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Home My WebLink About2009/03/03 Item 4 CITY COUNCIL AGENDA STATEMENT ~{~ CllY OF "-! ~.. CHULA VISTA MARCH 3,2009, Item-A- ITEM TITLE: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING THE NATIONWIDE RETIREMENT SOLUTIONS GOVERNMENTAL MONEY PURCHASE PLAN AND TRUST (401 (A) PLAN) DIRECTOROFF~WTREASURE~ CITY MANAGER ASSISTANT CITY I AGER ~)" SUBMITTED BY: REVIEWED BY: SUMMARY City Council approved a deferred compensation plan pursuant to Internal Revenue Code section 401(a) in December 2001. Per Council direction on January 13, 2009, staff is amending the Plan to suspend the City's contributions for certain employees. 4/STHS VOTE: YES D NO 0 ENVIRONMENTAL REVIEW The Environmental Review Coordinator has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project" as defined under Section 15378 (b)(4) of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary. RECOMMENDATION Council approve the resolution. BOARDS/COMMISSION RECOMMENDATION Not applicable. DISCUSSION In December 2001, City Council approved a deferred compensation plan pursuant to Internal Revenue Code section 401(a) for certain employees. The Plan provided for a mandatory employee contribution and an employer (City) contribution. On January 13, 2009, City Council, as part of a budget reduction plan, voted to suspend the City's contributions for all participating employees except for the City Manager, City Attorney, 4-1 MARCH 3, 2009 ItemL Page 2 of3 and City Clerk who all have employment contracts securing their 401(a) plans. This suspension would be effective starting on the pay period beginning January 16, 2009 through the end of the fiscal year 2009/2010. This matter has been reviewed by special tax counsel with the law firm of Luce, Forward, Hamilton and Scripps who has determined that the City may suspend its contributions to the 401(a) plan. Counsel has also determined that the employees' contributions to the plan must continue because they were made through an irrevocable election. Accordingly, staffhas prepared an amendment to the Adoption Agreement for the City of Chula Vista Money Purchase Retirement Plan which provides for the suspension of the City's contribution. DECISION MAKER CONFLICT Staff has reviewed the decision contemplated by this action and has determined that it is not site specific and consequently the 500 foot rule found in California Code of Regulations section 18704.2(a)(1) is not applicable to this decision. FISCAL IMP ACT This action should result in a savings to the General Fund of approximately $56,000 for the remainder of the current fiscal year and approximately $160,000 in savings for fiscal year 2009/2010. ATTACHMENTS A. Record of Action Taken - January 13,2009 B. 401(a) Plan Administrative Agreement Prepared by: N. Mandery, Treasury Manager, Finance Dept. 4-2 , , , f11A--c.C/h I'll e{)}- A ~"I?- -~- "-;: -;;::--,;:.-..: ~~~~ CHOrA ~STA Office of the City Clerk RECORD OF ACTION TAKEN AT THE REGULAR :MEETING OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ON JANUARY 13, 2009 The. following is the action taken by the Chula Vista City Council at its meeting of January 13, 2009 regarding the 401(a) plan: ACTION: Deputy Mayor McCann moved to suspend 401(a) matching contributions by the City of Chula Vista for current recipients, other than City Manager, City Attorney, and City Clerk, immediately and for fiscal year 2009/2010, Councilmember Castaneda seconded the motion, and it carried 4-1, with Mayor Cox opposed. j lu"'- /! ~ D6nna 1t. Norris, CMC City Clerk City of Chula Vista 4-3 -A~fY)<tr\+ B Amendment to Adoption Agreement for Nationwide Retirement Solutions Governmental Money Purchase Plan and Trust for The City of Chula Vista . WHEREAS the City of Chula Vista (City/Employer) adopted the NRS Governmental Money Purchase Plan and Trust (plan) effective January 1,2002; and WHEREAS the City now wishes to ame.nd the Plan; NOW THEREFORE, the following changes are hereby made: 1. Effective Date of this Amendment is: January 16,2009. 2. This Amendment shall not apply to any Employee who severed employment before the effective date ofthis Amendment. The accrued benefit and vesting percentage of each Participant who is an Employee on the effective date of this Amendment shall be no less than before the Amendment. 3. Section 2 of the Adoption Agreement titled "'FORMULA FOR DETER.J\1INING EMPLOYER'S CONTRlBUTION", subsection "FOR A NON-INTEGRATED PLAN" is hereby deleted and replaced as follows: "FOR A NON-INTEGRATED PLAN o Class One: The amount equal to 1 00% of the maximum dollar amount under IRC Section 47(b)(2)(A) as adjusted for cost of living adjustments described in IRC Section 457(e)(15). o Class Two: Suspended. · Class Three: Suspended. · Class Four: The amount equal to 200% of the maximum dollar amount under IRC Section 47(b)(2)(A) as adjusted for cost ofliving adjustments described in IRC Section 457(e)(l5). · Class Five: 5% of the Participant's Compensation. 4. Section E5 of the adoption Agreement titled "'PARTICIPATING EMPLOYEES' MANDATORY EMPLOYEE CONTRIBUTIONS" is hereby deleted and replaced as follows: 4-4 "P ARTICIP A TING EMPLOYEES' MANDATORY EMPLOYEE CONTRIBUTIONS . Class One and Class Four: Subsequent to their Entry Date and on an annual basis, an eligible Employee shall contribute to the Plan the amount of their Compensation equal to 100% of the maximum dollar amount under the IRe Section 47(b)(2)(A) as adjusted for cost of living adjustments described in IRC Section 457(e)(15). . Class Two: Subsequent to their Entry Date and on an annual basis. an eligible Employee shall contribute 2% of their Compensation to the Plan. . Class Three and Class Five: Subsequent to their Entry Date and on an annual basis, an eligible Employee shall contribute 5% of their Compensation to the Plan. Note: The Mandatory Contribution shaIl be considered "picked up" by the Employer under Sections 414(h) of the Code. AIl Eligible Employees are required to make a Mandatory Contribution as a condition of employment." In Witness Whereof, the Employer. Trustee and Administrator hereby cause this Amendment to be executed. Cheryl Cox Mayor NATIONWIDE RETIREMENT ~TIONS (NRS) )~ ) ~ JJ1. L.. -^-'-^- Vice rre:;ide"r CITY OF CHULA VISTA Date: -rJ,f)/V1~5 H. tv~ Printed Name Attest: City Clerk TRUSTEE Maria Kachadoorian Date: Approved as to Form: City Attorney 4-5 RESOLUTION NO. 2009- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AMENDING THE NATIONWIDE RETIREMENT SOLUTIONS GOVERNMENTAL MONEY PURCHASE PLAN AND TRUST [40l(A) PLAN] WHEREAS, in December 2001, the Chula Vista City Council approved a Deferred Compensation Plan pursuant to Internal Revenue Code section 401(a) for certain employees; and WHEREAS, the Plan provided for a mandatory employee contribution and an employer (City) contribution; and WHEREAS, on January 13,2009, the City Council, as part of a budget reduction plan, voted to suspend the City's contribution for all participating employees except for the City Manager, City Attorney, and City Clerk, who all have employment contracts securing their 401(a) plans; and WHEREAS, this suspension would be effective starting on the pay period beginning January 16,2009, through the end of the fiscal year 2009/2010; and WHEREAS, special tax counsel with the law firm Luce, Forward, Hamilton & Scripps has reviewed this matter and determined that the City may suspend its contributions and that the employees must continue their contributions as they were made through irrevocable elections; and WHEREAS, the City desires to amend the 401(a) plan accordingly. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby amend the Nationwide Retirement Solutions Governmental Money Purchase Plan and Trust [40 1 (A) Plan]. Approved as to form by (\ U' 'f ' , t \J )" 1A.; " . . .(;,/\ BaryQ: Mie~ ld ~ \ ct^ttorney Presented by Maria Kachadoorian Director of Finance J:\Attomey\FINAL RES0S\2009\03 03 09\Amend 401a Deferred Compensation Plan_02~17.09.doc 4-6