CC Resolution No. 8050
RESOIIJI'ION NO. 8050
A RESOIIJI'ION OF THE CITY romCIL OF THE CITY OF COPERI'INO
AMENDmG RESOIIJI'ION NO. 6455,
ESTABLISHING A 1JU'~ o.:::MPENSATION PIAN
THE CITY romCIL OF THE CITY OF COPERI'INO HEREBY RESOLVES '!HAT
Resolution No. 6455 is ëIIIIelJ:Ù!d per attached Exhibit "Alii
PASSED AND ADOPl'ED at a regular meetin;J of the City Council of the
City of CUpertino this 20th day of February, 1990 by the fol~owin;J vote:
Vote Members of the city Council
AYES: Goldman, KI:ß>el, Szabo, Rogers
NOES: None
ABSENT: Sorensen
ABSTAIN: None
APPROVED:
Isl Barbara A, Rogers
Mayor, City of CUpertino
ATI'FSI' :
Isl Roberta A. Wolfe
Dep.lty City Clerk
RESOIIJI'ION NO. 8050
A RESOIIJI'ION OF THE CITY CXJUNCIL OF THE CITY OF aJPERI'INO
AMENDING RESOIIJI'ION NO. 6455,
ESTABLISHING A DEFERRED COMPENSATION PLAN
'!he City Council of the City of CUpertino resolves that Resolution No.
6455 is amen:led as follows:
SECI'ION 1.
NAME :
'!he name of the Plan is city of CUDertino Deferred
Comcensation Plan hereinafter referred to as the "Plan".
SECI'ION 2.
RJRR:SE:
'!he primary purpose of the Plan is to attract and hold
personnel by permittin;J them to enter into agreements with
the city of aroertino Deferred Comcensation Plan which will
provide future payments in lieu of deferred current income
upon death, disability, retirement, or other tennil1ation of
employment. '!he Plan is interx:led to qualify as an eligible
state Deferred CoI1p;nsation Plan within the meanin;J of
section 457 of the Internal Revenue Code of 1954, as amended
(hereinafter referred to as the "Code").
SECI'ION 3.
DEFINITIONS:
For the purposes of this Plan, certain words or phrases used
herein will have the followin;J meanings:
3.1 "Employer" shall mean the City of aroertino.
3.2 "Employee" shall mean a management, supervisory or
other full-tiroe or pemanent part-tiroe employee, City
Council member or city Attorney of the Employer who has
been designated by the Employer.
3.3 "Participant" shall mean an employee who has elected to
participate in the Plan. Only Wividuals who perfonn
service for the Employer may be participants.
3.4 "Participation Agreement" shall mean the agreement
executed and filed by an Employee with the Employer
pursuant to section 4, in which the Employee elects to
becane a participant in the Plan.
3.5 "Compensation" shall mean the salary of wages which
would be paid by the Employer to or for the benefit of
an employee (if they were not a Participant in the
Plan) for actual services perfonæd by the Employee.
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3.6 "Includible Compensation" shall mean compensation
received from the employer that is attributable to
services perfo:rned for the Employer and that is
includible in the Participant I s gross income for the
taxable year. Accordi.rgly I a Participant's includible
compensation for a taxable year does not include any
am:JlII'lt payable by the Employer that is excludible from
the Participant' s gross income urrjer section 457,
section 403 (b) and section 911 of the Code. A
Participant's includible compensation for a taxable
year is detennined without regard to any Cammunity
Property laws.
3.7 "Deferred Compensation" shall mean the aIOOlU1t of
Compensation which the Participant and the Employer
Imltually agree shall be deferred in accordance with the
provisions of this Plan.
3.8 "Disability" JreanS the inability of a Participant to
engage in hisjher usual occupation by reason of a
medically determinable physical or mental iJrpainrent as
detennined by the Employer on the basis of advice from
a physician or physicians.
3.9 "Nomal Retirement Age" shall mean, as to each
participant, the age designated by the Participant in
the range of ages erding with 70 l/2 years and
beginnin;J with the earliest age at which Participant
could retire with no actuarial reduction in benefits
under the retirement plan, but in any event not later
than the date or age which Participant separates from
the service of the Employer.
3.10 "Nomal Retirement" shall mean retirement from service
with the Employer which beocmes effective on the
Participant's attainment of Nomal Retirement Age.
3.11 "Early Retirement" shall mean retirement from service
with the Employer which beocmes effective on the first
day of the calen::1ar =nth after the Participant meets
the age requirements for early retirement specified in
the Employer's qualified retirement plan.
3.12 "late Retirement" shall mean retirement from service
with the Employer which beocmes effective after the
Participant has passed the Nomal Retirement Age.
3.13 "Termination of Employment" shall mean the severance of
the Participant's employment with the Employer prior to
retirement.
3.l4 Reouired Beclinnim Date: April 1st of the year
followin;J the later of attainment of age 70 1/2 or
separation from service.
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SECI'ION 4.
SECI'ION 5.
PARrICIPATION:
4.1 Each Enployee may elect to becane a Participant of the
Plan and defer payment of hisjher O:Jrpensation by
executin;J and deliveriß;J to the Enployer a written
Participation Agreement. At the Enployer's option,
there may be established one or =re ent:ry dates durin;J
the year. Deferral may not start \Jlltll the calen:1ar
=nth followin;J the =nth in which the Participation
Agreement is executed and filed with the Enployer.
4.2 '!he Participation Agreement shall state the æoount of
Compensation to be deferred ¡;xJrSUant to the Plan, which
shall not exceed the aIOOlII1ts provided in section 5.2
and 5.3 below.
4.3 A Participant may revoke hisjher Participation
Agreement by filin;J with the Enployer an executed
written notice of revocation for that portion which
they voluntarily defer. In the event such notice of
revocation is filed, it will take effect the first pay
period of the followin;J =nth. A Participant who
revokes hisjher volunta:ry deferral may not resume
volunta:ry deferrals until the next open enrollment
period. No æoounts shall be payable to an Enployee
upon revocation of hisjher Participation Agreement
UlÙess otherwise due ¡;xJrSUant to section 10.
DEFERRAL OF cx:MPENSATION:
, 5.1 For each =nth in which a Participation Agreement of an
Enployee is in effect, the Enployer shall not pay the
Enployee hisjher full compensation, but shall defer
payment of such part of hisjher Compensation as is
specified by the Enployee in the Participation
Agreement.
5.2 Except as provided in section 5.3, the maximum ancunt
that may be deferred urrjer the Plan for any taxable
year of a Participant shall not exceed the lessor of:
1. $7,500; or
2. 33 lj3 of the Participant's Includible
Compensation for the taxable year, reduced by any
æoount excludible fran the Participant' s gross
inoane for the taxable year urrjer section 403 (b)
of the COde on acx::ount of contributions made by
the Enployer. If the Enployer contributes
additional æoounts into the Plan, the maximum
æoount that may be deferred by the Participant
shall be reduced by the æoount of the Enployers
contribution.
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SECl'ION 6.
SECl'ION 7.
5.3 For arr¡ one or =re of a Participant's last three (3)
taxable years enlin;J before such Participant attains
Nomal Retirement Þqe, the maxÍ11'Ø.IIII æoount that may be
deferred urrjer the Plan for arr¡ taxable year of the
Participant shall not exceed the lesser of $15,000 or
the sum of the maxÍ11'Ø.IIII æoount that could be deferred
for such taxable year urrjer Section 5.2 above (without
regard to this section), plus so nuch of the maxÍ11'Ø.IIII
æoount that could be deferred for all prior taxable
years, beginnin;J after December 3l, 1978, un:1er section
5.2 (without regard to this Section) as has not
theretofore been deferred. In no event may the ærount
of Deferred CaI1pensation for the year exceed the total
æoount of CaI1pensation for the year. 'Ibis Section
shall be interpreted and applied consistent with
Section 457(b) (2) and (3) of the Code.
5.4 If an irxtividual is a Participant in =re than one
eligible state Deferred CaI1pensation Plan established
pursuant to section 457 of the COde, the æoount of
CaI1pensation deferred urrjer this Plan when added to the
CaI1pensation deferred all such other Plans, may not
exceed the maximum æoounts set forth in section 5.2 and
5.3 above.
AI:MINISTRATION OF THE PIAN:
6.1 '!he Enployer shall have full authority and power to
adopt the roles and regulations for the administration
of the Plan, and to interpret, amen:i, alter, and revoke
any roles and regulations so adopted.
6.2 '!he Enployer may, at its option, established one or
=re Deferred CaI1pensation Plan F\Jrds to which Deferred
CaI1pensation is credited at such times as the
CaI1pensation would have been payable to irxtividual
employees if they were not Participants in the Plan.
EARNINGS OF THE FUND:
If a furrl is established pursuant to section 6.2, and such
furrl is invested and reinvested in a manner interoed to
increase Plan assets, the net eamin;¡s of such furrl may be
accumulated and held in the furrl, provided that such assets
remain the unrestricted assets of the Enployer as set forth
in section 8 below.
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SECl'ION 8.
SECl'ION 9.
ASSEI'S OF THE PIAN:
All annmts of Cclrp3nsation deferred urrjer the Plan, all
property and rights purchased with such annmts, and all
incane attributable to such annmts, or rights shall remain
solely the property and rights of the Enployer, subject only
to the claims of the Enployer's general creditors, until
made available to the participant or other beneficia:ry. 'Ihe
obligation of the Enployer to a Participant for payment of
the Deferred Cclrp3nsation and in::rements thereon referred to
in this Plan is a contractual obligation only and
Participants shall have no preferred or specific interest by
way of trust, escrow, annuity or otherwise, in and to the
specific assets or fun:)s that may be established.
MAINI'ENANCE OF BJOK ACCXXJNl'S:
A book account shall be maintained for each Participant.
'!here shall be credited to the book account all annmts of
Compensation deferred urrjer the Plan and all incane
attributable to such annmts. '!he incane attributable to an
annmt shall mean the actual earnin:Js of the funj
established ¡;xJrSUant to section 6.l of the Plan if such a
funj is established by the Enployer, allocated on a pro rata
basis but in no event less than the earn.i.rgs that would have
been earned if the annmts deferred had been invested from
tiIne to tiIne in one or =re of the various investment
options available within the Plan.
SECl'ION lO. DISTRIIUITON OF BE!'.¡~',I.'l::;:
Distribution of benefits to each Participant shall carnrrence
not later than sixty (60) days after the erxi of the calemar
year followin;J a distribution event. '!he Participant must
elect a m:>de of distribution irrevocably not less than
thirty (30) days prior to the date on which distribution is
to oammence. In the event a distribution event occurs prior
to the date the Participant attains (or would have attained)
Nomal Retirement lv:Je the Participant may irrevocably elect,
prior to the tiIne the annmts becane payable, to defer
payment of some or all of such æoounts until such tiIne as
the Participant attains Nomal Retirement lv:Je.
10.l Retirement:
In the event of early, nomal or late retirement, the
annmt credited to the Participants's book account
shall be distributed. to them in arr¡ one or =re of the
rrethods stated in section 11.
10.2 Termination of EmPlovment:
In the event of the Participant's termination of
employment with the Enployer all annmts credited to
the Participant' s book account shall be distributed to
them in anyone or =re of the rrethods as stated in
section l1.
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SECI'ION 11
lO.3 Disabilitv:
In the event of termination of enployment by reason of
disability distribution of all amamts in the
Participant's book account shall be distributed to them
in arr¡ one or =re of the methods as stated in section
11.
10.4 ~:
In the event of the death of the Participant prior to
the cx:mnencement of distribution, all aIIPUI'lts credited
to hisjher book account shall be distributed to the
name beneficia:ry(ies) or estate. In the event death,
beneficia:ry may, at that time, elect distribution by
all methods which were available to Participant. '!he
only exception is that a non-spousal beneficia:ry IlU.lSt
take distribution over a period not to exceed fifteen
(15) years.
ME'IHOD OF DISTRIIUI'ION:
11.1 All funds credited to a Participant's book account
shall be distributed to them or their beneficia:ry in
the case of Death Benefits by arr¡ one or =re of the
followin;J methods:
l1.la. In a lUlTp sum.
11.1b. In monthly, quarterly, semi-annual or annual
installments for a fixed number of years, not
to exceed the life expectancy of the
Participant, or Participant and hisjher spouse.
Life expectancy shall be deteDnined by the
furxling agerq based on the date the initial
distribution shall begin.
11.1c. A life annuity purchased by the Enployer.
11.2 Distribution fran this Plan must be made primarily for
the benefit of Participants. Mr¡ payment fonn
specified above must be such that benefits payable to a
Beneficia:ry are not =re than incidental. Benefits
payable to a Beneficia:ry shall be incidental if
distributions to the participant are in a=rdance with
tables to be issued by the Internal Revenue Service and
are at least as rapid as these required by section
40l(a) (9) (G) of the Internal Revenue COde of 1986
(re1atin;J to incidental death benefits)
11.3 Upon request of a Participant, the Enployer may allow
canunencement of distribution of the Participant' s book
account to be delayed not later than sixty (60) days
after the en:l of the calemar year in which the
Participant retires.
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SECTION 12. MINIMUM DISI'RIBJl'IONS:
12.l Minimum Distriliutions: Notwithstandin;J arr¡ provisions
to the contrazy, this Plan provides that the entire
interest of the participant be distribrt:ed begÍl'1r1in;J no
later than the Participant's Required BegÍl'1r1in;J Date.
Beginnin;J with the calerdar year in which the
Participant attains age 70 1/2 (or separates fran
service, whichever is later), and for each calerdar
year thereafter, distribution durin;J such calerdar year
fran the Participant's ao<:x)Imt shall be in an anount
not less than that based on the followin;J formula:
B
= MINIMUM DISTRIWl'ION
y
x
For purposes of the preœdin;J fODlUla, "B" is equal to the
value of the Account on December 31 of the preœdin:¡-
calerdar year (assuming an April 1 initial payment), "Y" is
equal to the life expectancy of the Participant (or the
joint life expectancy of the Participant and hisjher
Benefici;ny) based on his birthday (or their birthdays) in
the 70-l/2 calerdar year, and "X" is the number of calerdar
years that have erx:ied since the participant attained age
70-1/2 (includin:.J the 70-1/2 calerdar year) .
For purposes of this section, the followin;J rules shall
apply when det.erminirY;J the mi:niJm.nn distribution:
(i) the IIIlIUlTLIIII distriliution to be made with
respect to the 70-1/2 calerdar year may be
delayed until no later than April 1 of the
followin;J calerdar year;
(H) if, pursuant to clause (i), all or part of a
miniIm.nn distribution is delayed until after
December 31 of the 70-1/2 calerdar year, the
value of "B" for the calerdar year followin;J
the 70-1/2 calerdar year shall be reduced by
the anount of such delayed distribution;
(Hi) the life expectancy of a Benefici;ny may be
used only if the interest of such person is
payable on account of the death of the
Participant (Le. such person is a prilrary
benefici;ny);
(iv) if there is =re than one prilrary benefici;ny,
the life expectancy of the oldest prilrary
benefici;ny shall be used;
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(v) (A) except as provided in (B) and (C), prima:ry
beneficiaries (and life expectancy) shall be
detennined as of the Required Beginnin;J Date of
the Participant,
(B) with respect to the 70-1/2 calerrlar year,
it is pennissible to use the life expectancy of
arr¡ beneficiary designated durin;J such year or
at arr¡time prior to the Participant' s Required
Beginnin;J Date, and
(C) if a prima:ry beneficia:ry is added or
chan3'ed after the Required Beginnin;J Date of
the Participant, the life expectancy of the ner,.¡
prima:ry beneficiary shall be substituted for
all subsequent calemar years if the life
expectancy of such new beneficiary (detennined
as of the Required Beginnin;J Date) was shorter
than the life expectancy of the current prima:ry
beneficiary (detennined as of the Required
Beginnin;J Date);
12.2 Time of Pavment: Participants who attain age 70-l/2
who are not workin;J have until the followin;J April 1st
to take the initial mininum payment. Subsequent
mininum payments must continue annually, the most
llmnediate of those bein;J no later than 12/31 of the
same year in which the first minimum payment was made
(and eve:ry 12/31 thereafter) .
12.3 Participant Elections: Prior to the date the first
payment is due, Participants must choose between sin;Jle
or joint life expectancy. If joint life expectancy is
elected, the participant must designate the
beneficiary, and provide the beneficiary's birthdate.
l2.4 Other Reauirements: No payment option may be selected
by a participant or beneficia:ry under section 12 unless
it shall also satisfy the Minimum Distribution
Incidental Benefit (M!)IB) requirements of section
1.401(a) (9)-2 of the Income Tax Regulations.
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SECl'ION 13. ~CY wrmmAWAlS:
If a Participant is faced with all e..e:go..n::y, the Participant
may a¡:ply to the Enployer for withdrawal frail the Plan prior
to retirement or other tezmination of the Participant's
service with the Enployer. SUd1 withdrawals shall be
permitted, in the Enployer's discretion, only in
circumstanceS of severe emeJ:gencies whim are beyoni the
Participant's control, which would cause the Participant
great finan::ia1 hardship if early withdrawal were not
peDlÚ.tted and which are othexwise within the meanin;J of the
term "unforE!f'~~hle emeJ:gency" as defined in section 457(b)
(5) of the COde, and as interpreted by such regulations as
may be prcm1l.gated by the Secreta:ry of the Treasu:ry.
SECTION 14. PlJIN-'ro-PlJIN 'lRì\NSFERS:
(a) Transfer to another olan. A Participant who separates
from service in order to accept enploymant with an entity
other than the enployer, which entity also sponsors an
eligible state deferred compensation plan, and who becanes a
participant in such plan (the "transferee plan") may have
the balance in such participant's participation acx::ount
transferred to the transferee plan. Payments of benefits
will not commence upon the participant's separation from
service, notwithstandin;J arr¡ other provision of this plan,
if the transferee plan provides for the acceptance of such
balance.
(b) Transfer from another olan. A participant who, in order
to accept enployment with the enployer, tezminated
enployment with an entity other than the enployer, which
entity also sponsors an eligible state deferred compensation
plan, and who was a participant in such plan (the
"transferor plan") shall, upon receipt by the plan of the
amounts deferred by such participant in the transferor plan,
have such participant's participation acx::ount credited with
the balance of such participant's acx::ount in the transferor
plan if the transferor plan provides for the transfer of
such balance.
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SECl'ION 15. EMPIDYER PARl'ICIPATION:
Notwithstandin;J arr¡ other provision of this Plan, the
Ðtployer may, by means of additional deposits in any
Deferred Canpensation Plan :fuJ'xi or otherwise, provide for
additional Deferred Canpensation for the services ren:1ered
by arr¡ ~loyee to the ~loyer ciuriJ'q arr¡ year, but is
subject to the lilnitations in Section 5.2.
SECl'ION 16. NON-ASSIGNABILITY CIAUSE:
It is agreed that neither the Participant nor hisjher
beneficia:ry, nor any other designee, shall have arr¡ right to
COI11l1Ulte, sell, assign, transfer, or otheJ:wise convey the
right to receive arr¡ payments hereun:1er, which payments and
right thereto are expressly declared to be non-assignable
and non-transferable, and in the event of any attempted
assignment or transfer, the Ðtployer shall have no further
liability hereun:1er nor shall arr¡ payments be transferable
by operation of law in event of bankruptcy or insolverq,
except to the exterx:1 otheJ:wise provided by law,
notwithstandin;J the above clause.
SECl'ION 17. caMJNICATION:
lv:rj notice, filin;J or CCII11IIP.1nication directed to the Ðtployer
shall be mailed or delivered to the followin;J address:
City of CUpertino Deferred Canpensation Plan
10300 Torre AVemle
CUpertino, California 95014
lv:rj notice or CCII11IIP.1nication directed to any Participant
shall be mailed or delivered to the address provided in his
Participation Agreement.
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SECl'IOO 18. AMENI:MENT OR TERMINATION OF PIAN:
'!he Elrployer may, at arr¡ time, teJ:minate this plan for all
Participants. Upon sudl teJ:mination, each Participant in
the Plan will be deemed to have revoked hisjher
Participation Agreement as of the date of sudl teJ:mination.
'!he Elrployer may also amend the provisions of this Plan at
any time; provided, however, that no amen:hnent shall affect
the rights of the Participants or their beneficiaries to the
receipt of payment of benefits, to the extent of any
~tion deferred at the time of the amen:hnent as
adjusted for incx:me attr:iJ:JUtable to such Deferred
Compensation prior to and subsequent to the amen:hnent.
'!his Plan is int.emed to qualify as an eligible state
Deferred Compensation Plan under section 457 of the COde,
and shall be interpreted and administered in a manner
consistent with such qualification. '!he Elrployer reserves
the right to amend the Plan to the extent that may be
necessary to confODll the Plan to the requirements of section
457 of the COde and any other applicable law, regulation or
rulin;J, includin;J amen:hnents that are retroactive to the
effective date of the Plan. In the event that the Plan is
deemed by the Intema1 Revenue Service to be administered in
a manner inconsistent with section 457 of the COde, the
Elrployer shall correct such administration within the period
provided in Section 457 (b) of the COde. '!he Elrployer
reserves the right to take sudl action and do sudl thin;Js as
'are required to make the Plan, as administered, consistent
with section 457 of the COde.
'!he Elrployer hereby establishes this Deferred' Compensation
Plan on the tams and conditions set forth herein.
DI'œE :
2/20/90
BY:
Isl Don Brown
City Manager
2120/90
BY:
Is I Dorothy Cornelius
City Clerk
~:¡71¿~
City Attornéy
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