04-20-04 Item 6TO: Mayor and City Commission DATE: April 20, 2004
FROM: Mara V. Davis, Manager Re: Agenda Item #
Offering Optional Retirement Plan
to City Employees
The Request
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
SOUTH MIAMI, FLORIDA, AUTHORIZING THE CITY MANAGER TO OFFER TO
CITY EMPLOYEES THE OPPORTUNITY TO PARTICIPATE IN THE
INTERNATIONAL CITY MANAGER'S ASSOCIATION (ICMA) 401A MONEY
PURCHASE PLAN PROVIDING AN EFFECTIVE DATE.
Background and Analysis
Currently, the City offers the following retirement plans for its employees:
City of South Miami General and Police Pension Plan — Any employees starting after October
1, 1995 are required to join the Pension Plan. There are, however, several employees that started
prior to October 1, 1995, who are not required to enroll in the pension. The City is responsible to
contribute towards the pension an amount actuarially determined, on a yearly basis.
457 Deferred Compensation Plan (ICMA) — This is an optional plan offered to all employees
wherein they contribute amounts on a biweekly basis (amounts are determined by the employee
according to IRS guidelines).
There are several employees that are enrolled in both the Pension and the ICMA Deferred
Compensation plan; however, the City only contributes to the City's Pension Plan, not both.
Offering this 401A Money Purchase Plan to employees will allow them the flexibility of
selecting between the 457 Deferred Compensation Plan and the 401 A Money Purchase Plan
giving them alternative retirement options. Currently, the 457 Deferred Compensation Plan
allows employees to contribute up to $13,000 per year. The 401A Money Purchase Plan would
allow employees to contribute up to $40,000 per year. Offering the choice would not incur any
additional costs to the City, since this is an optional retirement plan and requires no employer
contributions.
RECOMMENDATON
Commission approval is recommended.
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RESOLUTION NO.
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
SOUTH MIAMI, FLORIDA, AUTHORIZING THE CITY MANAGER TO OFFER TO
CITY EMPLOYEES THE OPPORTUNITY TO PARTICIPATE IN THE
INTERNATIONAL CITY MANAGER'S ASSOCIATION (ICMA) 401A MONEY
PURCHASE PLAN PROVIDING AN EFFECTIVE DATE.
WHEREAS, the City has an optional 457 Deferred Compensation Plan which allows
employees to contribute up to the amount allowed by the Economic Growth and Tax Relief
Reconciliation Act (EGTRRA); and
WHEREAS, as an alternative, employees would have the opportunity to enroll into the
401A Money Purchase Plan which allows for higher contribution limits by employees, at no
additional cost to the City; and
WHEREAS, this option will provide employees with other options to invest their monies
for the future;
NOW, THEREFORE BE IT RESOLVED BY THE MAYOR AND CITY
COMMISSION OF SOUTH MIAMI, FLORIDA, THAT:
Section 1. The City Manager be, and hereby is, authorized to offer to City of South Miami
employees the opportunity to enroll in the ICMA 401A Money Purchase Plan.
Section 2. This resolution shall take effect immediately upon approval.
PASSED AND ADOPTED this day of April , 2004.
ATTEST: APPROVED:
CITY CLERK
READ AND APPROVED AS TO FORM:
CITY ATTORNEY
MAYOR
COMMISSION VOTE:
Mayor Russell:
Vice Mayor Palmer:
Commissioner Wiscombe:
Commissioner Marie Birts- Cooper:
Commissioner Sherar:
ICMA RETIREMENT CORPORATION
GOVERNMENTAL MONEY PURCHASE PLAN & TRUST
ADOPTION AGREEMENT
Account Number 10-
The Employer hereby establishes a Money Purchase Plan and Trust to be known as (the "Plan ") in the
form of the ICMA Retirement Corporation Governmental Money Purchase Plan and Trust. The Plan
shall be known as:
This Plan is an amendment and restatement of an existing defined contribution money purchase plan.
❑ Yes ❑ No
If yes, please specify the name of the defined contribution money purchase plan which this Plan
hereby amends and restates:
1. Employer Name:
II. The Effective Date of the Plan shall be the first day of the P1anYear during which the
Employer adopts the Plan, unless an alternate Effective Date is hereby specified:
III. P1anYear will mean:
W
0
[906]
[902]
The twelve (12) consecutive month period which coincides with the limita-
tion year. (See Section 5.04(i) of the Plan.) [803]
The twelve (12) consecutive month period cormnencing on
and each anniversary thereafter.
IV. Normal Retirement Age (not to exceed age 65) shall be age _
V. ELIGIBILITY REQUIREMENTS:
1. The following group(s) of Employees are eligible to participate in the Plan:
All Employees
All Full-Time Employees
Salaried Employees
Non -union Employees
Management Employees
Public Safety Employees
General Employees
Other (specify below):
[803]
[288]
MPP Adoption Agreement 4 /30/2000 1
The group specified must correspond to a group of the same designation that is defined
in the statutes, ordinances, rules, regulations, personnel manuals or other material in
effect in the state or locality of the Employer.
2. The Employer hereby waives or reduces the requirement of a twelve (12) month Period
of Service for participation. The required Period of Service shall be
write N/A if an Employee is eligible to participate upon employment). [344]
If this waiver or reduction is elected, it shall apply to all Employees within the Covered
Employment Classification.
3. A minimum age requirement is hereby specified for eligibility to participate. The
minimum age requirement is (not to exceed age 21). Write N/A if no mini- [341]
mum age is declared.
VI. CONTRIBUTION PROVISIONS
1. The Employer shall contribute as follows (choose one):
❑ Fixed Employer Contributions With Or Without Mandatory
Participant Contributions.
The Employer shall contribute on behalf of each Participant % of
earnings or $ for the P1anYear (subject to the limitations
ofArticleV of the Plan). Each Participant is required to contribute
of earnings or $ for the P1anYear as a condition
of participation in the Plan. (Write "0" if no contribution is required.)
If Participant Contributions are required under this option, a Participant
shall not have the right to discontinue or vary the rate of such contribu-
tions after becoming a Plan Participant.
The Employer hereby elects to "pick up" the Mandatory /Required
Participant Contribution.
❑ Yes ❑ No [621]
The pick -up provision specifies that the contribution is treated, for
federal income tax purposes, as though it is made by the employer. The
pick -up provision allows the employee to defer taxes on the employee
mandatory contribution. The actual result is the same as if the contribu-
tion were a reduction in that employee's salary by the amount of the
contribution. Picked up contributions are NOT exempt from Social
Security tax
[Note to Employer: A determination letter issued to an adopting Em-
ployer is not a ruling by the Internal Revenue Service that Participant
contributions that are picked up by the Employer are not includable in
the Participant's gross income for federal income tax purposes. The
Employer may seek such a ruling.
2 MPP Adoption Agreement 4/30/2000
[Picked up contributions are excludable from the Participant's gross
income under section 414(h)(2) of the Internal Revenue Code of 1986
only if they meet the requirements of Rev. Rul. 81- 35,1981 -1 C.B. 255.
Those requirements are (1) that the Employer must specify that the
contributions, although designated as employee contributions, are being
paid by the Employer in lieu of contributions by the employee; and (2)
the employee must not have the option of receiving the contributed
amounts directly instead of having them paid by the Employer to the
plan.]
❑ Fixed Employer Match of Participant Contributions.
The Employer shall contribute on behalf of each Participant % of
Earnings for the Plan Year (subject to the limitations of Article V of the
Plan) for each P1anYear that such Participant has contributed %
of Earnings or $ . Under this option, there is a single, fixed rate
of Employer contributions, but a Participant may decline to make the
required Participant contributions in any P1anYear, in which case no
Employer contribution will be made on the Participant's behalf in that
P1anYear.
❑ Variable Employer Match Of Participant Contributions.
The Employer shall contribute on behalf of each Participant an amount
determined as follows (subject to the limitations of Article V of the
Plan) :
% of the contributions made by the Participant for the Plan
Year (not including Participant contributions exceeding % of
Earnings or $ );
PLUS % of the contributions made by the Participant for the
Plan Year in excess of those included in the above paragraph (but not
including Participant contributions exceeding in the aggregate %
of Earnings or $ ).
Employer Contributions on behalf of a Participant fora PlanYear shall
not exceed $ or % of Earnings, whichever is
more or less.
2• Each Participant may make a voluntary (unmatched), after -tax contribution, subject to
the limitations of Section 4.05 and Article V of the Plan.
❑ Yes ❑ No
VII.
VIII
3. Employer contributions and Participant contributions shall be contributed to the Trust
in accordance with the following payment schedule: (please circle one choice)
0 BI-Weekly 1 Weekly 2 Semi - Weekly
3 Bi- Monthly 4 Monthly 5 Semi - Monthly
6 Bi- Quarterly 7 Quarterly 8 Semi- Quarterly
9 131-Annually 10 Annually 11 Semi- Annually
EARNINGS
Earnings, as defined under Section 2.09 of the Plan, shall include:
(a)
Overtime
❑
Yes
❑
No
(b)
Bonuses
❑
Yes
❑
No
LIMITATION ON ALLOCATIONS
If the Employer maintains or ever maintained another qualified plan in which any Participant in
this Plan is (or was) a participant or could possibly become a participant, the Employer hereby
agrees to limit contributions to all such plans as provided herein, if necessary in order to avoid
excess contributions (as described in Sections 5.02 and 5.03 of the Plan).
1. If the Participant is covered under another qualified defined contribution plan main-
tained by the Employer, the provisions of Section 5.02(a) through (f) of the Plan will
apply unless another method has been indicated below.
❑ Other Method. (Provide the method under which the plans will limit
total Annual Additions to the Maximum Permissible Amount, and will
properly reduce any excess amounts; in a manner that precludes Em-
ployer discretion.)
2. If the Participant is or has ever been a participant in a defined benefit plan maintained
by the Employer, and if the limitation in Section 5.03 of the Plan would be exceeded,
then the Participant's Projected Annual Benefit under the defined benefit plan shall be
reduced in accordance with the terms thereof to the extent necessary to satisfy such
limitation. If such plan does not provide for such reduction, or if the limitation is still
exceeded after the reduction, annual additions shall be reduced to the extent necessary
in the manner described in Sections 5.02 and 5.02. The methods of avoiding the limita-
tion described in this paragraph will not apply if the Employer indicates another method
below.
(611)
4 MPP Adoption Agreement 4/30/3000
❑ Other Method. (Note to Employer: Provide below language which
will satisfy the 1.0 hi-nitation of section 415(e) of the Code. Such
language must preclude Employer discretion. See section 1.415 -1 of
the Regulations for guidance.)
3. The limitation year is the following 12- consecutive month period:
IX. VESTING PROVISIONS
X.
XI.
The Employer hereby specifies the following vesting schedule, subject to (1) the minimum
vesting requirements as noted and (2) the concurrence of the Plan Administrator.
Years of
Service Percent
Completed Vesting
Zero
%
One
%
Two
%
Three
%
Four
%
Five
%
Six
%
Seven
%
Eight
%
Nine
%
Ten
%
Loans are permitted under the Plan, as provided in Article XIII:
❑ Yes
❑ No
The Employer hereby attests that it is a unit of state or local government or an agency or
instrumentality of one or more units of state or local government.
XII. The Plan Administrator hereby agrees to inform the Employer of any amendments to the
Plan made pursuant to Section 14.05 of the Plan or of the discontinuance or abandonment
of the Plan.
XIII. The Employer hereby appoints the ICMA Retirement Corporation as the Plan Adiministra-
tor pursuant to the terms and conditions of the ICMA RETIREMENT CORPORA -
TION GOVERNMENTAL MONEY PURCHASE PLAN & TRUST.
The Employer hereby agrees to the provisions of the Plan and Trust.
MPP Adoption Agreement 4/30/2000
(751)
5
XIV. The Employer hereby acknowledges it understands that failure to properly fill out this Adoption
Agreement may result in disqualification of the Plan.
XV. An adopting Employer may not rely on a determination letter issued by the National or District Offic
of the Internal Revenue Service as evidence that the Plan is qualified under Section 401 of the Inter -
nal Revenue Code. In order to obtain reliance with respect to plan qualification, the Employer must
apply to the appropriate key district office for a determination letter.
In Witness Whereof, the Employer hereby causes this Agreement to be executed on this day of
, 200
EMPLOYER
By:
Title:
Attest:
ACCEPTED: ICMA RETIREMENT CORPORATION
Title: Corporate Secretary
Attest:
6 MPP Adoption Agreement 4/30/2000