HomeMy WebLinkAboutReso 22-22 Amending PARS AgreementRESOLUTION NO. 22-22
RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF MORRO BAY, CALIFORNIA,
APPROVING AGREEMENT AMENDMENTS WITH PARS AND AUTHORIZING
THE CITY MANAGER TO EXECUTE THE SAME
THE CITY COUNCIL
City of Morro Bay, California
WHEREAS, the City of Morro Bay is required to contribute to a form of retirement savings
for all employees given that the City is not a participate in social security; and
WHEREAS, the City satisfies that requirement for part-time employees through the
Public Agency Retirement System (PARS), facilitating employer and employee contributions to
retirement savings for part-time employees; and
WHEREAS, the City's agreement with PARS must be amended and restated every six
years; and
WHEREAS, the amended agreement does not change the City's participant benefits nor
the way the City administers the plan and the City Attorney's Office has fully reviewed the
agreement amendment;
N OW, THEREFORE, BE IT RESOLVED by the City Council of the City of Morro Bay,
California, as follows:
S ECTION 1. The City Council approves the amended and restated agreement with PARS
(attached hereto as Exhibit A) and the CARES/SECURE Plan Amendment document for PARS
(attached hereto as Exhibit B).
S ECTION 2. The City Manager is hereby authorized to execute the amended and restated
agreement with PARS and the CARES/SECURE Plan Amendment document for PARS
PASSED AND ADOPTED by the City Council of the City of Morro Bay at a regular meeting
thereof held on the 22nd day of March 2022, by the following vote:
AYES Headding, Addis, Barton, Ford, Heller
NOES None
ABSENT: None
\
I
JOH
ATTEST:
)14v tot•-`701-----
A A SWANSON, City Clerk
AMENDMENT TO THE
CITY OF MORRO BAY
PARS ALTERNATE RETIREMENT SYSTEM
WHEREAS, the City of Morro Bay (the "Employer") adopted the City of Morro Bay PARS
Alternate Retirement System (the "Plan"), amended and restated effective March 22, 2022; and
WHEREAS, the Employer desires to amend the Plan in response to the Setting Every
Community up for Retirement Act (the "SECURE Act") to increase the Required Beginning Date age
to 72 for participants who turn 70'/2 in the calendar year 2020 and after; and
WHEREAS, the Employer further desires to amend the Plan in response to the Coronavirus
Aid, Relief, and Economic Security Act (the "CARES Act") to waive 2020 required minimum
distributions;. and
WHEREAS, the Employer has the right to amend the Plan in accordance with Section 8.3 of
the Plan.
NOW THEREFORE, BE IT RESOLVED, effective January 1, 2020, the Plan is hereby
amended as follows:
1. Section 6.1, Incidental Death Benefits, is hereby amended in its entirety to read.
6.1 Incidental Death Benefits
(a) Distributions from the Plan shall be made in accordance with Section 401(a)(9)
of the Code, including the incidental death benefits under Section 401(a)(9)(G) and the
regulations thereunder. The Required Beginning Date of benefit payments that represent the
entire interest of the Participant shall be as follows:
(b) A Participant shall have the option of commencing distributions by (i) April 1.
following (A) age 701 if the Participant was born before July 1 1949, or (B) age 72 if the
Participant was born after June 30, 1949, or (ii) deferring payment until actual retirement.
For avoidance of doubt, a Participant is not required to receive a distribution while an
Employee (in 2009 or any other year).
(c) Time and Manner of Distribution.
(i) Required Beginning Date. The Participant's entire interest will be
distributed to the Participant no later than the Participant s Required Beginning Date.
(ii) Death of Participant Before Distributions Begin. If the Participant dies
before distributions begin, the Participant s entire interest will be distributed no later than
December 31 of the calendar year immediately following the calendar year in which the
Participant died.
Page 1 of 2
below.
(iii) Forms of Distribution. The Participant's interest shall be distributed in
the form of a single sum on or before the Required Beginning Date.
(iv) Required Beginning Date. The April 1 of the calendar year following the
calendar year in which the Participant attains (A) age 70'/2, if the Participant was born before
July 1 1949, or (B) age 72 if the Participant was born after June 30 1949, or, if the
Participant opts to defer payment until retirement, the April 1 of the calendar year following
the calendar year in which the Participant actually retires.
(d) Notwithstanding any contrary provision in this Section 6.1, in accordance with
section 2203 of the CARES Act, any distribution that is required in 2020 by Section 6.1(c)
(which implements the minimum distribution requirements of Section 401(a)(9) of the
Code) will not be made In addition, notwithstanding Section 6.7 of the Plan, and solely for
purposes of applying the direct rollover provisions of the Plan, any amount that would
otherwise be a minimum distribution under Code section 401(a)(9) in 2020 will be treated
as an eligible rollover distribution.
2. All other terms and conditions under the Plan shall remain in full force and effect.
IN WITNESS WHEREOF, this amendment is hereby adopted effective as of the date executed
CITY OF MORRO BAY
By:
Sco
Title: City Manager
Dated:
3 / z.-f ezz—
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CITY OF MORRO BAY
PUBLIC AGENCY RETIREMENT SYSTEM
ALTERNATE RETIREMENT SYSTEM
(PARS-ARS)
AMENDED AND RESTATED
EFFECTIVE MARCH 22, 2022
INTRODUCTION
The City of Morro Bay (the 'Employer") has adopted this tax qualified governmental
profit sharing plan for the benefit of its Eligible Employees as Plan Number: 002. This
document is a full and complete amendment and restatement of the City of Morro Bay PARS
Alternate Retirement System.
It is intended that this Plan and the Trust established to hold the assets of the Plan shall
be qualified under Section 401(a) and tax-exempt under Section 501(a) of the Internal Revenue
Code of 1986, together with any amendments thereto (the "Code"). It is also intended that this
Plan shall meet the requirements of a governmental plan under Section 414(d) of the Code and
of a pension trust. At any time prior to the satisfaction of all liabilities with respect to
Participants and their Beneficiaries under this Plan, the Trust assets shall not be used for, or
diverted to, purposes other than the exclusive benefit of Participants or their Beneficiaries, as
prescribed in Section 401(a)(2) of the Code.
ARTICLE I
DEFINITIONS
1.1 "Account ' means with respect to each Participant, the value of all accounts
maintained on behalf of the Participant.
1.2 "Aggregate Account" means, with respect to each Participant, the value of all
accounts maintained on behalf of the Participant, whether attributable to Employer or
Employee contributions.
1.3 "Amended Effective Date" means March 22, 2022.
1.4 "Beneficiary" means the person, trust, or other entity to whom a share of a
deceased Participant's Aggregate Account is payable.
1.5 "Code" means the Internal Revenue Code of 1986 as amended from time to time.
1.6 "Compensation" means all compensation for that portion of the Plan Year during
which the Employee was a Participant, paid in cash by the Employer to the Participant
for personal services. Further, the Employer defines compensation as "Gross Wages'
defined as all remuneration to a Participant by the Employer that is reportable on Box
1 of Form W-2, together with (i) any elective deferrals of the Participant to an individual
annuity contract under Section 403(b) of the Code and (ii) any amount which is
contributed or deferred by the Employer at the election of the Participant and which is
not included in the gross income of the Participant to an eligible deferred compensation
plan under Section 457 of the Code, a cafeteria plan under Section 125 of the Code or
paid as a qualified transportation fringe under Section 1320)(4) of the Code. The annual
compensation of each Participant, as defined above by the Employer, taken into account
in determining allocations for any Plan Year beginning after December 31, 2016 shall
not exceed $270,000, as adjusted for cost -of -living increases in accordance with
Section 401(a)(17)(B) of the Code For any short Plan Year, the Compensation limit
shall be an amount equal to the Compensation limit for the calendar year in which the
Plan Year begins multiplied by a ratio obtained by dividing the number of full months
in the short Plan Year by twelve (12). The limitation on the maximum amount of
Compensation that may be taken into account under the Plan shall not apply to any
Participant eligible for a higher limit on annual compensation under the transition rule
described in Section 1.401(a)(17)-1(d)(4)(ii) of the Treasury Regulations.
1.7 "Effective Date" means April 1, 1995.
1.8 "Eligible Class of Employees" means the eligible class of employees as provided
herein and in the applicable governing board policies and regulations promulgated
thereunder by the Employer.
1.9 "Ehgible Employee" means all of those Employees of the Employer whose
participation in this Plan are not prohibited or restricted by the provisions of a collective
bargaining agreement or another plan or retirement system maintained by the
Employer. Employees who are exempt from coverage under Social
Security by federal law or regulation shall not be Eligible Employees.
1.10 "Employee" means an employee of the Employer.
1.11 "Employee Contribution Account" means the account by that name established
pursuant to Section 3.2 hereof.
1.12 "Employer" means the City of Morro Bay that has adopted this Plan. Only an
employer eligible to adopt a governmental plan pursuant to Section 414(d) of the Code
may be an ` Employer' under this Plan.
1.13 'Employer Contribution Account" means the account by that name established
pursuant to Section 3.1 hereof.
1.14 "Inactive Participant" means a Participant who is no longer eligible to participate
because he is no longer in a class of Employees eligible to participate in this Plan but
is still employed by the Employer.
1.15 "Ineligible Employee" means all of those Employees of the Employer whose
participation in this Plan is prohibited or restricted by the provisions of a collective
bargaining agreement, another plan or retirement system maintained by the Employer,
or exempt from coverage under Social Security by federal law or regulation
1.16 "Investment Manager" means the entity appointed by the Employer as the investment
manager under the Plan.
1.17 "Limitation Year" means the limitation year under Section 3.5 hereof and shall mean
the Plan Year.
1.18 "Normal Retirement Age" means sixty-two (62) years of age.
1.19 "Participant" means a Participant under Article II hereof.
1.20 'Participant Aggregate Accounts" means the accounts by that name established
pursuant to Article III hereof.
1.21 "Participant Contributions" means contributions made on behalf of the Participant
by the Employer as Pick Up Contributions and/or Participant after tax contributions.
1.22 Participant Contribution Account" means the value of the Participant's interest in
this Plan that is attributable to Pick Up Contributions and/or Participant after tax
contributions
1.23 "Pick Up Contributions' means Participant Contributions made by the
Employer on behalf of the Participant pursuant to Section 414(h) of the Internal
Revenue Code. Pick Up Contributions shall not under any circumstances be paid to the
Participant or be directed by the Participant for any purpose except as Pick Up
Contributions to this Plan. The Employer may make Pick Up Contributions through a
reduction in salary, an offset against future salary increases, or a combination of the
two.
1.24 "Plan" means the City of Morro Bay PARS Alternate Retirement System.
1.25 "Plan Administrator" means the individual or position designated by the Employer
to act on behalf of the Employer in matters relating to this Plan. If no designation is
made, the Employer shall be the Plan Administrator. If a Plan Administrator has been
appointed, the word 'Employer" as used in this Plan shall mean Plan Administrator
unless the context indicates a different meaning is intended
1.26 "Plan Year" means the consecutive twelve-month period beginning on July 1 and
ending on June 30.
1.27 "Public Agency" means an Employer authorized to establish a pension trust.
1.28 "Regulations" means the regulations adopted or proposed by the Department of
Treasury from time to time pursuant to the Code.
1.29 "Retirement System" means any plan that meets the requirements for a
retirement system under Section 3121(b)(7)(F) of the Code and the final
regulations thereunder.
1.30 "Social Security" means the Social Security program as set forth in Title 42 of the
United States Code, Section 301 et seq.
1.31 "Trust" means the trust established as part of the Public Agency Retirement System
Trust to hold the assets of the Plan.
1.32 "Trustee" means the trustee of the Trust.
1.33 "Valuation Date" means the last day of the Plan Year or such other day on which the
assets of the Trust are valued and the value of each Participant's Aggregate Account is
determined.
1.34 'Vested" means the nonforfeitable portion of any Account maintained on behalf of a
Participant.
ARTICLE II
ELIGIBILITY REQUIREMENTS FOR PARTICIPATION
2.1 Time of Participation
An Eligible Employee shall participate in this Plan on each day during which the Employee is
not accruing a benefit under Social Security or another Retirement System provided and
maintained by the Employer.
2.2 Termination of Participation
A Participant shall cease to be a Participant on the date on which the Participant begins to
participate in another Retirement System or the date of his or her termination of employment
as determined by the Employer.
2.3 Effect of Transfer to Ineligible Employment
If a Participant is no longer an Eligible Employee and becomes an Ineligible Employee, such
Employee will participate immediately upon returning to the Eligible Class of Employees.
Such participation shall commence as of the first day of such eligible employment.
2.4 In Service Distributions
A Participant who is no longer eligible to participate because he is no longer in the class of
Eligible Employees, but who has not terminated employment with the Employer, shall become
an Inactive Participant and shall remain such for twenty-four (24) months after which his
interest in the Plan will be distributed to him upon consent.
ARTICLE III
CONTRIBUTIONS
3.1 Amount of Employer Contributions
There is hereby created and established and shall be maintained by the Plan Administrator the
Employer Contribution Account. For Compensation earned during each day that an Employee
remains a Participant under this Plan, the Employer shall make a contribution of one and one-
half percent (1.5%) of Compensation Such contribution shall be made no later than the close
of the Plan Year. This amount shall be credited to the Employer Contribution Account.
Employer contributions will be allocated to each Participant in the ratio that such Participant's
compensation bears to the compensation of all Participants.
3.2 Amount of Employee Contributions
There is hereby created and established and shall be maintained by the Plan Administrator the
Employee Contribution Account. For Compensation earned during each day that an Employee
remains a Participant under this Plan, the Employee shall make a contribution of six percent
(6%) of Compensation. Such contribution shall be credited to the Employee Contribution
Account. In accordance with Section 414(h) of the Code and Sections 1.21 and 1.23 of this
Plan, the contributions required under this Section 3.2 shall be Pick Up Contributions. Pick Up
contributions shall meet the requirements of Revenue Ruling 2006-43.
3.3 Administrative Expenses
The Employer may make contributions to the Trust sufficient to defray all or part of the
expenses of administering the Plan or may pay such expenses directly.
3.4 Allocation of Administrative Expenses
If the Employer chooses not to pay the expenses of administering this Plan, such expenses
shall be charged ratably against the Participants' Aggregate Accounts.
3.5 Limits on Annual Additions
Annual additions credited to a Participant's Account during a Limitation Year shall not exceed
the lesser of $40,000 (adjusted as permitted by Section 415(d) of the Code and Regulations
issued thereunder) or 100 percent of Section 415 Compensation (provided that such 100
percent limitation shall not apply to any contributions for medical benefits after separation
from service, within the meaning of Section 401(h) or Section 419A(f)(2) of the Code). This
Section 3.5 shall be construed and interpreted in accordance with the provisions of Article IX
3.6 Vesting
Except as set forth in Section 5.1, a Participant will be fully Vested in his Aggregate Account
at all times. If the Plan's vesting schedule is amended or the Plan is amended in any way that
directly or indirectly affects the computation of a Participant's nonforfeitable percentage, each
Participant with at least three years of service with the Employer may elect within a reasonable
period of time after the adoption of the amendment or change to have his nonforfeitable
percentage computed under the Plan without regard to the amendment or change.
3.7 Investment in Accordance with Applicable Law
All contributions, interest earned, and any assets of the Plan shall at all times be invested and
managed in accordance with the requirements of applicable law.
3.8 Reversions
The Employer shall have the right to a reversion of assets from this Plan if (1) a contribution
is conditioned upon the initial qualification of the Plan, a timely determination letter request is
filed, and the Plan receives an adverse determination or (2) the reversion is due to a good faith
mistake of fact or (3) the contribution is conditioned on its deductibility under Section 404 of
the Code. Notwithstanding the foregoing (i) any contribution made by the Employer because
of a mistake of fact must be returned to the Employer within one year of the contribution; (ii)
in the event the deduction of a contribution made by the Employer is disallowed under Section
404 of the Code, such contribution (to the extent disallowed) must be returned to the Employer
within one year of the disallowance of the deduction and (iii) in the event that the
Commissioner of Internal Revenue determines that the Plan is not initially qualified under the
Internal Revenue Code, any contribution made incident to that initial qualification by the
Employer must be returned to the Employer within one year after the date the initial
qualification is denied but only if the application for the qualification is made by the time
prescribed by law for filing the Employer's return for the taxable year in which the Plan is
adopted, or such later date as the Secretary of the Treasury may prescribe.
ARTICLE IV
FUNDING AND VALUATION
4.1 Funding
The assets of the Plan shall be held in a trust or invested in an insurance contract, which may
or may not be held in a trust. For the purpose of funding this Plan, the Employer shall provide
the Trustee or Investment Manager with written direction on how to invest the assets of the
Plan. Notwithstanding anything to the contrary contained in the Trust Agreement, in -kind
contributions shall not be permissible under the Plan. In the case of any conflict between this
Plan document and any trust or custodial document under which assets of the Plan are held,
this Plan document shall control.
4.2 Valuation
The value of a Participant's Employer Contribution Account and Employee Contribution
Account shall be determined annually on a date hereafter referred to as a Valuation Date. As
of each Valuation Date there shall be determined the amount of the investment gain or loss to
be credited to the total of all assets held for Employer Contribution Accounts and Employee
Contribution Accounts during the period since the preceding Valuation Date The total
adjustment shall be allocated among all of the individual Participant and Inactive Participant
Accounts as of the current Valuation Date. The assets of the Trust shall be valued annually at
fair market value. On the Valuation Date the earnings and losses of the Trust will be allocated
to each Participant and Inactive Participant.
4.3 Type and Nature of Plan
Neither the faith and credit nor the taxing power of the Employer the State of California or
any other political subdivision thereof other than the Employer is pledged to the distribution
of benefits hereunder. Except for contributions and other amounts hereunder no other amounts
are pledged to the distribution of benefits hereunder. Distributions of benefits are neither
general nor special obligations of the Employer, but are payable solely from contributions as
more fully described herein. No Employee or Beneficiary may compel the exercise of the
taxing power by the Employer. Distributions of benefits are not a debt of the Employer, the
State of California or any of its political subdivisions within the meaning of any constitutional
or statutory limitation or restriction Distributions are not a legal or equitable pledge, charge
lien or encumbrance, upon any of the Employer's property, or upon any of its income, receipts
or revenues, except amounts in the accounts which are, under the terms of this Plan set aside
for distributions of benefits. Neither the Participants of the legislative body of the Employer
nor its officers, employees, agents, or volunteers are liable hereunder. Benefits under the Plan
may not be assigned or alienated except to the extent allowable under Sections 401(a)(13) and
414(p) of the Code.
ARTICLE V
VESTING
5.1 Vesting in Employer Contribution Account
Each Participant shall be one hundred percent (100%) Vested in his Employer Contribution
Account at all times.
5.2 Vesting in Employee Contribution Account
Each Participant shall be one hundred percent (100%) Vested in his Employee Contribution
Account at all times.
5.3 Full or Partial Termination
Notwithstanding the vesting schedule in 5.1 and 5 2, upon the complete discontinuance of
Employer contributions to the Plan or upon any full or partial termination of the Plan, all
amounts credited to the Account of any affected Participant shall become one hundred percent
(100%) Vested and shall not thereafter be subject to forfeiture for any reason.
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ARTICLE VI
DISTRIBUTION OF BENEFITS
6.1 Incidental Death Benefits
(a) Distributions from the Plan shall be made in accordance with Section 401(a)(9)
of the Code, including the incidental death benefits under Section 401(a)(9)(G) and the
regulations thereunder. The required beginning date of benefit payments that represent the
entire interest of the Participant shall be as follows:
(b) A Participant shall have the option of commencing distributions by April 1
following age 701/2 or deferring payment until actual retirement. For avoidance of doubt, a
Participant is not required to receive a distribution while an Employee (in 2009 or any other
year).
(c) Time and Manner of Distribution.
(i) Required Beginning Date. The Participant s entire interest will be
distributed to the Participant no later than the Participant s Required Beginning Date.
(ii) Death of Participant Before Distributions Begin If the Participant dies
before distributions begin, the Participant's entire interest will be distributed no later than
December 31 of the calendar year immediately following the calendar year in which the
Participant died.
(iii) Forms of Distribution. The Participant's interest shall be distributed in
the form of a single sum on or before the Required Beginning Date.
(iv) Required Beginning Date. The April 1 of the calendar year following
the calendar year in which the Participant attains age 70%2 or, if the Participant opts to defer
payment until retirement, the April 1 of the calendar year following the calendar year in which
the Participant actually retires.
6.2 Amount of Distribution
A Participant who terminates employment for any reason shall be entitled to one hundred
percent (100%) of the value of his Aggregate Account determined as of the most current
Valuation Date
6.3 Lump Sum Distributions
All distributions shall be made in a lump sum payment in cash constituting the entire value of
the distributee's Aggregate Account.
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6.4 Time of Distribution
Unless otherwise specified herein, benefits shall become distributable to a Participant (or the
Participant's Beneficiary in any case of the Participant's death) upon any termination of the
Participant's employment by reason of resignation discharge retirement, disability, or death.
This Plan does not provide for mandatory distributions of any amount. Therefore, no
distribution is made (regardless of the amount of the distribution) without the consent of the
Participant (or the Participant's Beneficiary in any case of the Participant's death).
6.5 Participant's Rights Not Subject to Execution
The right of a Participant to a benefit under this Plan is not subject to execution or any other
process whatsoever, except to the extent permitted and is unassignable.
6.6 Unclaimed Benefits
Each Participant and Beneficiary of a deceased Participant shall file with the Plan
Administrator from time to time in writing, his home address and each change of home
address. Any communication shall be addressed to the Participant or the Beneficiary at his
last home address filed with the Plan Administrator, or if no such address was filed, then at
his last home address as shown on the Employer's records shall be binding on the Participant
or Beneficiary for all purposes of the Plan The Participant's Account balance shall be subject
to the abandoned property law of the applicable jurisdiction.
6.7 Direct Rollovers
(a) Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a distributee's election under this Plan, a distributee may elect, at the time and in the
manner prescribed by the Plan Administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the distributee in a direct
rollover. A distributee includes an Employee or former Employee. In addition the
Employee's or former Employee's surviving spouse and the Employee's or former
Employee's spouse or foniiier spouse who is the alternate payee under a qualified domestic
relations order, as defined in Section 414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse
(b) A Beneficiary who is not the spouse of the Participant may elect a direct trustee
to trustee transfer that qualifies as an eligible rollover distribution under this Section 6.7 Such
transfer shall be made to an individual retirement plan described in Section 408(a) of the Code
or an individual retirement account that is established for the purpose of receiving the
distribution on behalf of such Beneficiary. Such individual retirement account shall be
deemed an inherited IRA pursuant to the provisions of Section 402(c)(11) of the Code. Also,
in this case, the determination of any required minimum distribution under Code Section
401(a)(9) that is ineligible for rollover shall be made in accordance with Notice 2007-7, Q&A
17 and 18 2007-5 I R.B 395.
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(c) Definitions
(i) Eligible Rollover Distribution
An eligible rollover distribution is any distribution of all or any portion of the balance to the
credit of the distributee except that an eligible rollover distribution does not include: (i) any
distribution that is one of a series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the distributee or the joint lives (or
joint life expectancies) of the distributee and the distributee's designated Beneficiary or for a
specified period of ten (10) years or more; (ii) any distribution to the extent such distribution
is required under Section 401(a)(9) of the Code; (iii) any hardship distribution (iv) and any
other distribution(s) that is reasonably expected to total less than $200 during a year For
purposes of the $200 rule, a distribution from a designated Roth account and distributions
from other accounts under the Plan are treated as made under separate plans. Any portion of
a distribution that consists of after-tax employee contributions which are not includable in
gross income may be transferred only to (A) a traditional individual retirement account or
annuity described in Section 408(a) or (b) of the Code or Roth individual retirement account
or annuity described in Section 408A of the Code; or (B) to a qualified plan described in
Section 401(a) of the Code or to an annuity contract described in Section 403(b) of the Code,
that agrees to separately account for amounts so transferred (and earnings thereon), including
separately .accounting for the portion of the distribution that is includible in gross income and
the portion of the distribution that is not so includible.
(ii) Eligible Retirement Plan
An eligible retirement plan is an eligible plan under Section 457(b) of the Code which is
maintained by a state political subdivision of a state, or any agency or instrumentality of a
state or political subdivision of a state and which agrees to separately account for amounts
transferred into such plan from this Plan, a traditional IRA, a Roth IRA, an annuity plan
described in Section 403(b) of the Code or a qualified plan described in Section 401(a) of the
Code, that accepts the distributee's eligible rollover distribution. The definition of eligible
retirement plan shall also apply in the case of a distribution to a surviving spouse, or to a
spouse or former spouse who is the alternate payee under a qualified domestic relation order,
as defined in Section 414(p) of the Code If any portion of an eligible rollover distribution is
attributable to payments or distributions from a designated Roth account an eligible
retirement plan with respect to such portion shall include only another designated Roth
account of the individual from whose account the payments or distributions were made, or a
Roth IRA of such individual.
(iii) Direct Rollover
A direct rollover is a payment by the Plan to the eligible retirement plan specified by the
distributee.
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6.8 Military Service
Notwithstanding any provision of this Plan to the contrary, contributions, benefits, and service
credit with respect to qualified military service will be provided in accordance with Section
414(u) of the Code. In addition, the survivors of any Participant who dies on or after January
1, 2007 while performing qualified military service, are entitled to any additional benefits
(other than benefit accruals relating to the period of qualified military service) provided under
the Plan had the Participant resumed and then terminated employment on account of death.
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ARTICLE VII
DEATH BENEFITS
7.1 Designation of Beneficiary
Each Participant and Inactive Participant shall have the right to designate a Beneficiary to
receive the death benefits that are payable from this Plan. Such designation must be evidenced
by a written instrument filed with the Employer on a form prescribed by the Employer and
signed by the Participant.
7.2 Married Participant
The Beneficiary for a married Participant shall at all times be the Participant's spouse and may
not be changed to someone other than such spouse unless the consent of such spouse is
provided upon a written form witnessed by a duly authorized Plan representative or a notary
public and acceptable to the Employer. If no such designation is on file with the Employer at
the time of the death of the Participant, or if for any reason at the sole discretion of the
Employer such designation is defective, then the spouse of such Participant shall be
conclusively deemed to be the Beneficiary designated to receive such benefit
7.3 Spouse's Signature
The signature of the Participant's spouse shall be required on a designation of beneficiary form
if the spouse is not the Beneficiary, unless the Participant declares in writing that one of the
following conditions exists:
(a) The Participant is not married;
(b) The Participant does not know and has taken all reasonable steps to determine
the whereabouts of the spouse;
(c) The spouse is incapable of executing the acknowledgement because of an
incapacitating mental or physical condition.
7.4 Default Beneficiary
In the event the Participant dies and is not survived by a spouse, the Aggregate Account shall
pass by the laws of intestacy.
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7.5 Domestic Partners
For purposes of this Article VII only: (1) all references to "marriage" shall also include
`registered domestic partnerships," (2) individuals in a "registered domestic partnership" shall
be considered "married, ' and (3) all references to a "spouse ' shall also include a "registered
domestic partner." A "registered domestic partner" and a "registered domestic partnership"
refer to persons and partnerships satisfying the requirements of applicable law (including any
registration requirements) as of the date of death.
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ARTICLE VIII
ADMINISTRATION AND AMENDMENT OF PLAN
8.1 Designation of Plan Administrator
The Employer is the Plan Administrator under this Plan unless an individual employed by, or
a position within the Employer, has been appointed by the Employer as Plan Administrator.
In addition to a Plan Administrator the Employer may designate a delegatee to perform those
activities relating to the Plan as specified in the written appointment of such delegatee The
term "Employer' as used in this Article VIII shall mean the Plan Administrator or delegatee
where responsibility for administration of the Plan has been given to such parties.
8.2 Rules and Regulations
The Employer shall supervise and control the operation of this Plan in accordance with its
terms and may make rules and regulations for the administration of this Plan that are not
inconsistent with the terms and provisions hereof. The Employer shall determine any
questions arising in connection with the interpretation, application, or administration of the
Plan (including any question of fact relating to age, employment, Compensation, or eligibility
of Employees) and its decisions or actions in respect thereof shall be conclusive and binding
upon any and all persons and parties. The Employer's interpretations, determinations and
actions taken under the Plan shall in all cases result in like treatment for Employees who are
similarly situated. In the event of any conflict between the terms of this Plan and conflicting
provision contained in the Trust, the terms of this Plan will govern.
8.3 Amendment and Termination
The Employer shall have the right to amend, modify or terminate this Plan at any time. In the
event of a termination or the complete discontinuance of this Plan the entire interest of each
Participant affected thereby shall immediately become 100% Vested. The Employer shall not
be liable for the payment of any benefits under this Plan and all benefits hereunder shall be
payable solely from the assets of the Trust. The Provider, as defined in section 4.08 of Rev.
Proc 2017-41, may amend any part of the Plan solely for purposes of the Plan continuing to
satisfy the requirements of Internal Revenue Code Section 401. However, for purposes of
reliance on an Opinion Letter the Provider will no longer have the authority to amend the
Plan on behalf of the Employer as of the date (1) the Employer amends the Plan to incorporate
a type of plan described in section 6.03 of Rev. Proc. 2017-41 that is not permitted under the
Pre -approved Plan program, or (2) the Internal Revenue Service notifies the Employer, in
accordance with section 8.06(3) of Rev. Proc 2017-41, that the Plan is an individually
designed plan due to the nature and extent of Employer amendments to the Plan. The Provider
will inform the Employer of any amendments made to the Plan or of the discontinuance of
the Plan.
17
ARTICLE IX
ANNUAL ADDITION LIMITS
9.1 Construction
Section 3.5 of the Plan shall be construed in accordance with this Article IX Unless the
context clearly requires otherwise, words and phrases used in this Article IX shall have the
same meanings that are assigned to them under the Plan.
9.2 Definitions
As used in this Article IX, the following terms shall have the meanings specified below.
(a) "Annual Additions" shall mean the sum credited to a Participant's Accounts
for any Plan Year of (i) Employer contributions, (ii) Employee contributions, (iii) forfeitures,
(iv) amounts credited after March 31 1984 to an individual medical account, as defined in
Section 415(1)(2) of the Code which is part of a pension and annuity maintained by the
Employer (v) amounts derived from contributions paid or accrued which are attributable to
post -retirement medical benefits, allocated to the separate account of a key employee, as
defined in Section 419A(d)(3) of the Code, under a welfare benefit fund, as defined in Section
419(e) of the Code, maintained by the Employer, and (vi) allocations under a simplified
employee pension
(b) "Defined Benefit Plan" means a plan described in Section 4140) and
414(k)(2) of the Code.
(c) "Defined Contribution Plan" means a plan described in Section 414(i) and
414(k)(2) of the Code.
(d) ' Section 415 Compensation" shall mean a Participant's wages within the
meaning of Code Section 3401(a) and all other payments of compensation to the Participant
by the Employer (in the course of the Employer's business) for which the Employer is required
to provide the Participant a written statement under Code Sections 6041(d), 6051(a)(3) and
6052. Section 415 Compensation shall be determined without regard to any rules under Code
Section 3401(a) that limit the remuneration included in wages based on the nature or location
of the employment or the services performed. Compensation for any Limitation Year is the
compensation actually paid or includible in gross income during such year. Compensation
paid or made available during a Limitation Year shall include amounts that would otherwise
be included in compensation but for an election under Code Sections 125(a), 132(0(4),
402(e)(3), 402(h)(1)(B), 402(k) or 457(b) After December 31, 2008, differential wage
payments shall be treated as payment of wages under Code Section 3401(a) for purposes of
Code Section 415(c)(3). Section 415 Compensation does not include any amounts paid
following a severance from employment, except amounts paid or includible in gross income
by the later of 2 1/2 months after a severance from employment or the end of the Plan Year
that includes the severance from employment shall be included if, (i) absent the severance
18
from employment, such compensation would have been paid to the Participant while the
Participant continued in employment with the Employer, and such payments represent regular
compensation for services during the Participant s regular working hours (or compensation
for services outside the Participant's regular working hours such as overtime or shift
differential), commissions bonuses or similar compensation, (ii) the payment is for unused
accrued bona fide sick, vacation or other leave that the Participant would have been able to
use if employment had continued, or (iii) the payment is received by the Participant pursuant
to a nonqualified unfunded deferred compensation plan and would have been paid at the same
time if employment had continued, but only to the extent includible in gross income Any
payments not described above shall not be considered Section 415 Compensation if paid after
severance from employment, even if they are paid by the later of 2 12 months after the date
of severance from employment or the end of the Limitation Year that includes the date of
severance from employment.
9.3 Annual Addition Limitations
(a) Annual Additions shall not exceed the limit set forth in Section 3.5 of Article
III of the Plan.
(b) The compensation limitation of Section 3.5 of the Plan shall not apply to any
contribution for medical benefits (within the meaning of Code Section 419A(f)(2)) after
separation from service which is treated as an Annual Addition.
(c) If any Employer contributes amounts, on behalf of Participants covered by the
Plan, to other defined contribution plans, the limitation on Annual Additions provided in
Article III of the Plan shall be applied to Annual Additions in the aggregate to the Plan and
such other plans. Reduction of Annual Additions, where required, shall be accomplished by
reducing contributions under such other plans pursuant to the directions of the fiduciary for
administration of such other plans or under priorities, if any established by the terms of such
other plans, and then if necessary, by reducing contributions under the Plan.
(1) This Section 9.3(c)(1) applies if, in addition to this Plan, the Participant is
covered under another qualified pre -approved Defined Contribution Plan maintained by the
Employer, a welfare benefit fund maintained by the Employer, an individual medical account
maintained by the Employer or a simplified employee pension maintained by the Employer,
that provides an Annual Addition during any Limitation Year. The Annual Additions which
may be credited to a Participant's Account under this Plan for any such Limitation Year will
not exceed the maximum permissible amount reduced by the Annual Additions credited to a
Participant's Account under the other qualified pre -approved Defined Contribution Plans,
welfare benefit funds, individual medical accounts, and simplified employee pensions for the
same Limitation Year If the Annual Additions with respect to the Participant under other
qualified pre -approved Defined Contribution Plans, welfare benefit funds, individual medical
accounts, and simplified employee pensions maintained by the Employer are less than the
maximum permissible amount and the Employer contribution that would otherwise be
contributed or allocated to the Participant's Account under this Plan would cause the Annual
Additions for the Limitation Year to exceed this limitation the amount contributed or
allocated will be reduced so that the Annual Additions under all such plans and funds for the
19
Limitation Year will equal the maximum permissible amount. If the Annual Additions with
respect to the Participant under such other qualified pre -approved Defined Contribution
Plans, welfare benefit funds, individual medical accounts, and simplified employee pensions
in the aggregate are equal to or greater than the maximum permissible amount, no amount
will be contributed or allocated to the Participant's Account under this Plan for the Limitation
Year.
(2) If the Participant is covered under another qualified Defined Contribution
Plan maintained by the Employer which is not a pre -approved plan, Annual Additions which
may be credited to the Participant's Account under this Plan for any Limitation Year will be
limited in accordance with this section as though the other plan were a pre -approved plan.
(d) If a short Limitation Year is created because of an amendment changing the
Limitation Year to a different 12-consecutive month period, the maximum permissible
amount will not exceed the limitation in Section 3.5 multiplied by a fraction, the numerator
of which is the number of months in the short Limitation Year, and the denominator of which
is 12.
(e) In the event the limitations of Section 3.5 of the Plan or Sections 9.3(a)
through (d) of this Article IX are exceeded such excess may be corrected through the
Employee Plans Compliance Resolution System as permitted by applicable IRS guidance
(such as under Rev. Proc. 2016-51 or its successors).
20
ADOPTION OF THE
AMENDED AND RESTATED
CITY OF MORRO BAY
PARS ALTERNATE RETIREMENT SYSTEM
The Employer may rely on an opinion letter issued by the Internal Revenue Service as
evidence that the Plan is qualified under Section 401 of the Internal Revenue Code except to
the extent provided in Rev. Proc. 2017-41.
An Employer who has ever maintained or who later adopts any plan (including a welfare
benefit fund, as defined in Section 419(e) of the Code, which provides post -retirement medical
benefits allocated to separate accounts for key employees as defined in Section 419A(d)(3)
of the Code, or an individual medical account, as defined in Section 415(1)(2) of the Code) in
addition to this Plan may not rely on the opinion letter issued by the Internal Revenue Service
with respect to the requirements of Section 415.
The Employer may not rely on the opinion letter in certain other circumstances, which are
specified in the opinion letter issued with respect to the plan or in Rev. Proc. 2017-41.
The Amended and Restated City of Morro Bay PARS Alternate Retirement System is hereby
adopted.
BY:
TITLE: City Manager
DATE: 3 icy/ 10-011,"
Provider:
Public Agency Retirement Services
P.O Box 11119
Newport Beach, CA 92658-5019
(800) 540 6369
Opinion Letter Serial No: Q702335a
21
TABLE OF CONTENTS
Page
IN PRODUCTION 2
DEFINITIONS 3
ELIGIBILITY REQUIREMENTS FOR PARTICIPATION 6
2.1 Time of Participation 6
2 2 Termination of Participation 6
2.3 Effect of Transfer to Ineligible Employment 6
2.4 In Service Distributions 6
CONTRIBUTIONS 7
3.1 Amount of Employer Contributions 7
3.2 Amount of Employee Contributions 7
3.3 Administrative Expenses 7
3.4 Allocation of Administrative Expenses 7
3.5 Limits on Annual Additions 7
3.6 Vesting 8
3.7 Investment in Accordance with Applicable Law 8
3.8 Reversions 8
FUNDING AND VALUATION 9
4.1 Funding 9
4.2 Valuation 9
4.3 Type and Nature of Plan 9
VESTING 10
5.1 Vesting in Employer Contribution Account 10
5.2 Vesting in Employee Contribution Account 10
5.3 Full or Partial Termination 10
DISTRIBUTION OF BENEFITS 11
6.1 Incidental Death Benefits 11
6.2 Amount of Distribution 11
6.3 Lump Sum Distributions 11
6.4 Time of Distribution 12
6.5 Participant's Rights Not Subject to Execution 12
-i-
TABLE OF CONTENTS
(continued)
Page
6.6 Unclaimed Benefits 12
6.7 Direct Rollovers 12
6.8 Military Service 14
DEATH BENEFITS 15
7.1 Designation of Beneficiary 15
7.2 Married Participant 15
7.3 Spouse's Signature 15
7.4 Default Beneficiary 15
7.5 Domestic Partners 16
ADMINISTRATION AND AMENDMENT OF PLAN 17
8.1 Designation of Plan Administrator 17
8.2 Rules and Regulations 17
8.3 Amendment and Termination. 17
ANNUAL ADDITION LIMITS 18
9.1 Construction. 18
9.2 Definitions 18
9.3 Annual Addition Limitations. 19