HomeMy WebLinkAboutOCSD 02-12 (REPEALED))
RESOLUTION NO. OCSD 02-12
APPROVING FIRST AMENDMENT TO THE DEFERRED
COMPENSATION PLAN FOR OFFICERS AND EMPLOYEES OF THE
DISTRICT
A RESOLUTION OF THE BOARD OF DIRECTORS OF ORANGE
COUNTY SANITATION DISTRICT APPROVING FIRST AMENDMENT
TO THE ORANGE COUNTY SANITATION DISTRICT DEFERRED
COMPENSATION PLAN [19981 FOR OFFICERS AND EMPLOYEES OF
THE DISTRICT
WHEREAS, the Board of Directors has, pursuant to Resolution No. OCSD 98-36,
adopted July 1, 1998, adopted a Deferred Compensation Plan, known as the Orange
County Sanitation District Deferred Compensation Plan [1998], for eligible Employee
Participants (hereinafter referred to as the "Plan"); and
WHEREAS, the United States Congress enacted the Economic Growth and Tax
Relief Reconciliation Act of 2001 ("2001 Act"), in part amending Internal Revenue Code
Section 457 relating to Deferred Compensation Plans; and
WHEREAS, the State Legislature has enacted Senate Bill 657 (Chapter 34, 2002
STATS.), amending the California Revenue & Taxation Code to conform to the similar
provisions in the Internal Revenue Code Section 457; and
WHEREAS, the Board of Directors desires to amend the Plan in order to comply
with and provide the benefits of the "2001 Act".
NOW, THEREFORE, the Board of Directors of Orange County Sanitation District,
DOES HEREBY RESOLVE, DETERMINE, AND ORDER:
Section 1: That the First Amendment to the Orange County Sanitation
District Deferred Compensation Plan, as set forth in Exhibit "A", attached hereto and
incorporated herein by reference as though set forth herein at length, is hereby adopted
and shall remain in effect until amended or terminated by Resolution of the Board of
Directors.
PASSED AND ADOPTED at a regular meeting held 'fj1'4 < /: ') , 2002.
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REPEALED BY
OCSD 03-10
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FIRST AMENDMENT TO ORANGE COUNTY SANITATION
DISTRICT DEFERRED COMPENSATION PLAN [1998]
SECTION 1: Background. The Board of Directors of the Orange County
Sanitation District, pursuant to Resolution No. OCSD 98-36, adopted July 1, 1998, has
adopted a Deferred Compensation Plan, known as the Orange County Sanitation
District Deferred Compensation Plan [1998), for eligible Employee Participants
(hereinafter referred to as the "Plan").
SECTION 2: Purpose. The primary purpose of the Plan is to attract and retain
personnel by permitting them to enter into Plan Participation Agreements which will
provide future payments in lieu of current income upon death, disability, retirement, or
other termination of employment with the Employer. Neither the Plan, nor any provision
of the Plan, shall be construed as either an employment agreement, or a right to be
retained by the Employer. The Employer intends that the Plan satisfy the Internal
Revenue Code Section 457 requirements for an "eligible deferred compensation plan."
However, the Employer does not guarantee any tax benefits due to participation in the
Plan, and each Participant should consult his or her own tax representative for
information and advice on the tax ramifications of participation in the Plan.
SECTION 3: Definitions. For the purposes of this Plan, certain words or phrases
used herein will have the following meanings:
3.1 "Applicable Dollar Amount" shall mean the maximum amount of
elective deferrals that a Participant in the Employer's Section 457 Plan
may defer for the taxable year, as set forth in Section 4.2 (a) and (b). 12001
Amendment]
3.2 "Category A Beneficiary" shall mean any individual designated as
the beneficiary by the Participant, either pursuant to the Participation
Agreement or pursuant to a later written election filed with the Employer
before the death of the Participant. A trust may also be designated as a
beneficiary under the Plan, under certain circumstances more specifically
described in Subsection 10.6.2 below, but in that case the trust
beneficiaries who may receive trust distributions on account of payments
from the Plan shall be deemed to be the Category A Beneficiaries under
the Plan. No other legal entity, such as a charitable foundation or the
estate of the Participant, may be a Category A Beneficiary for the
purposes of the Plan.
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3.3 "Category B Beneficiary" shall mean a beneficiary who is
designated by the Participant in either the Participation Agreement or a
later written election filed with the Employer before the Participant's death,
and who is not a "Category A Beneficiary" within the meaning of Section
3.2 above. (Example: a legal entity other than a trust, such as a charitable
foundation or the estate of the Participant.)
3.4 "Deferred Compensation" shall mean the amount of compensation
not yet earned, which the Participant and the Employer mutually agree
shall be deferred in accordance with the provisions of this Plan.
3.5 "Deferred Compensation Investment Fund" shall mean the fund to
which all Deferred Compensation is credited, as described in Section 6.2.
3.6 "Employee" shall mean any employee who is a director or officer, or
who is a permanent, full-time employee of the Orange County Sanitation
District.
3. 7 "Employer'' shall mean the Orange County Sanitation District.
3.8 "lncludible Compensation" (a term defined in Internal Revenue
Code Section 457(e)(5) and Treasury Regulation Section 1.457-2(e)(2))
shall mean compensation for services performed for the Employer which
is currently includible in gross income. Accordingly, a Participant's
includible compensation for a taxable year does not include any amount
payable by the Employer that is excludable from the Participant's gross
income under Internal Revenue Code section 457(a) and Treasury
Regulation Section 1.457-1 (including but not limited to this Plan), Internal
Revenue Code section 403(b), or other applicable federal income tax
laws. The amount of lncludible Compensation shall be determined without
regard to any community property laws.
3.9 "Investment Account" shall mean a book account for the individual
Participant, as more fully described in Section 6.3.
3.10 "Late Retirement" shall mean a termination of service with the
3.11
Employer which becomes effective after the date on which the Participant
has met the requirements to effect a Normal Retirement.
"Maximum Annual Deferral" shall mean the overall maximum annual dollar
amount (except for roll-over amounts) that a Participant in the Employers'
Section 457 Plan may defer pursuant to Sections 4.2 and 4.3 of the Plan.
[2001 Amendment]
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3.12 "Normal Retirement" shall mean a termination of service with the
Employer which becomes effective on the first day of the calendar month
after the Participant meets the minimum age and/or service requirements,
for voluntary retirement, specified in the Retirement Plan.
3.13 "Normal Retirement Age" shall mean the age at which the Participant has
met the requirements for Normal Retirement; provided, however, that a
Participant who continues to work for the Employer after attaining Normal
Retirement Age may elect, for the purposes of Section 4.3 below, an
alternate Normal Retirement Age, which may be an age greater than age
70Y2, but which shall be a date or age not later than either (a) any
mandatory retirement age specified by the Employer, or (b) the date or
age at which the Participant actually separates from service with the
Employer. The Participant shall make any such election by delivering to
the Employer, prior to separation from service with the Employer, written
notice specifying the chosen alternate Normal Retirement Age. Nothing in ·
this Section 3.13 shall be construed to mean that the Employer has
imposed a mandatory retirement age or that the Participant has agreed to
retire at a designated age.
3.14 "Participant" shall mean an Employee who has elected to participate in the
Plan.
3.15 "Participation Agreement" shall mean the agreement which is executed by
the Employee and filed with the Employer in accordance with Section 4,
and pursuant to which the Employee elects to become a Participant in the
Plan and defers a portion of his income.
3.16 "Plan" shall mean the Orange County Sanitation District Deferred
Compensation Plan, as established hereunder.
3.17 "Plan Year" shall mean the calendar year.
3.18 "Qualified Domestic Relations Order (QDRO")" is a judgment, decree, or
order (such as an order approving of a property settlement agreement)
which: (1) relates to the provision of child support, spousal support, or
marital property rights to a spouse, former spouse, child, or other
dependent of a Participant; and (2) creates or recognizes the existence of
an alternate payees right to receive all or a portion of the Participant's
Investment Account. [2001 Amendment]
3.19 "Required Beginning Date" shall mean the latest date that distributions are
permitted to commence under Section 10.3.
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)
3.20 "Retirement Plan" shall mean the retirement plan of the Orange County
Employees' Retirement System, which is governed by the County
Employees Retirement Law of 1937 (California Government Code Section
31450 et seq.) and is made available to the employees of the Employer
pursuant to contract.
3.21 "Salary" shall mean the full, regular, basic salary which would be paid by
the Employer to or for the benefit of the Employee (if he were not a
Participant in the Plan) for actual services for the period that he is a
Participant.
3.22 "Termination of Service" shall mean the severance, prior to retirement and
other than by death, of the Participant's employment with the Employer.
3.23 "Unforeseeable Emergency" shall mean a severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of
the Participant or of a dependent (as defined in Internal Revenue Code
Section 152(a)) of the Participant, loss of the Participant's property due to
casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant. The
circumstances that will constitute an Unforeseeable Emergency will
depend upon the facts of each case. Examples of what are not
considered to be Unforeseeable Emergencies include the need to send a
Participant's child to college or the desire to purchase a home.
SECTION 4: Participation in the Plan.
4.1 Any Employee designated by the Employer to be eligible may elect
4.2
to become a Participant in the Plan by executing and filing a Participation
Agreement with the Employer. An election to participate in the Plan and to
defer compensation under the Plan shall become effective with respect to
compensation earned by the Participant during the period commencing
with the beginning date of the first pay period in the month following the
month in which the Employer consents to and approves of the
Participation Agreement. Such election to defer compensation shall
continue thereafter in full force and effect unless and until terminated by
the Participant as provided in Section 4.4, Section 10.4 or Section 11.
Each Participation Agreement shall specify the amount of
compensation, either by dollar amount or by percentage of Salary, which
is to be deferred pursuant to the Plan and to be withheld out of the Salary
otherwise payable to the Participant for each pay period. The amount
deferred each year may not exceed the lesser of:
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4.3
(a) The "applicable dollar amount" determined in accordance with the
following table:
Taxable Year Applicable Dollar Amount
2002 $11,000
2003 $12,000
2004 $13,000
2005 $14,000
2006 or thereafter $15,000
[2001 Amendment] 1
(b} One Hundred Percent (100%) of the Participant's lncludible
Compensation.
or be less than Three Hundred Dollars ($300.00) each year. This Three
Hundred Dollar ($300.00) limitation shall not be applied to any Participant
who is paid less than $1,200.00 per year for services rendered to the
Employer. [1997 Amendment]
Notwithstanding the provisions of Section 4.2 herein, during any or
all of the last three (3) taxable years ending before a Participant attains
Normal Retirement Age (or the alternate Normal Retirement Age chosen
pursuant to Section 3.11 above), the maximum amount which may be
deferred annually shall be the lesser of:
(a) Twice the dollar amount in effect in Subsection 4.2(a) for the
taxable year; (2001 Amendment] or
(b) The sum of:
(i) The maximum deferral amount established for the purposes
of Section 4.2 for the taxable year (determined without
regard to this Section 4.3), plus
(ii) The maximum deferral amount established in Section 4.2 for any prior taxable
year or years, less the amount of compensation deferred under the Plan, for such prior
taxable
1 Cost-of-Living adjustments: In the case of taxable years beginning after December 31,2006, the Secretary [of the Treasury] shall
adjust the $15,000 amount (A) at the same time and in the same manner as under Internal Revenue Code Section 415(d), except
that the base period shall be the calendar quarter beginning July 1, 2005, and any increase under this section which is not a multiple
of $500 shall be rounded to the next lowest multiple of $500. /2001 Amendment]
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4.4
4.5
4.6
year or years, pursuant to either Section 4.2 or this Section 4.3.
A prior taxable year shall be taken into account under subdivision
(ii) only if: (a) it begins after December 31, 1978; (b) the Participant
was eligible to participate in the Plan during all or any portion of the
taxable year; and (c) compensation deferred (if any) under the Plan
during the taxable year was subject to the maximum deferral
amount under Section 4.2 herein. A Participant will be considered
to have been eligible to participate in the Plan for a taxable year if
the Participant was an Employee for any part of that taxable year. A
prior taxable year includes a taxable year in which the Participant
was eligible to participate in an Internal Revenue Code section 457
eligible deferred compensation plan sponsored by an entity other
than the Employer, provided that such other entity is located in the
State of California. [1997 Amendment]
A Participant may terminate his election to defer compensation
under the Plan by executing and filing with the Employer a written notice
at least thirty (30) days prior to the effective date of termination. In the
event a Participant ceases to qualify under Section 3 hereof as a
Participant, his election to defer compensation shall automatically
terminate on the same date as he becomes ineligible. A Participant
(including a former Participant who is again eligible to participate) may not
resume the deferral of compensation during the calendar month in which
termination occurred; however, he may elect to resume the deferral of
compensation in subsequent calendar months after a lapse of not less
than three (3) months. No amounts shall be payable to an Employee
upon the termination of deferral of compensation, unless otherwise
provided for in either Section 10 or Section 11.
A Participant may change the amount of compensation to be
deferred in a subsequent calendar month by executing and filing notice
with the Employer at least thirty (30) days prior to the beginning of such
month; provided, however, that such change may be made not more than
four (4) times in a calendar year.
In applying the provisions of this Section 4, amounts deferred shall
be taken into account at present value in the Plan Year in which deferred.
SECTION 5: Deferral of Compensation. During the period of participation, the
Employer shall not pay the Participant his full Salary, but shall defer payment of such
part of his Salary as is specified by the Participant in the Participation Agreement, which
has been executed and filed with the Employer.
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I 6.1
SECTION 6: Administration of the Plan.
The Employer shall have full authority and power to adopt the rules
and regulations for the administration of the Plan, and to interpret, amend,
alter and revoke any rules and regulations so adopted. The actions of the
Employer, with respect to the Plan and the administration of the Plan, shall
be presumed to be fair, reasonable, and impartial, and the Employer shall
be deemed to have exercised reasonable care, diligence and prudence,
unless the contrary is proven by affirmative evidence.
6.2 The Employer shall establish a Deferred Compensation Investment
Fund to which all Deferred Compensation shall be credited at such times
as the amounts deferred would have been payable to the individual
Employee if he were not a Participant in the Plan.
6.3 The Employer shall maintain a book account (the "Investment
Account") for each Participant, to which shall be credited the Deferred
Compensation of the individual Participant. The Participant's Investment
Account shall be credited with the earnings thereof, if any, and shall be
credited or debited, as the case may be, with the net amount of any gains
or losses which may result from the investment of all or any portion of the
amount in the Participant's Investment Account. The Employer, its
directors, officers and employees, shall not be liable for any losses on any
investment credited to any Investment Account. On a quarterly basis, the
Employer shall credit the earnings and/or gains and debit the losses on
each Investment Account. Such credits and debits sl:lall be made, and the
final quarterly balance of the Investment Account shall be posted, as of
the last day of each quarter.
SECTION 7: Asset Ownership. Except as otherwise provided in Section 8
below, all Deferred Compensation credited to the Deferred Compensation Investment
Fund, all property and rights purchased with amounts credited to the Deferred
Compensation Investment Fund, and all income attributable to such amounts, property,
or rights shall be and remain (until made available to the Participant or other
beneficiary) solely the property and rights of the Employer (without being restricted to
the provision of benefits under the Plan), subject only to the claims of the Employer's
general creditors. Without such Employer ownership, the Plan would not qualify as an
"eligible deferred compensation plan" within the meaning of Internal Revenue Code
section 457, so as to make tax benefits available to the Participants.
SECTION 8: Declaration of Trust. ·
8.1 Notwithstanding the provisions of Section 7, all Deferred
Compensation credited to the Deferred Compensation Investment
Fund, all property and
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rights purchased with amounts credited to the Deferred Compensation Investment
Fund, and all income attributable to such amounts, property, or rights
(collectively, the "Trust Estate") shall be held, by the Employer as trustee,
in trust for the exclusive benefit of the Participants and their beneficiaries,
per the terms and conditions of Section 8.2 below. No portion of the Trust
Estate shall revert to the Employer or be used or diverted to purposes
other than the exclusive benefit of the Participants and their beneficiaries.
8.2 The Employer, as trustee, and in accordance with applicable law:
(a) shall have the power to invest and reinvest the Trust Estate in all
assets permitted under Government Code section 53609;
(b) shall have the power to retain in cash, without obligation for
interest, such portion of the Trust Estate as it may deem (i)
advisable to meet Plan obligations, or (ii) to be in the best interests
of the Plan;
(c) shall have the power to retain, manage, operate, administer and
otherwise deal with the Trust Estate in such manner as it deems
appropriate;
(d) shall have the power to transfer, sell, exchange, redeem and
dispose of the assets of the Trust Estate, in any manner and at any
time, by private or public sale or otherwise;
(e) shall have the power, with respect to the assets of the Trust Estate,
to exercise all the rights of an individual owner, including, but not
limited to, the power to give proxies, to participate in any voting
trusts, mergers, consolidations or liquidations, and to exercise or
sell stock subscriptions or conversion rights;
(f) shall have the power to hold, authorize the holding of, and register
any assets of the Trust Estate in any manner permitted by law;
(g) shall have the power, in its discretion, to compromise, contest
(whether through legal proceedings or otherwise), arbitrate, or
abandon claims and demands on behalf of the Trust Estate and/or
the Plan, and to commence, maintain or defend the Trust Estate
and/or the Plan in suits or legal proceedings;
(h) shall have the power to employ consultants, accountants,
depositories, agents and legal counsel on behalf of the Trust Estate
and/or the Plan;
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(i) shall have the power to open, maintain and close any bank
account(s), in any federally insured financial institution permitted by
law, in the name of the Plan, the Employer or, to the extent
permitted by law, any nominee or agent of the Plan or the
Employer;
U) shall have the power to charge to, and pay from, the Trust Estate:
(i) any taxes levied or assessed upon or in respect to the assets of
the Trust Estate, (ii) any commissions and similar expenses with
respect to the assets of the Trust Estate, (iii) the reasonable
compensation of any third-party manager or administrator utilized
by the Employer in the management or administration of the Trust
Estate and/or the Plan, and (iv) the reasonable expenses of such
third-party manager or administrator or the Employer incurred in
connection with Trust Estate and/or Plan management or
administration (including, but not limited to, legal, accounting,
investment and custodial services);
(k) shall pay benefits to Plan Participants and their beneficiaries, in
cash or in kind or partly in each, in accordance with the terms
hereof;
(I) shall have the power: (i) to retain any funds or property subject to
any dispute, without liability to pay interest, (ii) to decline to make
payment or delivery of the funds or property until final adjudication
of the dispute is made by a court of competent jurisdiction, and (iii)
to charge an Investment Account with the Employer's legal
expenses and costs incurred due to a dispute concerning that
Investment Account;
(m) shall have the power to make Participant loans, as described in
Section 15;
(n) shall administer the Plan and the Trust Estate as described in
Sections 6, 15 and this Section 8;
(o) shall have the discretion: (i) to make limited investment options
available to the Participant and to change those investment options
from time to time, (ii) to eliminate an investment option, even if all or
a portion of a Participant's Investment Account is already invested
therein, with the result that such amount must be reinvested in
another, permitted, investment), and (iii) to invest the amounts in a
Participant's Investment Account either as requested by the
Participant, or as otherwise determined by the Employer;
(p) shall not be required to invest the amounts in the Trust Estate; however, it is the
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amounts in a manner intended to increase the same, and the net interest,
accumulation and increments thereon shall be credited to, and held
in, the Trust Estate for the exclusive benefit of the Participants and
their beneficiaries; the Employer shall not be responsible for any
loss due to the investment or failure of investment of such assets;
nor shall the Employer be required to replace any loss whatsoever
which may result from said investments; and
(q) shall have the power to make, execute, acknowledge and deliver
any and all instruments necessary or proper for the
accomplishment of, and to do any and all other acts that it may
deem necessary or appropriate to carry out, the foregoing powers.
SECTION 9: Plan Benefits. Deferred Compensation benefits are payable on the
happening of any of the following events:
(a) Normal Retirement of a Participant;
(b) Late Retirement of a Participant;
(c) Termination of Service of a Participant; or
(d) Death of a Participant who dies either before or after Deferred
Compensation payments commence, and before the entire amount
of his Investment Account is paid.
SECTION 10: Distribution of Benefits.
10.1 Termination of Emolovment by Retirement. The Participant is
eligible to receive distributions of benefits, with respect to retirement, after
the Participant has met the requirements for Normal Retirement and has
retired from service with the Employer. The Participant may submit to the
Employer an application for distribution of benefits under the Plan as early
as the date he notifies the Employer of his intended retirement and as late
as thirty (30) days following the actual date of termination of employment
due to retirement. Pursuant to such application, the Participant shall elect
one of the benefits described below, expressed in terms of both payment
option and commencement date option. Except as otherwise provided in
Subsection 10.1.3, the commencement date portion of such election shall
become irrevocable upon the lapse of the thirtieth (30th) day following
termination of employment with the Employer due to retirement.
10.1.1 Options.
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Following the Participant's termination of employment due to retirement
and the receipt of such application, the Employer shall pay to the
Participant one of the following benefits (expressed in terms of both
payment option and commencement date option) as elected by the
Participant:
A. PAYMENT OPTION -
(1) Options:
(a) Consecutive equal monthly payments over a period of
36 months to 180 months, as determined by the
Participant; provided, however, that any such period
may not extend beyond the life expectancy of the
Participant or the joint life and last survivor
expectancy of the Participant and the Participant's
Category A Beneficiary.
(b) Consecutive equal monthly payments for the life of
the Participant or for the lives of the Participant and
his Category A Beneficiary.
(c) Annuity payments pursuant to an annuity that is
offered by a Plan provider providing services to the
Employer and that is structured so as to comply with
all applicable provisions of the Internal Revenue
Code, the Treasury Regulations and all other
applicable laws.
(d) A single payment equal to the balance of the
Participant's Investment Account.
(e) A single lump-sum payment in an amount to be
determined by the Participant, with the remainder of
the Participant's Investment Account to be paid under
payment option (a), payment option (b), or payment
option (c) above.
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(2) Modified or Delayed Election:
The Participant may modify his payment option election at
any time until the date which is thirty (30) days before the
commencement date as finally determined pursuant to
Subsection 10.1.1, 10.1.2, or 10.1.3, as applicable (the
"Final Commencement Date"). Or, the Participant may
choose to defer making a payment option election
altogether, until a date as late as thirty (30) days before the
Final Commencement Date. Thirty (30) days before the
Final Commencement Date, the most recent payment option
election on file with the Employer shall become irrevocable.
If there is no payment option election on file with the
Employer at that time, the Employer shall pay the sum in the
Participant's Investment Account to the Participant according
to payment option (d) above, on the Final Commencement
Date.
B. COMMENCEMENT DATE OPTION -
(a) The first day of the third calendar month following the
month in which termination of employment occurs, or
(b) The first day of a later month as designated by the
Participant.
In the case of payment option (e) above, the lump sum must be
paid on the same date that the first payment over time is paid.
C. LIMITATIONS -
The foregoing options are limited by, and these payments shall be made
subject to, the provisions of Sections 10.3, 10.5, 10.6 and 10. 7 hereof.
The total amount of any benefits paid pursuant to payment options (a)
through (e) above shall not exceed the sum of the amounts deferred by
the Participant, as adjusted for any earnings or losses thereon.
10.1.2 Default Election.
Should the Participant fail to elect one of the benefits hereunder by way of an
application for retirement benefits filed with the Employer within thirty (30) days after
retirement, the Employer shall pay the sum in the Participant's Investment Account
according to the "Benefit A" election previously made
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pursuant to either the Participation Agreement or a modification thereof.
However, if there is no such previous election, then the Employer shall
pay the sum in the Participant's Investment Account according to payment
option (d) above on the Required Beginning Date.
10.1.3 One-Time Change in Commencement Date Election.
Notwithstanding anything to the contrary in this Section 10.1, the
Participant may, at any time after the first day of the third calendar month
following the month in which termination of employment occurs, and at
least thirty (30) days before the scheduled commencement date, pursuant
to either Subsection 10.1.1 or the Benefit "A" election on file with the
Employer as of the date of retirement, elect to further defer the
commencement date, to a date later than that previously elected (but not
later than the Required Beginning Date). The Participant may exercise his
or her right, under this Subsection 10.1.3, to file a changed
commencement date election only once.
10.2 Termination of Employment Prior to Retirement. Following the
Termination of Service of a Participant, the Employer shall pay to the
Participant the benefit elected by the Participant pursuant to either (a)
"Benefit B" of the Participation Agreement submitted by the Participant at
the time of election to participate in the Plan or (b) a later written election
delivered to the Employer within thirty (30) days following Termination of
Service. Except as otherwise provided in Subsection 10.2.3 below, the
commencement date portion of the latest such election filed with the
Employer shall become irrevocable upon the lapse of the thirtieth (30th)
day following Termination of Service.
10.2.1 Options.
A. PAYMENT OPTION -
(1) Options:
(a) Consecutive equal monthly payments over a period of
36 months to 180 months, as determined by the
Participant; provided, however, that any such period
may not extend beyond the life expectancy of the
Participant or the joint life and last survivor
expectancy of the Participant and the Participant's
Category A Beneficiary.
(b) Consecutive equal monthly payments for the life of the Participant or for the lives
of the Participant and his
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Category A Beneficiary.
(c) Annuity payments pursuant to an annuity that is
offered by a Plan provider providing services to the
Employer and that is structured so as to comply with
all applicable provisions of the Internal Revenue
Code, the Treasury Regulations and all other
applicable laws.
(d) A single payment equal to the balance of the
Participant's Investment Account.
(e) A single lump-sum payment in an amount to be
determined by the Participant, with the remainder of
the Participant's Investment Account to be paid under
payment option (a), payment option (b), or payment
option (c) above.
(2) Modified or Delayed Election:
The Participant may modify his payment option election at
any time until the date which is thirty (30) days before the
commencement date as finally determined pursuant to
Subsection 10.2.1, 10.2.2, or 10.2.3, as applicable (the
"Final Commencement Date"). Or, the Participant may
choose to defer making a payment option election
altogether, until a date as late as thirty (30) days before the
Final Commencement Date. Thirty (30) days before the
Final Commencement Date, the most recent payment option
election on file with the Employer shall become irrevocable.
If there is no payment option election on file with the
Employer at that time, the Employer shall pay the sum in the
Participant's Investment Account to the Participant according
to payment option (d) above, on the Final Commencement
Date.
B. COMMENCEMENT DATE OPTION -
(a) The first day of the third calendar month following the
month in which termination of employment occurs, or
(b) The first day of a later month as designated by the
Participant.
In the case of payment option (e) above, the lump sum must be
paid on the same date that the first payment over time is paid.
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C. LIMITATIONS -
The foregoing options are limited by, and these payments shall be made
subject to, the provisions of Sections 10.3, 10.5, 10.6 and 10. 7 hereof.
The total amount of any benefits paid pursuant to payment options (a)
through (e) above shall not exceed the sum of the amounts deferred by
the Participant, as adjusted for any earnings or losses thereon.
10.2.2 Default Election.
Should the Participant fail to elect one of the benefits hereunder either
pursuant to the "Benefit B" provisions of the Participation Agreement or
pursuant to a subsequent written election delivered to the Employer within
thirty (30) days after Termination of Service, then the Employer shall pay
the total amount in the Participant's Investment Account to the Participant
in a single lump sum on the first day of the third calendar month following
the month in which Termination of Service occurs. In no event, however,
shall such payment occur later than the Required Beginning Date.
10.2.3 One-Time Change in Commencement Date Election.
Notwithstanding anything to the contrary in this Section 10.2, the
Participant may, at any time after the first day of the third calendar month
following the month in which Termination of Service occurs, and at least
thirty (30) days before the scheduled commencement date, pursuant to
either Subsection 10.2.1 or the Benefit "B" election on file with the
Employer as of the date of Termination of Service, elect to further defer
the commencement date, to a date later than that previously elected (but
not later than the Required Beginning Date). The Participant may
exercise his or her right, under this Subsection 10.2.3, to file a changed
commencement date election only once.
10.3 Required Beginning Date of Distributions. Notwithstanding any
other provision of the Plan, payments under Sections 10.1 and 10.2 shall
begin no later than the later of:
(a) April 1 of the calendar year following the calendar year in which the
Employee attains age 70%; or
(b) April 1 of the calendar year following the calendar year in which the
Employee retires.
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10.4 Acceleration of Payment of Small Investment Accounts.
Notwithstanding the provisions of Sections 10.1 and 10.2 above, a
Participant may elect to receive the full balance of his or her Investment
A~count at any time, but only on the following conditions:
(a) the balance of the Investment Account does not exceed the
maximum amount permitted under Internal Revenue Code section
457(e)(9) (or a successor provision) at the time of the withdrawal;
(b) no amount has been deferred under the Plan with respect to the
Participant during the two-year period ending on the date of the
distribution; and
(c) there has been no prior distribution to the Participant under this
Section 10.4 (i.e., the acceleration right can be exercised only
once).
Any distribution under this Section 10.4 shall be deemed a termination of
participation in the Plan. The (former) Participant may re-elect to
participate in the Plan, pursuant to Section 4.1, after a lapse of at least
three (3) months after the date of distribution under this Section 10.4.
10.5 Lifetime Distribution Requirements. The distributions under this
Plan must be made primarily for the benefit of the Participant and the
schedule elected by the Participant for payment of benefits under Sections
10.1 and 10.2 of the Plan must be such that benefits payable to a
beneficiary are not more than incidental, according to the applicable
Treasury Regulations. Payments under those sections shall be distributed
over the life of the Participant or over the lives of the Participant and a
Category A Beneficiary (or over a period not extending beyond the life
expectancy of the Participant or the joint life and last survivor expectancy
of the Participant and a Category A Beneficiary), in accordance with the
Treasury Regulations under Internal Revenue Code section 401 (a)(9).
In addition, as required by Internal Revenue Code section 401 (a)(9)(G),
and except as otherwise provided in Section 10.7 below, all distributions
shall be made in accordance with the incidental death benefit
requirements of Internal Revenue Code section 401 (a). As more fully
described in the applicable Treasury Regulations, as promulgated
pursuant to the authority of Internal Revenue Code section 401 (a)(9), this
means that distributions must be made in accordance with a certain
formula designed to ensure that the entire Investment Account of the
Participant is distributed over a period of time not to exceed the joint life
and last survivor expectancy of the Participant and a Category A
Beneficiary who is not more than ten years younger than the Participant.
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10.6 Death of Participant. In the event of the death of the Participant,
either before or after termination of employment (by retirement or
otherwise), and before the entire amount of his Investment Account has
been distributed, the Employer shall distribute the amount then remaining
in the Participant's Investment Account pursuant to Subsections 10.6.1
through 10.6.3 below.
10.6.1 When Participant Dies on or after the Required Beginning Date and
after Distributions Have Begun. If distributions have already begun
during a Participant's lifetime, and the Participant dies on or after
the Required Beginning Date and before the entire amount of his
Investment Account has been distributed, then the remaining
portion of the Participant's Investment Account shall be distributed,
as elected by the Participant, pursuant to either the "Benefit C"
provisions of the Participation Agreement or a later written election
delivered to the Employer before the death of the Participant,
unless the Participant's election would permit distributions to be
made less rapidly after death than under the method of distribution
being used as of the date of death. In order 'to comply with Internal
Revenue Code section 401(a)(9), distributions (under this
Subsection 10.6.1) after death must be made at least as rapidly as
under the method of distribution being used as of the date of death.
10.6.2 When Participant Dies either before the Required Beginning Date
or before Distributions Have Begun. If a Participant dies either
before the Required Beginning Date or before distribution of his
Investment Account has begun, and, if any portion of the
Investment Account is payable to (or for the benefit of) a Category
A or B Beneficiary, then the Employer shall pay such portion as
follows -
A. CATEGORY A BENEFICIARIES -
(1) Category A Beneficiary Other than Surviving Spouse:
If the Category A Beneficiary is other than the surviving
spouse, the portion of the Investment Account payable to
such beneficiary shall be distributed according to one of the
following options, expressed in terms of both payment option
and commencement date option:
PAYMENT OPTION:
(a) consecutive equal monthly payments over a period of 36 months to 60 months
(but not
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exceeding the life expectancy of the Category A
Beneficiary);
(b) annuity payments pursuant to an annuity that is
offered by a Plan provider providing services to
the Employer and that is structured so as to
comply with all applicable provisions of the
Internal Revenue Code, the Treasury
Regulations and all other applicable laws;
(c) a single lump-sum payment; or
(d) a single lump-sum payment, with the
remainder of the portion of the Investment
Account payable to such beneficiary to be paid
under either payment option (a) or payment
option (b) above.
COMMENCEMENT DATE OPTION:
Such distributions shall begin on the date designated
by either the Participant or, if permitted by the
Participant, the Category A Beneficiary, but in no
event later than December 31 of the calendar year
immediately following the calendar year in which the
Participant dies. If the Category A Beneficiary
submits a permitted benefits election, the election
must be filed with the Employer within ninety (90)
days after the Participant's death, and the earliest
commencement date shall be the first day of the fifth
calendar month following the month in which the
death of the Participant occurred.
(2) Surviving Spouse:
If the Category A Beneficiary is the surviving spouse of the
Participant, the portion of the Investment Account payable to
the surviving spouse shall be distributed according to one of
the following options, expressed in terms of both payment
option and commencement date option:
PAYMENT OPTION:
(a) consecutive equal monthly payments over a
period not to extend beyond the life expectancy
of the surviving spouse;
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(b) annuity payments pursuant to an annuity that is
offered by a Plan provider providing services to
the Employer and that is structured so as to
comply with all applicable provisions of the
Internal Revenue Code, the Treasury
Regulations and all other applicable laws;
(c) a single lump-sum payment; or
(d) a single lump-sum payment, with the
remainder of the portion of the Investment
Account payable to the surviving spouse to be
paid under either payment option (a) or
payment option (b) above.
COMMENCEMENT DATE OPTION:
Such distributions shall begin on the date designated
by either the Participant or, if permitted by the
Participant, the surviving spouse, but in no event later
than the later of (i) December 31 of the calendar year
immediately following the calendar year in which the
Participant dies, and (ii) December 31 of the calendar
year in which the Participant would have attained age
70%. Notwithstanding the foregoing, however, if as of
the date of the Participant's death, both the surviving
spouse and another are Category A Beneficiaries,
then distributions shall begin on or before December
31 of the calendar year immediately following the
calendar year in which the Participant dies. If the
surviving spouse submits a permitted benefits
election, the election must be filed with the Employer
within ninety (90) days after the Participant's death,
and the earliest commencement date shall be the first
day of the fifth calendar month following the month in
which the death of the Participant occurred.
(3) Elections:
PARTICIPANT'S ELECTION:
All elections (as to both payment option and commencement date) to be made under
this Subsection 10.6.2 shall be made by the Participant
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pursuant to either the "Benefit C" provisions of the
Participation Agreement or a later written election
delivered to the Employer before the death of the
Participant. Notwithstanding the foregoing, however,
the Participant, in the Participation Agreement or such
later written election, may specify that, following the
death of the Participant, the Category A Beneficiary
may elect, subject to the foregoing limitations, the
form of payments and the commencement date of
distributions.
BENEFICIARY'S ELECTION:
Any permitted beneficiary election must be in the form
of a written election filed with the Employer no later
than ninety (90) days following the date of death of
the Participant. In the absence of any such timely
election, the portion of the Investment Account
payable to such Category A Beneficiary shall be
distributed to him in a lump sum on the first day of the
fifth calendar month following the month in which the
death of the Participant occurs. The commencement
date portion of the Beneficiary's election shall become
irrevocable on the date ninety (90) days after the
Participant's death. However, the Beneficiary may
modify his payment option election up to thirty (30)
days before the previously elected commencement
date.
(4) Death of a Category A Beneficiary:
If a Category A Beneficiary dies within six months of the date of the Participant's death
and before the entire portion of the Investment Account allocated to him has been paid
pursuant to this Subsection 10.6.2, then the remainder of such portion shall be paid to
the contingent beneficiary, if any, designated by the Participant in either the
Participation Agreement or a later written election delivered to the Employer before the
Participant's death. If there is no such contingent beneficiary, or if the Category A
Beneficiary dies more than six months after the date of the Participant's death and
before the entire portion of the Investment Account allocated to him has been paid
pursuant to this Subsection 10.6.2, then the remainder of such portion shall be paid to
the estate of the deceased Category A Beneficiary. Any payment under this paragraph
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shall be made in a lump sum on the first day of the third
calendar month following the month in which the death of the
Category A Beneficiary occurs.
B. CATEGORY B BENEFICIARIES -
If the beneficiary is a Category B Beneficiary, which is a validly
existing legal entity (such as a charitable foundation or the estate of
the Participant), the portion of the Investment Account payable to
such beneficiary shall be distributed as a lump sum on the first day
of the third calendar month following the month in which the death
of the Participant occurs.
C. TRUST AS BENEFICIARY -
The Participant may designate a trust as his beneficiary under the
Plan. However, in that case, any beneficiary of the trust, who is
eligible to receive trust distributions on account of payments from
the Plan, shall be deemed to be a Category A Beneficiary under the
Plan. (For example, if the Participant designates as his beneficiary
a trust of which his surviving spouse is the life beneficiary, and
elects lifetime payments, then for the purpose of this Subsection
10.6.2, the surviving spouse shall be deemed to be the Category A
Beneficiary, and the terms of this subsection shall be applied by
basing distributions on the life expectancy of the surviving spouse.)
Notwithstanding the foregoing, however, a trust may only be
designated as a beneficiary (and the beneficiary of the trust will
only be deemed to be a Category A Beneficiary) if, as of the later of
the date that the Participant submits to the Employer the election in
which the trust is named as a beneficiary or the Required Beginning
Date, and as of all subsequent periods during which the trust is
named as a beneficiary of the Plan, all of the following conditions
are met: (1) the trust is a valid trust under state law, (2) the trust is
irrevocable, (3) the beneficiaries of the trust can be identified from
the trust instrument, and (4) a copy of the trust instrument has been
provided to the Employer.
10.6.3 Default Provision. If, upon the death of the Participant, there exists
neither a Category A Beneficiary nor a Category B Beneficiary to
receive any portion of the Participant's Investment Account, then
the Employer shall, on the first day of the third calendar month
following the month in which the death of the Participant occurs,
pay that portion in a lump sum to the estate of the Participant.
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10. 7 General Distribution Requirements and Provisions.
Notwithstanding any other provision of this Plan to the contrary, all
distributions under this Plan shall be made in accordance with the
provisions of this Section 10.7 and, to the extent of any inconsistency, the
provisions of this Section 10. 7 shall control.
10. 7 .1 Calculation of Life Expectancy. For the purpose of ascertaining
the relevant distribution periods and amounts hereunder, life
expectancy, Where applicable, shall not be recalculated
annually. Rather, once life expectancy has been initially
calculated, it shall thereafter be reduced by one year for each
year that passes. Notwithstanding the foregoing, however, with
respect to permitted annuity distributions, life expectancy may
be calculated in any manner permitted by the Internal Revenue
Code, the Treasury Regulations, and all other applicable tax
laws.
10. 7 .2 Additional Distribution Requirements. Any payments payable
over a period of more than one year shall only be made in
substantially non-increasing amounts, paid not less frequently
than annually.
10.7.3 Employer Discretion to Accelerate Distributions. The Employer,
in its sole and absolute discretion, shall have the right, at any
time when subparagraphs (a)-(c) of Section 10.4 are satisfied,
to distribute the entire balance of the Participant's Investment
Account to the Participant. In addition, after distributions have
begun under Sections 10.1, 10.2 or 10.6, if the balance of the
Participant's Investment Account, or any portion thereof payable
to a beneficiary, should be less than or equal to the amount
provided in Internal Revenue Code section 457(e)(9) (or a
successor provision), the Employer, in its sole and absolute
discretion and for administrative ease, may distribute such
balance or such portion in a lump sum on the date of the first
regularly scheduled payment of the next calendar year.
Moreover, at any time after distributions have begun under
Sections 10.1, 10.2 or 10.6, if the Employer determines that the
payment schedule as elected by the Participant, or by the
Category A Beneficiary, if applicable, is such that monthly
payments would be in an amount less than $200.00, then the
Employer, in its sole and absolute discretion, may make
distributions in the amount of $200.00 per month, until
exhaustion of the Investment Account or portion thereof in
question, irrespective of the fact that this would have the effect
of shortening the distribution period originally elected by the
Participant, or the Category A Beneficiary, if applicable.
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10. 7.4 Statutory Compliance. All distributions under this Plan shall be
made in accordance with the Treasury Regulations under
Internal Revenue Code section 401 (a)(9), including both the
minimum distribution requirements of Treasury Regulation
section 1.401 (a)(9)-1, and, (in accordance with Internal
Revenue Code section 401 (a)(9)(G)) the minimum distribution
incidental benefit requirements of Treasury Regulation section
1.401 (a)(9)-2. To the extent that any distribution option
hereunder is inconsistent with Internal Revenue Code section
401 (a)(9), the provisions of Internal Revenue Code section
401 (a)(9) shall control and the Plan shall be administered so as
to conform with section 401 (a)(9). Notwithstanding the
foregoing, ·however, if, pursuant to Internal Revenue Code
section 457(d)(2)(B)(i)(I), Treasury Regulations (the
"Superseding Regulations") should be issued which require
more rapid distributions than those required by Internal
Revenue Code section 401 (a)(9)(G) and the Treasury
Regulations under section 401 (a)(9)(G), then the distributions
under this Plan shall be made pursuant to such Superseding
Regulations, to the extent inconsistent with section 401 (a)(9)
and the Treasury Regulations under that section.
10.7.5 Cost-of-Living Adjustment of Periodic Payments. The
Participant or a Category A Beneficiary, at the time of submitting
a distribution option election permitted under Section 10.1,
Section 10.2, or Section 10.6 of the Plan, may elect that any
distributions made pursuant to a periodic payment option may
be made not in equal amounts, but rather in increasing
amounts, based on increases in the cost-of-living. The formula
for determining cost-of-living increases shall be established by
the Employer from time to time.
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SECTION 11: Emergency Withdrawals. In the event of an Unforeseeable
Emergency, to be determined by the Employer in its sole discretion, the Employer may
pay to the Participant all or any portion of the amount in such Participant's Investment
Account, as of the month end following the date when such determination is made.
Payment may not be made to the extent that the hardship resulting from the
Unforeseeable Emergency is or may be relieved (a) through reimbursement or
compensation by insurance or otherwise, (b) by liquidation of the Participant's assets, to
the extent the liquidation of such assets would not itself cause severe financial hardship,
or (c) by cessation of deferrals under the Plan. The amount that may be paid out is
limited to the amount reasonably necessary to alleviate the Unforeseeable Emergency
need and, in most cases, will be paid only in a single lump sum. In the event of an
Unforeseeable Emergency which causes the initial lump sum payment to be inadequate
to meet the Unforeseeable Emergency need, the Participant (or former Participant) may
apply for the payment of subsequent lump-sum amounts, up to the entire amount in the
Participant's (or former Participant's) Investment Account.
Any distribution under this section shall be deemed a termination of the election
to defer compensation under Section 4.4 above, and no further deferral of
compensation shall be made unless the Participant subsequently re-elects to defer
compensation under the Plan, as provided in Section 4.4. Moreover, any distribution of
100% of the Participant's Investment Account under this section shall be deemed a
revocation of the Participant's agreement to participate in the Plan. The (former)
Participant may re-elect to participate in the Plan, pursuant to Section 4.1, after a lapse
of not less than three (3) months.
SECTION 12: Assignments and Transfers.
12.1. Consistent with Section 7 above, no one, including the Participant, his
beneficiary or designee, or any other person, shall have any right to
commute, sell, assign, transfer, or otherwise convey the right to receive
any payments hereunder, which payments and right thereto are expressly
declared to be non-assignable and non-transferable. The Employer shall
have no liability to either the Participant or a purported assignee or
transferee, on account of any attempted assignment or transfer. In
addition, except to the extent otherwise provided by law, no interest of the
Participant in the Plan shall be subject to attachment, garnishment or
execution, or be transferable by operation of law, whether due to
bankruptcy, insolvency, liquidation for the benefit of creditors, or any other
cause.
12.2 Notwithstanding the foregoing, however, the amounts deferred by a former
Participant may be transferred to another Internal Revenue Code section
457 eligible deferred compensation plan of which the former Participant
has become a participant, if the following conditions are met:
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(1) the plan to which the former Participant wishes to transfer
amounts deferred is located within the State of California;
(2) the plan receiving such amounts provides for the acceptance
of such amounts;
(3) the employer accepting the transfer funds gives written
notice of its agreement to accept such transfer and assumes
liability therefor; and
(4) the Participant provides a written release to the Employer
releasing the Employer from any claim or liability under the
Plan after the date such transfer of funds occurs.
If a Participant separates from service in order to accept employment with
another entity which permits the Participant to participate in a section 457
eligible deferred compensation plan, and if the four conditions enumerated
above are met, payout of benefits will not commence upon separation
from service, notwithstanding any other provision of the Plan, and
amounts previously deferred will automatically be transferred to that other
entity's section 457 eligible deferred compensation plan, to be credited to
the Participant's account.
12.3 A Participant, who was formerly employed by another public agency
located within the State of California, may transfer, to the Plan, funds from
an Internal Revenue Code section 457 eligible deferred compensation
plan maintained by that former employer, if that eligible deferred
compensation plan permits transfers to other section 457 eligible deferred
compensation plans and if the Participant complies with all applicable
terms and conditions of both the transferring plan and this Plan in
effectuating the transfer. As a condition to transfer to this Plan, the
Employer may require that assets transferred from another plan be in the
form of cash or cash equivalents.
12.4 "12.4 Qualified Domestic Relations Order ("ODRO").
Notwithstanding any other provision of these Distribution rules to the
contrary, if a QDRO provides that a Participant's benefit is to be divided
and a portion allocated to an alternate payee under the terms of a QDRO
(such as a spouse or former spouse), of a Participant in the District's
Section 457 plan receives a distribution under the terms of a QDRO, the
spouse (or former spouse) will be treated as the distributee and taxed on
the benefits received. Distributions under the District's Section 457 plan
made to an alternate payee other than a spouse (or former spouse) under
a QDRO are taxable to the Participant." [2001 Amendment]
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SECTION 13: Notice. Any notice or other communication required or permitted
under the Plan shall be in writing, and, if directed. to the Employer (ATTN: Director of
Human Resources), shall be sent to the Employer at its principal office, and, if directed
to a Participant or a beneficiary, shall be sent to such Participant or beneficiary at his
last-known address as it appears on the Employer's records. Such notice shall be
deemed given when mailed, unless notice is given in person, in which case such notice
shall be deemed given upon receipt.
SECTION 14: Amendment or Termination of Plan. The Employer may, at any
time, terminate this Plan for all Participants. Upon such termination, the Participants in
the Plan shall be deemed to have withdrawn from the Plan as of the date of such
termination; each Participant's full Salary on a non-deferred basis will be thereupon
restored; and the Employer agrees to pay each Participant the amount of money
determined as if the Participant had terminated his employment, said payment to be
made in accordance with the provisions of Section 10.2.
The Employer may also amend the provisions of this Plan at any time; provided,
however, that no amendment shall affect the rights of the Participants or their
beneficiaries to the receipt of payment of benefits, to the extent of any compensation
already deferred at the time of the amendment, as adjusted for investment experience
prior to and subsequent to the amendment.
SECTION 15: Participant Loans. The Employer may establish a Participant loan
program on the terms and conditions set forth in this Section 15, and any additional
terms and conditions as the Employer may prescribe from time to time. If the Employer
establishes such a loan program, the Participants may apply to the Employer for loans,
to be secured by their respective Investment Accounts. In addition to such other terms
and conditions as the Employer may prescribe, the following terms and conditions shall
apply to the Participant loans.
15.1 Maximum Loan Amount. The outstanding aggregate balance of all loans
made to the Participant under the Plan shall not exceed the lesser of:
(a) fifty thousand dollars ($50,000), reduced by the excess (if
any) of-
(i) the highest outstanding balance of loans from the Plan during
the one-year period ending on the day before the date on which such loan
was made, over (ii) the outstanding balance of loans from the Plan on the
date on which such loan was made, or
(b) one-half of the present value of the nonforfeitable accrued
benefit of the Participant under the Plan.
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(For the purpose of determining the maximum loan amount under this Section
15.1, all deferred compensation plans of the Employer shall be treated as one
plan.)
15.2 Maximum Loan Term. Except as otherwise provided in this Section 15,
each loan shall be repaid in full within five (5) years. However, the five-year
limitation shall not apply if the purpose of the loan is to enable the Participant to
acquire a dwelling unit which, within a reasonable period of time (to be
determined by the Employer at the time the loan is made), is to be used as the
Participant's principal residence.
15.3 Promissorv Note. The loan shall be evidenced by an interest-bearing
promissory note, payable to the Employer. The promissory note shall be fully
amortized, with payments to be made at such intervals as provided therein,
which shall be no less frequently than quarterly. The promissory note shall
contain terms and conditions as are required by this Section 15, and such
additional terms and conditions as are established by the Employer from time to
time.
15.4 Collateral/Security. The loan shall be secured by the Participant's
assignment, to the Employer, of the Participant's right, title and interest in and to
his or her Investment Account, or such portion thereof as the Employer, in its
sole and absolute discretion, determines to be adequate security under the
circumstances.
15.5. Distributions. No distribution of any portion of a Participant's Investment
Account shall be made to any Participant, or to any beneficiary of the Participant,
until such time as all Participant loans and accrued interest thereon are repaid in
full. Notwithstanding the foregoing, however, the Employer, in its sole discretion,
may permit an emergency withdrawal, under the terms and conditions described
in Section 11 above, provided such emergency withdrawal shall not cause the
then outstanding balance of the Participant's loan to exceed the maximum loan
amount described in Section 15.1 above.
15.6 Repayment. Loan repayments shall be made by payroll deduction, or when
repayment cannot be made by payroll deduction, then by check. Notwithstanding any
provision of Section 15.2 to the contrary, the outstanding balance of all loans to a
Participant shall immediately become due and payable in full on Termination of Service
for any reason. If the loan is not paid in full within thirty (30) days of Termination of
Service, the unpaid balance shall be deducted from any Plan benefit payable to the
Participant or the Participant's beneficiary. In addition, in the event of default in
repayment of a loan, the Employer, in its sole and absolute discretion, may deem the
loan to be immediately due and payable in full, in which case the Employer may pursue
any and all remedies available at law or in equity, and may liquidate the security and
apply it to satisfy the then outstanding balance under the loan, treat the then
outstanding balance as a distribution to the
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Participant, and reduce the amount of the Participant's Investment Account by
such amount.
15.7 Participant Loan Account. Notwithstanding any provision of Section 6.3 to
the contrary, upon delivery, to the Employer, of the executed promissory note
and assignment of interest in the Participant's Investment Account, the Employer
shall establish a loan account for the Participant (the "Participant's Loan
Account"), and transfer from the Participant's Investment Account to the
Participant's Loan Account an amount equal to the amount of the Participant's
loan. The assets of the Participant's Loan Account may be invested and
reinvested only in promissory notes payable to the Employer by the Participant,
or in cash. The Employer shall not be liable for any loss resulting from the
Participant's breach of his payment obligations under such promissory note(s).
Uninvested cash balances in a Participant's Loan Account shall not bear interest.
Repayments of principal and interest shall be transferred to the Participant's
Investment Account and invested as provided in Sections 6 and 8. The amount
of the Participant's Loan Account shall be reduced by the amount of each such
transfer.
15.8 Application Procedures. Loan Requirements. Terms and Conditions. and
Accounting Procedures. From time to time, the Employer shall establish loan
application procedures, loan requirements, loan terms and conditions, and loan
accounting procedures. The application procedures, loan requirements, terms
and conditions, and accounting procedures shall be uniform and non-
discriminatory. From time to time, the Employer shall set an interest rate for new
loans, based on prevailing rates. Loans made at different times may be subject
to different interest rates, due to the difference in prevailing rates at the time.
The Employer hereby establishes, on the terms and conditions set forth above,
the Orange County Sanitation District Deferred Compensation Plan.
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