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HomeMy WebLinkAboutCOW 2003-02-24 Item 5 - Resolution - Hartford Deferred Compensation Plan (DCP)CAS Number 03-023 I Agenda Item Title: Original Sponsor: Timeline: Sponsor's Summary: Recommendations: Sponsor: Committee: Administration: Cost Impact (if ]mown): Fund Source (if known): Meeting Date 2/24/03 2/24/03 2/24/03 COUNCIL AGENDA SYNOPSIS Meetinz Date Prepared by 2/24/03 ARD R 3 I Meeting Date 2/24/03 Proposed Resolution 2/24/03 Staff Report dated February 12, 2003 I Mayor's review I Council review I U I I I I I Original Agenda Date: 2/24/03 Resolution adopting Hartford Deferred Compensation Plan documents. Council Admin. X Approve at March 3, 2003 Regular Meeting Update of all Plan document changes. See attached Staff Report. Approve as submitted Finance Safety Move forward January 18, 2003 Meeting. Same as Sponsor N/A N/A Action 4V r «'.frt Finance Safety February 18, 2003 minutes Initials NOTE: Copies of the Plan documents are under separate cover. ITEM NO. 5. Attachments City of Tukwila 6200 Southcenter Boulevard a Tukwila, Washington 98188 G o MEMORANDUM To: Alan Doerschel, Finance Director a 1^ From: Linda Grage, Fiscal Coordinator Date: February 12, 2003 Subject: Hartford Deferred Compensation Draft Resolution The Economic Growth and Tax Relief Reconciliation Act EGTRRA) of 2001 caused many changes to the City's Deferred Compensation Plan for the year 2002 and forward. The Act will require several amendments to the City's Plan Document and other procedural changes. Attached is a draft Resolution incorporating the new tax law changes into our Deferred Compensation Plan and replacing the document in its entirety. Also the resolution acknowledges a new Administrative Services Agreement with Hartford Life Insurance Company, and an amended Group Annuity Contract. Please put these items on the Finance and Safety Committee Agenda for Tuesday February 18, 2003. The resolution has 3 documents attached, an amended Plan Document, a signed Administrative Services agreement, and an amended Group Annuity Contract. Listed below is a summary of the items that have been or need to be accomplished: A new Administrative Services Agreement with Hartford Life Insurance Company has been signed and executed in November of 2002. EGTRRA required certain changes to our group annuity contract. Also, effective October 2002 Hartford added enhancements to our plan, new fund options and reduced some of the fees. We have received an amended Group Annuity Contract from Hartford. No further action is required, however I recommend we acknowledge the new contract in the resolution and attached it After EGTRRA was passed, several changes happened to our plan. IRS published Revenue Procedure 2002 -29, which requires that qualified plans must be amended to conform to the final regulations by the close of the 2003 plan year. The amended plan document references different effective dates for some of the provisions. I am recommending that the City incorporate all of the plan changes into a new Plan Document and adopt the amended Plan by Resolution. I received a specimen plan document from Hartford along with the amendments and created a new revised plan document. A draft copy is attached. The major changes are summarized below: Amending the Contribution Limits including the Pre Retirement Catch -Up Adding an Age 50+ Catch -up Provision Redefining "Includible Compensation" within the meaning of Code Section 415(c)(3) Page 3 Deferred Comp Plan Document 2/12/03 There have been several Council actions regarding the Deferred Compensation Plan along with administrative changes. A history of the plan is listed below: 1. Resolution 569 dated March 7, 1977 authorizes the Deferred Compensation Plan. 2. The original Plan Document with Hartford was executed in May 1977. 3. A four-page amendment to the Plan was signed by the Mayor in 1979, however there was no resolution. 4. Resolution No. 812 was passed on February 16, 1982 authorizing the Mayor to execute an additional deferred compensation plan. To date, we have only had one deferred compensation plan. 5. There is a signed application for a Group Annuity Contract with Hartford Life Insurance Company dated December 13, 1982. 6. Resolution 1026 creates an Agency Fund to account for the City's Deferred Compensation Plan Balances. 7. There is a Plan Document signed by Mayor Van Dusen on June 9, 1989, with no accompanying resolution. 8. There is a signed Contract Endorsement on March 27, 1997 that enhances the plan effective November 1, 1996. 9. Resolution 1412 is the most current action amending the deferred compensation plan. It was signed December 7, 1998 and also repealed Resolution 1026, which eliminated the Deferred Compensation 631 Agency Fund that was no longer required. 10. The most recent plan document was established with Resolution 1412 dated December 7, 1998. This Resolution also authorizes the City to sign a new contract with Hartford Life Insurance Company. Our goal with the proposed resolution is to incorporate all the changes that have occurred into one place for ease of reference. And, in the future, keep the housekeeping of these documents to a minimum. Please let me know if you need additional information, have any other comments or changes. Thanks, Attachments Acceptance of Rollover Contributions from other plans in addition to other Governmental 457 plans, (401,403(b), and 408 IRAs) More Flexible Distribution (Payout) Options upon severance of employment Replaced Section 4.7 (Minimum Distribution Requirements) in its entirety with provisions that allows options for the participant or the beneficiary to choose or apply the 5 year rule l t l u C k1 City of Tukwila Washington Resolution No. DRAFT A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, TO ADOPT THE AMENDED PLAN DOCUMENT FOR THE CITY OF TUKWILA DEFERRED COMPENSATION PLAN; AND ACKNOWLEDGING THE AMENDED GROUP ANNUITY CONTRACT AND THE SIGNING OF A NEW ADMINISTRATIVE AGREEMENT WITH THE HARTFORD LIFE INSURANCE COMPANY. WHEREAS, the City established the City of Tukwila Deferred Compensation Plan (hereinafter "Plan per Resolution 569 on March 7, 1977; and WHEREAS, the City is authorized to sign a new contract with Hartford Life Insurance Company per Resolution 1412 signed on December 7, 1998; and WHEREAS, the City desires to amend the Plan and related documents to conform with changes in the federal law brought about by the Economic and Tax Relief Reconciliation Act of 2001 "EGTRRA and to conform with the technical corrections to EGTRRA contained in the Job Creation And Worker Assistance Act of 2002; and WHEREAS, the City desires to amend the Plan to conform with the final and temporary Treasury regulations under §401(a)(9) of the Internal Revenue Code as published in the Federal Register on April 17, 2002, 74 FR 18987; and WHEREAS, the City received an amended Group Annuity Contract from Hartford Life Insurance Company containing enhancements and lower fees; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: Section 1. The attached amended City of Tukwila Deferred Compensation Plan is hereby adopted, effective as indicated within the Plan Document. Section 2. The City accepts the amended Group Annuity Contract issued by Hartford Life Insurance Company, which offers more fund options, enhanced features, reduced fees, and is in compliance with EGTRRA requirements. Section 3. The City of Tukwila has signed a new Administrative Services Agreement with Hartford Life Insurance Company as required by EGTRRA and authorized by Resolution 1412. Deferred Comp Resolution No. Deferred Comp Resolution No. Page 2 PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a regular meeting thereof this day of 2003. ATTEST AUTHENTICATED: Jane E. Cantu, City Clerk APPROVED AS TO FORM: By: Office of the City Attorney Filed with the City Clerk: Passed by the City Council: Published: Effective Date: Ordinance No.: Pam Carter, Council President ATTACHED UNDER SEPARATE COVER FOR FINANCE SAFETY COMMITTEE AGENDA FEBRUARY 18, 2003 1. City of Tukwila Deferred Compensation Plan Document 2. Amended Group Annuity Contract with Hartford Life 3. Hartford Life Administrative Services Agreement Committee chair approval Finance and Safety Committee February 18, 2003 Present: Joe Duffie, Chair; Richard Simpson, Pam Carter (for Jim H) Alan Doerschel, Rhonda Berry, Lucy Lauterbach 1. Hartford Deferred Como Resolution Alan explained the draft resolution which adopts the City's deferred compensation program The resolution includes both some administrative housekeeping changes and some responses to legislation that require formal adoption. Once adopted, the resolution will be completely up to date. As no city funds are involved in this fund, it applies only to the employee contribution program for deferred compensation. Recommend resolution to COW. 2. Interfund Loans to Hotel/Motel Fund The Hotel Motel fund bought the land which is nearest I -405 east of West Valley. At the time it was purchased, it was to be used in conjunction with the convention center McCloud was going to build. Since then, the property is expected to be used when the Transit Oriented Development moves forward. That could be several years down the road. Because the loan to buy the property was a 5- year loan, Alan had two ways to deal with it. He could take out a bond, or could have the city carry the loan, and have Lodging pay the loan down until it is sold. Lodging will pay $100,000 per year on the principal to pay the loan down while interest rates are low. The city's debt charges are under 2 which is better than any loan or bond. The committee was concerned that the city may have to carry this debt for a long time. Alan said in the worst -case scenario, the General Fund could buy the loan from Lodging, and roll it into a bond. In the best -case scenario, we'll be able to sell the property for something approaching its sale price, in the next few years. Recommend to that evening's Regular Meeting.