HomeMy WebLinkAbout026202 ORD - 04/12/2005
1
ORDINANCE
AMENDING THE ICMA RETIREMENT CORPORATION DEFERRED
COMPENSATION PLAN ADOPTED BY ORDINANCE NUMBER 18127 TO
INCLUDE PROVISIONS FOR LOANS TO PARTICIPANTS; AND DECLARATION
OF AN EMERGENCY
Whereas, in 1984, the City of Corpus Christi authorized the adoption of the ICMA Deferred
Compensation Plan in Ordinance 18127 established in accordance with Section 457 of the
Internal Revenue Code;
Whereas, recently issued federal regulations under Internal Revenue Code Section 457
provide that eligible governmental 457 plans may permit loans to participants;
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CORPUS
CHRISTI, TEXAS:
SECTION 1. The ICMA Deferred Compensation Plan authorized in Ordinance 18127 and
established in accordance with Section 457 of the Internal Revenue Code is amended to allow
loans to participants in accordance with the 457 Plan Loan Guidelines attached as Exhibit A.
SECTION 2. The ICMA Deferred Compensation Plan authorized in Ordinance 18127 and
established in accordance with Section 457 of the Internal Revenue Code is amended to permit
online loans in accordance with the online loan procedures described in the attached Exhibit B.
SECTION 3. The City Manager or his designee is authorized to execute documents to amend
the Plan Document to allow loans to participants.
SECTION 4. That upon written request of the Mayor or five Council members, copy attached, the
City Council (1) finds and declares an emergency due to the need for immediate action necessary
for the efficient and effective administration of City affairs and (2) suspends the Charter rule that
requires consideration of and voting upon ordinances at two regular meetings so that this : ,tl--.
ordinance is passed and takes effect upon first reading as an emergency measure this the \ <-
day of 0 r I ,( , 2005.
ATTEST:
THE CITY OF CORPUS CHRISTI
~.&t ~
Mayor
Arman~
City Secretary
APPROVED: April 5, 2005
;t~)L fff-L+.
Lisa Aguilar
Assistant City Attorney
For City Attorney
leMA Defd Comp Plan amd April 12 2005.DOC
026202
,
~ '
[> I II /I
], \) tI if
C; II i {II' 1 i II ('.'
l::,Xh,\""it
P t\{Y I
It
of +
Name of Plan:
I. Purpose
nIP purpose (lfthese guidelines is 1(il establish the If'rnlS dlHI conditio!ls lmdcl \vhic:h the (lrnpJoycl \vill grant loans to partiei-.
pants Thh is t[lP onl\ orncial Loan Progr,\llI Document of tile ilho\'t' named Pial!.
II. Eligibility
Loans arp availablp to all actl\'(' Plllplu\('('s, j ,(l(jllS \\-illllO! IJf' grdllll'd to participants \vho have an E~xisting loan in default.
Loans \vi!1 he pro-rater:! r1rllong all (II(' rumh ill \\'hich tile particjp;mr is invested at the time tllf' loan is made.
Loan" arc available for the follo\ving purposes: IseJect o11el
ifj\] I purposes
o Loans Shill! only be granted in the (,\Tllt of a participant's hardship or for the purpose of enabling a participant to meet
Ct'Ttain specified financial siluatiun". The Plllplo\'er shrlll dr'lennine. based on all relevant facts and circumstances. that
t)l(' amount of [/1e loan is !lot ill ('XCPSS or 1I1l' Cllllount required to relieve the financial need. For this purpose, financial
r'I('ecl shed I inclllde. but r lut be lillliteej tC): llllreimburscc] 111ediral PXIWIISl'S of the participant or members of the
pdrtiripalll's irllrIH:'diate ramUii. eSlilll]isl1illg or suhstallli;lIh rdmbiJitatinRlhe principal residence of the participant, or
pdving rClT a college eduultioll (illlhlding graduate studies) for Ih.e participant or his/her dependents.
III. Frequency of loans [select onel
~lilIticiPallts IlIa\' receive (lIlP I()iil] per ci.i.k'mlcu
veal'. ~v1orf'ovf'r, parlicipant<i may have only one outstanding loan at a time.
o P;uticipants mav recehT OIl(' IOelll per ca]plldar year. ~'lorC'over. no participant may have more than five (5) loans
outstanding at one timf'.
IV. Loan amount
The minimum loan amount is $1.000.
The maxirmll r] amount of all loans to the participant from the plan and all other plans sponsored by the employer that are
qualified pmployer plans under section 72(p)(4) of thp Code is the lesser of:
(1) $50,000, reduced by tbe excess (if allY) 01
a The highest outstanding bdbrHT of loans during I he olle-year period ending on the day before the date a loan
is to be made. or
b The outsl<-lllding balance of loans on the date the loan is to be made; or
(2) one half of the participant's vested account balance.
If a participant has any loans outstanding at the time a ne\\' loan is requested, the new loan will be limited to the maximum
amount calculiHed above reduced by the total of the outstanding loans.
A loan cannot be issued for tnore than the above amoullLThe participant's requested loan amount is subject to downward
adjustment \vithout notice due to market Ouctuation betvveen the time of application and the time the loan is made.
3
I C M A
RETIREMENT
CORPORATION
t::f-\\'hl t A
pcty ?- "F 4-
V. length of loan
/\ loan must he repaid in substalltiall\' erl'Jal itlstallmE'Tlts of principal and interest, at least monthly, over a period that does not
exceed th'p (5) veal's.
I,uans for (j principal residence must be rCI31id in substantiall)
least month lv, elver no mOff' than I ~
equaj installments of principal <ind interest, at
[stalP number of .yearsl ,years (maximum 30 years).
VI. Loan repayment process
I,oans for dcti\:(' employ'f'Ps must be repaid through pa)TolI ch->duCljOtl, Repa\iInCrH \\ill begin as soon as practicable on a date
determined hy the empl,IJyer's payToll
Loans olltStdlldillg for former employ'ces or pmplo)'ct-'S on a lea\'c of absence lllllst be repaid on the same schedule as if payroll
deductions \Vert' still being made unless the}' I'earnortize their loans and estahlish a nc\v rppa)'tnent schedule that provides that
substantiall\ equal paYlnents are made at least monthly O\'CT the remaining period 01' the loan. All repayments must be made
through the employer.
I.oan pa).'nwnts, including loan payments from former C'tllplovpes, art' allocated to the participant's current ejection of invest-
IllPIH op1iollS 0]1 file \vith ICI'v1J-\-RC.
Thp participan1 lllay payoff all or a portion of dIP principal and inlt-'rest t-'ad'y' \vithout penalty' or additional fee. Extra payments
art-' applic'd fOI"\\an--j tu both principal and interest as specified in tilt, ()rigin;:d rcpavJ1l('nt schedulp, unless the additional payment
is for the bellancl' due.
VII. Loan interest rate
The r<l((-' of inlC'lI'st for loans (Jf five (:')) vears or lpss \~'ill be based UII primp pillS O,51'u.
The ran' 01" interpst for Joans lor a prirlCipal re"iclcn'cp \vill he baspd Oil the FHA/\'i\ 'rate.
Interest rdtes an-> detennined on the last bu,;illess dav of the 111UIlth preuxling the mom,h the loan is disbursed. The interest rate
is lockt"d in ilt thp time a loan is a.pproved a.nd !"l)Illains constant thl'Uughollt the life of the loan.
The priml' inten'st rate is delPl'lllined on tile last business dav of each IIlOllth using till' rI~dl ,')'trccl}o/lrlwl as the source. The
FHA/\.';\ illlcrpst rate is also determilH'd 011 the last husiness d,l)' of edch month using thl' Tc;]erate Information Service as the
SOUITP.
Loan illl('I"l)SI rat>',; for nc\\' loans may flucru;-)!t-, lq.l\\'drd or clO\\lI\v;ml monthlv, depending on Ihe rnovempnt. of the prime and
J+IA/VA illrcn"1 ratc,.
'lhe Ptnplo\,'('r IIIdY moclil")-' the lllaTllHT ill \\-hich loan intf'rest raIl'S \\'ill lw dHeJ"lllincd, but only \vith respect In future loans.
4
~ ,
/'
" !/
I. (' " II
(, /I i Ii {'
! /I ('-'
[M-l,I.,;1-- A-
P <1.5'" 3 <l' 4-
VIII. Loan application procedure
f\lll();lIl" must hi rP<!lH'S!I'd ill \\Tiling (Ill ;111 '1Ilplii ;lli()11 dPPI{)\Td 11\ till' pld)1 ddlllilli,;tr,1101
the participdTlI llle C'l1lploY('l IllllSI n-'\ie\\ <11](1 dJlpnl\(' 11](' ;lllplicilli())]
!"'JH' application IllllSI be signed h,''''
The particip;ltlt \\ill bl:' required 10 Sigll d prOlllis,,()r\ !lot(, ('vidpllcirlg lilt' loall am] a disc'losurc slalclllCnt that includes ,-]f]
amortizatioll sdwdule prior tu l'f"('Plvillg;j loafl ('lli:'ck. LOdl1 CIH'cks will gCIH'Ial]v Ill.' issued OIl the Frida,V follo\ving the rpndpt
of (! cornplct(, IO;!I] applicatioll The luaf! t"!1l'CK. ]l]'(\I11i<,sOI\ lI())V, disc]()SUIl' )(att'JlH'lll i.lnd truth-in-lending recision notice \\'ill
bp SCllt to till' lllllp]O\,C[, Will) \"ill obtaill lllt, lHT('\\;lrv Sig!lcltUl't'\ ,lIld dc']inT the rlwek to the participant. All c'xccutcd docu-
men1s Illust IH' ll'tUIIlPd to tlw p);-1l1 adlllillistr;l1()l \\itllin 10 c;i1eIllLlI d;IVS ('rUllllllc' dill(-' Ill(' rheck is issuecl,
IX. Security/Collateral
That porlion Ofd participant's accnunl halanrp then j<; equa] tu tile iilllOllllt ofllw IOelll is llsed as collatera] for the ]oan.The
collateral anluUll1 lTW)' 110t exceed 50 !lnccl1t of Ihe participant's account hillancc ilt the tinw the loan is taken. Only that
portion of the' aCI'oUllt-balance that C(lJTl'SIKllHls to Jhe amount of tll(' outstancling 1(J;Hl b;l]ance is used as col]ateral.
X. Acceleration Iselclt OIl!' I
J,i{' /\11 loans arc due dnd pavable ill full UIXlll \cpiil'atioll from sel'\'ict',
...J Alll()ans ;\I'e due and payalllc when il p,lrticip;1111 recci\'I"'i d distribution ()j all of Ids/her account ha]ance aftpr
separation from service, Tllc' amount of the outstanding ](J;m hillance \vill be reported as a distribution in addition
to Ill(' amount of cash dislrihuted frOJll ll1e plilll.
....J All loans are clUf' and pa.vallh' \\'1]('11 il jlilrlicipd!ll ]l-'Cf'h'(',);1 dislrihulinn '(J/' part of his/her account balance after
')cp;-:lIiHion from servin'.TIH' ;1ll10l111l (l!' the Ollls(;lllcling IO;l1l habmT will he reported as a distribution ill actdition to
I hE-' amount of cash distrilJu\('d fnllll the plim,
XI. Reamortization
Anv outstanding IO;:Ill Jll(j,\' 1)(> n'i1Jllorti7pd. Rr'dllloIli7,l1ioII Illeans cl1imging thl-' tL-']1l1S of a loan. such as length of repayment
period. interpst r<lte. and frPljuencv of n'pdvlllellfs. ,;' loaJ] !ll(]V !lot L)(' I"edmortizpd to pxtend the length of the loan repayment
period to more than five (5) .\pars frot1] the datt' the loan \\'(1S originilll\' made. or in 1 he case of a loan to securE' a principal
residence. bcvoncl the llumlwl of veill'> s]JCTifiecl hv rllP Plllplnv'Pl' ill S('ctiun \/ abcl\'('
A participanl IIllls1 requPsI the learnortizalioJ1 oj" il IOdll ill \\Tiring 011 a rearnortizatioI\ application acceptable to the plan
administrator. Upon processing the request, a 1\C\\ disclosUIT' slatpIlll'llt v\"ill be sent 10 the employer for endorscment b)' the
participant and approval by the' crnplcl\l'r. Tlw pXPculed disclosure stdtemeJll mllst he refurned to the plan administrator within
10 calendar days frolnlhc dat!" il is signed. The nc\\' disclo')un' ,,1;-ll\')I1(,JlI j) considered an anlt'ncllllent to the original promis-
sory nOI(-', t1H'ref()re a l}("'\."" pIolllissory' 1'l()lc will nor Iw rcquin'cI
A reamortization \vill not he considt'rpd (l llC\\ IOd!1 for purposes of (',rlculat ing the number or loans outstanding or the one loan
per ca]eJldarvem limit
XII. Refinancing existing loans
If a participant hilS one outstanding lOdll. that loan Illay Iw refinal1ced. If a participanr has morp than one outstanding loan, no
loans may bf:' refinanced. Refinancing rneilll') COllClIITCllt h' I"f'pa)-'ing an existing loan and bOJ'n)\ving an additional amount
through a ne\v loan. A participant may not refinance a residential loan
In or-dccr to rdinance an existing loan. a particilJ<Hlt must request a nc\v loan in v\Titillg on an application approved by the plan
administrator. Such request IIlust be made at a time \vhen the participant is eligib]e to obtain a loan as defined by the employer
in Section III above.TllE' amourH of a Ile\\/ loan J'f'qllf'stf'd for the purpose of refinancing is subject to the loan limits specified in
Section IV abovf-'.
Because a refinancing is considered a 11('\\' loan. on]} active l'lllployees ma.'J-' refinance an outstanding loan.
5
I C M A
RETIREMENT
CORPORATION
bt,;I.,,;t
p~ t 0('
~
'T
XIII.
Reduction of Loan
If;1 fJ(Jrticipilll1 dips prior to llll! rppil\-11WIII or till' I )\lls1;lIlding l(ldll!\) lilt, ()lllSlall(jing I0.111 lJalancc(s) \vill be deducted rrom the
aCCollnt ]lrici!- to distribution to thE' bt'lldkiiU'\ (iI'''). JI](' 11lllldid IOi1l1 dlllOlltlt i<; a r<1.\.;'lhlc distribution (lnd may he subject to
pari: \vithdLl\\al penaltics.Tlw panicipdll\ '" CS(il(C i) l'l'spo!lSiblc fot 1<1.'\('<; or jWll,lllie<., on the unpClid loan amount, if an}'. The
helwfici<-jJ')' h rt'spollo;,ihl(' fO! tilXCS chw 011 tIll' illll()l1Il( hCi'ilw rccTi\('\.:\ Fortn 1099 \villlw issued to both the benPFiciary and
tlip ('stale for thest-' purposps
XIV. Loan default
If a required pa\Tnenl of princi'paJ and in1l'I'f''i! is II()I Illddl' \\ithill S)(l dcl\S of the datr' sllch p;I\'rnPflt is due, the loan is consid-
ered in dpf{llllt. If a lo,Hl is in dt'fauJt. till' loan \\illlw foreclosed during rlw c{I]pndar y'par in \vhich the p{lrticipant separates
frolll service If d participant ha:c, "pp;lrilIPd frolll Ser\icl' iHld (kfau!ts nn ;1 loan. fhen Ihp loan \vil1 be foreclosed during the
calendar .ver][' in \vhich the C]el'aull O(TUIS.
If thl' cIllplover !)as elected in Section X. ;mcllhp promi:c,son note so pn)\'iclcs. a 10a11 bee-GilleS due and payable v\/hen the
participcmt Sl'pilldtes from service. If ttlP (PITns of thp loan contain tlji<, pro\ision. the. outstanding loan amount is "deemed'" in
default as of the date of separation froJl] service. The amount of the ulltstol1ding 10011, including accrued interest, will be
reported to the IRS as a distribution that lllav' be subject to tdXPS
If the employer has so elected in Section X, dnd tll(' prornissorv !Jote so provides, d loan becomes due and payable \vhen the
participcmt lith,s d di<.tributioll or SOI1H.' 01 al1 of the b,llCJncp in his./'ht'r ,lCcount after separation from service, If the terms uf the
loans contail! sue h a provisiol) and the O\lf.<,t;lIlding ]()dll bal;-lJj(p is 1101. paid prior to d-1P distribution from the account, the
outstanding loan dT1l011l!t \\i]] be considvn'c! ill dcfcndl \lpon hSlldJ)('(' ()f Ihe di'iJribuiioll check. The i1lllount of the outstanding
loan. including accrued inten's!. \villIH' [('portl'd 1tJ llw IRS CIS a dislributioll that mav bp sll~ject to taxes. Participants \vho
have an existing luan ill default \vill nDt he cligjbll' f()r additiollalludfls
XV.
Fees
Fees may' be e-harged for variou:c, :c,prvil'ps ,lssociilled \.\"ith rhe dpplicalioll for CIne! iSSUClIKe of loans. All applicable fpes \\,'ill be
debitc'd from the partidpant's account I)alancf' dJHL/or from Ilw participant's loan repa,vments prior to crediting the repayment
of principal (lnd interest to the participant's account !\ schedule of fees applicable to this plan is available from the plan admin-
istrator.
XVI. Other
The employer hd<, the right to set ot]wr tprms ;lIld conditions as it dCVlllS neCPSSofV for loans from the plan in order to comply'
vv,ith any' lpgill rpquirelllt'Ilts_ All U'nl1S ;Hld ('ollditic)J}s will he administered ill a unifurm and llon discrirninatu1".'Y rnanner.
In V\fitness \iVtw!'cof, the emplo)-'er hereby e-aused t]]ese Clli(kJincs to he excultcd this
day
of
, 20
EMPLOYEr<
!\ucptecllCMA ],ETIREMENT CORPORATION
By:
Bv:
Title:
Title:
Attest:
Attest:
6
.'
E x.\-'; I.:,it- B
PC] I of--
'-
"
ADOPTION OF ONLINE LOAN PROCEDURES
(Amendment to 401 or 457 Plan Loan Guidelines)
Sections VI (Loan Repayment Process) and VIII (Loan Application Procedure) are
amended as follows:
All loans must be requested online by employees through ICMA.RC's Account Access
site at www.icmarc.org.
If a employee is married at the time of application, and spousal consent is required by the
Plan for the loan, the employee's spouse must consent, in writing, to the loan and the
consent must be witnessed by a plan representative or notary public. Such consent must
be received in writing by ICMA-RC within the ninety (90) day period before the loan
request is submitted through Account Acce5s.
The promissory note, truth-in-lending rescission notice and disclosure statement are
presented to the employee online on Account Access at the time the employee submits
the loan request. The employee confirms receipt and acceptance of these documents by
clicking on the affirmative buttons on the Account Access program.
The Employer hereby authorizes all future loans requested through the online process via
Account Access, as well as any requests that employees submit on paper forms, pending
review of the application by ICMA-RC. Notice of loan issuance will be provided to the
Employer via reports posted on the EZLink site.
The loan check will generally be redeemed from the employee's account on the same day
as, and issued on the next business day following, the employee's successful submission
of the loan request through Account Access. The loan check will be mailed directly to
the employee. The employee's presentment for payment of the check constitutes an
acknowledgement that the employee has received and read the loan disclosure
information provided via Account Access and agrees to the terms therein.
Loan repayment will begin as soon as practicable following the employee's presentment
for payment of the loan check,
Loans repayments for active employees must be through (choose one):
o Payroll deduction only.
(P1642(2}=2)
~ ACH debit only
(pl642(2)eO)
o Employee may choose either payroll deduction or ACH debit.
(pl64212=-1)
.'
bJ,. \:,;-\ 13
fc) 2" F L
"
If payroll deduction repayment is allowed, the Employer will receive notice of payroll
deduction start-up requirements via reports posted on the EZLink site. An employee will
appear on a "start-up" list when ICMA-RC receives notice that the loan check has been
cleared for payment. The list will show the employee's name and the repayment amount.
>- Payroll deduction should begin within two payroll cycles following the
employee's appearance on the start-up list.
>- Repayments through payroll deduction will be sent via check or wire by
the Employer to ICMA-RC on the following cycle (choose one):
o Weekly
oBi-weekly
o Semi-monthly
o Monthly
If ACH debit repayment is allowed, debits from the employee's designated bank
account will begin approximately one month following the date the loan check has been
cleared for payment. Debits will be made on a monthly basis. Please note that
employees must use Account Access only, and not paper forms, in order to invoke ACH
as a repayment vehicle.
Plan Name:
Plan Number:
In Witness Whereof, the Employer hereby caused these Amendments to the plan's Loan
Guidelines to be executed this day of , 20
EMPLOYER
ACCEPTED: ICMA Retirement Corporation
BY:
BY:
TITLE:
TITLE: Corporate Secretary
ATTEST:
ATTEST:
NOTE: When amending multiple plans, please use a separate form for each plan.
Corpus Christi, Texas
li-n
Day of
~)III
,2005
TO THE MEMBERS OF THE CITY COUNCIL
Corpus Christi, Texas
For the reasons set forth in the emergency clause of the foregoing ordinance an
emergency exists requiring suspension of the Charter rule as to consideration and
voting upon ordinances at two regular meetings: I/we, therefore, request that you
suspend said Charter rule and pass this ordinance finally on the date it is introduced, or
at the present meeting of the City Council.
Respectfully,
Respectfully,
Hen
Council Members
The above ordinance was passed by the following vote:
Melody Cooper
CV--;\K
,
o
L~cfS
f
L.l.Ly:
Henry Garrett
Brent Chesney
Rex Kinnison
i..~ ~ J
(3---<. I'-
II ()~
I , .
l./\ or J ....
( L'-y-
Jerry Garcia
Bill Kelly
John E. Marez
Jesse Noyola
Mark Scott
,
L/l...-c
\,-,
,
02h202