Ord 93-201
ORDINANCE NO.
93-20l
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 BY REVISING THE
COMPOSITION OF THE PLAN'S ADMINISTRATION
COMMITTEE, AMENDING THE PLAN'S VESTING
SCHEDULE FROM A SEVEN-YEAR TO A FIVE-YEAR
VESTING SCHEDULE, AND DELETING THE TRUST
PORTION OF THE PLAN, TO BE SUBSTITUTED WITH
THE MUNICIPAL EMPLOYEES' BENEFIT TRUST
(AMENDING ORDINANCES 90-74, 91-118 AND 91-
119).
WHEREAS, under the Federal Social Security Act (42 USCA,
§418 (g), and pursuant to Ordinance 90-74, the City Council had
previously established an employee retirement system in lieu of
employee and employer contributions to the Federal Social Security
Program; and
WHEREAS, such a system was established by creating a Plan
and a Trust to provide a defined contribution plan providing
retirement and other related benefits for the employees of the city
eligible to participate; and
WHEREAS,
the
adopted
Plan,
as
a
social
security
alternative program, provides employees of the City of Federal Way
with benefits that equal or exceed the current or future Social
Security benefits system; and
WHEREAS, it is the intent of the Council that the Plan
qualify for approval under sections 401 and 410 through 417 of the
Internal Revenue Code; and
ORD. # 93-201
, PAGE 1
COpy
WHEREAS,
on september 23,
1991,
the Internal Revenue
service issued a favorable determination on the Plan, conditioned
upon
the
City
Council
adoption
of
certain
amendments;
which
amendments were adopted by Council pursuant to Ordinance 91-118;
and
WHEREAS, subsequent to the approval by the IRS of the
Plan, and pursuant to Ordinance 91-119, the city found it necessary
and desirable to further modify the Plan to provide that part-time,
seasonal
and
temporary
employees
shall
contribute
to
social
Security, in lieu of participating in the city's Plan; and that
City council members shall contribute to a section 457 IRS deferred
compensation plan, in lieu of participating in the City's Plan; and
to provide further that the participant accounts in the Plan are to
be valued quarterly, rather than annually as now provided; and
WHEREAS,
the
city
currently
finds
it
necessary
and
desirable to further amend the Plan to modify the composition of
the Plan Administration committee, to amend the seven-year vesting
schedule to be a five-year vesting schedule, and to delete the
trust and trustee portions of the Plan, to be replaced by the Trust
Agreement with Municipal Employees I
Benefit Trust
(MEBT); NOW,
THEREFORE,
THE CITY COUNCIL OF THE CITY OF FEDERAL WAY, WASHINGTON,
DOES HEREBY ORDAIN AS FOLLOWS:
section 1.
Amendment. section 1.22.
section 1.22 of the
Federal Way Employees' Retirement System ("Plan") is hereby amended
as follows:
ORD. #
93-201 , PAGE 2
1.22 Plan A4miBia~pa~ÐPCommittÐe.
~he PlaR AàmiRistrater is tho iRài.iàual er
oorporatieR aJ J eiRtoe!. iR the maRRor e!.esoriseà iR
SeetiaR 9. e 1. OR the Elate af ae!.aJ tieR af this
àes~eRt the PlaR ~ElmiRistratar is CI~Y OF FEDER~
WA¥TThe term shall mean the aroup of individuals
appointed in the manner described in Section 9.01
of this Aareement.
section 2.
Amendment. section 1.31.
section 1.31 of the
Plan is hereby amended as follows:
1.31 Trust Definitions.
(a)
1.Ql
Trust
The term means the ~rast estaslishee!. ày
A-rtiele 11 af this I'laR that §'a'.,erRs tho
maRa§'emoRt af I'laR Assets far the exelüsiye
boRofit ef PartisiJ aRts aRà their
soRefieiaries.Municipal Employees I Benefit
Trust. a trust aqreement existina between the
Employer and the Trustee. to which this
Aqreement is attached and under the provisions
of which the contributions to this Plan are
administered. as said trust aqresment now
exists or hereafter mav be amended.
Trust Committee
The term of the Trust Committee shall mean the
Committee aDDointed and actina under the terms
of the Municipal Employees' Benefit Trust.
(1;>£) Trust Fund
This term shall means the same as Plan Assets.
(eg) Trustee
~he Trustees arc the City UaRa§'or, the FiRaRee
Ðireeter, aRe!. the PerSBRRel Direst-Br.The term
Trustee shall mean First Interstate Bank of
Washinqton or any successor trustee or
trustees who accepts in writinq the position
of Trustee.
ORD. #
93-201
, PAGE 3
Section 3.
Amendment. Section 1.33.
section 1.33 of the
Plan is hereby amended as follows:
1.33 Vested Accrued Benefit.
(a)
(b)
(c)
ORD. #
In General
A Participant's Vested Accrued Benefit
given date is equal to the product
Accrued Benefit multiplied by his
Percentage as of that same date.
as of a
of his
Vested
Vested Percentaqe
A Participant I s Vested Percentage as of a
given date is the percentage determined
according to the Vesting Schedule. However, a
Participant is lOOt vested upon reaching his
Normal Retirement Age.
vestinq Schedule
A Participant's Vested Percentage is
determined according to the following table:
Years of vestina Service
Vested Percentaqe
Less
than a..l Years
a..l Years
4Å Years
52 Years
5! Years
f~ Years or more
0%
20%
40%
60%
80%
100%
If a Participant's emploYment wi th the
Employer terminates as a result of death or
disability. the Participant's Vested
Percentaqe will be 100%. Participants shall
be qiven credit for vestinq service with other
employers who are parties to the Municipal
Employees Benefit Trust Aqreement provided (i)
the Employee was an active participant under
the terms of such plan as is maintained bv the
other emplover immediately prior to his
emploYment with this emDlover. and (ii1 the
Employee becomes an active participant
hereunder as of the date of emploYment and
makes a full rollover of all his permissible
benefits from the other emDlover Plan as soon
as practical. or a direct transfer of such
amounts is made between the two relevant
plans.
93-201 , PAGE 4
Section 4.
Plan is hereby amended as follows:
Amendment. Section 3.02.
section 3.02 of the
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)
Section 5.
Voluntary Contributions
Each Participant will be entitled to make a
voluntary contribution each contribution
Period equal to a minimum of l% 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 allowed by the Plan Administrator.
All Voluntarv contributions will be made
pursuant to a Pavroll withholdinq Aqreement.
All Voluntarv Contributions to the
Participant's Vo1untarv contribution Account
are Employee contributions and must satisfY
the Nondiscrimination Requirement of section
3.05 for Plan Years beqinninq on or after
January 1. 1996.
Amendment. section 3.05.
section 3.05 of the
Plan is hereby amended as follows:
3.05 Nondiscrimination Requirements.
This section applies for all Plan Years beginning
on or after January 1, ~1996.
(a)
ORD. #
contribution Percentaqe Test
Employee contributions and Matching
Contributions (to other plans) 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 Test has
been satisfied. If the contribution
Percentage Test is not satisfied, the Employer
may elect to make an additional contribution
93-201
, PAGE 5
ORD. #
93-201
(b)
(c)
to the Plan on account of the Non-Highly
Compensated Group. The additional
contribution will be treated as a Non-Elective
contribution.
If the Contribution Percentage Test is not
satisfied after any Non-Elective
contributions, 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 of the Excess Aggregate contribution
and distribute the vested portion, together
with the income allocable to it, to the
affected participants of the Highly
Compensated Group to the extent necessary to
satisfy the contribution Test.
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, and so on
continuing until sufficient total reductions
have occurred to achieve satisfaction of the
contribution Percentage Test.
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. The income allocable to the Excess
Aggregate contribution for the period between
the end of the Plan Year for which the
, PAGE 6
ORD. #
93-201
(d)
determination is being made and the date on
which the Excess Aggregate Contribution is
distributed to the Participant will be equal
to 10% of the income allocable to the Excess
Aggregate contribution for the Plan Year,
determined in the manner described in the
preceding sentence, multiplied by the number
of calendar months which have elapsed since
the end of the Plan Year for which the
determination is being made. For the purpose
of determining the number of calendar months
which have elapsed, a distribution occurring
on or before the l5th day of the month will be
treated as having been made on the last day of
the preceding month and a distribution
occurring after the 15th day of the month will
be treated as having been made on the first
day of the next month. Income includes all
earnings 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.
Aqqreqation of Plans
If the Employèr or a Related Employer sponsors
one or more other plans which include a Cash
or Deferred Arrangement, the Employer may
elect to treat any 2 or more such plans as an
aggregated single plan for purposes of
satisfying Code sections 401(a) (4), 401(k) and
410(b). The Cash or Deferred Arrangements
included in the aggregated plans will be
treated as a single Arrangement for purposes
of this section.
If the Employer maintains 2 or more plans
which are treated as an aggregated single plan
for purposes of Code section 40l(a) (4) or
410(b), all Cash or Deferred Arrangements
which are included in the aggregated plans
will be treated as contributed to an
aggregated single Arrangement for purposes of
this section.
For purposes of this Section, contributions
and allocations under the portion of a plan
described in Code section 4975(e) (7) (an ESOP)
may not be aggregated with the portion of a
plan not described in Code Section 4975(e) (7)
, PAGE 7
ORD. #
93-201
(e)
(f)
(a non-ESOP) for purposes of determining
whether the ESOP or non-ESOP satisfies the
requirements of this Section and Code Sections
401(a) (4), 401(k) and 410(b).
For Plan Years beginning after December 3l,
1989, plans may be aggregated in order to
satisfy Code section 401(k) only if they have
the same Plan Year.
Reserved
Treatment as Matchina contributions
The Plan Administrator may, in its discretion,
treat all or any portion of Non-Elective
contributions and Elective Contributions,
whether to this Plan or to any other qualified
plan maintained by the Employer or any Related
Employer which has the same Plan Year, as
Matching contributions for purposes of
satisfying the Contribution Percentage Test,
but not for any other purpose under this Plan.
Elective contributions and Non-Elective
contributions may be treated as Matching
Contributions only if they meet all of the
following requirements.
All Non-Elective Contributions, including
those treated as Matching contributions
for purposes of the contribution
Percentage Test, satisfy the requirements
of Code section 401(a) (4);
All Non-Elective contributions which are
not treated as Matching contributions for
purposes of the contribution Percentage
Test, satisfy the requirements of Code
section 401(a)(4);
All Elective Contributions, including
those treated as Matching contributions
for purposes of the contribution
Percentage Test, satisfy the requirements
of Code section 401(k)(3);
All Elective contributions which are not
treated as Matching contributions for
purposes of the Contribution Percentage
Test, satisfy the requirements of Code
section 401(k) (3);
, PAGE 8
ORD. #
93-201
(g)
The Non-Elective Contributions are
allocated to the Participant as of a date
within the Plan Year;
The Elective Contributions satisfy the
requirements of Treasury Regulation
Section 1.401(k)-l(b) (6);
The treatment of Non-Electi ve
contributions and Elective contributions
as Matching contributions does not
increase the spread between the
contribution Percentage for the Highly
compensated Group and the contribution
Percentage for the Non-Highly Compensated
Group;
The Non-Elective Contributions and
Elective Contributions which are treated
as Matching contributions are not taken
into account in determining whether any
other contributions or benefits satisfy
Code section 401(a) (4) or 401(k)(3); and
The Plan requirements of Treasury
Regulation section 1. 401 (m) -1 (b) (2) (viii)
are met.
Familv Aqqreaation
The contribution Percentage for any Highly
Compensated Employee who is subject to the
family aggregation rules of section 1.14 (c)
will be the contribution Percentage determined
by combining the Employee contributions,
Matching Contribution, amounts treated as
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)-l(e) (4) (iii) of
the Treasury Regulations. For all other
purposes under this section, the contributions
and compensation of eligible Family Members
who are not Highly Compensated Employees
without regard to family aggregation will be
disregarded.
, PAGE 9
section 6.
Amendment. section 9.01.
Section 9.01 of the
Plan is hereby amended as follows:
9.01 Plan ~dmiBis~Fatercommittee.
The Plan ~e!.miftistra~erCommittee 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 aft iftài~ie!.Hal er a committee of
a~ leas~ 3seven persoftsindividuals. one of which
will be the Citv Manaqer or his or her Desiqnee.
and the remaininq six positions shall be elected at
larqe from the membership. based uPon their
interest and qualifications. to serve as the Plan
Aàmiftiatrator Committee. If the Employer àees fte~
appoiRt aR iRàiviàual er a eemmi~~ce as Plaft
Aei¡¡¡iftis~ra~er, the EmfI1eyer ,:ill fHfte~ieft as Plaft
Ae!.miftis~ra~er.
Members will serve overlappinq three vear terms.
The Employer may at any time, with or without
cause, remove an individual as Plaft Aei¡¡¡iftistrater
eæ-as a member of the Plan Committee and substitute
another individual therefor.
Section 7.
Amendment:
Delete Article 11.
Article 11 of
the Plan is deleted in its entirety.
section 8.
Ratification.
All prior acts and actions of
employees and the City prior to the effective date of this
ordinance that are in compliance with such Plan are hereby
ratified.
section 9.
IRS Oua1ification Intended.
The amendments
to the Plan are specifically enacted with the intent that the Plan
qualify for approval under sections 40l and 410 through 417 of the
Internal Revenue Code and that the Trust qualify for approval under
§501 of the Internal Revenue Code now or as hereinafter enacted.
ORD. #
93-201
, PAGE 10
section 10.
Severability.
Should any section, sentence,
clause, phrase, or subsection of this ordinance or the Plan adopted
herein or the application of the ordinance or Plan to a specific
person or set of circumstances be declared unconstitutional or
invalid for any reason, such decision shall not affect the validity
or constitutionality of any other section,
sentence, clause or
phrase of this ordinance, this Plan or their application to any
other person or set of circumstances.
section 11.
Effective Date.
This ordinance shall be
effective January 1, 1994, which is five days after passage and
publication of an approved summary, consisting of the title hereto.
PASSED by the City Council of the City of Federal Way
this
21st
day of
December
, 1993.
CITY OF FEDERAL WAY
~~~
EY, CMC
APPROVED AS TO FORM:
Lk---
CITY ATTORNEY, CAROLYN A. LAKE
FILED WITH THE CITY CLERK:
PASSED BY THE CITY COUNCIL:
PUBLISHED: December 28, 1993
EFFECTIVE DATE: January 1, 1994
ORDINANCE NO. 93-201
December 1,1993
December 21,1993
MARYKlORDIFWRS.ORD
ORD. #
93-201
, PAGE 11