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CC Resolution No. 13-010 Amending PARS 457 FICA alternative retirement system RESOLUTION NO. 13-010 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO AMENDING THE PUBLIC AGENCY RETIREMENT SYSTEM (PARS) 457 FICA ALTERNATIVE RETIREMENT PLAN FOR PART-TIME, SEASONAL AND TEMPORARY EMPLOYEES WHEREAS, the City of Cupertino (the "Employer") has previously adopted the City of Cupertino PARS 457 FICA Alternative Retirement Plan, effective September 10, 2012 (the "Plan); and WHEREAS, the Employer has reserved the right to amend the Plan in accordance with Section 5.2 of the Plan; and WHEREAS, the Employer desires to amend the contribution rates under Article II of the Plan effective as of February 5, 2013, in coordination with the expiration of the temporary rate reduction for Social Security taxed under the Tax Relief Act of 2010. NOW, THEREFORE, BE IT FURTHER RESOLVED, that Article II of the Plan is hereby amended as follows: 1. Article II, Section 2.1, Employer Contributions, is hereby amended and restated effective February 5, 2013, to read as follows: 2.1 Employer Contributions For each day that an Eligible Employee remains a Participant under this Plan, the Employer shall contribute one and three-tenths percent (1.30%) of his or her Compensation to his or her Account. The Employer shall contribute such amounts to the Trust at such times as are determined by the Employer in its discretion, but no less frequently than annually. 2. Article II, Section 2.2, Employee Contributions, is hereby amended and restated effective February 5, 2013, to read as follows: 2.2 Employee Contributions For each day that an Eligible Employee remains a Participant under this Plan, the Employee shall contribute six and two-tenths percent (6.20%) of his or her Compensation to his or her Account. Such contributions shall be pre-tax contributions accomplished by means of compensation reduction and shall be credited to his or her Account. The Employee shall contribute such amounts to the Trust at such times as are determined by the Employer in its discretion, but no less frequently than annually. PASSED AND ADOPTED at a regular meeting of the City Council of the City of Cupertino this 5th day of February, 2013 by the following vote: Vote Members of the City Council AYES: Mahoney, Wong, Chang, Santoro, Sinks NOES: None ABSENT: None ABSTAIN: None ATTEST: APPROVED: GYA-k.),-1 Li,di-- Grace Schmidt, City Clerk Orrin Mahoney, Ma r, City of Cupertino THE CITY OF CUPERTINO PUBLIC AGENCY RETIREMENT SYSTEM SECTION 457 FICA ALTERNATIVE RETIREMENT PLAN Effective September 10, 2012 NB I:564577,3 TABLE OF CONTENTS Page Introduction 1 Article I Participation 2 1.1 Eligibility for Benefits 2 1.2 Participation 2 1.3 Reemployment as an Eligible Employee 2 1.4 Qualified Military Service 2 1.5 Designation of Beneficiary 3 Article II Contributions 6 2.1 Employer Contributions 6 2.2 Employee Contributions 6 2.3 Limitations on Contributions 6 2.4 No Other Contributions. 7 2.5 Coordination With Other Plans 7 Article III Vesting 9 3.1 Vesting 9 Article IV Distributions 10 4.1 Distribution of Benefits 10 4.2 In Service Distributions 10 4.3 Qualified Domestic Relations Order 11 4.4 Direct Rollovers 12 4.5 Purchase of Service Credit 14 Article V Administration,Amendment And Termination 15 5.1 Rules and Regulations 15 5.2 Amendment and Termination 16 Article VI Miscellaneous 17 6.1 Participant's Right Not Subject to Execution 17 6.2 Investment 17 NBl:564577.3 _i_ TABLE OF CONTENTS (continu.ed) Page 6.3 Valuation 17 6.4 Unclaimed Benefits 18 Article VII Definitions 19 7.1 Definitions 19 Appendix A Minimum Distribution Requirements A-1 NB 1:564577.3 -11 INTRODUCTION The City of Cupertino (the "Employer") has adopted this deferred compensation plan for the benefit of its eligible employees. It is intended that this plan and the trust established to hold the assets of the plan shall be an eligible deferred compensation plan under Section 457 of the Internal Revenue Code of 1986, together with any amendments thereto (the"Code"). It is further intended that the plan shall meet all of the requirements of a government alternative retirement system under Code Section 3l 2l(b)(7)(F). It is also intended that this plan and the trust established hereunder shall meet the requirements of a pension trust under California Government Code sections 53215 —53224, or their successor sections. At any time prior to the satisfaction of all liabilities with respect to participants and their beneficiaries under the trust created pursuant to this plan,the trust assets shall not be used for, or diverted to, purposes other than the exclusive benefit of participants or their beneficiaries, as prescribed in Section 457(g)(l) of the Code. NBl:564577.3 1 ARTICLE I PARTICIPATION 1.1 Eligibility for Benefits. An Eligible Employee shall become a Participant on the first day the Employee is not accruing a benefit under another Retirement System provided by the Employer. 1.2 Participation. Participation of a Participant shall commence as of the date specified in Section 1.1 and shall continue during the Participant's employment with the Employer and until the occurrence of a Break in Employment or until the Participant is no longer an Eligible Employee or commences benefit accruals under another Retirement System provided by the Employer. An Employee who becomes an Eligible Employee while on an Approved Absence shall not become a Participant until the end of his or her Approved Absence; but a Participant who is on Approved Absence shall continue as a Participant during the period of his or her Approved Absence. 1.3 Reemployment as an Eligible Employee. An Eligible Employee who has become a Participant in accordance with Section 1.1, but who ceases to be a Participant in accordance with Section 1.2,will again become a Participant immediately upon meeting the requirements of Section 1.1. 1.4 Qualified Military Service. Notwithstanding any provision of the Plan to the contrary, contributions, benefits, and service credit with respect to qualified military service will be provided in accordance with Section 414(u) of the Code. In the case of a Participant who dies while performing qualified military service, the survivors of the Participant are entitled to any NBl:5645773 2 additional benefits (other than benefit accruals relating to the period of qualified military service) provided under the Plan had the Participant resumed and then terminated employment on account of death. 1.5 Designation of Beneficiary. (a) Each Participant shall designate in writing the Beneficiary or Beneficiaries whom such Participant desires to receive the benefits (if any) that are payable under this Plan in the event of the Participant's death. Such designation must be evidenced by a written instrument filed with the Employer, on a form prescribed by the Employer, and signed by the Participant. (b) Except as set forth in subsection (c), the Beneficiary of a married Participant shall be the Participant's spouse at the date of death, unless the written consent of such spouse is provided upon a form acceptable to the Employer. If no valid designation of Beneficiary, along with a valid spousal consent, is on file with the Employer at the time of the death of the Participant, or if for any reason at the sole discretion of the Employer, such designation is defective, then (except as set forth in subsection (c)) the spouse of such Participant shall be conclusively deemed to be the Beneficiary designated to receive such benefit. (c) The spousal consent required under subsection (b) shall not be required if Participant declares in writing that one of the following conditions exists: (i) The Participant is not married; (ii) The Participant does not know, and has taken all reasonable steps to determine,the whereabouts of the spouse; (iii) The spouse is incapable of executing the acknowledgment because of an incapacitating mental or physical condition; N131:564577.3 3 (iv) The Participant and spouse have executed a marriage settlement agreement that makes the community property laws inapplicable to the marriage; or (v) The current spouse has no identifiable community property interest in the benefits. (d) Upon the Employer being provided with written notice of the dissolution of marriage of a Participant, any earlier designation of the Participant's former spouse as a Beneficiary shall be treated as though the Participant's former spouse had predeceased the Participant, unless prior to payment of benefits on behalf of the Participant (i) the Participant executes and delivers another Beneficiary designation that complies with this Section 1.5 and that clearly names such former spouse as a Beneficiary, or (ii) there is delivered to the Plan a domestic relations order providing that the former spouse is to be treated as the Beneficiary. In any case in which the Participant's former spouse is treated under the Participant's Beneficiary designation as having predeceased the Participant, no heirs or other beneficiaries of the former spouse shall receive benefits from the Plan as a Beneficiary of the Participant except as provided otherwise in the Participant's Beneficiary designation. (e) For purposes of this Section 1.5 only: (1) all references to 'marriage' shall also include 'registered domestic partnerships,' (2) individuals in a 'registered domestic partnership' shall be considered `married,' and (3) all references to a 'spouse' shall also include a `registered domestic partner.' A `registered domestic partner' and a `registered domestic partnership' refers to persons and partnerships satisfying the requirements of the California Family Code and officially registered as of the date of death with the NB 1:564577.3 4 Secretary of State as such in accordance with Section 298.5 of the California Family Code. NB1:564577.3 5 ARTICLE II CONTRIBUTIONS 2.1 Employer Contributions. For each day that an Eligible Employee remains a Participant under this Plan,the Employer shall contribute three and three-tenths percent (3.30%) of his or her Compensation to his or her Account. The Employer shall contribute such amounts to the Trust at such times as are determined by the Employer in its discretion, but no less frequently than annually. 2.2 Employee Contributions. For each day that an Eligible Employee remains a Participant under this Plan, the Employee shall contribute four and two-tenths percent (4.20%) of his or her Compensation to his or her Account. Such contributions shall be pre-tax contributions accomplished by means of compensation reduction and shall be credited to his or her Account. The Employee shall contribute such amounts to the Trust at such times as are determined by the Employer in its discretion,but no less frequently than annually. 2.3 Limitations on Contributions. (a) Normal Limitation. Except as provided in Subsection (b) below, the maximum amount which may be contributed on behalf of a Participant for any taxable year of the Participant (the "Normal Limitation") shall not exceed the lesser of (i) the Applicable Dollar Amount or (ii) one hundred percent (100%) of the Participant's Compensation. (b) Catch-Up Limitation. For each of a Participant's last three (3) taxable years ending before the Participant attains Normal Retirement Age,the maximum amount which may be contributed on behalf of that Participant for that taxable year (the "Catch- N131.564577.3 6 Up Limitation") shall be the lesser of(i) twice the Applicable Dollar Amount or (ii) the amount determined under the immediately following sentence. The amount referred to in Section 2.3(b)(ii) is the sum of (i) the Normal Limitation for the taxable year as determined under Subsection (a) above, plus (ii) so much of the Normal Limitation for prior taxable years in which the Participant was eligible to participate under the Plan, beginning after 1978, as has not been previously used for contributions under Subsection (a) or this Subsection(b). The Catch-Up Limitation is available to a Participant during one three-year period only. If the Participant uses the Catch-Up Limitation and then postpones retirement or returns to work after retirement, the Catch-Up Limitation shall not be available again. The provisions of this Subsection (b) shall be interpreted and administered in accordance with Regulations issued under Code Section 457 including, without limitation, special rules concerning application of the coordination limits in effect under Code Section 457 (c)(2) prior to 2002 for purposes of determining the amounts referred to in Section 2.3(b)(ii)for years prior to 2002. 2.4 No Other Contributions. No contributions other than as provided in Section 2.1 and Section 2.2 shall be made to this Plan. This Plan shall not accept rollover contributions or transfers from other plans. 2.5 Coordination With Other Plans. If a Participant participates in more than one eligible deferred compensation plan (as defined in Section 457(b) of the Code) other than a plan that is a qualified governmental excess benefit arrangement (as defined in Section 415(m)(3) of the Code), the maximum deferral under all such eligible deferred compensation plans shall not NI31:564577.3 7 exceed the Normal Limitation described in Section 2.3(a) (as modified by any adjustment provided under Section 2.3(b)). The Employer shall distribute the amount of a Participant's deferral in excess of the distribution limitations stated in Section 2.3, together with allocable net income, as soon as administratively practicable after the Plan determines that the amount is an excess deferral. For purposes of determining whether there is an excess deferral under Section 2.3, all plans under which a Participant participates as a result of his employment with the Employer shall be treated as a single plan. NI)1:564577.3 8 ARTICLE III VESTING 3.1 Vesting. Each Participant will be one hundred percent(100%)vested in his or her Account at all times. NB 1:564577.3 9 ARTICLE IV DISTRIBUTIONS 4.1 Distribution of Benefits. (a) Benefits shall become distributable to a Participant (or the Participant's Beneficiary in case of the Participant's death) upon the Participant's Break in Employment. The amount of the benefits distributable to a Participant shall be the vested amount credited to such Participant's Account as of the most recent Valuation Date. Notwithstanding any other provision of this Plan, all distributions shall be in the form of a single cash lump sum paid as soon as administratively practicable after the date benefits become distributable. (b) In the event of the death of a Participant prior to distribution, distribution of the Participant's vested Account shall be made to his or her Beneficiary in a cash lump sum as soon as practicable after the Participant's death, but in no event later than the last day of the calendar year following the calendar year in which the death occurs. (c) This Plan is subject to the minimum distribution requirements contained in Code Section 457(d)(2) and 401(a)(9) and the regulations thereunder. These requirements are set forth in Appendix A of this Plan. 4.2 In Service Distributions In accordance with Section 457(e)(9)(A), a Participant who is no longer eligible to participate because he is no longer in the class of Eligible Employees, but who has not terminated employment with the Employer, shall be eligible for a limited in-service distribution if (i) the Participant's benefit is not more than five thousand dollars ($5,000.00), (ii) no amount has been deferred under this Plan for the Participant during NB I:564577.3 10 the two (2) year period ending on the date of the distribution, and (iii) there has been no previous distribution to the Participant from this Plan under this Section 4.2. 4.3 Qualified Domestic Relations Order. (a) Subject to procedures established by the Employer, benefits may be paid from the balance of a Participant's Account in accordance with a Qualified Domestic Relations Order. This Section 4.3 is included in the Plan to comply with Section 414(p) of the Code, the regulations thereunder, and such regulations as the Secretary of the Treasury may publish under Code Sections 414(p)(11) and 414(p)(12). (b) Procedure. (i) Upon receipt of a Qualified Domestic Relations Order, the Employer will establish an Account for the benefit of the Alternate Payee specified in such order. The Employer will then transfer balances in accordance with the terms of such order from the Participant's Account to the Alternate Payee's Account. The Alternate Payee's Account, except as otherwise provided herein, will remain subject to all the rules of the Plan. (ii) An Alternate Payee under a Qualified Domestic Relations Order may designate the investment vehicles in which the balances in the Alternate Payee's Account will be invested, limited to the investment alternatives provided by the Plan. (iii) An Alternate Payee under a Qualified Domestic Relations Order may designate beneficiaries to receive any amount to which the Alternate Payee may be entitled to receive in the event of his or her death. (iv) All amounts credited to an Alternate Payee's Account will be payable to the Alternate Payee or the Alternate Payee's beneficiary in accordance NB 1:564577.3 11 with the terms of this Plan and the Qualified Domestic Relations Order. Such an order may provide for payment to the Alternate Payee prior to the Participant's Break in Employment. 4.4 Direct Rollovers. (a) Availability. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this Plan, a distributee may elect, at the time and in the manner prescribed by the Employer, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the distributee in a Direct Rollover. (b) Definitions. For purposes of this Section 4.4, the following terms shall have the meanings set forth below. (I) Eligible Rollover Distribution. An Eligible Rollover Distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an Eligible Rollover Distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributes or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Section 401(a)(9) of the Code, any hardship distribution, and the portion of any distribution that is not includible in gross income. (ii) Eligible Retirement PIan. An Eligible Retirement Plan is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, a qualified NB 1:564577.3 12 trust described in Section 401(a)of the Code, an annuity plan described in Section 403(a) of the Code, an eligible deferred compensation plan described in Section 457(b) of the Code which is maintained by an eligible employer described in Section 457(e)(1)(A) of the Code, or an annuity contract described in Section 403(b) that accepts the distributee's Eligible Rollover Distribution. With respect to Eligible Rollover Distributions made on or after January 1, 2008, "Eligible Retirement Plan" shall also include a Roth IRA as described in Section 408A(b) of the Code, provided that the distributee is not restricted from making such a rollover from the Plan to a Roth IRA pursuant to Section 408A(c) of the Code. A distributee includes an Employee or former Employee. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse who is the Alternate Payee under a Qualified Domestic Relations Order, as defined in Section 414(p) of the Code, are distributees with regard to the interest of the spouse or former spouse. In addition, a Beneficiary other than an individual described in the preceding sentence is a distributee with regard to the interest of the Participant, subject to the limitation that an Eligible Retirement Plan with respect to such distributee is an individual retirement account or individual retirement annuity that will be treated as an inherited individual retirement account or annuity under Section 402(c)(11) of the Code. (iii) Direct Rollover. A Direct Rollover is a payment by the Plan to the Eligible Retirement Plan specified by the distributee. NBI:564577.3 13 4.5 Purchase of Service Credit. If a Participant is also a participant in a defined benefit governmental plan (as defined in Code Section 414(d)), such Participant may request that the Employer transfer amounts from his or her Account for (a) the purchase of permissive service credit (as defined in Code Section 415(n)(3)(A)) under such plan, or (b) a repayment to which Code Section 415 does not apply by reason of Code Section 415(k)(3). Such transfer requests shall be granted in the sole discretion of the Employer, and if granted, shall be made directly to the defined benefit governmental plan. NB 1:564577.3 14 ARTICLE V ADMINISTRATION,AMENDMENT AND TERMINATION 5.1 Rules and Regulations. The Employer has full discretionary authority to supervise and control the operation of this Plan in accordance with its terms and may make rules and regulations for the administration of this Plan that are not inconsistent with the terms and provisions hereof. The Employer shall in its discretion determine any questions arising in connection with the interpretation, application or administration of the Plan (including any question of fact) and its decisions or actions in respect thereof shall be conclusive and binding upon all persons and parties. The Employer shall have all discretionary powers necessary to accomplish its purposes, including,but not by way of limitation,the following: (a) To determine all questions relating to an Employee's eligibility; (b) To construe and interpret the terms and provisions of the Plan and to determine any question of fact; (c) To compute, certify to, and direct the Trustee with regard to the amount and kind of benefits payable to the Participants and their Beneficiaries; (d) To authorize all disbursements by the Trustee from the Trust; (e) To maintain all records that may be necessary for the administration of the Plan other than those maintained by the Trustee; and (f) To appoint a plan administrator or any other agent, and to delegate to them or to the Trustee such powers and duties in connection with the administration of the Plan as it may from time to time prescribe, and to designate each such administrator or agent as a fiduciary with regard to matters delegated to him. NB1:5645773 15 With respect to management and control of investments,the Employer shall have the power to direct the Trustee in writing with respect to the investment of the Trust assets or any part thereof. Expenses and fees in connection with the administration of the Plan and the Trust shall be paid from the Trust assets to the fullest extent permitted by law, unless the Employer determines otherwise. In accordance with Section 53217 of the California Government Code, the Employer may elect to make contributions to the Trust sufficient to defray the expenses of administering the Plan or may pay such expenses directly. 5.2 Amendment and Termination. The Employer shall have the right to amend, modify or terminate this Plan at any time. The Employer shall not be liable for the payment of any benefits under this Plan and all benefits hereunder shall be payable solely from the assets of the Trust. N131:564577.3 16 ARTICLE VI MISCELLANEOUS 6.1 Participant's Right Not Subject to Execution. The right of a Participant to a benefit under this Plan is not assignable and is not subject to execution or any other process whatsoever, except to the extent permitted by the Code of Civil Procedure and the Family Code of the State of California. Any payment hereunder required under the California Family Code to a person other than the Participant must not alter the form or amount of benefits hereunder except to the extent provided in a Qualified Domestic Relations Order (as defined in Code Section 414(p)) prior to the Participant's Break in Employment. 6.2 Investment. All contributions, interest earned, and any assets of the Plan shall at all times be invested and managed in accordance with the requirements of the California Government Code. 6.3 Valuation. The value of the Trust under the Plan shall be established periodically as determined by the Employer in its discretion (but no less frequently than annually) and investment gains and losses thereon shall be allocated to the Participants' Accounts. Notwithstanding anything to the contrary herein, if the Employer determines that Accounts should be valued on a more frequent basis or that an alternative method of allocating earnings and losses would better serve the interests of the Participants or their Beneficiaries or could more readily be implemented, the Employer may make such changes; provided that any alternative method must result in Plan earnings being allocated on the general basis of Account balances. NB 1:564577.3 17 6.4 Unclaimed Benefits. Each Participant and Beneficiary of a deceased Participant shall file with the Employer from time to time in writing, his or her home address and each change of home address. Any communication addressed to the Participant or the Beneficiary at his or her last home address filed with the Employer, or :if no such address was filed, then at his or her last home address as shown on the Employer's records, shall be binding on the Participant or Beneficiary for all purposes of the Plan. The Employer shall not be obligated to search for or ascertain the whereabouts of any Participant or Beneficiary, and the Participant's Account balance shall be subject to the abandoned property law of the applicable jurisdiction. NB I:564577.3 1 8 ARTICLE VII DEFINITIONS 7.1 Definitions. "Account" means the account maintained by the Employer for each Participant that is credited with the amounts provided herein. "Alternate Payee" means any spouse, former spouse, child or other dependent of a Participant who is recognized by a Domestic Relations Order (as defined under "Qualified Domestic Relations Order"below) as having a right to receive all, or a portion of,the benefits payable under this Plan with respect to such Participant. "Applicable Dollar Amount" means the "applicable dollar amount" as defined in Code Section 457(e)(15) (as adjusted from time-to-time as set forth in Code Section 457(e)(15)). "Approved Absence" means a leave of absence (without pay) granted to an Employee under the Employer's established leave policy. "Beneficiary" means the person, persons, trust or trusts designated by a Participant, or, in the absence of a designation, entitled by will or the laws of descent and distribution, to receive the benefit specified under this Plan if the Participant dies and means the Participant's executor or administrator if no other beneficiary is designated and able to act under the circumstances. "Break in Employment" means any termination of employment by reason of resignation, discharge, retirement, disability, death, or other event constituting a "severance from employment"as defined under Code Section 457(d)(1)(A)(ii). "Code" means the Internal Revenue Code of 1986, as amended from time to time. NB 1:564577.3 19 "Compensation"means all compensation paid to a Participant that is attributable to services performed for the Employer and is includible in the Participant's gross income for the Plan Year. Notwithstanding the foregoing, Compensation shall have the meaning of"includible compensation" as defined in Code Section 457(e). "Effective Date"means September 10,2012. "Eligible Employee" means all of those Employees of the Employer whose participation in this Plan is not prohibited or restricted by the provisions of a collective bargaining agreement or another plan or retirement system maintained by the Employer. Additionally, Employees who are exempt from coverage under Social Security by federal law or regulation shall not be Eligible Employees. "Employee" means an employee of the Employer. "Employer"means the City of Cupertino that has adopted this Plan. "Normal Retirement Age" means the range of ages from 55 through and including 70 1/2 as designated by the Participant. Any Participant who works beyond age 70 1/2 may designate a Normal Retirement Age greater than 70 1/2; provided, however that Normal Retirement Age may not be later than the date or age at which the Participant terminates employment with the Employer. "Participant" means a Participant under Article I hereof. "Plan" means the City of Cupertino Public Agency Retirement System Section 457 FICA Alternative Retirement Plan. "Plan Year" means the consecutive twelve-month period beginning on July 1 and ending on June 30. "Qualified Domestic Relations Order" means a Domestic Relations Order (as defined herein) which(a) creates or recognizes the existence of an Alternate Payee's right NB 1:564577.3 20 to, or assigns to an Alternate Payee the right to, receive all or a portion of the benefits payable to a Participant under this Plan; (b) clearly specifies (i) the name and the last known mailing address of the Participant and the name and mailing address of each Alternate Payee covered by the order, (ii) the amount or percentage of the Participant's benefits to be paid by this Plan to each such Alternate Payee, or the manner in which such amount or percentage is to be determined, (iii) the number of payments or period to which such order applies and (iv) that it applies to this Plan; and (c) does not (i) require this Plan to provide any type or form of benefit, or any option, not otherwise provided under the Plan, (ii) require this Plan to provide increased benefits (determined on the basis of actuarial value), or (iii) require the payment of benefits to an Alternate Payee which are required to be paid to another Alternate Payee under another order previously determined to be a Qualified Domestic Relations Order. For purposes of this Plan, a "Domestic Relations Order" means any judgment, decree, or order (including approval of a property settlement agreement) which (a) relates to the provisions of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a Participant and (b) is made pursuant to a State domestic relations law (including a community property law). "Retirement System" means any plan that meets the requirements for a retirement system under Section 3121(b)(7)(F) of the Code and the final Regulations thereunder. "Social Security" means the Social Security program as set forth in Title 42 of the United States Code, section 301 et seq. "Trust" means the trust established as part of the Public Agency Retirement Trust to hold the assets of the Plan. NB 1:564577.3 21 "Trustee"means the trustee of the Trust. "Valuation Date"means the last day of the Plan Year or such other day on which the assets of the Trust are valued and the value of each Participant's Account is determined. NB1:564577.3 22 ADOPTION OF THE CITY OF CUPERTINO PUBLIC AGENCY RETIREMENT SYSTEM SECTION 457 FICA ALTERNATIVE RETIREMENT PLAN The City of Cupertino Public Agency Retirement System Section 457 FICA Alternative Retirement Plan is hereby adopted effective September 10, 2012. BY: 22e1g Q- - TITLE: Director of Administrative Services DATE: Lea LL� /41 �d I APPENDIX A Minimum Distribution Requirements A.1 General Rules. (a) Effective Date. The provisions of this Appendix A will apply for purposes of determining required minimum distributions for calendar years beginning with the 2003 calendar year. (b) Precedence. The requirements of this Appendix A will take precedence over any inconsistent provisions of the Plan provided that this Appendix A shall not be considered to allow a Participant or Beneficiary to delay a distribution or elect an optional form of benefit not otherwise provided in the Plan. (c) Requirements of Treasury Regulations Incorporated. All distributions required under this Appendix A will be determined and made in accordance with the Treasury regulations under Section 401(a)(9)of the Internal Revenue Code. A.2 Time and Manner of Distribution. (a) Required Beginning Date. The Participant's entire interest will be distributed, or begin to be distributed, to the Participant no later than the Participant's Required Beginning Date. (b) Death of Participant Before Distributions Begin. If the Participant dies before distributions begin, the Participant's entire interest will be distributed, or begin to be distributed,no later than as follows: (1) If the Participant's surviving spouse is the Participant's sole Designated Beneficiary, then, except as provided elsewhere in this Appendix A, distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died, or by December 31 of the calendar year in which the Participant would have attained age 70'/z, if later. (2) If the Participant's surviving spouse is not the Participant's sole Designated Beneficiary, then, except as provided elsewhere in this Appendix A, distributions to the Designated Beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the Participant died. (3) If there is no Designated Beneficiary as of September 30 of the year following the year of the Participant's death, the Participant's entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the Participant's death. (4) If the Participant's surviving spouse is the Participant's sole Designated Beneficiary and the surviving spouse dies after the Participant but before NB 1:564577.3 A-1 distributions to the surviving spouse begin, this Section A.2(b), other than Section A.2(b)(l), will apply as if the surviving spouse were the Participant. For purposes of this Section A.2(b) and Section A.4, unless Section A.2(b)(4) applies, distributions are considered to begin on the Participant's Required Beginning Date. If Section A.2(b)(4) applies, distributions are considered to begin on the date distributions are required to begin to the surviving spouse under Section A.2(b)(1). (c) Forms of Distribution. Unless the Participant's interest is distributed in the form of a single sum on or before the Required Beginning Date, as of the first Distribution Calendar Year distributions will be made in accordance with Sections A.3 and A.4 of this Appendix A. A.3 Required Minimum Distributions During Participant's Lifetime. (a) Amount of Required Minimum Distribution For Each Distribution Calendar Year. During the Participant's lifetime,the minimum amount that will be distributed for each Distribution Calendar Year is the lesser of: (1) the quotient obtained by dividing the Participant's Account Balance by the distribution period in the Uniform Lifetime Table set forth in Section 1.401(a)(9)-9 of the Treasury regulations, using the Participant's age as of the Participant's birthday in the Distribution Calendar Year; or (2) if the Participant's sole Designated Beneficiary for the Distribution Calendar Year is the Participant's spouse, the quotient obtained by dividing the Participant's Account Balance by the number in the Joint and Last Survivor Table set forth in Section 1.401(a)(9)-9 of the Treasury regulations, using the Participant's and spouse's attained ages as of the Participant's and spouse's birthdays in the Distribution Calendar Year. (b) Lifetime Required Minimum Distributions Continue Through Year of Participant's Death. Required minimum distributions will be determined under this Section A.3 beginning with the first Distribution Calendar Year and up to and including the Distribution Calendar Year that includes the Participant's date of death. A.4 Required Minimum Distributions After Participant's Death. (a) Death On or After Date Distributions Begin. (1) Participant Survived by Designated Beneficiary. If the Participant dies on or after the date distributions begin and there is a Designated Beneficiary, the minimum amount that will be distributed for each Distribution Calendar Year after the year of the Participant's death is the quotient obtained by dividing the Participant's Account Balance by the longer of the remaining Life Expectancy of the Participant or the remaining Life N131:564577.3 A-2 Expectancy of the Participant's Designated Beneficiary, determined as follows: (A) The Participant's remaining Life Expectancy is calculated using the age of the Participant in the year of death, reduced by one for each subsequent year. (B) If the Participant's surviving spouse is the Participant's sole Designated Beneficiary, the remaining Life Expectancy of the surviving spouse is calculated for each Distribution Calendar Year after the year of the Participant's death using the surviving spouse's age as of the spouse's birthday in that year. For Distribution Calendar Years after the year of the surviving spouse's death, the remaining Life Expectancy of the surviving spouse is calculated using the age of the surviving spouse as of the spouse's birthday in the calendar year of the spouse's death, reduced by one for each subsequent calendar year. (C) If the Participant's surviving spouse is not the Participant's sole Designated Beneficiary, the Designated Beneficiary's remaining Life Expectancy is calculated using the age of the beneficiary in the year following the year of the Participant's death, reduced by one for each subsequent.year. (2) No Designated Beneficiary. If the Participant dies on or after the date distributions begin and there is no Designated Beneficiary as of September 30 of the year after the year of the Participant's death, the minimum amount that will be distributed for each Distribution Calendar Year after the year of the Participant's death is the quotient obtained by dividing the Participant's Account Balance by the Participant's remaining Life Expectancy calculated using the age of the Participant in the year of death, reduced by one for each subsequent year. (b) Death Before Date Distributions Begin. (1) Participant Survived by Designated Beneficiary. Except as provided elsewhere in this Appendix A, if the Participant dies before the date distributions begin and there is a Designated Beneficiary, the minimum amount that will be distributed for each Distribution Calendar Year after the year of the Participant's death is the quotient obtained by dividing the Participant's Account Balance by the remaining Life Expectancy of the Participant's Designated Beneficiary, determined as provided in Section A.4(a). (2) No Designated Beneficiary. If the Participant dies before the date distributions begin and there is no Designated Beneficiary as of September 30 of the year following the year of the Participant's death, distribution of the Participant's entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death. NB1:564577.3 A••3 (3) Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required to Begin. If the Participant dies before the date distributions begin, the Participant's surviving spouse is the Participant's sole Designated Beneficiary, and the surviving spouse dies before distributions are required to begin to the surviving spouse under Section A.2(b)(1), this Section A.4(b)will apply as if the surviving spouse were the Participant. A.5 Definitions. For purposes of this Appendix A, the following terms shall have the meanings set forth below: (a) Designated Beneficiary. The individual who is designated as the beneficiary under Section 1.5 of the Plan is the designated beneficiary under Section 401(a)(9) of the Internal Revenue Code and Section 1.401(a)(9)-1, Q&A-4, of the Treasury regulations, (b) Distribution Calendar Year. A calendar year for which a minimum distribution is required. For distributions beginning before the Participant's death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the Participant's Required Beginning Date. For distributions beginning after the Participant's death, the first distribution calendar year is the calendar year in which distributions are required to begin under Section A.2(b) The required minimum distribution for the participant's first distribution calendar year will be made on or before the Participant's Required Beginning Date. The required minimum distribution for other distribution calendar years, including the required minimum distribution for the distribution calendar year in which the Participant's Required Beginning Date occurs, will be made on or before December 31 of that distribution calendar year. (c) Life Expectancy. Life expectancy as computed by use of the Single Life Table in Section 1.401(a)(9)-9 of the Treasury regulations. (d) Participant's Account Balance. The account balance as of the last valuation date in the calendar year immediately preceding the Distribution Calendar Year (valuation calendar year) increased by the amount of any contributions made and allocated or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. The account balance for the valuation calendar year includes any amounts rolled over or transferred to the Plan either in the valuation calendar year or in the distribution calendar year if distributed or transferred in the valuation calendar year. (e) Required Beginning Date. The Required Beginning Date means April 1 of the calendar year following the later of(a) the calendar year in which the Participant attains age seventy and a half (70 1/2), or (b) the calendar year in which the Employee has a Break in Employment. NB I:564577.3 A-4 A.6 Effective Date of Plan Amendment for Section 401(a)(9) Final and Temporary Treasury Regulations. Appendix A applies for purposes of determining required minimum distributions for Distribution Calendar Years beginning with the.2003 calendar year. NB 1:564577.3 A-5