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HomeMy WebLinkAbout026346 RES - 07/19/2005 1 RESOLUTION AMENDING THE VALlC RETIREMENT SERVICES COMPANY DBA AMERICAN GENERAL RETIREMENT SERVICES DEFERRED COMPENSATION PLAN ADOPTED BY RESOLUTION 024321 TO INCLUDE PROVISIONS FOR LOANS TO PARTICIPANTS; Whereas, in 2000, the City of Corpus Christi authorized the adoption of the Valic Retirement Services Company dba American General Retirement Services Deferred Compensation Plan for sworn police officers pursuant to Section 457 of the Internal Revenue Code, as amended 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 Valic Retirement Services Company dba American General Retirement Services Deferred Compensation Plan for sworn police officers authorized in Resolution 024321 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. The guidelines are attached as Exhibit A SECTION 2. The City Manager or his designee ("Plan Administrator") is authorized to execute documents to amend the Plan Document to allow loans to participants. ATTEST: THE CITY OF CORPUS CHRISTI HL~~ Mayor ~ Armando Chapa, City Secretary APPROVED July 5, 2005 ct~ ~~ Lisa Aguilar Assistant City Attorney For City Attorney 'j AL I C DefdCompPlanamdApril122005. DOC 02fiJ46 2 EXHIBIT A LOAN POLICY The Plan Administrator of The City of Corpus Christi Deferred Compensation Plan, adopts the following loan policy pursuant to the terms of the Plan As a participant or beneficiary under the Plan, you may receive a loan only as permitted by this loan policy 1. LOAN APPLlCA TlON/FEES. Any Plan participant may apply for a loan from the Plan For purposes of this loan policy, the term "participant" means any participant with respect to the Plan. A participant must apply for each loan by signing a promissory note and reviewing the Loan Disclosure Statement. The Plan Administrator shall make decisions related to all loans and administer the loan. There will be a $50.00 loan initiation fee and a $50.00 annual loan maintenance fee charged to the participant's account. 2. LIMITATION ON LOAN AM'OUNT/PURPOSE OF LOAN. The Plan Administrator will not approve any loan to a participant in an amount that exceeds 50% of his or her nonforfeitable accrued benefit (account balance), as reflected by the books and records of the Plan, reduced by the current outstanding balance of all loans from the Employer's Qualified Plans as of the date of this loan. The 50% limit does not apply when the loan amount requested is $10,000 or less. The maximum dollar amount of a new loan to any participant may not exceed $50,000, reduced by the highest outstanding loan balance of all loans from the Employer's Qualified Plans during the 12-month period immediately proceeding the date of this loan. A participant may not request a loan for less than $1,000.00, and may have no more than one loan outstanding at any time. A participant loan may be made for any purpose. 3. EVIDENCE AND TERMS OF LOAN. The Plan Administrator will document every loan in the form of a promissory note signed by the participant for the face amount of the loan, together with a commercially reasonable rate of interest. The Plan Administrator must reevaluate interest rates for loans on a quarterly basis. A loan will provide a fixed rate of interest of 1.00(%) above the prime interest rate as published from time to time in the Wall Street Journal. The interest rate shall be subject to change on a quarterly basis The loan must provide at least quarterly payments under a level amortization schedule. The Plan Administrator will require the participant receiving a loan from the Plan to enter into an ACH debit agreement to repay the loan The Plan Administrator may suspend payments for a period not exceeding one year, which occurs dUring an approved leave of absence without pay, or at a pay rate lower than the loan payments. The Plan Administrator will fix the term for repayments of any loan; however, in no instance may the term of repayment be less than 12 months or greater than five years, unless the loan qualifies as a home loan. The Plan Administrator may fix the term for repayment of a home loan for a period not to exceed fifteen VAL i C DefdCompPlanamdApril122005, DOC 3 (15) years A "home loan" is a loan used to acquire a dwelling unit which, within a reasonable time, the participant will use as a principal residence Participants should note the law treats the amount of any loan (other than a "home loan") not repaid five years after the date of the loan as a taxable distribution on the last day of the five-year period or, If sooner, at the time the loan is in default If a participant extends a non-home loan having a five year or less repayment term beyond five years, the balance of the loan at the time of the extension is a taxable distribution to the participant 4. SECURITY FOR LOAN. A participant must secure each loan with an irrevocable pledge and assignment of a portion of the nonforfeitable amount of the borrowing participant's accrued benefit under the Plan 5. FORM OF PLEDGE. The pledge and assignment of a participant's account balance will be in the form prescribed by the Plan Administrator 6 DEFAUL T/RISK OF LOSS. The Plan Administrator will treat this loan in default: (a) if any scheduled payment remains unpaid on the last day of the calendar quarter following the calendar quarter in which the payment is due; (b) if there is the making or furnishing of any representation or statement to the Plan by or on behalf of the participant which proves to have been false in any material respect when made or furnished; (c) upon the dissolution, insolvency, business failure, appointment of receiver of any part of the property of, assignment for the benefit of creditors by, or the commencement of any proceeding under any bankruptcy or insolvency laws of, by or against the participant A default shall be treated as a deemed distribution, which is a taxable event under the terms of the Plan. The Plan Administrator will not offset the participant's account unless the participant has separated from service or unless the participant has attained age 70 1/2. Pending final disposition of the note the participant remains obligated for any unpaid principal and accrued interest The Plan Administrator intends this loan program not to place other participants at risk with respect to their interests in the Plan In this regard, the Plan Administrator will administer any participant loan as a participant-directed investment of that portion of the participant's vested account balance equal to the outstanding principal balance of the loan. The Plan will credit that portion of the participant's account balances with the interest earned on the note and with principal payments received by the participant The Plan also will charge that portion of the participant's account balances with expenses directly related to the maintenance and collection of the note (i.e., the annual loan maintenance fee). Dated this day of ,2005. Plan Administrator VAL ICDefdCompPlanamdApril12200S. DOC Corpus Christi, Texas (, ;~Day of 1-~ ' 2005 ( , The above resolution was lSassed by the following vote. John E. Marez ~ ~ ~L Q~K ~16Q... (J.RJR- (~~ ?:! ~~ Henry Garrett Brent Chesney Melody Cooper Jerry Garcia Bill Kelly Rex Kinnison Jesse Noyola Mark Scott G,~r.J46