Ord 92-152� �
ORDINANCE NO. 92-152
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF FEDERAL WAY, WASHINGTON, RELATING TO SOCIAL
SECURITY, AMENDING THE CITY OF FEDERAL WAY
EMPLOYEES' RETIREMENT SYSTEM TO PROVIDE THAT
FORFEITURES FOR NON-VESTED RETIREMENT BALANCES
SHALL TAKE PLACE ON THE DATE A PARTICIPANT
TERMINATES EMPLOYMENT WITH THE CITY, AND THAT
FORFEITURES SHALL BE REALLOCATED AMONG THOSE
PARTICIPANTS WHO ARE EMPLOYED BY THE CITY AT
THE END OF THE PLAN YEAR, AND DELETING CERTAIN
DUPLICATE DEFINITIONS (AMENDING ORDINANCE 90-
74, ORDINANCE 91-118 AND ORDINANCE 91-119).
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, there exists an employee Federal Way Retirement
System Board of Trustees ("Board"), which Board is charged with
administering and renewing the Retirement Plan; and
WHEREAS, the Board has recommended certain amendments to
be made to the Plan relating to forfeitures for non-vested
retirement funds, reallocation of those funds, and other minor
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ORIGINAL
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administrative changes; and
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WHEREAS, the recommended Plan changes are intended to
amend the current system whereby contribution forfeitures are
reallocated to terminated or "inactive" employees; NOW, THEREFORE,
THE CITY COUNCIL OF THE CITY OF FEDERAL WAY, WASHINGTON,
DOES HEREBY ORDAIN AS FOLLOWS:
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. Al1 prior acts and actions of employees and
the City prio� 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 shall now provide that non-
vested employee retirement balances shall be forfeited as of the
date a participant terminates his or her employment with the City
and, further, that these forfeitures shall be reallocated only
among those participants who are employed by the City at the end of
the Plan year.
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
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of this ordinance, this Plan or their application to any other
person or set of circumstances.
Section 5. This ordinance shall be effective thirty (30)
days after passage and publication of an approved summary
consisting of the title to this ordinance.
PASSED by the City Council of the City of Federal Way
this 17th day of November , 1992.
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ATTEST:
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CITY CLERK, MA EEN M. SWANEY, CMC
APPROVED AS TO FORM:
C EY, CAROLYN A. LAKE
FILED WITH THE CITY CLERK: November 4, 1992
PASSED BY THE CITY COUNCIL: November 17, 1992
PUBLI SHED : November 22, 199 � f ?.
EFFECTIVE DATE : December ��, 1992
ORDINANCE NO. 92-152 /7
la\kathleer\ordin\retire.sys
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CITY OF FEDERAL WAY
EMPLOYEES' RETIREMENT SYSTEM
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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 Em to Employees u
P p y under similar circumstances will be treated alike.
The undersigned Employer and Trustees hereby adopt this restatement of the Plan and
Trust to be effective as of and for Plan Years beginning on and after January 1, 1992 and
agree to be bound by the terms and conditions of this document.
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rr
R 41,
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 1 -1
1.05 Cash -Out Distribution 1 -1
1.06 Code 1 -1
1.07 Collective Bargaining Agreement 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 -5
1.12 Employer Definitions 1-6
1.13 Forfeiture 1 -7
1.14 Highly Compensated Definitions 1 -7
1.15 Reserved 1 -10
1.16 Leave of Absence 1 -10
1.17 Reserved 1 -10
1.18 Optional Benefit Form 1 -11
1.19 Participant Definitions 1 -11
1.20 Payroll Withholding Agreement 1 -11
1.21 Plan 1 -12
1.22 Plan Administrator 1 -13
1.23 Plan Assets, Trust Fund 1 -13
1.24 Reserved 1 -13
1.25 Reserved 1 -13
1.26 Qualified Election 1 -13
1.27 Retirement Age Definitions 1 -14
1.28 Service Definitions 1 -14
1.29 Spouse, Surviving Spouse 1 -16
1.30 Reserved 1 -16
1.31 Trust Definitions 1 -16
1.32 Reserved 1 -16
1.33 Vested Accrued Benefit 1 -16
1.34 Written Resolution 1 -17
1.35 Year Definitions 1 -18
ARTICLE 2: PARTICIPATION 2 -1
2.01 Participation 2 -1
2.02 Participation After Reemployment .2 -1
2.03 Change in Employment Classification 2 -1
ARTICLE 3: ACCOUNTS 3 -1
3.01 Participant Contribution Account 3 -1
3.02 Voluntary Contribution Account 3 -1
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3.03 Employer Contribution Account 3 -2
3.04 Rollover Account 3 -3
3.05 Nondiscrimination Requirements 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 -1
ARTICLE 8: MISCELLANEOUS 8 -1
8.01 Employment Rights of Parties Not Restricted 8 -1
8.02 Alienation 8 -1
8.03 Qualification of Plan 8 -2
8.04 Construction 8 -2
8.05 Fiduciaries 8 -2
8.06 Reserved 8 -3
8.07 Adoption and Withdrawal by Other Organizations 8 -3
8.08 Employer Contributions 8-4
ARTICLE 9: ADMINISTRATION 9 -1
9.01 Plan Administrator 9.1
9.02 Powers and Duties of the Plan Administrator 9 -1
9.03 Actions of the Plan Administrator 9 -2
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 9-4
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
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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 Trust Fund 11 -1
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 11-4
11.07 Fees and Expenses from Fund 11 -5
11.08 Records and Accounting 11 -5
11.09 Distribution Directions 11-6
11.10 Third Parry 11 -6
11.11 Professional Agents 11-6
11.12 Valuation of Trust 11-6
11.13 Liability of Trustee 11-6
11.14 No Bond 11 -7
11.15 Ancillary Trustee 11 -7
11.16 Removal or Resignation and Successor Trustee 11 -7
11.17 Appointment of Investment Manager 11 -8
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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 Accounting Period, Valuation Period
The terms Accounting Period and Valuation Period are used interchangeably and
mean each Plan Quarter.
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
or contributed by the Employer 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 future
legislation that amends, supplements or supersedes such section and any
regulations issued thereunder.
1 -1
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1.07 Collective Bargaining Agreement
Collective Bargaining Agreement means an agreement negotiated in good faith
between employee representatives and the Employer or a group of employers to
which the Employer belongs. The term "employee representatives" does not
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include any organization more than half of whose members are officers or
executives of the Employer.
1.08 Compensation Definitions
(a) Aggregate Compensation
Aggregate Compensation means a Participant's wages as defined in Code
Section 3401(a) (for purposes of income tax at the source) and all other
payments of compensation to an employee by his employer for which the
employer is required to furnish the employee a written statement under
Code Sections 6041(d) and 6051(a)(3), but determined without regard to
any rules that limit wages based on the nature or location of the employment
or the services performed (such as the exception for agricultural labor in
Code Section 3401(a)(2)).
(b) 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 liy 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.
(c) Withheld Compensation
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:
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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
govemmental plans that are picked up by the employing unit and thus
treated as employer contributions).
(d) 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
(a) Accounting Date, Valuation Date
The terms Accounting Date and Valuation Date are used interchangeably
and mean the last day of each Accounting Period. However, if the value of
the Trust Fund declines more than 20% between the applicable Accounting
Date and the last business day of the month immediately preceding the date
distribution of an Account Balance is made or begun, the Accounting Date
for purposes of determining the Account Balance will be the last business
day of the month immediately preceding the date the Account Balance is
distributed or distributions began.
(b) Annuity Starting Date
Annuity Starting Date means the first day on which all events have occurred
that entitle the Participant to receive a benefit.
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(c) Effective Date
The Effective Date of the Plan is June 1, 1990. Except as specified
elsewhere in this document, the effective date of this restatement of the
Plan is January 1, 1992.
(d) Employment 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.
(e) Entry Date
Entry Date means an Employee's Employment Commencement Date.
(f) Normal Retirement Date
A Participant's Normal Retirement Date is the date on which the Participant
attains Normal Retirement Age.
(g) Required Beginning 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 Eligible Employee Classification
An Eligible Employee Classification is a classification of Employees, the members
of which are eligible to participate in the Plan. The only Eligible Employee
Classification is Budget Employees. The following Employees are not members of
the Eligible Employee Classification:
Members of the City Council who are not otherwise Budgeted Employees;
Temporary Employees;
Employees who are covered by a Collective Bargaining Agreement unless the
Collective Bargaining Agreement specifically provides that covered Employees
are eligible to participate in this Plan; and
For Plan Years beginning on or after June 1, 1990, Leased Employees.
1.11 Employee Definitions
(a) Employee
An Employee means:
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(1) Any person who is employed b the YP by Employer or a Related or P Y
Adopting Employer; and
(2) Any Leased Employee deemed to be an Employee of any Employer
described in clause (1) as provided in Code Section 414(n) or (o).
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.
(b) 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(o) 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 Tess 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) immediate participation; and
(3) 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 Participant's
Vested Accrued Benefit include service by an Employee as a Leased
Employee.
(c) Budgeted Employee
A Budgeted Employee is any Employee whose position is provided for in the
City budget and who is employed to work 2,080 hours per year.
(d) Temporary Employee
A Temporary Employee is any Employee who is employed to work 2,080
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hours per year but who is not a Budgeted Employee and performs services
under a contractual arrangement with the Employer of two years or Tess
duration. Possible contract extensions will not be considered in determining
the duration of a contractual arrangement until such time as the Employee
becomes a Budgeted Employee.
1.12 Employer Definitions
(a) Employer
The Employer and Plan Sponsor is CITY OF FEDERAL WAY.
(b) Adopting Employer
An Adopting Employer is any organization which has adopted this Plan and
Trust in accordance with Section 8.07.
(c) 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 goveming
authority to which the CITY OF FEDERAL WAY is the successor.
(d) Related Employer
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(o).
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.
A Forfeiture is considered to occur as of the date determined under Section 5.04.
1-6
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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.
(d) 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.
(e) 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;
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(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 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.
(f) Highly Compensated Former Employee
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.
(g) Highly Compensated Group
Highly Compensated Group means all Highly Compensated Employees.
(h) Lookback Year
Lookback Year means the 12 -month period immediately preceding the
Determination Year.
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(i) Non Highly Compensated Employee
Non- Highly Compensated Employee means an Employee who is neither a
Highly Compensated Employee nor a Family Member.
i
(j) Non Highly Compensated Group
Non- Highly Compensated Group means all Non Highly Compensated
Employees.
(k) Top -Paid Group
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) Employees who normally work less than 17 1/2 hours per week;
(3) Employees who normally work fewer than 6 months during any year.
For this purpose, an Employee who has worked on one 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
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1.16 Leave of Absence
(a) Authorized Leave of Absence
An Authorized Leave of Absence means a period of time of one year or Tess
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) Maternity or Paternity Leave of Absence
A Matemity or Paternity 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 Matemity or Paternity Leave of Absence are those
which would normally have been credited but for such absence; 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 Matemity 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 Patemity 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 Reserved
1.18 Optional Benefit Form
Any Optional Benefit Form which is provided under the Plan is described in Section
5.05.
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1.19 Participant Definitions
The term Participant means an Employee or former Employee who is eligible to
participate in this Plan and who is or who may become eligible to receive a benefit
of any type from this Plan or whose Beneficiary may be eligible to receive any such
benefit.
(a) Active Participant means a Participant who is currently an Employee in an
Eligible Employee Classification.
(b) 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.
(c) 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.
(d) 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.
(e) 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.
(f) 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 Participant means a Participant who, under Article 3, is eligible to
share in the allocation of a contribution or forfeiture for a given Contribution
Period.
Eligiblc Participants.
1.20 Payroll Withholding Agreement
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.
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
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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 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 Withholding Agreements are govemed by the following general
guidelines:
(a) 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.
(b) 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.
(c) 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; and
the requirements of Code Section 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.
1.21 Plan
Plan means CITY OF FEDERAL WAY EMPLOYEES' RETIREMENT SYSTEM, the
terms of which are established by this Plan document. The Plan Identification
Number assigned fo
g ruse 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.
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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 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.
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1.27 Retirement Age Definitions
(a) 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.
(b) Normal Retirement Age
A Participant's Normal Retirement Age is his attained age on the date which
he satisfies the following requirements:
(1) Attainment of age 65, and
(2) Attainment of the fifth anniversary of the Participant's Employment
Commencement Date.
1.28 Service Definitions
(a) 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;
(2) 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
(3) 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.
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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.
(b) 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.
(c) 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) 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.
(2) 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.
(3) 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.
(d) Reserved
(e) 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.
All of a Participant's Years of Vesting Service are taken into account in
determining his Vested Percentage, including service with any Related
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1
Employer exce. t Years of Vestin Service eamed before the Emilio ee
incurred 5 consecutive One Year Breaks -in- Service.
1.29 Spouse, Surviving 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 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) Trust
This term means the Trust established by Article 11 of this Plan that govems
the management of Plan Assets for the exclusive benefit of Participants and
their beneficiaries.
(b) Trust Fund
This term means the same as Plan Assets.
(c) Trustee
The Trustees are the City Manager, the Finance Director, and the Personnel
Director.
1.32 Reserved
1.33 Vested Accrued Benefit
(a) In General
A Participant's Vested Accrued Benefit as of a given date is equal to
•_the product of that portion of his Accrued Benefit as of that date that is
subiect to the Vesting Schedule and his Vested Percentage
as of that same date plus
100% of the remaining portion of his Accrued Benefit as of that date.
(b) Vested Percentage
Except for a Participant's Participant Contribution and Voluntary Contribution
Account, which are fully Vested at all times, his A Participant's Vested
Percentage as of a given date is the percentage determined according to
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the Vesting Schedule. However, a Participant is 100% vested upon reaching
his Normal Retirement Age.
In addition, any Participant who is a part-time, temporary or seasonal
employee within the meaning of Treas. Reg. Section 31.3121(b)(7)-
2(d)(2)(iii) at any time during the period beginning July 1, 1991 and ending
December 31, 1991 shall be immediately Vested in 25% of the Employer
Contribution made on his behalf during that period plus earnings
accumulated on that amount. For this purpose only, the following definitions
apply:
A part-time employee is any employee who normally works 20 hours or
Tess per week;
A seasonal employee is any employee who normally works on a full -time
basis less than 5 months in a year; and
A temporary employee is any employee performing services under a
contractual arrangement with the Employer of two years or less duration.
Possible contract extensions will not be considered in determining the
duration of a contractual arrangement.
(c) Vesting Schedule
A Participant's Vested Percentage is determined according to the following
table:
Years of Vesting Service Vested Percentage
Less than 3 Years 0%
3 Years 20%
4 Years 40%
5 Years 60%
6 Years 80%
7 Years or more 100%
If a Participant's employment with the Employer terminates as a result of
death or disability, the Participant's Vested Percentage will be 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.
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1.35 Year Definitions
(a) 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 1st and ending
December 31st.
(b) Plan Year
The Plan Year is the 12 month period beginning January 1st and ending
December 31st. The term Plan Quarter means the 3 consecutive month
period ending each March 31, June 30, September 30 and December 31.
(c) Limitation Year
The Limitation Year coincides with the Plan Year.
(d) Year of Service
Years of Service are determined in the manner described in Section 1.28.
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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 Reemployment
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, the Participant will participate immediately
upon his return to an Eligible Employee Classification.
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.
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ARTICLE 3: ACCOUNTS
3.01 Participant Contribution Account
For Plan Years beginning on or after June 1, 1990, Participant Contribution Account
means the Account of a Participant reflecting Participant Contributions, investment
income or Toss allocated thereto and distributions. A Participant's Participant
Contribution Account is 100% vested at all times.
(a) Participant 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 Account 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. In the absence of a Written Resolution, the
Participant Contribution Percentage will remain unchanged.
(b) Contribution Period
The Contribution Period for Participant Contributions is each payroll period.
(c) Withdrawals
A Participant may not withdraw any portion of his Participant Contribution
Account 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) Voluntary 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.
All Voluntary Contributions will be made pursuant to a Payroll Withholding
Agreement.
All Voluntary Contributions to the Participant's Voluntary Contribution
Account are Employee Contributions and must satisfy the Nondiscrimination
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Requirements of Section 3.05 for Plan Years beginning on or after January
1, 1993.
(b) Contribution Period
The Contribution Period for Voluntary Contributions is each payroll period.
(c) 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) Employer 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.
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 Eligible
Participants. The City Council will by Written Resolution establish a new
Employer Contribution percentage for each Plan Year no later than the
be §inning of that Plan Year. In the absence of a Written Resolution, the
Employer Contribution Percentage for the next Plan Year will remain
unchanged from the level at that time.
(b) Allocation of Contribution
The total Employer Contribution made by the Employer will be allocated in
the ratio that each Eligible Participant's Compensation for the Contribution
Period bears to the total Compensation for the Contribution Period of all
Eligible Participants. For purposes of this Section 3.03(c), all Participants
are Eligible Participants.
(c) Contribution Period
The Contribution Period for Employer Contributions is each payroll period.
(d) Application of Forfeitures
Forfeitures from a Participant's Employer Contribution Account will be added
to and allocated among the Employer
Contribution Accounts of Eligible Participants on the last day of in-the Plan
Year in which the Forfeitures are determined to occur in the ratio that each
Eligible Participant's Compensation bears to the total Compensation of all
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Eligible Participants. For purposes of this Section 3.03(d), anv Participant
who is employed on the last day of the Plan Year is an Eligible Participant.
(e) 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) 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.
(b) Withdrawals
A Participant may not withdraw any portion of his Rollover Account before
his benefits otherwise become payable under Article 5.
3.05 Nondiscrimination Requirements
This Section applies for all Plan Years beginning on or after January 1, 1993.
(a) Contribution Percentage Test
Employee Contributions must satisfy the Contribution Percentage Test. The
Plan Administrator will determine as soon as administratively feasible after
the end of the Plan Year whether the Contribution Percentage Test has
been satisfied. If the Contribution Percentage Test is not satisfied, then on
or before the close of the following Plan Year (but preferably no later than
the 15th day of the third month following the end of the Plan Year), the Plan
Administrator will forfeit the nonvested portion and distribution the vested
portion of the Excess Aggregate Contribution, together with the income
allocable to it, to the affected Participants of the Highly Compensated Group
to the extent necessary to satisfy the Contribution Percentage Test.
(b) Priority of Reductions
The Excess Aggregate Contribution will be reduced in a manner so that the
Contribution Percentage of the affected Participant(s) with the highest
Contribution Percentage will first be lowered to a point not less than the level
of the affected Participant(s) with the next highest Contribution Percentage.
If further overall reductions are required to satisfy the Contribution
Percentage Test, each of the above Participants' (or groups of Participants')
Contribution Percentage will be lowered to a point not less than the level of
the affected Participant(s) with the next highest Contribution Percentage,
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and so on continuing until sufficient total reductions have occurred to
achieve satisfaction of the Contribution Percentage Test.
(c) Income
The income allocable to any Excess Aggregate Contribution made to a given
Account for a given Plan Year will be equal 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 the
denominator of which is the closing balance of the Account decreased (or
increased) by the amount of earnings (or losses) allocated to the Account for
the Plan Year. Income includes all eamings and appreciation, including
interest, dividends, rents, royalties, gains from the sale of property, and
appreciation in the value of stocks, bonds, annuity and life insurance
contracts and other property, regardless of whether the appreciation has
been realized.
(d) Aggregation of Plans
If the Employer or a Related Employer sponsors one or more other plans to
which Employee Contributions or Matching Contributions are made, the
Employer may elect to treat any two or more such plans as an aggregated
single plan for purposes of satisfying Code Sections 401(a)(4), 401(m) and
410(b). The aggregated plans will be treated as a single plan for purposes
of this Section 3.05. If the Employer maintains two or more plans which are
treated as an aggregated single plan for purposes of Code Section
401(a)(4) or 410(b), all Employee Contributions and Matching Contributions
made to the aggregated plans will be treated as contributed to an
aggregated single plan for purposes of this Section 3.05. Plans may be
aggregated in order to satisfy Code Section 401(m) only if they have the
same Plan Year.
(e) Family Aggregation
The Contribution Percentage for any Highly Compensated Employee who is
subject to the family aggregation rules of Code Section 414(q)(6) will be the
Contribution Percentage determined by combining the Employee
Contributions, Matching Contributions and Compensation of all the eligible
Family Members. If it is necessary to correct Excess Aggregate
Contributions, the Plan Administrator will take corrective actions in the
manner described in Section 1.401(m)- 1(e)(3) of the Treasury Regulations.
(f) Definitions
(1) Compensation
For purposes of this Section 3.05, Compensation means Aggregate
Compensation received during the Plan Year plus Withheld
Compensation. Compensation received while an Employee is not
eligible to participate in the Plan is disregarded.
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(2) Contribution Percentage
Contribution Percentage means, for any specified group, the average
of the ratios calculated (to the nearest one hundredth of one percent)
separately for each Participant in the group, of the amount of
Employee Contributions and Matching Contributions which are made
by or on behalf of each Participant for a Plan Year to each
Participant's Compensation for the Plan Year.
For purposes of determining the Contribution Percentage, each
Employee who is eligible under the terms of the Plan to make or to
have contributions made on his behalf is treated as a Participant.
The Contribution Percentage of an eligible Employee who makes no
Employee Contribution and receives no Matching Contribution is
zero.
For purposes of determining the Contribution Percentage of a
Participant who is a Highly Compensated Employee, the Participant's
Compensation includes the Compensation of any Family Member of
the Participant. Likewise, the Participant's Employee Contributions
and Matching Contributions include the Employee Contributions and
Matching Contributions for any Family Member of the Participant.
The Contribution Percentage of a Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to
make Employee Contributions or receive an allocation of Matching
Contributions allocated to his accounts under two or more plans
which are sponsored by the Employer will be determined as if the
Employee and Matching Contributions were made under a single
plan. For purposes of this paragraph, if a Highly Compensated
Employee participates in two or more such plans which have different
Plan Years, all plans ending with or within the same calendar year
will be treated as a single plan.
(3) Contribution Percentage Test
The Contribution Percentage Test is .a test applied on a Plan Year
basis to determine whether a plan meets the requirements of Code
Section 401(m). The Contribution Percentage Test may be met by
either satisfying the General Contribution Percentage Test or the
Altemative Contribution Percentage Test.
The General Contribution Percentage Test is satisfied if the
Contribution Percentage for the Highly Compensated Group does not
exceed 125% of the Contribution Percentage for the Non Highly
Compensated Group.
The Altemative Contribution Percentage Test is satisfied if the
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Contribution Percentage for the Highly Compensated Group does not
exceed the lesser of:
the Contribution Percentage for the Non Highly Compensated
Group plus 2 percentage points, or
the Contribution Percentage for the Non Highly Compensated
Group multiplied by 2.0.
(4) Employee Contribution
Employee Contribution means any contribution made by an
Employee to any plan maintained by the Employer or any Related
Employer which is other than an Elective Contribution within the
meaning of Section 1.401(k)- 1(g)(3) of the Treasury Regulations and
which is designated or treated at the time of contribution as an
Employee After-Tax Contribution.
(5) Excess Aggregate Contribution
Excess Aggregate Contribution means, for each member of the
Highly Compensated Group, the amount of Employee and Matching
Contributions which exceeds the maximum which could be made if
the Contribution Percentage Test were to be satisfied.
(6) Matching Contribution
Matching Contribution means any contribution made by the Employer
to any plan maintained by the Employer or any Related Employer
which is based on an Employee contribution together with any
forfeiture allocated to the Participant's Account on the basis of
Employee Contributions or Matching Contributions. A Matching
Contribution will be taken into account for a given Plan Year only if:
The Matching Contribution is allocated to the Participant's
Account as of a date within the Plan Year to which it relates;
The allocation is not contingent upon the Employee's participation
in the Plan or performance of services on any date after the
allocation date;
The Matching Contribution is actually paid to the Trustees no
later than 12 months after the end of the Plan Year to which the
Matching Contribution relates; and
The Matching Contribution is based on an Employee Contribution
for the Plan Year.
(-7-} Highly-Gempensatecl-Group
Employoos of the Employor.
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mploycc me ns an Employec who i;
f-93 Nen-Highiy-Gempensated-Group
Se°1..,,� n aced Employcos of the Employcr.
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1
ARTICLE 4: ACCOUNTING AND VALUATION
4.01 General Powers of the Plan Administrator
The Plan Administrator may establish whatever rules and guidelines it believes
necessary or appropriate goveming 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.
4.02 Accounting 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) 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.
(b) Creditor 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.
(c) Credit to the proper Accounts all contributions and any reallocated
forfeitures which are to be credited for the current Accounting Period.
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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. For Plan Years beginning before January 1, 1992 only, distributions
will bear interest at a reasonable rate, to be determined by the Plan Administrator in
a uniform and nondiscriminatory manner, from the most recent Valuation Date
through the last day of the month immediately preceding the date of distribution.
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 his 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
govemed 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 Tess than 12 months.
5.04 Termination of Employment
(a) In Genera!
If a Participant's employment terminates for any reason other than
retirement, death or disability, his Vested Accrued Benefit 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
Accrued Benefit becomes distributable. The form of benefit payment will be
govemed by the provisions of Section 5.05. The undistributed portion of the
Participant's Accrued Benefit will be 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 Accrued Benefit as of the data he completes 3
period of 5 consecutive one year breaks in scrvicclater of:
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the date his employment terminates; or
January 1, 1992 if his employment terminated before that date.
If a Participant who forfeited the nonvested portion of his Accrued Benefit on
or before January 1, 1992 returns to the employ of the Employer before he
completes a period of 5 consecutive One Year Breaks -in- Service, the
forfeited portion of his Accrued Benefit will be restored on the date of his re-
employment.
(b) Involuntary Cash -Out Distribution
If the total value of a Vested Terminated Participant's Vested Accrued
Benefit 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 Accrued Benefit. This
paragraph (b) does not apply after the Participant's Annuity Starting Date.
(c) Request for Early Distribution
A Vested Terminated Participant will be entitled, upon written request at any
time after his termination of employment, to the immediate distribution in a
lump sum of the entire amount of his Vested Accrued Benefit.
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 Accrued Benefit has ever exceeded $3,500 at the time of
any distribution, 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.
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5.06 Commencement of Benefit
(a) 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) Mandatory Distribution to Participant
Notwithstanding 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.
(c) 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
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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.
(d) 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.
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 substituting 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.
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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 Designation of Beneficiary
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.
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;
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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.
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ARTICLE 7: LIMITATIONS ON BENEFITS
7.01 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 any applicable
limitation imposed by Code Section 415, the provisions of which are incorporated
into this document by reference.
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, made in the following order:
(a) The amount of the reduction consisting of Employee Contributions will be
paid to the Participant as soon as administratively feasible.
(b) 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 Plana
(c) 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.
(d) 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 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
(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
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Section 419(e), or one or more individual medical accounts (as defined in
Code Section 415(I)(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
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.
(b) Where Employer 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.
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ARTICLE 8: MISCELLANEOUS
8.01 Employment 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.
8.02 Alienation
(a) 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.
(b) Exceptions
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
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 "altemate payee" under
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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 Intemal Revenue Code with respect to the
Employers 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 fumish 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;
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 Obligations 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
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4
omission deemed to be a breach was not within the scope of the Fiduciary's
authority or delegated responsibility.
(d) 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.
(e) 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 by Other Organizations
(a) 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 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.
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(b) 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.
(c) 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 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 Employer 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) 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 retumed to the
Employer.
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(b) Notwithstanding any other provision of the Plan and Trust, if the Intemal
Revenue Service determines initially that the Plan, as adopted by the
Employer, does not uali applicable sections of the Code and
4 fY under PP
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.
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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 in its discretion;
to determine in its discretion the facts of any individual case and to apply the
Plan's meaning and intent (as determined above) to those facts;
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
generally to 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 unless it can be
shown that the decision, action, interpretation or determination was arbitrary and
capricious. The Employer and the Plan Administrator will make and receive any
reports and information, and retain any records necessary P y ry 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.
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r
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 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 Employer
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, any one 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 Compensation 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 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.
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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
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.
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i
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.
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
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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.
I
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
counsel or 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 attomeys' fees incurred.
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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 canceled, 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 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 ualified status of the Plan, ,whereupon written notice thereof will be famished to
all affected Employees, Participants and Beneficiaries.
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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
Y 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 liabilities 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 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.
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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) 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 Employer the Em to er and the
Participants, including the investment earnings thereon. The Trust Fund
arising from such contributions and eamings 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.
(b) 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 specified by the Plan, and to
pay expenses authorized by the Plan Administrator.
(c) investment Policy
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
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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) 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;
(b) 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;
(c) 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
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1
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;
(d) 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;
(1) 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;
(j) 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;
(k) To file all tax forms or returns required of the Trustee;
(I) 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
(m) To keep any or all of the Trust property at any place or places within the
United States or abroad, or with a depository place or
P ry or custodian at such
P
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
1 1 -3
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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:
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;
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 govem 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.
Th e 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 ssi n an Contract held in the
9 Y C
9 any
Trust Fund; surrender for cash any Contract y C r ct 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
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Contract held in the Trust Fund that are ranted by the terms of any such Contract
9 Y Y
or b the terms of this Agreement.
by g nt.
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 execute 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 u ose or unless it has been indemnified to its satisfaction for its counsel fees
P rP fees,
costs, disbursements 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 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 P
Contract held in the Trust Fund upon such terms and conditions as it
may deem just, and the discretion of the Trustee will be d"
Y 1 binding and conclusive
upon all persons interested p p r sted in the Trust Fund.
No insurance company which may issue any Contract based upon the application of
the Trustee will 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 govem.
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
p p 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 re are and
P P
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 9
0 days. If the
Employer and the
9 Y Plan Administrator fail to
1 1
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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.
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 Agents
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, attomey,
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, attomey, 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 Liability of Trustee
The Trustee will be liable only for the safeguarding and administration of the assets
of this Trust Fund in accordance 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
11-
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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 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 Administrator. 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 Administrator.
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 Resignation 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 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
1 1 -7
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1
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 mission 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 Manager
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
(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
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1
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 y tee 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 no b
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
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Manager.
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IN WITNESS WHEREOF, this instrument has been executed by the duly authorized and
empowered officers of the Employer, this day of 199217th day of
December, 1991.
ti
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
Trustee
Trustee
Trustee
Trustee
Trustee
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