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HomeMy WebLinkAboutOrdinance - 9781-1995 - Deferred Compenastion Plan For City Employees. - 02/09/1995First Reading February 9, 1995 Item 1117 Second Reading February 23, 1995 Item #4 ORDINANCE NO. 9781 AN ORDINANCE AMENDING ORDINANCE NO. 8904 OF THE CITY OF LUBBOCK, WinCH ORDINANCE PROVIDED PARTICULARS OF A DEFERRED .· COMPENSATION PLAN FOR CITY EMPLOYEES, AND MODIFYING SAID ORDINANCE TO PROVIDE FOR ADDITIONAL VENDORS AND TO CONFORM TO FEDERAL AND STATE LAW. WHEREAS, the City Council heretofore established a Deferred Compensation Plan for City employees by enacting Ordinance No. 7809 as amended by Ordinance 8904; and WHEREAS, V.T.C.A., Government Code §§690.001 ~ RQ., providing for Deferred Compensation Plans for political subdivisions of the State of Texas, authorizes, in addition to life insurance policies and fixed or variable rate annuities, the inclusion of mutual funds, certificates of deposit, money market accounts and passbook savings accounts as proper investment products for Deferred Compensation Plans; and WHEREAS, it is the desire of the City Council to expand the investment options contained within the City of Lubbock's Deferred Compensation Plan so as to provide greater flexibility and investment opportunities to its employees; and WHEREAS, it is also the desire of the City Council as well to amend the City's Deferred Compensatio,n Plan to conform with changes in State and Federal Law; NOW THEREFORE: BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT Ordinance No. 8904 of the City of Lubbock, BE and is hereby amended to read as follows: DEFERRED COMPENSATION PLAN I. INTRODUCTION The City of Lubbock, Texas, by virtue of the authority granted by V.T.C.A., Government Code §§690.001 ~ RQ. and 26 U.S.C. §457, hereby establishes the City of Lubbock Employees Deferred Compensation Plan, hereinafter referred to as the "Plan", the purpose of which is to attract and retain certain individuals as Employees by permitting them to enter into agreements with the City which will provide for monthly payments of deferred compensation on retirement, as well as death benefits in the event of death before or after retirement. The effective date of the start of this Plan shall be July 1, 1978, or as soon as practical thereafter. Nothing contained in this Plan shall be deemed to constitute an employment contract or agreement for services between the Participating Employees and the City and nothing contained herein shall be deemed to give any such Employee a right to be retained in the employ of the City. Nothing herein shall be construed to modify the terms of the employment relationship between Participating Employees and the City, this Plan being intended as part of each Participant's Compensation and as a Retirement supplement. This Plan shall, unless otherwise determined as provided by State and Federal Laws governing Deferred Compensation Plans, be implemented and serviced by Qualified Vendors selected by the Plan Administrator or with whom the Plan Administrator has contracted for participation in the Plan, subject to approval of the governing body of the City. II. DEFINITIONS 2.01. Compensation: The total annual remuneration for employment or contracted services payable by the City that would be included in the federal gross income of the Participant but for the Participant's election to participate in the Plan. 2.02. Includible Compensation: That amount of Compensation includible in a Participant's federal gross income, reduced both by amounts of Compensation deferred under this Plan or any other Plan or arrangement pursuant to Section 457 of the Internal Revenue Code of 1986 or otherwise and by amounts contributed by the City to an annuity contract described in Section 403(b) of the Code, without regard to any community property laws. 2.03. Deferred Compensation: The amount of Compensation not yet earned, as designated in the Participation Agreement, which the Participant and the City mutually agree shall be deferred in accordance with the provisions of this Plan, subject to the following limitations: (a) Normal Limitation: The maximum amount that may be deferred under this Plan for a Participant's taxable year, except as provided in Section 2.03(b), shall not exceed the lesser of$7,500 or 33 1/3% of the Participant's Includible Compensation. For a Participant in more than one 457 Plan, the maximum amount that may be deferred for such Participant's taxable year is $7,500 (as modified by Sect-ion 2.03(b) below). In applying this limit, a reduction must be made for any amounts excluded from gross income under Section 403(b) for the year and any salary Deferrals for the year under a 401 (k) Plan or a simplified employee pension plan. (b) Catch-up Limitation: For each one of the Participant's last three taxable years ending prior to but not including the year of such Participant's Normal Retirement Age, as elected by the Participant pursuant to or as otherwise defined in Section 2.04 of this Plan, the limitation set forth in Section 2.03(a) shall be the lesser of: 1. $15,000; or 2. the sum of the normal limitation set forth in Section 2.03(a), plus so much of the normal limitation which has been underutilized in all prior taxable years after December 31, 1978. (c) For purposes of Section 2.03(b), a prior taxable year can be taken into account: (1) if the Participant was eligible to participate in the Plan or any similar prior plan of the City or another Texas entity during any portion of any prior taxable year after December 31, 1978; and (2) if the Compensation deferred, if any, under this Plan or such other plan during such prior taxable years was subject to a maximum deferral limitation as required by Section 457 of the Code. A Participant may elect to utilize the catch-up limitation with respect to only one Normal Retirement Age in this Plan or any other similar plan notwithstanding the fact that the Participant utilizes the catch-up limitation in less than all of the three eligible years. 2.04. Nonna1 Retirement Age: The age as described in Section 2.04(a) below subject to the alternative provision of Section 2.04(b) as elected in writing by the Participant or pursuant to the automatic provision of Section 2.04( c): (a) Age 70 1/2; or (b) Any of the following as elected by the Participant in writing at any time prior to Separation from Service or prior to the use of the catch- up limitation provision described in Section 2.03(b ): 1. Any age which is ( 1) not earlier than the earliest age at which the Participant has the right to retire and receive unreduced retirement benefits from the City's basic pension plan; and (2) not later than the date the Participant attains age 70 112; or 2. For a Participant who continues in the service of the City after the Normal Retirement Age provided in Section 2.04(a) or after the age elected pursuant to Section 2.04(b)(l), such Normal Retirement Age may be a later age as elected by the Participant; provid~d, however, such age may not be later than the Participant's actual date of Separation from Service with the City. (c) If a Participant continues to provide services for the City either ( 1) after age 70 112 without having previously elected an alternative Normal Retirement Age as provided in Section 2.04(b); or (2) after such age as elected pursuant to Section 2.04(b ), such Participant's Normal Retirement Age shall automatically be the Participant's actual date of Separation from Service. (d) Once a Participant has to any extent utilized the catch-up limitation of Section 2.03(b), such Participant's Normal Retirement Age shall be determined solely by reference to that age as used for purposes of Section 2.03(b); provided, further, such age may not thereafter be changed. 2.05 Retirement: The severance of the Participant's employment relationship with the City on or after attainment of the Participant's Normal Retirement Age whereby the Participant thereafter is not providing services to the City. 2.06. Se:paration from Service: The severance of the Participant's employment relationship with the City whereby the Participant thereafter is not providing services to the City. -3- 2.07. Beneficiary: The Beneficiary or Beneficiaries of certain benefits of the Plan designated by the Participant in the Participation Agreement. Nothing herein shall prevent the Participant from designating more than one Beneficiary or primary and secondary Beneficiaries or changing the designation of a Beneficiary. If two or more or less than all designated Beneficiaries survive the Participant, payments shall be made equally to all such Beneficiaries, unless otherwise provided in the Beneficiary designation. Elections made by a Participant in the Participation Agreement shall be binding on any such Beneficiary or Beneficiaries except for the right of a Beneficiary as provided in Section 6.05. 2.08. Deferral: The amount of Compensation the receipt of which a Participating Employee has agreed to defer under the Plan. 2.09. Deferred Compensation Trust Fund: The fund in which Deferrals arid Investment Income of Participants are temporarily held. 2.10. Eligible Individual: Any individual Employee of the City or any individual performing services for the City by appointment, election or contract, who performs services for the City for which Compensation is paid and who meets the criteria set forth in Section 4.0 1. 2.11. Employee: An individual who is an officer or employee of the City. 2.12. Investment Income: The amount earned from investment in a Qualified Investment Product of Compensation deferred under the Plan. 2.13. Investment Product: Includes life insurance policies, fixed or variable rate annuities, mutual funds, certificates of deposit, money market accounts and passbook savings accounts. 2.14. Participant or Participating Empl<zyee: An employee who has executed a Participation Agreement to participate in the Plan or an Eligible Individual who the Plan Administrator has determined may participate in the Plan and who has executed a Participation Agreement. 2.15. Participation Agreement: A written agreement between the Plan Administrator on behalf of the City and a Participant for the deferment of a portion of the Participant's Compensation through automatic payroll deductions. 2.16. Plan Administrator: The person responsible for administering the Plan, who shall be the Director of Human Resources for the City. 2.17. Plan Year: The calendar year. 2.18 Qualified Investment Product: An Investment Product that a Plan Administrator has in writing approved to receive Deferrals and Investment Income. 2.19. Qualfied Vendor: A Vendor approved by the Plan Administrator or with whom the Plan Administrator has contracted for participation in the Plan. 2.20. vendor: A private entity that sells Investment Products. -4- III. ADMINISTRATION 3.01. This Plan shall be administered by a Plan Administrator subject to the supervision of an Oversight Committee as hereinafter provided. 3.02. The Oversight Committee shall consist of the City's Chief Financial Officer, Chief Accountant and Managing Director of Management Services. The Committee shall meet as often as necessary to transact business but not less than monthly. A quorum must be present to conduct business. The agenda for such meetings shall be prepared by the Plan Administrator and shall include all matters concerning the Plan which Plan Participants desire to submit for the Committee's consideration, including, but not limited to, requests from Participants for withdrawals due to unforeseeable emergencies. In addition, the Committee shall review all criteria and procedures developed by the Plan Administrator under Section 3.03 of this Plan and may also promulgate rules and regulations for the administration of the Plan provided they are not inconsistent with the provisions of this Plan or State and Federal Laws governing this Plan. 3.03. Subject to the direction and supervision of the Oversight Committee, the Plan Administrator shall: (1) (2) (3) (4) (5) (6) (7) (8) (9) Invest a Participating Employee's Deferrals and Investment Income in the Qualified Investment Products designated by such Employee; Transfer the Deferrals and Investment Income of a Participating Employee from one Qualified Investment Product to another at such Employee's request; Determine the minimum and maximum number of Vendors that may be Qualified Vendors for the Plan at any given time; Execute necessary contracts for the administration of Plan, subject to prior approval of the governing body of the City. Develop and implement criteria and procedures for evaluating a Vendor's application to become a Qualified Vendor; Develop and implement requirements for Qualified Vendors and their employees concerning disclosure, reporting, standards of conduct, solicitation, advertising, relationships with Participating Employees, the nature and quality of services provided to those Employees, and other matters; Develop and implement criteria and procedures for evaluating a Qualified Vendor's Investment Products to determine whether those products are acceptable as Qualified Investment Products; Develop and implement procedures that allow a Participating Employee to designate a Beneficiary to receive such Employee's Deferrals and Investment Income if the Employee dies; Develop and implement procedures for distributing Deferrals and Investment Income to a Participating Employee or such Employee's -5- Beneficiary, as appropriate, because of the Employee's death, termination of employment, financial hardship, or other reason permissible under federal law; (10) Determine whether independent contractors who provide services to the City may participate in the Plan; and (11) Develop and implement criteria and procedures on any other matter the Plan Administrator considers appropriate for the operation of the Plan. (12) Change the amount of a Participant's Deferrals upon written notification from the Participant. 3.03. Limitation on Approval ofYendor: A Plan Administrator may not approve a Vendor's participation in the Plan if the Vendor is: (1) a state or national bank or savings and loan association, the deposits of which are not insured by the Federal Deposit Insurance Corporation; (2) a credit union whose deposits are not insured by the National Credit Union Administration Board or the Texas Share Guaranty Credit Union; or (3) an insurance company that: (a) is not a member of the Life, Accident, Health and Hospital Services Insurance Guaranty Association; or (b) is an impaired or insolvent insurer under V.A.T.S. Insurance Code, art. 21.28-D. 3.04. Certification by the Texas D~artment oflnsumnce: The Plan Administrator may request the Texas Department oflnsurance to certify in writing whether an insurance company is prohibited from being approved as a Qualified Vendor under Section 3.03(3) of this Plan and the Plan Administrator may rely on the certification. 3.05. Approval of Vendor; Contract: After the Plan Administrator approves a Vendor's request to become a Qualified Vendor, the Plan Administrator shall execute a written contract with the Vendor to participate in the Deferred Compensation Plan. However, the Vendor may offer only Qualified Investment Products to Participating Employees. 3.06. Failure ofYendorto Satisfy Requirements: A Vendor may become and remain a Qualified Vendor only if the Vendor satisfies the requirements of State law governing Deferred Compensation Plans and the Plan Administrator for participation in the Plan .. The Plan Administrator may immediately transfer to the Plan's Deferred Compensation Trust Fund all Deferrals and Investment Income from any Vendor who fails to satisfy either of these requirements. Immediately after making the transfer, the Plan Administrator shall give to each Participating Employee whose Deferrals and Investment Income were transferred a notice which states that: ( 1) the Vendor's Investment Products are ineligible to receive additional Deferrals; and (2) such -6- Employee's Deferrals have been transferred from the Vendor to the Deferred Compensation Trust Fund. 3.07. Each member of the Committee shall be eligible to participate in the Plan but may not vote or otherwise participate in discretionary decisions relating to such member's own participation in the Plan. 3.08. The Committee may adopt rules and regulations for the administration of this Plan; provided, however, no such rule or regulation shall be contrary to State or Federal Law or any regulation adopted pursuant thereto. 3.09. The Committee may adopt rules and procedures for conducting business. IV. PARTICIPATION IN THE PLAN 4.01. Elif:;ibility: Any Eligible Individual who performs services for the City for which Compensation is paid and who executes a Participation Agreement is eligible to participate in the Plan. 4.02. Enrollment in the Plan: (a) An eligible individual may become a Participant and agree to defer Compensation not yet earned by entering into a Participation Agreement prior to the first day of the calendar month in which it is to become effective; provided, further, the calendar month shall always be the second calendar month following the month of execution of the Participation Agreement. (b) At the time of entering into or modifying the Participation Agreement hereunder to defer Compensation or at the time of re-entry following a withdrawal under Article VII, a Participant must agree to defer a minimum amount of $600.00 annually. · (c) A Participant who defers Compensation may not modify such agreement to change the amount deferred except with respect to Compensation to be earned in a subsequent calendar month or except as provided in Article VII hereof with respect to withdrawals. Notice of such modification must be given prior to the first day of the calendar month for which such modification is to be effective; provided, further, the calendar month shall always be the second calendar month following the month of execution of the Participation Agreement. (d) A Participant may at any time revoke the Participation Agreement to defer Compensation with respect to Compensation not yet earned. The revocation is effective and the Participant's full Compensation will be restored in the month subsequent to the month such revocation is approved by the Plan Administrator. The Participant must notify the Plan Administrator in writing of such revocation at least thirty-five (35) days prior to the beginning of the calendar month for which such revocation is to be effective. Amounts previously deferred shall be paid only as provided in this Plan. -7- (e) A Participant who has withdrawn from the Plan, as set forth in Article VII, or who has revoked the Participation Agreement, as set forth in paragraph (d) of this section, or who returns to perform services for the City after a Separation from Service, may again become a Participant in the Plan and agree to defer Compensation not yet earned by entering into a new Participation Agreement as provided in paragraph (a) of this section. V. CALCULATION OF BENEFITS 5. 01. The amount of any benefit to a Participant or Beneficiary made pursuant to this Plan shall be determined by the value at the time of such payment of the Investment Products selected by the Participant in accordance with the elections in the Participation Agreement and the provisions of this Plan. 5.02. Each Qualified Vendor selected by the Plan Administrator shall file with the Plan Administrator a form, statement or report setting forth the calculations of benefits peculiar to said Vendor's Qualified Investment Products, which document or documents above referred to are hereby incorporated as if fully set out herein. 5.03. The City at its discretion may acquire Investment Products and invest amounts of Deferred Compensation in Investment Products in order to provide a fund from which it can satisfy its obligation to make benefit payments pursuant to this Plan. Any Investment Product so acquired for the convenience of the City shall be the sole and exclusive property of the City, with the City named as owner and beneficiary; provided, further, such Investment Products shall not be held in trust or as collateral security for the benefit of any Participant or Beneficiary. 5.04. All amounts of Compensation deferred under this Plan, all property and rights to property which may be purchased with such Compensation and all income attributable to such Compensation, property or rights to property shall remain (until paid or made available to a Participant or Beneficiary under the Plan) the sole property and rights of the City without being restricted by the provi- sions of this Plan, subject only to the claims of the City's general creditors. However, nothing in this section shall prohibit Participants from directing the investment of Deferrals and Investment Income among Qualified Investment Products. The obligation of the City under this Plan is purely contractual and shall not be funded or secured in any way. 5.05. The City shall be liable to pay benefits under this Plan only to the extent of amounts that would have been available under the Investment Product as measured by the elections made in the Participation Agreement, and the City shall not be responsible for the investment or performance results of such Investment Product. Furthermore, if an Investment Product is so acquired to measure benefits payable under this Plan, the value of any benefit shall be determined by the actual value of the Investment Product at the time of benefit payment, unaffected by any independent or arbitrary standard of calculation with respect to such Investment Product. VI. BENEFITS 6.01. General Benefit Ienns: (a)(i) Benefit payments to a Participant or Beneficiary shall be made according to the manner and method of payment as elected in the Participation Agreement, which election may be changed by a Participant or a Beneficiary, as appropriate, and as allowed by the Plan, at any time more than thirty (30) days prior to the commencement of such benefit payments pursuant to the Participation Agreement. (ii) Subject to the restrictions on choice of benefit contained in Sections 6.01 (b), 6.01(c), 6.04 and 6.05, the options available for selection by the Participant or Beneficiary as to the manner and method of payment for Investment Products which are fixed or variable rate annuities are: (iii) (b) 1) lump sum; 2) periodic payments for a designated period; 3) periodic payments for life; 4) periodic payments for life with a guaranteed minimum number of payments; 5) periodic payments for the life of the Participant with continuation of the payments or a percentage of the payments for the lifetime of the Participant's spouse; 6) life annuity with payments guaranteed for a fixed period such as 5,10,15 or20 years; 7) joint and survivor life; 8) such other option as the City may, in its sole discretion, offer to the Participant prior to the commencement of benefits. Periodic payments may be monthly, quarterly, semiannually or annually. The amount of each payment may be fixed or fluctuate with the performance of the Investment Product. Subject to the restrictions on choice of benefit contained in Sections 6.01(b), 6.01(c), 6.04 and 6.05, the options available for selection by the Participant or Beneficiary as to the manner and method of payment for Investment Products other than fixed or variable rate annuities shall be determined by Qualified Vendors; provided, however, such options shall not be contrary to State and Federal Laws governing this Plan. In the absence of an election in the Participation Agreement as to the manner and method of such benefit payments as provided in Sections . 6.01(a)(ii), the City shall make periodic payments to the Participant or (c) (d) {e) (f) (g) Beneficiary as a distribution of the account in equal percentages over ten (1 0) years; provided, furtlu~r, in no event shall payments to a Beneficiary exceed (i) the life expectancy of a Beneficiary where such Beneficiary is the surviving spouse of the Participant; or (ii) a period of fifteen (15) years or, ifless, the life or life expectancy of the Beneficiary where such Beneficiary is not the surviving spouse of the Participant. In determining the amount of benefit payments, the minimum distribution incidental death benefit rule must be satisfied. This rule will be similar to the one contained in IRS Proposed Regulation 1.401(a){9)-2. To the extent that the payment required under this rule is greater than the amount determined under Section 6.01(f), the greater amount must be paid. Benefit payments to a Participant or Beneficiary shall commence at the time provided in the Plan, subject to an irrevocable election by the Participant or Beneficiary, as appropriate, prior to the time such benefits first become payable, to defer the beginning of such payments or a portion of such payments to a later date as allowed by the Plan and pursuant to the Participation Agreement. In no event may benefit payments to the Participant or any Beneficiary commence more than sixty {60) days after the close of the Plan Year after the later of ( 1) the date of Separation from Service; or (2) the date the Participant attains (or would have attained) Normal Retirement Age. Benefits under the Plan must either (i) be distributed by April 1 of the calendar year following the calendar year in which the Participant attains age 70 112 or retires, whichever occurs later; or (ii) commence no later than April 1 of such calendar year and be made over the life of the Participant (or the lives of the Participant and the Participant's Beneficiary) or over a period not exceeding the life expectancy of the Participant (or the life expectancies of the Participant and his Beneficiary). For purposes of this provision, life expectancy(ies) shall be determined using the return multiples of Section I. 72-9 of the Regulations. The life expectancy of the Participant and the Participant's spouse (other than in the case of a life annuity) may be recalculated, but not more frequently than annually. Distributions payable over a period of more than one year must be paid in substantially non-increasing amounts (not less frequently than annually). 6.02. Benefits Upon Retirement: Beginning no earlier than thirty-one (31) days and no later than sixty (60) days following the Participant's Retirement, the City shall begin payments to the Participant in accordance with the elections made in the Participation Agreement; provided, however, the Participant may irrevocably elect, within the one hundred twenty (120) day period ending thirty (30) days after Retirement, to defer the beginning of such payments or any portion of such payments to a date not later than sixty ( 60) days after the close of the Plan Year following Retirement and as provided in the Participation Agreement. -10- This provision shall only apply if the Participant retires prior to attaining age 70 112. For Participants retiring on or after attaining age 70 112, the City shall begin benefit payments on April 1 of the calendar year following the calendar year in which the Participant retires or sixty (60) days after the close of the Plan Year following Retirement, whichever is earlier, in accordance with the provisions of Section 6.o1(f) and (g) and with the election made by the Participant in the Participation Agreement. 6.03. Benefits Upon Separation From Service: If Separation from Service occurs prior to attainment of the Normal Retirement Age, the City shall begin benefit payments no earlier than sixty-one (61) days and no later than ninety (90) days following such Separation from Service; provided, however, the Participant may irrevocably elect, within the one hundred twenty (120) day period ending sixty (60) days after Separation from Service, to defer the beginning of such payments, or any portion of such payments, to a date not later than Normal Retirement Age as provided in the Participation Agreement. 6.04. Benefits Upon Death After Commencement of Benefits: (a) (b) Should the Participant die at any time after benefit payments have commenced, the City shall commence payment to the Beneficiary of the balance remaining of such payments no earlier than sixty-one (61) days and no later than ninety (90) days following the Participant's death. Payments to the Beneficiary shall continue under the option selected by the Participant in the Participation Agreement. If no Beneficiary is designated by the Participant or if no Beneficiary survives the Participant for a period of thirty (30) days, then the City shall pay to the estate of the Participant a single lump sum amount equal to the current value of such remaining payments. If a Beneficiary does not survive the period after the Participant's death during which such payments to the Beneficiary are to be made, the City shall pay to the estate of that Beneficiary a single lump sum amount equal to the current value of such remaining payments to that Beneficiary. 6.05. Benefits Upon Death Prior to Commencement of Benefits: (a) Should the Participant die at any time before benefit payments have commenced, the City shall commence benefit payments to the Beneficiary no earlier than sixty-one ( 61) days and no later than ninety (90) days following the Participant's death. Such payments shall be made according to the manner and method provided in the Participation Agreement or as selected by the Beneficiary pursuant to a revised Participation Agreement submitted to the Committee more than thirty (30) days prior to the commencement of such benefit payments over a period not to exceed: 1. the life expectancy of the Beneficiary if the Beneficiary is the Participant's surviving spouse; or 2. a period not in excess of fifteen (15) years or, ifless, the life or life expectancy of the Beneficiary if the Beneficiary is not the Participant's surviving spouse. -11- (b) However, the Beneficiary may irrevocably elect within the sixty (60) day period subsequent to the Participant's death to defer the beginning of such payments as described below. Subject to the limitations provided under Section 6.05(a), the Beneficiary may also elect to change the manner and method of benefit payments as allowed under the Plan if such election is made more than thirty (30) days prior to the date when such deferred benefits are to commence pursuant to Section 6.05(b) of the Plan. The maximum deferral period is five (5) years from the Participant's date of death or the date the Participant would have attained Normal Retirement Age, whichever date is earlier; provided, however, if the deferral of benefits extends beyond one year from the Participant's date of death, the manner of payout elected must assure that the entire amount payable is distributed within five (5) years of the Participant's date of death. Notwithstanding the foregoing, if the Participant's spouse is the Beneficiary, the beginning of such payments can be deferred until the date the Participant would have attained age 70 112 or the date the Participant would have attained Normal Retirement Age, whichever date is earlier. (c) If no Beneficiary is designated by the Participant or if no Beneficiary survives the Participant for a period of thirty (30) days, the City shall pay to the estate of the Participant a single lump sum amount equal to the current value of any remaining payments. If a Beneficiary does not survive the period after the Participant's death during which such payments to the Beneficiary are to be made, then the City shall pay to the estate of that Beneficiary a single lump sum amount equal to the current value of such remaining payments to that Beneficiary. VII. WITHDRAWALS 7. 01. In the case of an unforeseeable emergency prior or subsequent to the commencement of benefit payments, a Participant may apply to the Committee for withdrawal of an amount reasonably necessary to satisfy the emergency need. If such application for withdrawal is approved by the Committee, the withdrawal will be effective at the later of the date specified in the Participant's application or the date of approval by the Committee. The approved amount shall be payable in a lump sum within thirty (30) days of such effective date or in some other manner consistent with the emergency need as determined by the Committee. 7.02. For purposes of this Plan, the term "unforeseeable emergency" means 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 Section 152(a) of the Internal Revenue Code) 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. Withdrawals for foreseeable expenditures normally budgetary, such as a down payment on a home or purchase of an automobile or college expenses, will not be permitted. The Committee shall not permit withdrawal for unforeseeable emergency to the extent that such hardship is or may be relieved: -12- (a) through reimbursement of expenditures 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. 7.03. In no event shall the amount of a withdrawal for an unforeseeable emergency exceed the amount of benefits which would have been available to the Participant at the time of withdrawal. Notwithstanding any other provision of this Plan, if a Participant makes a withdrawal hereunder, the value of benefits under the Plan shall be appropriately reduced to reflect such withdrawal, and the remainder of any benefits shall be payable in accordance with otherwise applicable provisions of the Plan. VIII. LEAVE OF ABSENCE A Participant on an approved leave of absence with or without Compensation may continue to participate in the Plan subject to all the terms and conditions of the Plan; provided, further, Compensation may be deferred for such Participant if such Compensation continues while the Participant is on an approved leave of absence. IX. NON-ASSIGNABILITY CLAUSE Neither the Participant nor any other person shall have any right to commute, sell, assign, pledge, transfer or otherwise convey or encumber the right to receive any payments hereunder, which payments and rights thereto are expressly declared to be unassignable and nontransferable. Nor shall any unpaid benefits be subject to attachment, garnishment or execution for payment of any debts, judgments, alimony or separate maintenance owed by the Participant or any other person, or be transferable by operation of law in the event of bankruptcy or insolvency of the Participant or any other person. X. AMENDMENT OR TERMINATION OF PLAN 10.01. The City may terminate or amend the provisions of this Plan at any time; provided, however, no termination or amendment shall affect the rights of a Participant or a Beneficiary to the receipt of benefits with respect to any Compensation deferred before the time of the termination or amendment. 10.02. Upon termination of the Plan, the Participants in the Plan will be deemed to have withdrawn from the Plan as of the date of such termination. The full Compensation of all Participants will be thereupon restored on a non· deferred basis. The City shall not distribute Plan benefits at the time of such termination; the City shall rather retain all Deferrals and Investment Income and shall only pay or dispose of Plan benefits as otherwise provided in the Plan and according to the terms and conditions of the Plan. XI. PLAN-TO-PLAN TRANSFERS 11.01. This Plan shall accept for transfer amounts of Compensation previously deferred pursuant to another "eligible" Deferred Compensation Plan established pursuant to Section 457 of the Code and maintained by another Texas entity. -13- 11.02. If the Participant separates from service to accept employment with or perform services for another Texas entity which maintains an eligible Deferred Compensation Plan pursuant to Section 457 of the Code, the amounts deferred under this Plan shall, at the Participant's election, be transferred to such other eligible Plan, provided such other Plan provides or is able to provide for the acceptance of such amounts. The Participant's election to transfer must be made prior to the date benefits would otherwise become payable pursuant to the terms of this Plan. XII. APPLICABLE LAW This Plan shall be construed under the laws of the State of Texas. AND IT IS SO ORDERED. Passed by City Council on first reading~·-...........,._ Passed by City Council on second r ATTEST: · ~L~ecretary . APPROV~D AS TO CONTENT: APPROVED AS TO FORM: HW:da ccdocs\DEFCOMP.ord January 19, 1995 -14- February 1995 __ __________ ..__, . ---..,...-c--"""""""-._..--' 1995.