HomeMy WebLinkAboutResolution #0808. • ,.
RESOLUTION N0. ~~~i~'
A RESOLUTION APPROVING A DEFERRED COMPENSATION MASTER AGREEMENT AND
JOINDER AGREEMENT AND AUTHORIZING AND DIRECTING THE MAYOR AND CITY
CLERK TO EXECUTE SAID AGREEMENTS ON BEHALF OF THE CITY OF CANTON.
WHEREAS, the Finance and Personnel Committee of the City of Canton,
Illinois has entered into negotiations with Lincoln National Life Group
Variable Annuity Company and Aetna Variable Annuity Life Insurance Com-
pany, relative to the establishment of a deferred compensation plan for
the employees of the City of Canton; and
WHEREAS, the City Council of the City of Canton, Illinois has
reviewed the terms of the proposed agreements, copies of which are
attached hereto and made a part hereof as Exhibits A and B; and
WHEREAS, ttie City Council of the City of Canton, Illinois has
determined that it is desirable and in the best interest of the City of
Canton to approve said agreements.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
CANTON, ILLINOIS, AS FOLLOWS:
1. That the Master Agreement which is attached hereto and made a part
hereof as Exhibit A, is hereby approved, said agreement to be subject to and
effective pursuant to the terms and conditions set forth therein and at no
cost to the City of Canton.
2. That the Joinder Agreement which is attached hereto and made a part
hereof as Exhibit B, is hereby approved, said agreement to be subject to and
effective pursuant to the terms and conditions set forth therein and at no
cost to the City of Canton.
3. That the Mayor and the City Clerk of the City of Canton, Illinois
are hereby authorized and directed to execute said agreements on behalf of
the City of Canton.
4. That this Resolution shall be in full force and effect upon its
passage by the City Council of the City of Canton, Illinois and approval
by the Mayor thereof.
PASSED by the City Council of the City of Canton, Illinois and
APPROVED by the Mayor thereof this ~'~'l~ day of /.L , 1979.
APPROVED: MAYOR
HARLAN E. CROUCH
ATTEST: -!~1 l~(. CITY CLERK
TT NANCY S. WHITES
MASTER AGREEMENT
6~
THIS MASTER AGREEMENT, made this . ~ ,~t..~ day of ~ ~(,~.%y, ,
1979, by and between the City of Canton (hereinafter referred to as the
"City") and the Participants who become a party to this agreement by reason
of a "Joinder Agreement" signed at this time or at a time in the future.
WITNESSETH
WHEREAS, the Participants are valued employees or independently
contracted persons of the City, and the City desires to retain these
individuals in its service; and
WHEREAS, it is to the mutual benefit of the parties hereto that
said relation continue for an extended number of years so that the Parti-
cipants shall continue to participate in the operations of the City.
NOW, THEREFORE, the parties hereby agree as follows:
Section 1 - Definitions
(a) "Compensation" shall mean all payments for normal services
rendered by the Participants to the City, including but not limited
to the gross salary of the individual. These amounts would be before
any deduction are made for Federal or State Income Tax, F.I.C.A. or
pension plan contributions.
(b) Includible Compensation is the compensation that results after
deferred compensation to Tax Deferred Annuity reduction amounts have
been reduced from the original compensation and which will be shown on
the IRS form W-2.
(c) "Compensation Reduction" shall mean that amount deferred which
results from the Participant's election to reduce his compensation
under the Joinder Agreement and which the Participant and the City
mutually agree shall be deferred in accordance with this Agreement.
(d) "Participant" shall mean an individual who is eligible to defer
compensation and who fulfills the eligibility requirements of this
Agreement.
(e) "City" shall mean the City of Canton, Illinois.
(f) "Beneficiary" shall mean the beneficiary or beneficiaries design-
ated in the Joinder Agreement by the Participant.
1
(g) "Normal Retirement" for purposes of this Agreement shall mean
a retirement from service with the City which becomes effective on
the first day of the calendar month after the Participant attains
age 65.
(h) "Early Retirement" for purposes of this Agreement shall mean
a retirement from service with the City which is effective prior
to age 65, provided the Participant has attained age 55.
(i) "Late Retirement" for purposes of this Agreement shall mean a
retirement from service with the City which becomes effective after
the Participant has attained age 65. (When any Participant is placed
on extended service with the City after attaining age 65, the amount
of compensation deferred by the Participant prior to age 65 plus any
amount deferred under Compensation Reduction subsequent to age 65
under this Agreement will be continued for the period of such extend-
ed service.)
(j) "Termination of Service" shall mean severance of the Participant's
contract or employment with the City prior to the Participant's 55th
birthday by reason other than death or disability.
(k) "Disability" means total and permanent disability which prohibits
the Participant from engaging in any substantial gainful activity by
reason of any medically determinable physical or mental impairment
which can be expected to result in death or to be of long and indefinite
duration.
(1) "Underutilized deferrals" means the amount by which the compensation
actually included in the participant's income for the previous taxable
year exceeded the amount which would have been included in income had
the maximum deferral been utilized.
Section 2 - Eligibility
Any participant of the City who, with the consent of the City, irrevocably
elects to reduce and defer compensation as specified in Section 3 and as
elected through the Joinder Agreement shall be a Participant.
Section 3 - Reduction of Compensation
The City and Participant agree that the Participant's compensation which
would otherwise be receivable during a period of employment subsequent to the
effective date of the Joinder Agreement shall be irrevocably reduced and that
that portion of Compensation Reduction shall be deferred as specified in the
Agreement.
It is further agreed that:
(a) The annual compensation reduction amount will not exceed the
lesser of:
1) 25% of compensation (33 1/3% of includible compensation) or;
2) $7500.
2
(b) An eligible participant may utilize a limited "catch-up" provision
for any, or all, of the last three taxable years of a participant immedi-
ately preceding the normal retirement age specified in Section 1(g). The
maximum that can be deferred in any taxable year through the utilization
of both the defined contribution limits and the "catch-up" provisions is
$15,000. The "catch-up" amount may not exceed the underutilized deferrals.
(See Section 1(1) Definitions.)
(c) An eligible person, with respect to participation commencing in the
initial year of the plan, or an individual when he or she first becomes
eligible to participate, may become a participant prior to or within 60
days after the plan becomes effective or the employee first becomes
eligible, by agreeing to defer compensation not yet earned, but such
agreement must be made prior to the beginning of the period in which it
is to become effective.
(d) A Participant shall have the right exercisable within thirty days
prior to the beginning of any calendar year to elect to increase or
decrease the Compensation Reduction for the ensuing calendar year by
executing another Joinder Agreement.
(e) For purposes of the Agreement, a Participant's failure to file
written notice of this elective choice as provided in (d) above shall
constitute a waiver by the Participant of his right to elect a different
reduction sum for the next succeeding calendar year and an affirmation
and ratification to continue the stated Compensation reductions chosen
in the prior period.
(f) A Participant may elect to discontinue compensation reductions for
any subsequent calendar year following the effective date of his/her
Joinder Agreement; provided, however, the Participant shall notify the
City of such discontinuance at least 30 days prior to the subsequent
calendar year.
Section 4 - Coordination with Tax Deferred Annuity 403(b) Plans
If an individual participates in a tax deferred annuity 403(b) plan
(TDA), these TDA contributions reduce both the $7500 and the 25% of gross com-
pensation (33 1/3% of includible compensation) limitations explained in Section
3(a) (1)(2) and (b). The maximum combined annual contribution to both TDA and
deferred compensation plans shall not exceed the lesser of 25% of compensation
or $7500. The only exception to this normal rule is where the participant is
using the "catch-up" provision explained in Section 3(b).
Section 5 - Benefits
(a) The following alternative types of benefits shall be available to
the Participants under this Agreement:
(1) Retirement Benefits
The City agrees to pay benefits in the event of early, normal,
or late retirement to the Participant so qualifying as elected
3
in the Joinder Agreement. These elections include those mentioned
in paragraph (5). Such payments will begin not later than 30 days
after said retirement.
(2) Termination Benefits
Should the Participant terminate services other than by
retirement, disability, or death, the City shall make payment to
the Participant so qualifying as elected in the Joinder Agreement.
These elections include any of those mentioned in paragraph (5)
which follows. Such payments(s) will begin not later than 30 days
after said termination.
(3) Disability Benefits
In the event the Participant shall, prior to his/her normal
retirement date, become totally and permanently disabled as defined
in Section 1(k), the City shall pay benefits to the Participant so
qualifying as elected in the Joinder Agreement. These elections
include any of those mentioned in paragraph (5) which follows. Such
payment(s) will begin not later then 30 days after receipt of proof
of said disability.
(4) Death Benefits
In the event the Participant dies prior to his/her retirement
date, the City agrees to pay death benefits to the Participant's
beneficiary or to the Participant's estate as elected in the Joinder
Agreement. These elections include any of those mentioned in para-
graph (5) which follows. Such payment(s) will begin not later than
30 days after receipt of proof of death.
If the Participant dies after he/she has begun receiving any
benefits to which he is entitled but before the receipt of all pay-
ments, the City agrees to continue to pay the balance of such pay-
ments to the Participant's designated beneficiary, if living, other-
wise to the Participant's estate,
(5) Joinder Agreement Settlement Options
(a) Lump Sum, (b) Life Annuity, (c) 60, 120, 180 or 240 months
certain and life, (d) Unit refund life annuity, (e) Installment
Refund Life Annuity, (f) Joint and Full Survivor or Two-thirds to
Survivor Annuity, (g) Installments for a designed period or amount,
(h) or any other mutually agreeable payout option.
(b) Factors determining the benefits under this agreement are age at the
time compensation is deferred; the amount of reduced compensation deferred;
and the age at retirement, termination, disability, or death. To determine
these benefits, the participant's age on the birthdate nearest the date he
or she elects to defer compensation will be used as the "age at the time
compensation is deferred".
4
The benefits under this Agreement shall be dependent upon that amount
which has accumulated in the City's general account with respect to the
Participant or Beneficiary for whom such payments are being determined
under the funding media selected.
(c) Each Participant shall have the right to designate a beneficiary,
including a contingent beneficiary, to receive any benefits which may be
payable upon the death of the Participant. The Participant shall have
the right to change any beneficiaries designated under this Agreement.
Changes of a beneficiary designation are binding only if they have been
made in a manner acceptable to the City and prior to the payment of the
amounts that become due.
(d) The City shall have no obligation to set aside, earmark, or entrust
any fund, policy, or money with which to pay its obligations under this
Agreement. The Participant, and any successor in interest to him/her
shall be and remain simply a general creditor of the City with respect
to the compensation deferred under this Agreement in the same manner as
any other creditor who has a general claim for an unpaid liability. The
City shall be the sole owner and beneficiary of any assets acquired for
its general account under this Agreement. The City shall not make. any
substantial loans or extend substantial credit to a Participant or
designated Beneficiary which will be offset by benefits payable under
this Agreement.
Section 6 - Withdrawal for Hardship
A Participant may request a withdrawal under this Agreement prior to
retirement or termination of service, but such a request will not be honored
unless great hardship conditions exist. Hardship conditions must be the
result of a real emergency beyond the control of a Participant or his
Beneficiary. Withdrawals must be limited to amounts necessary to meet the
hardship. The withdrawal shall be effective upon approval by the City and
shall be paid in lump sum to the Participant.
Section 7 - Amendment or Termination
The City reserves the right to amend any provision of this Agreement
at any time to the extent that it may deem advisable without the consent of
the Participant or any beneficiary.
The City reserves the right to terminate this Agreement at any time.
Upon termination, the City shall pay to each Participant an amount of
money which would have been available had the Participant terminated his
service at that time. The City will make payments in lump sum not later
than 30 days after said termination of plan.
Section 8 - Nonassignability Clause
No benefits under this Agreement shall be subject in any manner to
anticipation, alienation, sale, transfer, assignments, pledge, or encumbran-
ce. Any attempt to do so shall be void. Such benefits shall not be subject
to or liable for the debts, contracts, liabilities, or torts of the Partici-
pant or his beneficiary.
5
Section 9 - Headings
Headings and subheadings in the Agreement are inserted for convenience
of reference only and constitute no part of this Agreement.
Section 10 - Waiver
Notwithstanding any other provision of this Agreement, the City shall
not be liable to the Participant or any beneficiary hereof for any mistakes
in judgment in the making or retaining of any investments, nor for any loss
from investing the funds so long as the City performs its obligations here-
under in good faith.
Section 11 - Types of Investments
The deferred amounts may, at the sole discretion of the City, be invest-
ed in Lincoln National Life Group Variable Annuity or life insurance products
or Aetna Variable Annuity or life insurance products.
Nothing herein shall require the City to purchase investments or assets,
but in the event the City should purchase such investments or assets, it shall
not be required to exercise any option, election, or right with respect to
such investments or assets, or if it wishes to exercise any option, election
or right under such investments or assets it shall not be required to exercise
such option, election or right in any particular manner.
Section 12 - Applicable Law
This Agreement shall be construed under the law of the State of Illinois
and Section 457 of the Internal Revenue Code of 1954, as amended.
IN WITNESS WHEREOF, the City has caused thi"s Agreement to be signed by
its Mayor, and attested by its Clerk on the ~ /L.-C~ day of ~ ~~~(.~ ,
1979.
CITY OF CANTON
~-
BY:
Harlan E. Crouch, Mayor
ATTEST:
ancy S. Wh' es, City Clerk
6
JOINDER AGREEMENT
Application for Participation and Beneficiary Designation Under the City of
Canton Master Deferred Compensation Agreement.
The undersigned hereby agrees to the terms and conditions of the City of
Canton Master Deferred Compensation Agreement as such Agreement now exists,
and as it may be amended, and applies for participation thereunder effective
as of
The undersigned agrees that the City`s payroll department shall have the
irrevocable right to reduce his/her income by $ each pay
period. This election to reduce income shall continue until the undersigned
makes a subsequent election as provided by the Master Agreement.
The participant hereby elects to have benefit payments described in Section
5 of this Agreement made as follows:
1. Lump Sum 7. Unit Refund Life Annuity
2. Life Annuity 8. Installment Refund Life Annuity
3. 60 Months Certain and Life 9. Joint and Full Survivor
4. 120 Months Certain and Life 10. Joint and 2/3 Survivor
5. 180 Months Certain and Life 11. Installments for a Designated Period
6. 240 Months Certain and Life 12. Installments for a Designated Amount
13.
Retirement Benefit above is elected under Section 5(a)(1)
Termination Benefit above is elected under Section 5(a)(2)
Disability Benefit above is elected under Section 5(a)(3)
Death Benefit above is elected under Section 5(a)(4)
The undersigned acknowledges that the City ~s under no obligation to continue
the Deferred Compensation Agreement and that being a participant thereunder in
no way guarantees his employment. Until further notice, the undersigned requests
that any death benefits be payable to:
Name
Address Relationship
however, if there be no surviving beneficiary then to the Participant's estate.
This application shall become effective as of the effective date above stated
without further notice upon receipt by the City.
Date
Signature of Participant
Application for Participation and Beneficiary Designation received this
day of 19
CITY OF CANTON
BY
MASTER APPLICATION
to l~tna Variable Annuity Life Insurance Company
~ 11 ~~//
1. Applicant (give exact legal name): _ L - .T h O C_:. u-k~~ y~
Address: 02 ~ O ~~ ~ ~es~ti +~~ L° ~:..~.~ .. .C-~ ~. ~v/.~~ C?
~ ~ (street) (city) (state) (zip code)
2. Employer i ~~ `~ ° t' t'~'~~ wl
Address: ~~O ~f ~1t~5'Tyk'T C~-,+'70--~ ij~.~ ~~s.~ O
(street) (city) (state) (zip code)
Tax Identification Number: -3 ~ ~ O ~ ~ ~ 7 ~°
3. Exact Name of Plan, if any:
4. Section (if any) of Internal Revenue Code under which plan is to qualify
(complete one block only):
4A -Section 401
^ Corporation
^ Self-employed, HR-10
Ownership will be vested in applicant, unless stated otherwise in Item 7 or on the Individual Application
46 -Section 403 (b)
^ Public School System
^ Other:
Ownership will be vested in participant, unless stated otherwise in Item 7.
4C -Non-Qualified
Deferred Compensation
Ownership must be vested in employer. .
ti; 5. ^ Contract to be effective on_ ~8 n , ~ ~ / 9~~ ^ Per Item 3 on Individual Application
6. Is the contract for which you are applying intended to replace any existing insurance or annuity contracts or mutual
tunds investments? If "yes" give amount, plan, name of company and date of termination: N~^-
7. Special Requests:
Corrections and amendments (Home Office Use Only). (Errors and omissions may be corrected by the Company,
except that no change in plan, classification, amount or extra benefits shall be made without written agreement of
the undersigned.)
I understand that annuity payments and termination values (if any), provided by the contract being applied tor, when
based on investment experience of a separate account, are variable and are not guaranteed as to fixed dollar amount.
Dated at ~f~!z~+'zL
this t day of~__ ~, 19
(city an'd stat~ ~--
, /~ ~~
Witness `~ t ~~~, ~.~,,~,~~, ,-~ Applicant/Owner,
Agent's Note:
Do you know or have reason to believe that any existing insurance or annuities will be replaced or modified if this con-
tract is issued? ^ Yes ^ No
Signature of Soliciting Agent
200-IMV-GG JAVA-6aa
CAT. 164890