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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 05/15/2007 - RESOLUTION 2007-049 ADOPTING A 401A MONEY PURCHASE ITEM NUMBER: 20 AGENDA ITEM SUMMARY DATE: May 15, 2007 FORT COLLINS CITY COUNCIL STAFF: Amy Sharkey Wendy Williams SUBJECT Resolution 2007-049 Adopting a 401A Money Purchase Retirement Plan and a 457 Deferred Compensation Plan for the City Manager, City Attorney and Municipal Judge. RECOMMENDATION Staff recommends adoption of the Resolution. EXECUTIVE SUMMARY Adoption of this Resolution creates a separate 401A money purchase and a separate 457 deferred compensation plan for the City Council's direct employees (City Manager, City Attorney, and Municipal Judge), so that they can be more efficiently administered. The Resolution also provides for some ICMA-RC recommended amendments to the plans to increase flexibility as permitted by changes in the tax code. The Employer Contribution on behalf of the Council Employee does not change with the adoption of these two separate plans. BACKGROUND Currently, the Council's direct employees (City Manager, City Attorney, and Municipal Judge) participate in a 401A money purchase plan and a 457 deferred compensation plan that include as participants other City employees who do not report directly to City Council. Because the City Manager is authorized to establish benefit plans,including retirement plans, for all City employees except the Council's direct employees, it is administratively cumbersome for the plans to have a combination of Council employees and City Manager employees. Adoption of this Resolution will create a separate 401A money purchase plan and 457 deferred compensation plan for the Council's direct employees. It will not change the retirement plan provisions of each Council-direct employee's employment contract. The creation of these two plans will not change the City's contribution rate to each Council-direct employee's retirement plans. The Adoption Agreement for the 401 A money purchase plan and the Affirmative Statement for the 457 deferred compensation plan, which are being approved via this Resolution, do contain some May 15, 2007 -2- Item No. 20 additional provisions recommended by ICMA-RC, the plans administrator. The changes permit more flexibility to the plans, but do not result in any increase in cost to the City. The changes are summarized as follows: Provisions added to the 457 plan are: 1. Age 70 1/2 - in-service distributions are permitted under the Plan. 2 In-service distributions of Rollover Assets are permitted under the Plan. Provisions added to the 401 plan are: 1. Age 70 1/2 - in-service distributions are permitted under the Plan. 2. In-service distributions of Rollover Assets are permitted under the Plan. 3. Definition of Earnings shall include any pre-tax contributions to an integral part trust of the Employer providing retiree health care benefits. 4. Spousal Protection changes from QJSA Election where the spouse must agree and provide a notarized signature to any and all type of withdrawals from the plan including loans to a Beneficiary Spousal Consent Election where the participant may elect any of the available distribution options without spousal consent with the exception of the beneficiary option. One additional change to the 401 A money purchase plan is to remove the requirement that the City Manager contribute a percentage of his salary into the plan. The previous City Manager had requested that the plan be changed to require him to contribute a percentage of his salary into the plan. The employee contribution into a 401A plan is only"pre-tax" if it is made mandatory. Each of the Council-direct employees'employment contracts with City Council allow them to request that the plan be amended to require an employee contribution if requested by the employee. The current City Manager has requested that the required employee contribution provision be removed from the plan and the Adoption Agreement reflects that change. This has no effect upon the amount of the City's contribution to the plan, which remains unchanged. Because of their length, the 401A money purchase plan Adoption Agreement and the 457 deferred compensation plan Affirmative Statement,along with the actual plan documents,are on file with the City Clerk's Office and will be provided upon request. RESOLUTION 2007-049 OF THE COUNCIL OF THE CITY OF FORT COLLINS ADOPTING A 401A MONEY PURCHASE RETIREMENT PLAN AND A 457 DEFERRED COMPENSATION PLAN FOR THE CITY MANAGER, CITY ATTORNEY AND MUNICIPAL JUDGE WHEREAS,the City of Fort Collins(City)has previously established the Service Directors Plan ("401 Plan"), a qualified 401A money purchase retirement plan administered by the International City Management Association Retirement Corporation ("ICMA-RC") for those employees who report directly to the City Council and for certain other high level management employees; and WHEREAS,the City has previously established the 457 Deferred Compensation Plan("457 Plan")administered by ICMA-RC for those employees who report directly to the City Council and for classified and unclassified management employees; and WHEREAS,pursuant to the provisions of section 2-567 of the City Code,the City Manager has the authority to establish benefits,including retirement plans,forboth classified and unclassified employees of the City, but not for the City Manager, City Attorney, and Municipal Judge, since these employees report directly to City Council and have separate employment agreements with City Council; and WHEREAS, combining within a single retirement plan and deferred compensation plan employees who report directly to City Council and those who report to the City Manager is administratively confusing and does not recognize the separate authority between the City Council and the City Manager with regard to establishment of benefits; and WHEREAS,placing the City Manager, City Attorney, and Municipal Judge into a separate 401 Plan and a separate 457 Plan from those employees who report to the City Manager will remove the administrative confusion in administering benefits for the employees of the City Council; and WHEREAS,ICMA-RC has recommended that certain changes be made to both the 401 and 457 Plans in order to take advantage of recent changes in federal law and to more effectively administer the Plans; and WHEREAS, the adoption of the Plans as described herein and as offered by ICMA-RC, including the change in employee contribution requested by the City Manager,will not result in an increased financial burden to the City; and WHEREAS,the contribution rates for the Plans are set forth in the employment agreements for the City Manager, City Attorney, and Municipal Judge,and the adoption of these Plans will not alter those contribution rates. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS, COLORADO: Section 1. That the Mayor is hereby authorized to execute on behalf of the City the ICMA Retirement Corporation Governmental Money Purchase Plan and Trust Adoption Agreement for the Council Employees'Plan, a copy of which is on file with the City Clerk's Office. Section 2. That the Mayor is hereby authorized to execute on behalf of the City the ICMA Retirement Corporation Governmental Deferred Compensation Plan and Trust Affirmative Statement for the Council Employees'Plan, a copy of which is on file with the City Clerk's Office. Section 3. That the assets of the Plans shall continue to be held in trust,with the City serving as trustee, for the exclusive benefit of the Plans' participants and their beneficiaries, and the assets shall not be diverted to any other purpose. Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 15th day of May, A.D. 2007. Mayor ATTEST: City Clerk