HomeMy WebLinkAboutRES 1998-06 - Board r t
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WHEREAS, the defined benefit pension plan makes appropriate provisions for the Board of
Directors to make amendments to the plan from time to time; and
WHEREAS, the Board of Directors further deems it in the best interest of the District to (1) modify
the current pension plan documents to allow immediate distributions to alternative payees under
a Qualified Domestic Relations Order and(2) authorize loans to participants from the plan for the
purpose of providing participants with an alternative method of satisfying the terms of a Qualified
Domestic Relations Order, and
WHEREAS, Truckee Donner Public Utility District intends that the plan and the related trust shall
constitute a tax-qualified retirement plan and retirement trust under the provisions of the Internal
Revenue Code and ERISA so that all contributions made thereunder shall be deductible for income
tax purposes and that any single-sum distribution be eligible for tax-free rollover treatment,
NOW THEREFORE BE IT RESOLVED that the District's defined benefit plan be amended affective
January 1, 1998 in accordance with the Eighth Amendment presented at this meeting and that the
General Manager of the District be appointed as the administrator of the plan's loan program.
BE IT FURTHER RESOLVED that the appropriate officers are hereby authorized and directed to
take any and all further actions necessary to implement the amendment and to ensure that the
plan, as amended, remains a tax qualified plan in accordance with the Internal Revenue Code and
the requirements of the Employee Retirement income Security Act of 1974.
PASSED AND ADOPTED by the Board of Directors at a meeting duly called and held within the
District on the fourth day of March 1998 by the following roll call vote:
AYES: Aguera, Hemig, Jones and Maass.
NOES: None.
ABSTAIN. Sutton.
TRUCK DONNER PUBLIC UTILITY DISTRICT
By
Peter L. Ho ister, C erk of the Board
ATTE
Susan M. Craig, Deputy District CI
Eighth Amendment
to the
Truckee-Donner Public Utility District Pension Plan
Truckee-Donner Public Utility District,hereby amends the Defined Benefit Pension Plan which
was adopted by said Employer on August 15, 1983.
The purpose of this Amendment is to (1)modify the current pension plan documents to allow
immediate distributions to alternative payees under a Qualified Domestic Relations Order, and(2)
authorize loans to participants from the plan for the purpose of providing participants with an
alternative method of satisfying the terms of a Qualified Domestic Relations Order. The effective
date of this Amendment would be January 1, 1998.
Article 1.37 shall be added to the plan as follows:
1.37 ,Qualified Domestic Relations_Order(QDRO)means a signed domestic relations order
issued by a State Court which creates, recognizes or assigns to an alternate payee(s)the right to
receive all or part of a Participant's Plan benefits, and which meets the requirements of Code
Section 414(p). An alternate payee is a Spouse,former Spouse, child, or other dependent who is
treated as a beneficiary under the Plan as a result of the QDRO.
Paragraph 7.1 of Article 7 shall be deleted and replaced by the following:
71General:
The Committee shall direct the Trustee to make payment of any benefit provided under Article 6,
and in accordance with Article 7 herein,in the event of death, disability,termination of
employment,normal retirement age, or plan termination. Notwithstanding other provisions of this
Article to the contrary,payout by the Plan to an alternate payee under a Qualified Domestic
Relations Order, as defined in Section 414(p) of the Code, and determined under Article 12.12 of
the Plan, may be made prior to the time the Participant would be entitled to receive a benefit
under this Article.
The method of distribution of a benefit shall be as elected by the Participant, or by his Beneficiary
in the event of the Participant's death, or by an alternate payee under a Qualified Domestic
Relations Order, and in accordance with the following Articles:
Article 12.12 shall be added to the Plan as follows:
12.12 Determination of Qualified Domestic Relations Order (QDRO)
A domestic relations order shall specifically state all of the following in order to be deemed a
Qualified Domestic Relations Order("QDRO"):
(a) The name and last known mailing address(if any) of the Participant and of each alternate
payee covered by the domestic relations order. However,if the domestic relations order
does not specify the current mailing address of the alternative payee(s),but the Plan
Administrator has independent knowledge of that address, the domestic relations order
may still be a valid QDRO.
(b) The dollar amount or percentage of the Participant's benefit to be paid by the Plan to each
alternate payee, or the manner in which the amount or percentage will be determined.
(c) The number of payments or period for which the domestic relations order applies.
(d) The specific plan(by name)to which the domestic relations order applies.
A domestic relations order shall not be deemed a QDRO if it requires the Plan to provide:
(e) any type or form of benefit, or any option not already provided for in the Plan;
(f) increased benefits, or benefits in excess of the Participant's vested rights;
(g) payment of a benefit earlier that allowed by the Plan's earliest retirement provisions; or
(h) payment of benefits to an alternate payee which are required to be paid to another
alternate payee under another QDRO.
Promptly, upon receipt of a domestic relations order, which may or may not be "Qualified"the
Plan Administrator shall notify the Participant and any alternate payee(s) of such receipt. The
Plan Administrator shall then forward the domestic relations order to the Plan's third-party
administrator to determine whether or not the domestic relations order is "qualified" as defined in
Code Section 414(p). Within a reasonable time after receipt of the domestic relations order,not
to exceed 60 days, the Plan's third-party administrator shall make a determination as to its
"qualified" status and the Participant and any alternate payee(s) shall be promptly notified in
writing of the determination.
If the "qualified" status of the domestic relations order is in question, there will be delay in any
payout to any payee until the status is resolved. Once an order is deemed a QDRO,the Plan
Administrator shall pay to the alternate payee(s) all the amounts due under the QDRO. This
Article will allow payouts to alternate payee(s) and not the Participant.
Section O,paragraph 5 of thg Joinder Agreement shall be changed to allow Participant loans in
accordance with the following policies:
TRUCKEE-DONNER PUBLIC UTILITY DISTRICT
DEFINED BENEFIT PLAN AND TRUST
PARTICIPANT LOAN POLICY
In accordance with the provisions of the TRUCKEE-DONNER PUBLIC UTILITY
DISTRICT DEFINED BENEFIT PLAN AND TRUST, Participants are able to apply for a
loan from the Plan for the following purer ose: to satisfy the Participant's obligation to an alternate
payee under a Qualified Domestic Relations Order. All loan applications will be accepted and
approved by the Plan Trustees on a uniform and non-discriminatory basis and will be subject to
the availability of funds in their accounts. Loan application requests should be directed to the loan
program administrator listed below:
Loan Program Administrator: The General Manager of Truckee-Donner Public Utility District
The rules which will govern the issuance of these loans are as follows:
(a) ,Amounts of Loan: The principal amount of the total of all a participant's loans shall be
limited to the lesser of
(1) $25,000; or
(2) One-half of the balance of a participant's non-forfeitable account balance (fully
vested portion),but not less than$1,000.
Please Note: If a participant has had an outstanding loan balance during the preceding 12
months, the maximum loan available will be reduced.
(b) Term of Loans: Plan loans shall be issued for a maximum term of five(5)years and shall
be repaid in full within this period.
(c) Interest Rate: Interest shall be charged on all loans at two percent (2%) above the
national prime rate of interest quoted at the end of the calendar quarter prior to issuance
of the loan. Loan payments must be level and in an amount which will fully amortize the
loan over its term. Payments will be made not less often than monthly by payroll
deduction and in an amount which will fully amortize the loan over its term The Trustee
will otherwise determine, at his discretion, the terms of repayment.
(d) Documents: All loans shall be evidenced by a written promissory note signed by the
participant and personally guaranteeing the repayment of such loan. The note shall be
secured by the participant's benefits under the plan.
(e) Default Provisions: A loan will be considered in default if payments are more than 90
days past due. If a loan is in default, the Plan will deduct the unpaid principal and interest
from any distribution to which the Participant or his Beneficiary may be entitled, at the
earliest time the distribution is payable under the terms of the plan. If the account balance
is not sufficient to pay the remaining balance of the loan, the Participant or his Beneficiary
will be liable for any balance still due, and shall continue to make payments to the Plan.
Please Note: A loan default may result in two types of distributions: (1) A deemed
distribution, and(2) a distribution of an offset amount.
(1) A deemed distribution occurs when a participant defaults on a loan and there is no
distributable event, i e. death, disability, retirement or termination. The tax
consequences of a deemed distribution are as follows:
(a) Federal and state income taxes are due on entire balance of unpaid principal
and accrued interest.
. - (b) Participants who have not attained age 59 1/2 at the time the loan is made
must pay a 10% additional federal tax and 2 1/2% state tax on the early_
deemed distribution.
(c) The loan will continue to exist as a plan loan even after tax is paid on the
entire unpaid balance. Failure to resume timely payments in accordance
with the terms of the note may create additional deemed distributions of the
unpaid interest as an indirect loan.
(2) A distribution of an offset amount occurs when a distributable event occurs and
the account balance of the participant is reduced(offset)by the amount of the
unpaid principal and interest. The distribution payable to the p articip ant would be
the total vested account balance 1m the unpaid loan principal and interest. The
consequences of an offset distribution are as follows:
(a) Federal and state income taxes are due on entire balance of unpaid principal
and accrued interest.
(b) Participants who have not attained age 59 1/2 at the time the loan is made
must pay a 10% additional federal tax and 2 1/2% state tax on the early
deemed distribution.
(f) Other Rules:
(1) The minimum loan amount shall be$1,000.00.
(2) Loans must be My prepaid from any distribution received by the participant from
the plan.
(3) Participants who have defaulted on loans may be refused subsequent loans by the
Trustee.
(4) A married Participant's legal Spouse must consent to any loan exceeding $3,500.
(5) Failure to make scheduled loan payments may result in serious adverse tax
consequences. Please consult your tax advisor in the event of a loan default.
(6) Loan payments received more than 5 days following the due date will be subject to
a 10%late payment penalty.
(7) Participants shall pay the administrative fee of$75.00 for processing the loan.
(8) Loan payments shall be subject to payroll deduction.
IN WITNESS WHEREOF, Truckee-Donner Public Utility District, has caused this
amendment to be executed by its authorized officer.
Dated this y� day of , 19
Presi nt of the Board