreciation in the value of stoc\(s, bonds, annl:Jily and life
in:>urance contracts and other property, regardless of v,'hether the
appreciation has been realized.
Aggreoatien of Plans
If the employer or a nelated employer sponsors one or more other
plans v.hich include a Casl9 or Deferred /\rrangement, the employer
may elect to treat any 2 or more such plans as an aggregated single
plan for pl:Jrposes of satisfying Code Sections 401 (a)(4), 401 (Ie) and
410(b). The Cash or Defermd /\rrangel9gents includee in the
aggregated plans will be treated as a single Nrangement for purposes
of tl9i:> Section.
If the employer 199aintains 2 or 1990re plans ',vhieh are treated as an
aggregated single plan for purposes of Code Section 401 (a)(4) or
41 O(b), all Casl9 or Deferred Arrangol9gents which arc included in the
ag§fOgated plans .....ill be treated as contributed to an aggregated
single Arrangel9gent for purposes of this £cction.
ror purposes of tl9is Section, contributions and allocations under the
portion of a plan eescribed in Code Section 4075(e)(7) (an ESOP)
199ay not be aggregated '",ith tho portion of a plan not describod in
Code Section 4075(e)(7) (a non [SOP) for purposes of deterl99ining
whether the [SOP or non [SOP satisfies tlge requirel99cnts of this
Section and Code Sections 401 (a)(4), 401 (Ie) and 41 O(b).
ror Plan Years beginning after Deoel99ber 31, 1 CIaO, plaRS 199ay bo
aggregated in order to satisfy Code Section 401 (\() only if they 19ave
the same Plan Year.
neser',ed
Treatl9gent as Matohino Contributions
The Plan Adl99ini:>trator 199ay, in its discretion, treat all or any portion of
Non elective Contributions and elective Contributions, whether to this
Plan or to any other qualifieel plan maintained by the [l99ploycr or any
nelated [l99ployer whicl9 has the sal9ge Plan Year, as Matcl9ing
Contributions for purposes of satisfying tlge Contribution Percentage
Test, but not for any other purpose under this Plan. elective
Contributions and ÞJen elective Contributions may be treated as
Matehing Contributions only if they moet 0.11 of the follo'.ving
requirel9gents:
3-5
w
FEDJOOO2,DOC
33 33 FED 14/~1
All ÞJon elective Contribution3, including th03e treated a3
Matching Contribution3 for purposes of the Contribution
rercentage Test, satisfy the requirements of Code Section
401 (a)(4);
All Non elective Contributions which arc not treated as
Matching Contributions for purposes of the Contribution
rercentage Te3t, satisfy the requircfRents of Code Section
401 (a)(4);
All [Iectivc Contributions, including those treated as Matching
Contributions for purposes of the Contribution rercentage Test,
satisfy the requircfRent3 of Code Section 401 (1<)(3);
All elective Contributions which are not treated as Matching
Contribution3 for 'JLHposes of the ContriBution rerce:ntage Test,
satisfy the requirements of Code Section 401 (Ie) (3);
The Non [Iecti'..e Contributions are allocated to the rarticipant
as of a date within the rlan Ycar;
The elective Contribution:> 3atisfy the requirements of Treasury
negulation Seetion 1.401 (Ie) 1 (b)(6);
The treatfRent of Non elective Contributions and elective
Contributions as Matching Contribution3 docs not increa3e the
spread bet'Neen the Contribution rereentage for the Ilighly
Compen:>ated Croup and the Contril3ution re:rcentage for the
ÞJon llighly Compensated Croup;
The Non Elective ContriButions and elective Contributions
..vhieh are treated a3 Matching Contributions are not tal<en into
account in determining '....hether any otlger contributions or
benefits sati3fy Code Section 401 (a)(4) or 401 (le)(3); and
The rlan Year requirements of Treasury negulation Section
1.401 (m) 1 (b)(2)(viii) arc met.
rafRiI'v' Aggregation
The Contribution rercentage for any Highly Compensated employee
'",ho i3 3uBject to the fafRily aggregation rules of Section 1.14(c) will be
the Contribution rercentage determined by cofRbining the employee
Contribution3, Matching Contribution, amount3 treates as Matching
Contributions and Compen3ation of all thc eligible ramily MembefG. If
3-6
FEDJOOO2.DOC
3333FEDl4I~1
it i3 neces3ary Ie correct CXCOS3 t,ggregate Contributions. the r'lan
Administrator will take corrective actions in the manner described in
Socticn 1.401 (m) 1 (e)(4)(iii) of Iho Troa3vry nogulation3. for all other
fJLJrfJOecS vAder tRia seetieR. tAe eeAtriel:ilieAS and cofAfJeRsatieR af
eligible family MefAbers who are not ¡¡i¡¡Alr CefAfJcneatod [fAfJIOYCO3
.....ithout regard to family aggregation Hill be disregarded.
3-7
ARTICLE 4
ACCOUNTING AND VALUATION
General Powers of the Plan Administrator
The Plan Administrator may establish whatever rules and guidelines it
believes necessary or appropriate governing accounting procedures and the
timing and method of contributions to and withdrawals from the Plan. These
rules and guidelines will be applied on a uniform and non-discriminatory
basis.
4.01
4.02 Accountina Procedure
As of each Valuation Date, the Plan Administrator will determine from the
Trustee the fair market value of Trust assets and will, subject to the
provisions of this Article, determine the allocation of such value among the
Accounts of the Participants; in doing so, the Plan Administrator will in the
following order:
(a)
(b)
(c)
FEDJOOO2.DDC
3333 FED 141~1
Credit or charge, as appropriate, to the proper Accounts all ,
payments, forfeitures, withdrawals or other distributions made to or
from each Account during the current Plan Year that have not been
previously credited or charged.
Credit or charge, as applicable, each Account that is in existence on
the Valuation Date with its pro rata portion of the appreciation or
depreciation in the fair market value of the Trust Fund since the prior
Valuation Date. Appreciation or depreciation will reflect investment
income, realized and unrealized gains and losses, other investment
transactions and expenses paid from the Trust Fund. Pro rata crediting
or charging will be based upon the current amounts of the Accounts as
adjusted by the above step (a). The Plan Administrator will establish
the guidelines under which any appreciation or depreciation is
allocated to the various Accounts as of the first Valuation Date for the
Plan.
Credit to the proper Accounts all contributions and any reallocated
forfeitures which are to be credited for the current Accounting Period.
4-1
ARTICLE 5
RETIREMENT BENEFITS
5.01
Valuation of Accounts
For purposes of this Article, the value of a Participant's Accounts will be
determined as of the Valuation Date that coincides with or immediately
precedes the Annuity Starting Date.
5.02 Normal Retirement
After an Active Participant reaches his Normal Retirement Date, he may elect
to retire. Upon retirement he will become a Retired Participant and his
Accrued Benefit will become distributable to him. No later than hisy
attainment of Normal Retirement Age, his Accrued Benefit will become 100%
Vested. The form of benefit payment will be governed by the provisions of
Section 5.05.
5.03 Disability Retirement
In the event of a Participant's termination due to Disability, he will be entitled
to begin to receive a distribution of his Accrued Benefit which will become
nonforfeitable as of his date of termination. The form of benefit payment will
be governed by the provisions of Section 5.05.
Disability will be determined by the Plan Administrator in a uniform and non-
discriminatory manner. Disability means that a Participant is, in the opinion of
a qualified medical authority appointed by the Plan Administrator, unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result
in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months.
5.04 Termination of Emoloyment
(a)
In General
If a Participant's employment terminates for any reason other than
retirement, death or disability, his Vested Account Balance will become
distributable to him as of the Valuation Date that coincides with or next
follows the date of termination. The Plan Administrator may, in a
uniform and nondiscriminatory manner, establish an earlier date on
which the Vested Account Balance becomes distributable. The form of
benefit payment will be governed by the provisions of Section 5.05.
The undistributed portion of the Participant's Account Balance will be
FEDJOO02,DOC
""FED 141".,
5-1
maintained and will continue to share in appreciation or depreciation of
the Trust Fund in the manner described in Section 4.02(b) until
distributed or forfeited. The Participant will forfeit the nonvested portion
of his Account Balance at the date he first incurs 5 consecutive one-
year breaks in service.
(b)
Involuntarv Cash-Out Distribution
If the total value of a Vested Terminated Participant's Vested Account
Balance has never exceeded $3,500 at the time of any Distribution,
the Plan Administrator will, without the request or approval of the
Participant or the Participant's spouse, if any, direct immediate
distribution to the Participant in cash or in kind of the total value of his
Vested Account Balances.
(c)
Request for Earlv Distribution
A Vested Terminated Participant will be entitled, upon written request
at any time after his Vested Account Balance becomes distributable, to
the immediate distribution in a lump sum of the entire amount of his
Vested Account Balance.
5.05 Form of Benefit Payment
The Plan Administrator will direct the Trustee to make the payment of any
benefit provided under this Plan upon the event giving rise to such benefit
within the time prescribed by this Article. The form of benefit will be a lump
sum payment.
If a Participant's Vested Account Balance has ever exceeded $3,500, any
payment of benefits before the Participant's Normal Retirement Date will be
subject to the Participant's written consent.
Upon request, the Participant may receive his benefit either in any form of
nonforfeitable, nontransferable annuity contract then available from an
insurer or in a series of substantially equal annual or more frequent
installments over a period certain not extending beyond the earlier of
the end of the period measured by the joint life and last survivor
expectancy of the Participant and his spouse, or
20 years.
The Plan Administrator and the Trustee may establish any rules and
guidelines which may be necessary or appropriate with regard to the
purchase of the annuity contract or the payment of benefits under the
installment payment form.
FEDJOOO2,DOC
33 33FED ""yl
5-2
5.06 Commencement of Benefit
(a)
FEDJOOO2.DDC
33 33 FED "I<yl
General
Unless the Participant elects otherwise in writing, payment of benefits
will begin no later than the 60th day after the close of the Plan Year
during which the latest of the following events occurs:
the earlier of the Participant's Normal Retirement Age or the
Participant's 65th birthday;
the 10th anniversary of the Participant's first participation in the
Plan; or
the Participant's termination of service with the Employer.
For purposes of Code Section 401 (a)(14) and the first sentence of this
Section 5.06(a) only, and not for any other purpose under this Plan,
failure of the Participant (or the Participant's spouse, if applicable) to
consent to immediate distribution of benefits when they are payable
before the Participant has attained the later of age 62 or Normal
Retirement Age will be treated as an election to defer commencement
until that age.
(b)
Mandatorv Distribution to Participant
Nothwithstanding anything contained in this Plan, the payment of
benefits must meet the requirements of the regulations issued under
Code Section 401 (a)(9) and the regulations issued under that Section.
Payment of a Participant's benefits must begin no later than his
Required Beginning Date. A Participant's benefits must either be
distributed in the calendar year which contains his Required Beginning
Date or must be paid over a period not exceeding one of the following
periods:
the lifetime of the Participant;
the lifetime of the last survivor of the Participant and the
Participant's designated Beneficiary;
the life expectancy of the Participant; or
the joint life and last survivor expectancy of the Participant and
the Participant's designated Beneficiary.
5-3
(c)
(d)
FEDJOOO2,DDC
3333FED141~1
Mandatory Distribution to Beneficiaries
if the Participant dies after distribution of his or her interest has begun,
the remaining portion of such interest will continue to be distributed at
least as rapidly as under the method of distribution being used before
the Participant's death.
If the Participant dies before distribution of his or her interest begins,
the Participant's entire interest will be distributed no later than five
years after the Participant's death except to the extent that an election
is made to receive distributions as follows:
if any portion of the Participant's interest is payable to a non-
spouse designated Beneficiary, such portion may be distributed
in substantially equal installments over the lifetime or life
expectancy of the designated Beneficiary. Such distributions
must commence no later than one year after the Participant's
death;
if any portion of the Participant's interest is payable to the
Participant's spouse, such portion may be distributed in
substantially equal installments over the lifetime or life
expectancy of the spouse. Distribution will commence no later
than the later of December 31 of the calendar year immediately
following the calendar year in which the Participant died and
December 31 of the calendar year in which the Participant
would have attained age 70-1/2. if the spouse dies before
payments begin, later distributions will be made as if the spouse
had been the Participant.
Additional Rules
For purposes of this Section 5.06, life expectancies are to be
computed by the use of the return multiples contained in Section 1.72-
9 of the Income Tax Regulations. Life expectancy of the Participant
and the Spouse or Surviving Spouse will be recalculated annually, but
only if requested by the Participant or the Spouse or Surviving Spouse;
otherwise, any life expectancy will be calculated at the time payment
first begins without further recalculation.
For purposes of this Section, any amount paid to a child of the
Participant will be treated as if it had been paid to the Surviving
Spouse if the amount becomes payable to the Surviving Spouse when
the child reaches the age of majority.
5-4
FEDJODO'.DOC
3333 FED ,.v~1
If the Participant's Spouse is not his designated Beneficiary, no
method of payment to the Participant may provide more than
incidental benefits to the Beneficiary. The Plan must satisfy the
minimum distribution incidental benefit ("MDIB") requirement in the
Treasury regulations issued under Code Section 401 (a)(9) for
distributions made on or after the Participant's Required Beginning
Date and before the Participant's death. To satisfy the MDIB
requirement, the Plan Administrator will compute the minimum
distribution required by this Section 5.06 by subsituting the applicable
MDIB divisor for the applicable life expectancy factor, if the MDIB
divisor is a lesser number. Following the Participant's death, the Plan
Administrator will compute the minimum distribution required by this
Section 5.06 solely on the basis of the applicable life expectancy factor
and will disregard the MDIB factor. The Plan Administrator will
determine whether benefits to the Beneficiary are incidental as of the
Participant's Annuity Starting Date or as of any date the Plan
Administrator redetermines the payment period to the Participant.
5-5
ARTICLE 6
DEATH BENEFIT
6.01
Valuation of Accounts
For purposes of this Article, the value of a Participant's Accrued Benefit will
be determined as of the Valuation Date which coincides with or immediately
precedes the Annuity Starting Date.
6.02 Pre-Retirement Death Benefit
If a Participant dies before his Annuity Starting Date, the Participant's
Surviving Spouse will be entitled to receive the value of the Participant's
Vested Account Balance.
The Participant's designated Beneficiary will be entitled to receive the value
of the Participant's Vested Account Balance in a lump sum if:
a Surviving Spouse does not exist,
the Participant is legally separated or the Participant has been
abandoned (within the meaning of local law) and the Participant has a
court order to that effect, or
the Participant has designated a Beneficiary other than his Surviving
Spouse by a Qualified Election.
6.03 Post-Retirement Death Benefit
If a Retired Participant or a Disabled Participant dies after his Annuity Starting
Date, the Participant's Surviving Spouse or Beneficiary will be entitled to
continue receiving payments from the Participant's Vested Account Balance
in the form elected under Article 5.
6.04 Desianation of Beneficiarv
Each Participant will be given the opportunity to designate a Beneficiary or
Beneficiaries, and from time to time the Participant may file with the Plan
Administrator a new or revised designation on the form provided by the Plan
Administrator. If a Participant is married, any designation of a Beneficiary
must be consented to by the Participant's Spouse pursuant to a Qualified
Election.
FEDJOO02.DOC
33 33 FED 14l<yl
6-1
If a Participant dies without designating a Beneficiary, or if the Participant is
predeceased by all designated Beneficiaries and contingent Beneficiaries,
the Plan Administrator will distribute all benefits which are payable in the
event of the Participant's death in the following manner and to the first of the
following (who are listed in order of priority) who survive the Participant by at
least 30 days:
All to the Participant's surviving spouse;
Equally among the then living children of the Participant (by birth or
adoption);
Among the Participant's then living lineal descendants by right of
representation; or
The Participant's estate.
FEDJOOO2.DDC
3333 FED 14J~1
6-2
ARTICLE 7
LIMITATIONS ON BENEFITS
Limitation on Annual Additions
The amount of the Annual Addition which may be allocated under this Plan to
any Participant's Account as of any Valuation Date will not exceed the
Defined Contribution Limit (based upon his Aggregate Compensation up to
such Valuation Date) reduced by the sum of any allocations of annual
additions made to the Participant's Accounts under this Plan as of any
preceding Valuation Date within the Limitation Year.
7.01
If the Annual Addition under this Plan on behalf of a Participant is to be
reduced as of any Valuation Date as a result of the next preceding
paragraph, the reduction will be, to the extent required, effected by first
reducing Employee Contributions (which increase the annual addition), then
Forfeitures (if any), and then Employer Contributions to be allocated under
this Plan on behalf of the Participant as of the Valuation Date.
Any necessary reduction will be made in the following order:
(a)
(b)
(c)
(d)
FEDJOOO2.DDC
3333 FED ""yl
The amount of the reduction consisting of Employee Contributions will
be paid to the Participant as soon as administratively feasible.
The amount of the reduction consisting of Forfeitures will be allocated
and reallocated to the Accounts of the other Participants according to
the Plan formula for allocating Forfeitures to the extent they do not
cause the additions to any other Participant's Accounts to exceed the
lesser of the Defined Contribution Limit or any other limitation provided
in the Plan.
The amount of the reduction consisting of Employer Contributions will
be allocated and reallocated to the Accounts of the other Participants
according to the Plan formula for allocating Forfeitures to the extent
they do not cause the additions to any other Participant's Accounts to
exceed the lesser of the Defined Contribution Limit or any other
limitation provided in the Plan.
To the extent that the reductions described in paragraph (b) or (c)
cannot be allocated to other Participant's Accounts, the reductions will
be allocated to a suspense account as Forfeitures and held therein
until the next succeeding Valuation Date on which Forfeitures could be
7-1
applied under the provisions of the Plan. All amounts held in a
suspense account must be applied as Forfeitures before any
additional contributions, which would constitute annual additions, may
be made to the Plan. If the Plan terminates, the suspense account will
revert to the Employer to the extent it may not be allocated to any
Participant's Accounts. If a suspense account is in existence at any
time during a Limitation Year pursuant to this Section, it will not
participate in the allocation of the Trust Fund's investment gains and
losses.
7.02 Where Employer Maintains Another Qualified Plan
FEDJOOO2,DOC
3333 FED 141~1
(a)
Where Employer Maintains Another Defined Contribution Plan
If the Employer maintains this Plan and one or more other qualified
defined contribution plans, one or more welfare benefit funds (as
defined in Code Section 419(e), or one or more individual medical
accounts (as defined in Code Section 415(1)(2), all of which are
referred to in this Article 7 as "qualified defined contribution plans", the
annual additions allocated under this Plan to any Participant's
Accounts will be limited in accordance with the allocation provisions of
this Section 7.02(a).
The amount of the Annual Additions which may be allocated under this
Plan to any Participant's Accounts as of any Valuation Date will not
exceed the Defined Contribution Limit (based upon Aggregate'
Compensation up to the allocation date) reduced by the sum of any
allocations of Annual Additions made to the Participant's Accounts
under this Plan and any other qualified defined contribution plans
maintained by the Employer as of any earlier Valuation Date within the
Limitation Year.
If a Valuation Date of this Plan coincides with a Valuation Date of any
other plan described in the above paragraph, the amount of Annual
Additions to be allocated on behalf of a Participant under this Plan as
of such date will be an amount equal to the product of the amount
described in the next preceding paragraph multiplied by a fraction (not
to exceed 1.0), the numerator of which is the amount to be allocated
under this Plan without regard to this Article during the Limitation Year
and the denominator of which is the amount that would otherwise be
allocated on this Valuation Date under all plans without regard to this
Article 7.
If the Annual Addition under this Plan on behalf of a Participant is to be
reduced as of any Valuation Date as a result of the next preceding two
7-2
(b)
paragraphs, the reduction will be, to the extent required, effected by
first reducing Participant contributions (which increase the annual
addition), then Forfeitures (if any). and then any Employer
contributions, to be allocated under this Plan on behalf of the
Participant as of the Valuation Date.
If as a result of the first four paragraphs of this Section 7.02 the
allocation of additions is reduced, the reduction will be treated in the
manner described in the third paragraph of Section 7.01.
Where Emeloyer Maintains a Qualified Defined Benefit Plan
If the Employer maintains (or has ever maintained), in addition to this
Plan, one or more qualified defined benefit plans, then for any
Limitation Year, the sum of the Defined Benefit Plan Fraction and the
Defined Contribution Plan Fraction will not exceed 1.0. If, in any
Limitation Year, the sum of the Defined Benefit Plan Fraction and the
Defined Contribution Plan Fraction for a Participant would exceed 1.0
without adjustment to the amount that can be allocated to the account
of the Participant under this Plan, then the amount that can be
allocated to the account of the Participant under this plan will be
reduced to the extent necessary to reduce the sum of the Defined
Benefit Plan Fraction and the Defined Contribution Plan Fraction for
the Participant to 1.0.
7.03 Definitions Aeelicable to Article 7
(a)
FEDJOOO2.DOC
33 33 FED "1<1"
Allocation Date. Valuation Date
These terms are used interchangeably and mean the date with respect
to which all or a portion of employer contributions, employee
contributions or forfeitures or both are allocated to participant accounts
under a defined contribution plan.
(b)
Annual Additions
Annual Additions are the sum of the following amounts allocated to
any defined contribution plan maintained by the Employer (including
voluntary contributions to any defined benefit plan maintained by the
Employer) on behalf of a Participant for a Limitation Year:
All Employee and Employer contributions;
All reallocated forfeitures;
Amounts allocated to an individual medical account, as defined
in Code Section 415(1)(2) which is part of a pension or annuity
7-3
(c)
FEDJOOO2.DOC
33 33 FED ""yl
plan maintained by the Employer, and amounts which are
attributable to post-retirement medical benefits required by
Code section 401 (h)(6) to be allocated to the separate account
of a Key Employee (within the meaning of Code Section 416)
under a welfare benefit plan (as defined in Code Section
419(e)) maintained by the Employer.
Contributions or forfeitures will be treated as Annual Additions
regardless of whether they constitute Excess Deferrals, Excess
Contributions or Excess Aggregate Contributions within the meaning of
the regulations under Code Section 401 (k) or 401 (m) and regardless
of whether they are corrected through distribution or
recharacterization.
Annual Benefit
Annual Benefit means a benefit payable annually in the form of a
straight life annuity with no ancillary benefits. Except as provided
below, a benefit payable in a form other than a straight life annuity
must be adjusted to an actuarially equivalent straight life annuity
before applying the limitations of this Article. The interest rate
assumption used to determine actuarial equivalence will be the greater
of the interest rate specified in the plan or 5 percent. The Annual
Benefit does not include any benefits attributable to employee
contributions or rollover contributions, or the assets transferred from a
qualified plan that was not maintained by the Employer. No actuarial
adjustment to the benefit is required for the value of a Qualified Joint
and Survivor Annuity, the value of benefits that are not directly related
to retirement benefits (such as qualified disability benefits, pre-
retirement death benefits or post-retirement medical benefits), or the
value of post-retirement cost-of-living increases made according to
Code Section 415(d) and Treasury Regulation Section 1.415-
3(c)(2)(iii).
(d)
Defined Benefit Compensation Limit
The Defined Benefit Compensation Limit is equal to 100% of the
Participant's average Aggregate Compensation for the three
consecutive calendar years (or other twelve consecutive month
periods adopted by the Employer pursuant to a Written Resolution and
applied on a uniform and consistent basis) of Service during which the
Participant had the greatest Aggregate Compensation.
Where the annual benefit is payable under this Plan to a Participant in
a form other than a straight life annuity or a Qualified Joint and
Survivor Annuity, the Defined Benefit Compensation Limit will be the
7-4
FEDJOO02.DOC
33 33 FED W~I
Actuarial Equivalent of a straight life annuity beginning at the same
age. No adjustment is required for pre-retirement disability benefits,
pre-retirement death benefits or post-retirement medical benefits. For
purposes of this paragraph, the interest rate used in adjusting the
Defined Benefit Compensation Limit will be the greater of (1) 5%, or
(2) the interest rate specified in the plan for purposes of determining
actuarial equivalents.
Where the annual benefit is payable under this Plan to a Participant
who has fewer than 10 years of Service with the Employer or any
Related or Predecessor Employer, the Defined Benefit Compensation
Limit will be multiplied by a fraction, the numerator of which is the
Participant's number of years of service with the Employer or Related
or Predecessor Employer, and the denominator of which is 10.
With regard to a Participant who has separated from Service with a
nonforfeitable right to an Accrued Benefit, the Defined Benefit
Compensation Limit will be adjusted effective January 1 of each
Calendar year. For any Limitation Year beginning after the separation
occurs, the Defined Benefit Compensation Limit will be equal to the
Defined Benefit Compensation Limit which was applicable to the
Participant in the Limitation Year in which he separated from service
multiplied by a fraction, the numerator of which is the Defined Benefit
Dollar Limit for the Limitation Year in which the Defined Benefit
Compensation Limit is being adjusted and the denominator of which is
the Defined Benefit Dollar Limit for the Limitation Year in which the
Participant separated from service.
(e)
Defined Benefit Dollar Limit
The Defined Benefit Dollar Limit is equal to $90,000 for each calendar
year as adjusted in the manner described in Code Section
415(b)(1)(A) as determined by the Secretary of the Treasury for that
calendar year. The Defined Benefit Dollar Limit for a calendar year
applies to Limitation Years ending with or within that calendar year.
Where the annual benefit is payable under this Plan to a Participant in
a form other than a straight life annuity or a Qualified Joint and
Survivor Annuity, the Defined Benefit Dollar Limit will be the Actuarial
Equivalent of a straight life annuity beginning at the same age. No
adjustment is required for the following: pre-retirement disability
benefits, pre-retirement death benefits, and post-retirement medical
benefits. For purposes of this paragraph, the interest rate used for
adjusting the Defined Benefit Dollar Limit will be the greater of (1) 5%,
7-5
FEDJOOO2,DOC
3333 FED "1<1"
or (2) the interest rate specified in the plan for the purpose of
determining actuarial equivalents.
Where the annual benefit is payable under this Plan to a Participant
who has fewer than 10 years of participation in the Plan, the Defined
Benefit Dollar Limit will be multiplied by a fraction, the numerator of
which is the Participant's number of years (or part thereof) of
participation in the Plan, and the denominator of which is 10. To the
extent provided by the Secretary of the Treasury, this paragraph will
be applied to each change in the benefit structure of the Plan.
For a benefit commencing before a Participant's Social Security
Retirement Age but at or after age 62, the Defined Benefit Dollar Limit
will be adjusted in a manner which is consistent with the reduction for
old.age insurance benefits commencing before Social Security
Retirement Age under the Social Security Act. The reduction will be
5/9 of 1 % for each of the first 36 months and 5/12 of 1 % for each
additional month (up to 24 months) by which benefits commence
before the month of the Participant's Social Security Retirement Age.
The Defined Benefit Dollar Limit for a benefit commencing before age
62 will be adjusted to the Actuarial Equivalent of the Defined Benefit
Dollar Limit for a benefit commencing at age 62 based on an interest
rate equal to the greater of (1) 5%, or (2) the interest rate specified in
the plan for determining actuarial equivalents.
For a benefit commencing after a Participant's Social Security
Retirement Age, the Defined Benefit Dollar Limit will be adjusted to the
actuarial equivalent of the Defined Benefit Dollar Limit for a benefit
commencing at the Participant's Social Security Retirement Age. For
purposes of this paragraph, the interest rate used for adjusting the
Defined Benefit Dollar Limit will be the lesser of (1) 5%, or (2) the
interest rate specified in the plan for determining actuarial equivalents.
(f)
Defined Benefit Limit
The Defined Benefit Limit is the lesser of the Defined Benefit Dollar
Limit or the Defined Benefit Compensation Limit.
(g)
Defined Benefit Plan Fraction Denominator
The Defined Benefit Plan Fraction Denominator with respect to any
Participant is the lesser of (1) the product of the Defined Benefit Dollar
Limit multiplied by 1.25, or (2) the product of the Defined Benefit
Compensation Limit multiplied by 1.4.
7.6
(h)
(i)
FEDJOOO2.DOC
3333FED141~1
Defined Benefit Plan Fraction
The Defined Benefit Plan Fraction is a fraction determined as of the
close of a Limitation Year, the numerator of which is the Projected
Annual Benefit payable to a Participant under this Plan and the
denominator of which is the Defined Benefit Fraction Denominator. if a
Participant has participated in more than one defined benefit plan
maintained by the Employer, the numerator of the Defined Benefit
Plan Fraction is the sum of the projected annual benefits payable to
the Participant under all of the defined benefit plans, whether or not
terminated.
Defined Contribution Limit
The Defined Contribution Limit for a given Limitation Year is equal to
the lesser of (1) the Defined Contribution Compensation Limit, which is
25% of Aggregate Compensation applicable to the Limitation Year, or
(2) the Defined Contribution Dollar Limit, which is the greater of
$30,000 or one-fourth of the Defined Benefit Dollar Limit for the
Limitation Year. If a short Limitation Year is created because of an
amendment changing the Limitation Year to a different 12 consecutive
month period, the Defined Contribution Dollar Limit is multiplied by a
fraction, the numerator of which is equal to the number of months in
the short Limitation Year and the denominator of which is 12.
(j)
Defined Contribution Plan Fraction
The Defined Contribution Plan Fraction is a fraction determined as of
the close of a Limitation Year, the numerator of which is the sum of the
Annual Additions to the Participant's Accounts under all defined
contribution plans of the Employer for the current and all prior
Limitation Years and the denominator of which is the sum of the
Annual Additions which would have been made for the Participant for
the current and all prior Limitation Years (for all prior years of service
with the Employer or any predecessor Employer) if in each Limitation
year the Annual Additions equaled the lesser of (1) the product of the
Defined Contribution Compensation Limit for the Limitation Year
multiplied by 1.4, or (2) the product of the Defined Contribution Dollar
Limit for the Limitation Year multiplied by 1.25,
(k)
Emoloyer
The Employer is the Employer that adopts this Plan together with all
Related Employers. For this purpose, the definition of Related
Employer in Section 1.12(d) of this Plan is modified by Code Section
415(h).
7-7
(I)
(m)
FEDJOOO2,DOC
3333 FED ""~I
Limitation Year
The Limitation Year will be the 12 consecutive month period which is
specified in Section 1.30 of this Plan and which is adopted for all
qualified plans maintained by the Employer pursuant to a Written
Resolution adopted by the Employer. In the event of a change in the
Limitation Year, the additional limitations of Treasury Regulation
Section 1.415-2(b)(4)(iii) shall also apply.
Projected Annual Benefit
For purposes of this section, a Participant's Projected Annual Benefit
is equal to the annual benefit to which a Participant in a defined benefit
Plan would be entitled under the terms of the plan based on the
following assumptions:
The Participant will continue employment until reaching normal
retirement age as determined under the terms of the plan (or
current age, if that is later);
The Participant's compensation for the Limitation Year under
consideration will remain the same for all future Limitation
Years;
All other relevant factors used to determine benefits under the
plan for the Limitation Year under consideration will remain
constant for all future Limitation Years; and
The benefits resulting from any Participant Contributions or
Rollover Contributions are disregarded.
7-8
ARTICLE 8
MISCELLANEOUS
Emplovment Rights of Parties Not Restricted
The adoption and maintenance of this Plan will not be deemed a contract
between the Employer and any Employee. Nothing in this Plan will give any
Employee or Participant the right to be retained in the employ of the
Employer or to interfere with the right of the Employer to discharge any
Employee or Participant at any time, nor will it give the Employer the right to
require any Employee or Participant to remain in its employ, or to interfere
with any Employee's or Participant's right to terminate his employment at any
time.
8.01
8.02 Alienation
(a)
(b)
FEDJOO02.DOC
3333FED14/~1
General
No person entitled to any benefit under this Plan will have any right to
sell, assign, transfer, hypothecate, encumber, commute, pledge,
anticipate or otherwise dispose of his interest in the benefit, and any
attempt to do so will be void. No benefit under this Plan will be subject
to any legal process, levy, execution, attachment or garnishment for
the payment of any claim against such person.
Exceotions
Section 8.02(a) will not apply to the extent a Participant or Beneficiary
is indebted to the Plan, for any reason, under any provisions of this
Plan. At the time a distribution is to be made to or for a Participant's or
Beneficiary's benefit, the Trustee will withhold the portion of the
amount to be distributed which is equal to the indebtedness and apply
it against or discharge the indebtedness. Before making a payment,
however, the Plan Administrator must give written notice to the
Participant or Beneficiary that the indebtedness is to be so paid in
whole or part from the Participant's Account Balance. If the Participant
or Beneficiary does not agree that the indebtedness is a valid claim
against his Vested Account Balance, he will be entitled to a review of
the validity of the claim under the procedures described in Section
9.08.
Section 8.02(a) will not apply to a qualified domestic relations order
("QDRO") as defined in Code Section 414(p), or any other domestic
relations order entered before January 1, 1985. The Administrator will
8-1
establish a written procedure to determine the qualified status of
domestic relations orders and to administer distributions under
QDROs. Further, to the extent provided under a QDRO, a former
spouse of a Participant will be treated as the spouse or Surviving
Spouse for all purposes under the Plan. All rights and benefits,
including elections, provided to a Participant under this Plan will be
subject to the rights afforded to any "alternate payee" under a
"qualified domestic relations order" as such terms are defined in Code
Section 414(p).
8.03 Qualification of Plan
The Employer will have the sole responsibility for obtaining and retaining
qualification of the Plan under the Internal Revenue Code with respect to the
Employer's individual circumstances.
8.04 Construction
This Plan will be construed according to the laws of the State of Washington.
Words used in the singular will include the plural, the masculine gender will
include the feminine, and vice versa, whenever appropriate.
8.05 Fiduciaries
(a)
Allocation of Functions
The authority to control and manage the operation and administration
of the Plan and Trust created by this instrument will be allocated
between the Trustee and the Plan Administrator, both of whom are
designated as Fiduciaries with respect to the Plan, and the Employer.
The Employer reserves the right to allocate the various responsibilities
for the present execution of the functions of the Plan among itself and
the Fiduciaries. Any person or group of persons may serve in more
than one fiduciary capacity.
(b)
Responsibilities of the Employer
The Employer will have the following authority and responsibility:
To appoint or remove the Plan Administrator and furnish the
Trustee with certified copies of any resolutions of the Employer
with regard thereto;
To appoint and remove the Trustee;
To appoint a successor Trustee or additional Trustees;
FEDJOO02,DOC
33 33 FED 141<yl
8-2
(d)
(e)
To communicate information to the Plan Administrator and the
Trustee as needed for the proper performance of the duties of
each; and
To appoint an investment manager in the manner described in
Section 11.17 (or to refrain from such appointment), to monitor
the performance of the investment manager so appointed, and
to terminate such appointment.
(c)
Limitation on Obliaations of Fiduciaries
No Fiduciary will have authority or responsibility to deal with matters
other than as delegated to it under this Plan or by operation of law. No
Fiduciary will be liable for breach of fiduciary responsibility or
obligation by another fiduciary (including Fiduciaries) if the
responsibility or authority of the act or omission deemed to be a
breach was not within the scope of the Fiduciary's authority or
delegated responsibility.
Standard of Care and Skill
Each Fiduciary will carry out his or its duties with the care, skill,
prudence and diligence under the circumstances then prevailing that a
prudent person acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of like character and with
like objectives.
Interest of Participants Paramount
In the discharge of his or its duties, each Fiduciary will act solely in the
interest of the Participants and Beneficiaries of the Plan and Trust and
for the purpose of providing benefits to Participants and Beneficiaries.
8.06 Reserved
8.07 Adoption and Withdrawal bv Other Organizations
(a)
FEDJOO02,DOC
3333FED141~1
Procedure for Adoption
Subject to the provisions of this Section 8.07, any organization now in
existence or hereafter formed or acquired, which is not already an
Adopting Employer under this Plan and which is otherwise legally
eligible may, in the future, with the consent and approval of the
Employer, by formal Written Resolution (referred to in this Section as
Adoption Resolution), adopt the Plan and Trust hereby created for all
or any classification of persons in its employment and thereby, from
and after the specified effective date, become an Adopting Employer
under this Plan. Such consent will be effected by and evidenced by a
8.3
(b)
(c)
FEDJOOO2,DDC
3333 FED "'~I
Written Resolution of the Employer. The Adoption Resolution may
contain such specific changes and variations in Plan terms and
provisions applicable to the Adopting Employer and its Employees as
may be acceptable to the Employer and the Trustee, However, the
sole, exclusive right of any other amendment of whatever kind or
extent to the Plan is reserved to the Employer. The Adoption
Resolution will become, as to the adopting organization and its
Employees, a part of this Plan as then amended or thereafter
amended. It will not be necessary for the adopting organization to sign
or execute the original or then amended Plan and Trust document or
any future amendment to the Plan and Trust document. The effective
date of the Plan for the adopting organization will be that stated in the
Adoption Resolution and from and after such effective date the
adopting organization will assume all the rights, obligations and
liabilities as a Participating Employer under this Plan. The
administrative powers of and control by the Employer as provided in
the Plan, including the sole right of amendment and of appointment
and removal of the Plan Administrator and the Trustee, will not be
diminished by reason of the participation of the adopting organization
in the Plan.
Withdrawal
Any Adopting Employer may withdraw from the Plan at any time,
without affecting the Employer or other Adopting Employers not
withdrawing, by complying with the provisions of the Plan. A
withdrawing Adopting Employer may arrange for the continuation by
itself or its successor of this Plan in separate forms for its own
employees, with such amendments, if any, as it may deem proper, and
may arrange for continuation of the Plan by merger with an existing
plan and transfer of plan assets. The Employer may, in its absolute
discretion, terminate an Adopting Employer's participation at any time
when in its judgment the Adopting Employer fails or refuses to
discharge its obligations under the Plan.
Adoption Contingent Upon Initial and Continued Qualifications
The adoption of this Plan by an organization as provided is hereby
made contingent and subject to the condition precedent that said
adopting organization meets all the statutory requirements for qualified
plans, including, but not limited to, Sections 401 (a) and 501 (a) of the
Internal Revenue Code for its Employees. If the Plan or the Trust, in its
operation, becomes disqualified, for any reason, as to the adopting
organization and its Employees, the portion of the Plan assets
allocable to them will be segregated as soon as is administratively
feasible, pending either the prompt (1) requalification of the Plan as to
8-4
the organization and its employees to the satisfaction of the Internal
Revenue Service so as not to affect the continued qualified status
thereof as to other Employers, (2) withdrawal of the organization from
this Plan and a continuation by itself or its successor of its plan
separately from this Plan, or by merger with another existing plan, with
a transfer of its said segregated portion of Plan assets, or (3)
termination of the Plan as to itself and its Employees.
8.08 Emolover Contributions
Employer contributions made to the Plan and Trust are made and will be held
for the sole purpose of providing benefits to Participants and their
Beneficiaries. In no event will any contribution made by the Employer to the
Plan and Trust or income therefrom revert to the Employer or otherwise be
used or diverted to purposes other than for the exclusive benefit of
Participants and their Beneficiaries. (However, Employer contributions and
the income therefrom may be used to pay the ongoing costs of maintaining
and administering the Plan and Trust). In addition, Employer contributions
may be refunded to the Employer on written demand within one year of the
event giving rise to the right to refund and upon presentation to the Trustee of
evidence of the right to and amount of the refund, but only to the extent that
the refunds do not, in themselves, deprive the Plan of its qualified status,
under the following circumstances and subject to the following limitations:
(a)
(b)
FEDJOOO2.DOC
333HED 141~1
Any contribution which is made in whole or in part by reason of a
mistake of fact (for example, incorrect information as to the eligibility or
compensation of a Participant, or a mathematical or actuarial error),
may be returned to the Employer.
Notwithstanding any other provision of the Plan and Trust, if the
Internal Revenue Service determines initially that the Plan, as adopted
by the Employer, does not qualify under applicable sections of the
Code and applicable Treasury Department Regulations, and the
Employer declines either to amend this Plan and Trust so that it meets
the objections of the Internal Revenue Service or to contest the
determination of the Internal Revenue Service in court, the Trustee will
distribute the value of all assets to the Employer. Thereafter, the
Employer's participation in this Plan and Trust will be considered
rescinded and of no force or effect.
8-5
ARTICLE 9
ADMINISTRATION
9.01
Plan Administrator
The Plan Administrator will have the responsibility for the general supervision
and administration of the Plan and will be a fiduciary of the Plan. The
Employer may, by Written Resolution, appoint an individual or a committee of
at least 3 persons to serve as Plan Administrator. If the Employer does not
appoint an individual or a committee as Plan Administrator, the Employer will
function as Plan Administrator. The Employer may at any time, with or
without cause, remove an individual as Plan Administrator or as a member of
the Committee and substitute another individual therefor.
9.02 Powers and Duties of the Plan Administrator
The Plan Administrator will be charged with and will have delegated to it the
power, duty, authority and discretion to interpret and construe the provisions
of this Plan, to determine its meaning and intent and to make application
thereof to the facts of any individual case; to determine in its discretion the
rights and benefits of Participants or the eligibility of Employees; to give
necessary instructions and directions to the Trustee and the Insurer as herein
provided or as may be requested by the Trustee and the Insurer from time to
time; and to generally direct the administration of the Plan according to its
terms, All decisions of the Plan Administrator in matters properly coming
before it according to the terms of this Plan, and all actions taken by the Plan
Administrator in the proper exercise of its administrative powers, duties and
responsibilities, will be final and binding upon all Employees, Participants and
Beneficiaries and upon any person having or claiming any rights or interest in
this Plan. The Employer and the Plan Administrator will make and receive
any reports and information, and retain any records necessary or appropriate
to the administration of this Plan or to the performance of duties hereunder or
to satisfy any requirements imposed by law. In the performance of its duties,
the Plan Administrator will be entitled to rely on information duly furnished by
any Employee, Participant or Beneficiary or by the Employer or Trustee.
9.03 Actions of the Plan Administrator
The Plan Administrator may adopt such rules as it deems necessary,
desirable or appropriate with respect to the conduct of its affairs and the
administration of the Plan. Whenever any action to be taken in accordance
with the terms of the Plan requires the consent or approval of the Plan
Administrator, or whenever an interpretation is to be made of the terms of the
Plan, the Plan Administrator will act in a uniform and nondiscriminatory
FEDJaOO',DDC
3333FED"'~1
9-1
manner, treating all Employees and Participants in similar circumstances in a
like manner. If the Plan Administrator is a committee, all of its decisions will
be made by a majority vote. The Plan Administrator will have the authority to
employ one or more persons (including but not limited to attorneys, actuaries
and accountants) to render advice or services (either ministerial or
discretionary or both) with regard to the responsibilities of the Plan
Administrator. Any persons employed to render advice or services will have
no fiduciary responsibility for any ministerial functions performed with respect
to this Plan.
9.04 Reliance on Plan Administrator and Emolover
Until the Employer gives notice to the contrary, the Trustee and any persons
employed to render advice or services will be entitled to rely on the
designation of Plan Administrator together with the most recent Written
Resolution adopted in accordance with the provisions of that section that has
been furnished to them. In addition, the Trustee and any persons employed
to render advice or services will be fully protected in acting upon the written
directions and instructions of the Plan Administrator made in accordance with
the terms of this Plan. If the Plan Administrator is a group of individuals,
unless otherwise specified, anyone of such individuals will be authorized to
sign documents on behalf of the Plan Administrator and such authorized
signatures will be recognized by all person dealing with the Plan
Administrator. The Trustee and any persons employed to render advice or
services may take cognizance of any rules established by the Plan
Administrator and rely upon them until notified to the contrary. The Trustee
and any persons employed to render advice or services will be fully protected
in taking any action upon any paper or document believed to be genuine and
to have been properly signed and presented by the Plan Administrator,
Employer or any agent of the Plan Administrator acting on behalf of the Plan
Administrator.
9.05 Reserved
9.06 Bond
The Fiduciaries will be bonded to the extent required by applicable state law.
The City Council may, by Written Resolution, require any additional bond it
believes appropriate in the circumstances.
9.07 Comoensation of Plan Administrator
The Compensation of the Plan Administrator will be left to the discretion of
the Employer; no person who is receiving full pay from the Employer will
receive compensation for services as Plan Administrator. All reasonable and
necessary expenses incurred by the Plan Administrator in supervising and
FEDJOOO2.DOC
33 33 FED 14/",1
9-2
administering the Plan will be paid from the Plan assets by the Trustee at the
direction of the Plan Administrator to the extent not paid by the Employer.
9.08 Claims Procedure
The Plan Administrator will make all determinations as to the rights of any
Employee, Participant, Beneficiary or other person under the terms of this
Plan. Any Employee, Participant or Beneficiary, or person claiming under
them, may make claim for benefit under this Plan by filing written notice with
the Plan Administrator setting forth the substance of the claim. If a claim is
wholly or partially denied, the claimant will have the opportunity to appeal the
denial upon filing with the Plan Administrator a written request for review
within 60 days after receipt of notice of denial. In making an appeal the
claimant may examine pertinent Plan documents and may submit issues and
comments in writing. Denial of a claim or a decision on review will be made in
writing by the Plan Administrator delivered to the claimant within 60 days
after receipt of the claim or request for review, unless special circumstances
require an extension of time for processing the claim or review, in which
event the Plan Administrator's decision must be made as soon as possible
thereafter but not beyond an additional 60 days. If no action on an initial claim
is taken within 120 days, the claims will be deemed denied for purposes of
permitting the claimant to proceed to the review stage. The denial of a claim
or the decision on review will specify the reasons for the denial or decision
and will make reference to the pertinent Plan provisions upon which the
denial or decision is based. The denial of a claim will also include a
description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of the claim review
procedure herein described. The Plan Administrator will serve as an agent for
service of legal process with respect to the Plan unless the Employer,
through written resolution, appoints another agent.
If a Participant or Beneficiary is entitled to a distribution, the Participant or
Beneficiary is responsible for providing the Plan Administrator with his current
address. If the Plan Administrator notifies the Participant or Beneficiary by
certified mail (return receipt requested) at his last known address that he is
entitled to a distribution and also notifies him of the provisions of this
paragraph, and the Participant or Beneficiary fails to claim his benefits under
the Plan or provide his current address to the Plan Administrator within one
year after such notification, the distributable amount will be forfeited and used
to reduce the Employer's next contribution to the Plan. If the Participant or
Beneficiary is later located, the benefit will be restored.
9.09 Liability of Fiduciaries
The Plan Administrator or the Employer may purchase insurance to provide
indemnification for the Plan Administrator, the Employer and any Employees
FEDJOO02.DOC
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9-3
against liability or losses occurring by reason of act or omission in their
capacity as fiduciaries or agents for the Plan. Except for a breach of fiduciary
responsibility due to gross negligence or willful misconduct, the Plan
Administrator will not incur any individual liability for any decision, act, or
failure to act hereunder. The Plan Administrator may engage agents to assist
it and may engage legal counsel who may be counsel for the Employer. The
Plan Administrator will not be responsible for any action taken or omitted to
be taken on the advice of counsel. All reasonable expenses incurred by the
Plan Administrator will be paid by the Employer.
If there is more than one person serving as a fiduciary in any capacity (for
example, co-Trustees), each will use reasonable care to prevent the other or
others from committing a breach of this Plan. Nothing contained in this
Section will preclude any agreement allocating specific responsibilities or
obligations among the co-fiduciaries provided that the agreement does not
violate any of the terms and provisions of this Plan. In those instances where
any duties have been allocated between co-fiduciaries, a fiduciary will not be
liable for any loss resulting to the Plan arising from any act or omission on the
part of another co-fiduciary to whom responsibilities or obligations have been
allocated except under the following circumstances:
If he participates knowingly in, or knowingly undertakes to conceal, an
act or omission of a co-fiduciary knowing the act or omission is a
breach; or
If by his failure to comply with his specific responsibilities which give
rise to his status as a fiduciary, he has enabled the other fiduciary to
commit a breach; or
If he has a knowledge of a breach by a co-fiduciary, unless he makes
reasonable efforts under the circumstances to remedy the breach.
9.10 Expenses of Administration
The Employer does not and will not guarantee the Plan Assets against loss.
The Employer may in its sole discretion, but will not be obligated to, pay the
ordinary expenses of establishing the Plan and Trust, including the fees of
consultants, accountants and attorneys in connection therewith. The
Employer may, in its sole discretion (but will not be obligated to), pay other
costs and expenses of administering the Plan, the taxes imposed upon the
Trust, if any, and the fees, charges or commissions with respect to the
purchase and sale of Plan Assets. Unless paid by the Employer, such costs
and expenses, taxes (if any), and fees, charges and commissions will be a
charge upon the Plan Assets and deducted from Plan Assets by the Trustee.
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9-4
9.11
Distribution Authority
If any person entitled to receive payment under this Plan is a minor, declared
incompetent or is under other legal disability, the Plan Administrator may, in
its sole discretion:
Distribute directly to the person entitled to the payment;
Distribute to the legal guardian or, if none, to a parent of the person
entitled to payment or to a responsible adult with whom the person
entitled to payment maintains his residence;
Distribute to a custodian for the person entitled to payment under the
Uniform Gifts to Minors Act if permitted by the laws of the state in
which the person entitled to payment resides; or
Withhold distribution of the amount payable until a court of competent
jurisdiction determines the rights of the parties thereto or appoints a
guardian of the estate of the person entitled to payment.
If there is any dispute, controversy or disagreement between any Beneficiary
or person and any other person as to who is entitled to receive the benefits
payable under this Plan, or if the Plan Administrator is uncertain as to who is
entitled to receive benefits, or if the Plan Administrator is unable to locate the
person who is entitled to benefits, the Plan Administrator may with
acquittance interplead the funds into a court of competent jurisdiction in the
judicial district in which the Employer maintains its principal place of business
and, upon depositing the funds with the clerk of the court, be released from
any further responsibility for the payment of the benefits. If it is necessary for
the Plan Administrator to retain legal counselor incur any expense in
determining who is entitled to receive the benefits, whether or not it is
necessary to institute court action, the Plan Administrator will be entitled to
reimbursement from the benefits for the amount of its reasonable costs,
expenses and attorneys' fees incurred.
FEDJOOO2.DOC
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9-5
ARTICLE 10
AMENDMENT OR TERMINATION OF PLAN
10.01 Right of Employer To Amend or Terminate
The Employer reserves the right to alter, amend, revoke or terminate this
Plan. No amendment will deprive any Participant or Beneficiary of any vested
right nor will it reduce his Accrued Benefit (Account Balance), except as may
be required to maintain the Plan as a qualified plan under the Code. No
amendment will change the duties or responsibilities of the Trustee without its
express written consent thereto.
A plan amendment which has the effect of eliminating an Optional Benefit
Form will, with respect to benefits attributable to Service before the
amendment, be treated as reducing Accrued Benefits.
10.02 Allocation of Assets Upon Termination of Plan
If this Plan is revoked or terminated (in whole or in part) or if contributions are
completely discontinued the Accounts of all affected Participants will become
non-forfeitable. The Employer will then arrange for allocation of all assets
among Participants so affected by the total or partial termination in
accordance with the requirements of all applicable law and the regulations
and requirements of the Internal Revenue Service. All allocated amounts will
be retained in the Plan to the credit of the individual Participants until
distribution as directed by the Employer, Distribution to Participants may be in
the form of cash or other Plan assets or partly in each.
10.03 Exclusive Benefit
At no time will any part of the principal or income of the Plan assets be used
or diverted for purposes other than the exclusive benefit of Participants in the
Plan and their Beneficiaries, nor may any portion of the Plan assets revert to
the Employer.
10.04 Failure To Qualify
Notwithstanding any of the foregoing provisions, if this Plan, upon adoption
by the Employer, is submitted to the Internal Revenue Service which then
determines that the Plan as initially adopted by the Employer is not a
qualified plan under the Code, the Employer may elect to terminate this Plan
by giving written notice thereof. Such termination will have the same effect as
if the Plan were never adopted, all Policies and Contracts will be cancelled,
and all contributions, to the extent recoverable from the Trustee, will be
returned to their source. If any amendment to this Plan is submitted to the
FEDJOOO2.00C
3333 FED ""~I
10-1
Internal Revenue Service within the period allowed under Code Section
401 (b) which then determines that the Plan as amended is not a qualified
plan under the Code, the Employer may cancel or modify any or all
provisions of the amendment retroactive to the effective date of the
amendment in order to maintain the qualified status of the Plan, whereupon
written notice thereof will be furnished to all affected Employees, Participants
and Beneficiaries.
10.05 Mergers. Consolidations or Transfers of Plan Assets
In the event this Plan is merged or consolidated with another plan which is
qualified under Code Sections 401 (a) (and 501 (a) if applicable), or in the
event of a transfer of the assets or liabilities of this Plan to another plan which
is qualified under Code Sections 401 (a) (and 501 (a) if applicable), the benefit
which each Participant would be entitled to receive under the successor plan
or other plan if it were terminated immediately after the merger, consolidation
or transfer will be equal to or greater than the benefit which the Participant
would have received immediately before the merger, consolidation or transfer
if this Plan had then terminated.
Any transfer of assets and/or liabilities to (or from) this Plan from (or to)
another plan qualified under Code Sections 401 (a) (and 501 (a) if applicable)
will be evidenced by a Written Resolution by the Plan Sponsor of each
affected plan which specifically authorizes such transfer of assets and/or
liabilities.
No transfer of assets and liabiiities of the Fund to another trust fund that
results in the elimination or reduction of benefits protected by Code Section
411 (d)(6) may be made unless the Participant has made a voluntary, fully
informed election to transfer his accrued benefit to the other fund. The
election is subject to the consent of the Participant's Spouse (if any) and must
comply in all respects with the requirements of Treasury Regulation Section
1.411 (d)-4 Q&A 3(b)(1), the provisions of which are incorporated by
reference into this Section 10.05.
10.06 Effect of Plan Amendment on VestinG Schedule
No amendment to the Vesting Schedule will deprive a Participant of his
nonforfeitable right to his Vested Accrued Benefit as of the later of the date
the amendment is adopted or its effective date. Further, if the Vesting
Schedule of the Plan is amended, or if the Plan is amended in any way that
directly or indirectly affects the computation of a Participant's non-forfeitable
percentage, each Participant with at least 3 Years of Vesting Service as of
the date of the change may elect, within a reasonable period after the
adoption of the amendment, to have his Vested Percentage computed under
the Plan without regard to such amendment. The period during which such
FEDJOOO2.DOC
33 33FED ""yl
10-2
election may be made will commence with the date the amendment is
adopted and will end 60 days after the latest of:
the date the amendment is adopted;
the date the amendment becomes effective or,
the date the Employer issued written notice of the amendment to the
Participant.
FEDJOOO2,DOC
3333FED141~1
10-3
ARTICLE 11
TRUSTEE AND TRUST FUND
11.01 Acceptance of Trust
The Trustee, by signing this Agreement, accepts this Trust and agrees to
perform the duties of the Trustee in accordance with the terms and conditions
set forth herein.
11.02 Trust Fund
(a)
(b)
FEDJOOO2.DDC
33 33 FED 141""
Purpose and Nature
The Employer and the Trustee will establish and maintain a Trust
Fund for purposes of providing a means of accumulating the assets
necessary to provide the benefits which become payable under the
Plan. The Trustee will receive, hold and invest all contributions made
by the Employer and the Participants, including the investment
earnings thereon. The Trust Fund arising from such contributions and
earnings will consist of all assets held by the Trustee under the Plan
and Trust. All benefits payable under the Plan will be paid by the
Trustee from the Trust Fund.
Any person having any claim under the Plan will look solely to the
assets of the Trust Fund for satisfaction. In no event will the Plan
Administrator, the Employer, any Employees, any officer of the
Employer or any agents of the Employer or the Plan Administrator be
liable in their individual capacities to any person whomsoever, under
the provisions of this Plan and Trust, except as provided by law.
The Trust Fund will be used and applied only in accordance with the
provisions of the Plan and Trust, to provide the benefits thereof, and
no part of the corpus or income of the Trust Fund will be used for, or
diverted to, purposes other than for the exclusive benefit of the
Participants or their Beneficiaries entitled to benefits under the Plan,
except to the extent specifically provided elsewhere in this Plan.
Operation of Trust Fund
The Trust Fund will be maintained in accordance with the accounting
requirements of the Plan. No Participant will have any right to any
specific asset or any specific portion of the Trust Fund before
distribution of benefits. Withdrawals from the Trust Fund will be made
to provide benefits to Participants and Beneficiaries in the amounts
11-1
(c)
specified by the Plan, and to pay expenses authorized by the Plan
Administrator.
Investment Policv
An Investment Committee appointed by the Employer (or, if there is no
Investment Committee, the Plan Administrator) will establish an
investment policy for the Trust Fund, bearing in mind the fiduciary
requirements of state law, the possible need for asset liquidity
including benefit payment requirements, the need for investment
growth, and the short-run and long-run goals of the Plan and Trust.
The Plan Administrator will communicate the investment policy to the
Trustee, or the Investment Manager if one has been appointed
pursuant to Section 11.17, who will invest the assets of the Trust Fund
according to the investment policy.
11.03 Receipt of Contributions
The Trustee will be accountable to the Employer for the funds contributed to
it, but will have no duty to see that the contributions received comply with the
provisions of the Plan. The Trustee will not be obligated to collect any
contributions from the Employer or the Participants, nor be obligated to see
that funds deposited with it are contributed according to the provisions of the
Plan.
11.04 Powers of the Trustee
Subject to the provisions and limitations contained elsewhere in this Plan, the
Trustee will have full discretion and authority with regard to the investment of
the Trust Fund. The Trustee will invest Plan Assets according to the
investment policy communicated to it by the Plan Administrator. The Trustee
is authorized and empowered, but not by way of limitation, with the following
powers, rights and duties:
(a)
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33 33 FED 14/oyl
To invest any part or all of the Trust Fund in any common or preferred
stocks, open-end or closed-end mutual funds, United States retirement
plan bonds, corporate bonds, debentures, convertible debentures,
commercial paper, U.S. Treasury bills, book entry deposits with the
United States Federal Reserve Bank or System, Master Notes or
similar arrangements sponsored by the Trustee or any other financial
institution as permitted by law, improved or unimproved real estate
situated in the United States, mortgages, notes or other property of
any kind, real or personal, as a prudent man would so invest under like
circumstances with due regard for the purposes of this Plan. Any
investment made or retained by the Trustee in good faith will be proper
but must be of a kind constituting a diversification considered by a law
suitable for trust investments;
11-2
(b)
(c)
(d)
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3333FED141~1
To maintain any part of the assets of the Trust Fund in cash, or in
demand or short-term time deposits bearing a reasonable rate of
interest (including demand or short-term time deposits of or with the
Trustee), or in a short-term investment fund (which fund may be
maintained in cash balances or in other cash equivalents having ready
marketability, including, but not limited to, U.S. Treasury Bills,
commercial paper, certificates of deposit (including such certificates of
deposit of or with the Trustee), and similar types of short-term
securities, as may be deemed necessary by the Trustee in its sole
discretion;
To manage, sell, contract to sell, grant options to purchase, convey,
exchange, transfer, abandon, improve, repair, insure, lease for any
term even though commencing in the future or extending beyond the
term of the Trust, and otherwise deal with all property, real or
personal, in such manner, for such considerations and on such terms
and conditions as the Trustee will decide;
To credit and distribute the Trust as directed by the Plan Administrator
or any agent of the Plan Administrator. The Trustee will not be obliged
to inquire as to whether any payee or distributee is entitled to any
payment or whether the distribution is proper or within the terms of the
Plan, or as to the manner of making any payment or distribution. The
Trustee will be accountable only to the Plan Administrator for any
payment or distribution made by it in good faith on the order or
direction of the Plan Administrator or any agent of the Plan
Administrator;
(e)
To borrow money, to assume indebtedness, extend mortgages and
encumber by mortgage or pledge;
(f)
To compromise, contest, arbitrate, or abandon claims and demands, in
its discretion;
(g)
To have with respect to the Trust all of the rights of an individual
owner, including the power to give proxies, to participate in any voting
trusts, mergers, consolidations or liquidations, and to exercise or sell
stock subscriptions or conversion rights;
(h)
To hold any securities or other property in the name of the Trustee or
its nominee, or in another form as it may deem best, with or without
disclosing the trust relationship;
11-3
(i)
(j)
(k)
(I)
(m)
To perform any and all other acts in its judgment necessary or
appropriate for the proper and advantageous management,
investment and distribution of the Trust;
To retain any funds or property subject to any dispute without liability
for the payment of interest, and to decline to make payment or delivery
of the funds or property until final adjudication is made by a court of
competent jurisdiction;
To file all tax forms or returns required of the Trustee;
To begin, maintain or defend any litigation necessary in connection
with the administration of the Plan, except that the Trustee will not be
obligated to or required to do so unless indemnified to its satisfaction;
and
To keep any or all of the Trust property at any place or places within
the United States or abroad, or with a depository or custodian at such
place or places, provided, however, that the Trustee may not maintain
the indicia of ownership of any assets of the Plan outside the
jurisdiction of the District Courts of the United States, except as may
be expressly authorized in U.S. Treasury or U.S. Department of Labor
regulations.
11.05 Investment in Common or Collective Trust Funds
Notwithstanding the provisions of Section 11.04, the Employer specifically
authorizes the Trustee to invest all or any portion of the assets comprising
the Trust Fund in any common or collective trust fund which at the time of the
investment provides for the pooling of the assets of plans qualified under
Code Section 401 (a). The authorization applies only if such common or
collective trust fund:
FEDJOO02.DOC
33 33 FED '4I~1
is exempt from taxation under Code Section 584 or 501 (a);
if exempt under Code Section 501 (a), expressly limits participation to
pension and profit sharing trusts which are exempt under Code
Section 501 (a) by reason of qualifying under Code Section 401 (a);
prohibits that part of its corpus or income which equitably belongs to
any participant trust from being used for or diverted to any purposes
other than for the exclusive benefit of the Employees or their
Beneficiaries who are entitled to benefits under such participating
trust;
11-4
prohibits assignment by participating trust of any part of its equity or
interest in the group trust; and
the sponsor of the group trust created or organized the group trust in
the United States and maintains the group trust at all times as a
domestic trust in the United States.
The provisions of the common or collective trust fund agreement, as
amended by the Trustee from time to time, are by this reference incorporated
within this Plan and Trust. The provisions of the common or collective trust
fund will govern any investment of Plan assets in that fund.
11.06 Investment in Insurance Company Contracts
The Trustee may invest any portion of the Trust Fund in a deposit
administration, guaranteed investment or similar type of investment contract
(hereinafter referred to as Contract); provided however that no such Contract
may provide for an optional form of benefit which would not be provided for
under the provisions of this Plan. The Trustee will be the complete and
absolute owner of Contracts held in the Trust Fund.
The Trustee may convert from one form to another any Contract held in the
Trust Fund; designate any mode of settlement; sell or assign any Contract
held in the Trust Fund; surrender for cash any Contract held in the Trust
Fund, agree with the insurance company issuing any Contract to any release,
reduction, modification or amendment thereof; and, without limitation of any
of the foregoing, exercise any and all of the rights, options and privileges that
belong to the absolute owner of any Contract held in the Trust Fund that are
granted by the terms of any such Contract or by the terms of this Agreement.
The Trustee will hold in the Trust Fund the proceeds of any sale, assignment
or surrender of any Contract held in the Trust Fund and any and all dividends
and other payments of any kind received in respect to any Contract held in
the Trust Fund.
The Trustee will have power to exècute all necessary receipts and releases
to any insurance company issuing any Contract or Contracts held in the Trust
Fund, and will make reasonable efforts to collect such sums as may appear
to be due; but the Trustee will have no duty to begin or maintain any action,
suit or legal proceeding to collect the proceeds of any Contract unless it is in
possession of funds sufficient for the purpose or unless it has been
indemnified to its satisfaction for its counsel fees, costs, disbursments and all
other expenses and liabilities to which it, in its judgment, may be subjected by
beginning or maintaining the action, suit or other legal proceeding. The
Trustee may use the proceeds of any Contract held in the Trust Fund to
FEDJOOO2,DOC
33 33 FED 14I~1
11-5
defray the expenses incurred in connection with enforcing payment of that
Contract. The Trustee will have power to compromise and adjust claims
arising out of any Contract held in the Trust Fund upon such terms and
conditions as it may deem just, and the discretion of the Trustee will be
binding and conclusive upon all persons interested in the Trust Fund.
No insurance company which may issue any Contract based upon the
application of the Trustee will be be responsible for the validity of this Plan,
be required to look into the terms of this Plan, be required to question any act
of the Plan Administrator or the Trustee hereunder or be required to verify
that any action of the Trustee is authorized by this Plan. If a conflict should
arise between the terms of the Plan and any such Contract, the terms of the
Plan will govern.
11.07 Fees and Expenses from Fund
The Trustee will be entitled to receive reasonable annual compensation as
may be mutually agreed upon from time to time between the Employer and
the Trustee. The Trustee will pay all expenses reasonably incurred by it in its
administration and investment of the Trust Fund from the Trust Fund unless
the Employer pays the expenses. No person who is receiving full pay from
the Employer will receive compensation for services as Trustee.
11.08 Records and Accounting
The Trustee will keep full and complete records of the administration of the
Trust Fund which the Employer and the Plan Administrator may examine at
any reasonable time. As soon as practical after the end of each Plan Year
and at such other reasonable times as the Employer may direct, the Trustee
will prepare and deliver to the Employer and the Plan Administrator an
accounting of the administration of the Trust, including a report on the
valuation of all assets of the Trust Fund, such valuation to be based upon the
fair market value on the valuation date. The Employer and the Plan
Administrator will accept or disapprove such accounting within 90 days. If the
Employer and the Plan Administrator fail to explicitly accept or disapprove
such accounting within 90 days, they will be deemed to have accepted such
accounting as of the close of the 90-day period. Upon acceptance by the
Employer and the Plan Administrator, the accounting will be conclusive and
binding on all parties and the Trustee will be relieved of any further liability or
accountability with respect to the matters accounted for. No Employee,
Participant or Beneficiary nor any other person will be entitled to or have the
right to demand any further or different accounting by the Trustee.
FEDJOOO2,DOC
3333FED141~1
11-6
11.09 Distribution Directions
If no one claims a payment or distribution made from the Trust, the Trustee
will notify the Plan Administrator and will dispose of the payment as directed
by the Plan Administrator in the manner described in Section 9.11.
11.10 Third Party
No person dealing with the Trustee will be obliged to see to the proper
application of any money paid or property delivered to the Trustee, or to
inquire whether the Trustee has acted pursuant to any of the terms of the
Plan. Each person dealing with the Trustee may act upon any notice, request
or representation in writing by the Trustee, or by the Trustee's duly
authorized agent, and will not be liable to any person whomsoever in so
doing. The certification of the Trustee that it is acting in accordance with the
Plan will be conclusive in favor of any person relying on the certification.
11.11 Professional Aaents
The Trustee may employ and pay from the Trust Fund reasonable
compensation to agents, attorneys, accountants and other persons to advise
the Trustee as in its opinion may be necessary. The Trustee may delegate to
any agent, attorney, accountant or other person selected by it any non-
Trustee power or duty vested in it by the Plan, and the Trustee may act or
refrain from acting on the advice or opinion of any agent, attorney,
accountant or other person so selected.
11.12 Valuation of Trust
The Trustee will value the Trust Fund as of the last day of each Plan Year to
determine the fair market value of the Trust, and the Trustee will value the
Trust Fund on such other date(s) as may be necessary to carry out the
provisions of the Plan.
11.13 Liabilitv of Trustee
The Trustee will be liable only for the safeguarding and administration of the
assets of this Trust Fund in accordànce with the provisions hereof and any
amendments hereto and no other duties or responsibilities will be implied.
The Trustee will not be required to pay any interest on funds paid to or
deposited with it or to its credit under the provisions of this Trust, unless
pursuant to a written agreement between the Employer and the Trustee. The
Trustee will not be responsible for the adequacy of the Trust Fund to meet
and discharge any liabilities under the Plan and will not be required to make
any payment of any nature except from funds actually received as Trustee.
The Trustee may consult with legal counsel (who may be legal counsel for
the Employer) selected by the Trustee and will be fully protected for any
action taken, suffered or omitted in good faith in accordance with the opinion
of said legal counsel. It will not be the duty of the Trustee to determine the
FEDJOOO2,DDC
3333 FED W~I
11-7
identity or mailing address of any Participant or any other person entitled to
benefits hereunder, such identity and mailing addresses to be furnished by
the Employer, the Plan Administrator or an agent of the Plan Adminstrator.
The Trustee will be under no liability in making payments in accordance with
the terms of this Plan and the certification of the Plan Administrator or an
agent of the Plan Administrator who has been granted such powers by the
Plan Aministrator.
11.14 No Bond
Except to the extent required by applicable state law, no bond or other
security for the faithful performance of duty hereunder will be required of the
Trustee.
11.15 Ancillary Trustee
Whenever and as often as the Trustee deems such action desirable, it may
by written instrument appoint any person or corporation in any state of the
United States to act as Ancillary Trustee with respect to any portion of the
assets then held or about to be acquired on behalf of the Trust. Each
Ancillary Trustee will have such rights, duties and discretionary powers as
are delegated to it by the Trustee, but will exercise the same subject to the
limitations or further directions of the Trustee as such be specified in the
instrument evidencing its appointment. The Ancillary Trustee may resign or
may be removed by the Trustee, as to all or any portion of the assets so
delivered one to the other, and the Trustee may thereupon appoint another
Ancillary Trustee or successor to whom the assets will be transferred, or may
itself receive such assets in termination of the ancillary trusteeship to that
extent. Such Ancillary Trustee will be accountable solely to the Trustee and
will be entitled to reasonable compensation.
11.16 Removal or Resianation and Successor Trustee
A Trustee may resign at any time upon giving 30 days prior written notice to
the Employer or, with the consent of the Board of Directors, a Trustee may
resign with less than 30 days prior written notice.
The Board of Directors may, at any time and from time to time, without order
of any court and without amending this Plan and Trust, remove a Trustee by
giving at least 30 days prior written notice to the Trustee.
Upon such removal or resignation of a Trustee, the Board of Directors will
appoint and designate a successor Trustee which will be one or more
individual successor Trustees or a corporate Trustee organized under the
laws of the United Sates or of any state thereof with authority to accept and
execute trusts. Any successor Trustee must accept and acknowledge in
FEDJOO02.DOC
33 33FED 14"yl
11-8
writing its appointment as a successor Trustee before it can act in such
capacity,
Title to all property and records or true copies of such records necessary to
the current operation of the Trust Fund held by the Trustee hereunder will
vest in any successor Trustee acting pursuant to the provisions hereof,
without the execution or filing of any further instrument. Any resigning or
removed Trustee will execute all instruments and do all acts necessary to
vest such title in any successor Trustee of record. Each successor Trustee
will have, exercise and enjoy all the powers, both discretionary and
ministerial, herein conferred upon his predecessor. No successor Trustee will
be obligated to examine the accounts, records and acts of any previous
Trustee or Trustees, and each successor Trustee in no way or manner will be
responsible for any action or omission to act on the part of any previous
Trustee.
Any corporation which results from any merger, consolidation or purchase to
which the Trustee may be a party, or which succeeds to the trust business of
the Trustee, or to which substantially all the trust assets of the Trustee may
be transferred, will be the successor to the Trustee hereunder without any
further act or formality with like effect as if such successor Trustee had
originally been named Trustee herein; and in any such event it will not be
necessary for the Trustee or any successor Trustee to give notice thereof to
any person, and any requirement, statutory or otherwise, that notice will be
given is hereby waived.
11.17 Appointment of Investment Manaaer
One or more Investment Managers may be appointed by the Employer, the
Plan Administrator or an Investment Committee appointed by the Employer to
exercise full investment management authority with respect to all or a portion
of the Trust assets. Authorized payment of the fees and expenses of the
Investment Manager(s) may be made from the Trust assets. For purposes of
this agreement, any Investment Manager so appointed will, during the period
of his appointment, possess fully and absolutely those powers, rights and
duties of the Trustee (to the extent delegated by the Employer or the Plan
Administrator) with respect to the investment or reinvestment of that portion
of the Trust assets over which the Investment Manager has investment
management authority. The Investment Manager must be one of the
following:
(a)
Registered as an Investment Advisor under the Investment Advisors
Act of 1940;
(b)
A Bank, as defined in the Investment Advisors Act of 1940; or
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(c)
An Insurance Company qualified to manage, acquire, or dispose of
such Plan assets under the laws of more than one state.
Any Investment Manager will acknowledge in writing to the Employer or the
Plan Administrator and to the Trustee that he or it is a fiduciary with respect
to the Plan. During any period of time when the Investment Manager is so
appointed and serving, and with respect to those assets in the Plan over
which the Investment Manager exercises investment management authority,
the Trustee's responsibility will be limited to holding such assets as a
custodian, providing accounting services, disbursing benefits as authorized,
and executing such investment instructions only as directed by the
Investment Manager. The Trustee will not be responsible for any acts or
omissions of the Investment Manager. Any Certificates or other instruments
duly signed by the Investment Manager (or the authorized representative of
the Investment Manager), purporting to evidence any instruction, direction or
order of the Investment Manager with respect to the investment of those
assets of the Plan over which the Investment Manager has investment
management authority, will be accepted by the Trustee as conclusive proof
thereof. The Trustee will also be fully protected in acting in good faith upon
any notice, instruction, direction, order, certificate, opinion, letter, telegram or
other document believed by the Trustee to be genuine and from the
Investment Manager (or the authorized representative of the Investment
Manager). The Trustee will not be liable for any action taken or omitted by
the Investment Manager or for any mistakes of judgment or other action
made, taken or omitted by the Trustee in good faith upon direction of the
Investment Manager.
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IN WITNESS WHEREOF, this instrument has been executed by the duly authorized
and empowered officers of the Employer, this 2nd day of October, 1990.
CITY OF FEDERAL WAY
By:
Brent McFall, City Manager
The Trustees agree to serve as Trustees under the terms of this instrument.
Trustee
Trustee
Trustee
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