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HomeMy WebLinkAboutCity of Tamarac Resolution (96)1 Temp. Reso. #9749 April 1, 2002 Page 1 CITY OF TAMARAC, FLORIDA RESOLUTION NO. R-2002- 96 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF TAMARAC, FLORIDA, AUTHORIZING THE APPROPRIATE CITY OFFICIALS TO APPROVE AMENDMENTS TO THE CITY'S ICMA 457 DEFERRED COMPENSATION PLAN EFFECTIVE JANUARY 1, 2002 IN COMPLIANCE WITH THE ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT; PROVIDING FOR CONFLICTS; PROVIDING FOR SEVERABILITY; AND PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the City has established a 457 Deferred Compensation Plan for Appointed and Elected Officials, and all other City employees through the International City Manager's Association Retirement Corporation (ICMA-RC); and WHEREAS on June 7, 2001, a tax bill was signed (the Economic Growth and Tax Relief Reconciliation Act of 2001 or "EGTRRA") which made changes to all 457 Deferred Compensation Plans as described in Exhibit 1; and WHEREAS, amendments to the Internal Revenue Code have been enacted that require our plan documents to be amended accordingly; and WHEREAS, the ICMA Retirement Corporation has implemented all the changes required by law in the City of Tamarac's 457 Deferred Compensation Plan to ensure compliance with the law; and WHEREAS, ICMA-RC has requested that the City officially approve the amendments; and Temp. Reso. #9749 April 1, 2002 Page 2 1 WHEREAS, the City's ICMA 457 Deferred Compensation Plan Documents have been amended to meet "EGTRRA" requirements; and WHEREAS, the City Manager and Personnel Director recommend approval of the amendments to the City's 457 Deferred Compensation Plan Documents effective January 1, 2002; and WHEREAS, the City Commission has deemed it to be in the best interest of the citizens and residents of the City of Tamarac to approve the amendments to the ICMA 457 Deferred Compensation Plan. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF TAMARAC, FLORIDA: SECTION 1: The foregoing "WHEREAS" clauses are hereby ratified and confirmed as being true and correct and are hereby made a specific part of this Resolution. SECTION 2: That the appropriate City officials are hereby authorized to approve the amendments to the City's ICMA 457 Deferred Compensation Plan in accordance with "EGTRRA" requirements as detailed on Exhibit 1, effective January 1, 2002. SECTION 3: All resolutions or parts of resolutions in conflict herewith are hereby repealed to the extent of such conflict. SECTION 4: If any clause, section, other part or application of this Resolution is held by any court of competent jurisdiction to be unconstitutional or invalid, in part or in application, it shall not affect the validity of the remaining portions or applications of this Resolution. E 1 Temp. Reso. #9749 April 1, 2002 Page 3 SECTION 5: This Resolution shall become effective immediately upon its passage and adoption. PASSED, ADOPTED, AND APPROVED this 10th day of April, 2002. ATTEST: MARION S ENSON, CMC CITY CLERK I HEREBY CERTIFY that I have approved this RESQrCWTIUN as to form, MITCHELL �°KRAFT CITY ATTORNEY '0 z4ter� -0 JOE SCHREIBER MAYOR RECORD OF COMMISSION VOTE: MAYOR SCHREIBER A ei DIST 1: V/M. PORTNER 6Xg DIST 2: COMM. MISHKIN A er DIST 3: COMM. SULTANOF_Ayei DIST 4: COMM. ROBERTS A -ye, ine cuui iax neim, Hui s OVERVIEW OF • •N PROVISIONS Rules in Effect in 2001 Tax Relief Act Provision What Does It Mean To You Topic Contribution Contributions to a 457 plan are limit- Beginning in 2002, the 457 plan con- Allows you to save additional funds Limits ed to the lesser of (1) 25% of taxable tribution limit is raised substantially. for retirement. compensation before reduction for The limit is the lesser of (1)50% of 457 deferrals or (2) $8,500. taxable compensation before reduc- Equates the maximum contribution tion for 457 deferrals or (2) a dollar limit for 457 plans to the elective amount in effect that year, starting deferral limit for 401(k) and 403(b) with $11,000 in 2002. plans, putting public sector employ- ees on a par with private, education, and nonprofit sector employees. Pre -retirement You may make total contributions of You may make contributions of up to You can save additional funds for "Catch -Up" up to $15,000 per year for the three twice the contribution limit for each retirement by increasing the amount years prior to Normal Retirement of the three years before Normal of catch-up contributions as you get Age. Retirement Age, beginning with closer to retirement age. $22,000 in 2002. (See "Contribution Limits" above.) Age 50 Catch- No provision. Beginning in the year you reach age Allows you to increase your retire - Up 50, you may make additional annual ment savings as you get closer to catch-up contributions up to a spec- retirement. ified dollar limit. Coordination Contributions to a 401(k) or 403(b) The coordination requirement is Allows you to participate fully in a Requirements plan reduce dollar -for -dollar the repealed. section 403(b) and/or section 401(k) amount of contributions you can plan and potentially make the maxi - make to a 457 plan (and vice versa). mum contributions to each plan, in the situation where you also partici- pate in a 457 plan. Tax Credit for No provision. A tax credit of as much as $1,000 is Provision provides an incentive for Low- and provided to qualifying low- and mid- qualifying low- to medium income Middle -Income dle-income savers who make salary individuals to contribute to retire - Savers reduction contributions to retire- ment plans such as 457 plans. ment plans such as 457 plans. The 2001 Tax Relief Act OVERVIEW OF • • Topic Rules in Effect in 2001 Tax Relief Act Provision What Does It Mean To You More flexible 457 distribution rules are restrictive. 457 plan participants should have The rules for timing of taxation of 457 Distribution For example, you must elect a the same flexibility as participants benefits are conformed to the rules Rules beginning payment date within a under other plans such as 401(k) for 401 plans, appearing to give you restricted period after leaving plans. This means you would be the same level of flexibility in planning employment. In addition, once distri- able to stop and restart your pay- the timing and amount of distributions butions begin, your payment sched- ments as well as to increase and as 401 participants currently enjoy. It ule may not be changed. decrease them. appears that beginning payment date elections and payment schedules will Distributions must generally be no longer be irrevocable. made at least annually in "substan- tially nonincreasing amounts." It appears you will be able to change your payment schedule to better suit your retirement income needs. If you have separated from service and are already receiving payments, or if you have named a beginning payment date but have not yet begun to receive payments, you may want to change your selections. ICMA-RC has made this easy for you —just download and print a copy of the ICMA-RC Payment Schedule Change Form from our Web site at www.icmarc.org/forms. Of course, you can also call Investor Services (800-669-7400) and request a copy of the form. Just complete the form and return it to ICMA-RC by fax or mail. We will take care of the rest. Withholding and In general, distributions from 457 457 distributions are subject to the Tax reporting and withholding for all Reporting of 457 plans are treated as W-2 wages and same withholding and reporting retirement plans will be consistent. Distributions reported as such. rules to which 401 plans are cur- Due to the portability provisions of rently subject. They will be reported the new law (see Section C), this You specify withholding instructions on a 1099-R. "Eligible rollover distri- will alleviate the confusion that on a Form W-4. butions" not directly rolled over will might have existed for participants if be subject to mandatory 20 percent the rules were different for different income tax withholding and other plans. withholding for non -eligible rollover distributions will be done as direct- ed by you on a Form WAR Division of 457 457 payments to your ex -spouse as Distributions may be made to the ex- Places participants and "alternate Benefits Upon a result of a divorce may not be spouse or other payee before you payees" of both 401 and 457 plans Divorce made before you separate from are entitled to a distribution. In addi- on a level playing field in divorce sit - service. The participant receives tax tion, the ex -spouse will pay tax on uations. reporting for the ex -spouse's distri- the distribution. bution. The 2001 Tax Relief Act OVERVIEW OF PORTABILITY PROVISIONS Topic Rules in Effect in 2001 Tax Relief Act Provision What Does It Mean To You Rollovers Out of Amounts paid from a 457 plan may Allows portability of retirement Expanding the rollover options for 457 Plans Into not be rolled into a Traditional IRA or assets between (to and from) retire- individuals in employer -sponsored Various Types of other type of retirement plan. They ment plans (401, 403(b), governmen- retirement plans and IRA owners Plans may only be transferred to another tal 457 plans and Traditional IRAs). provides opportunity to consolidate 457 plan. retirement savings and further You may roll 457 assets to another incentive for individuals to accumu- plan or Traditional IRA when you are late funds on a tax -deferred basis eligible to take a distribution from for retirement. the 457 plan (generally upon separa- tion from service), if the distribution is an "eligible rollover distribution" (ERD). Rollover Into Amounts paid from a 401 or 403(b) Allows portability of retirement Expanding the rollover options for 457 Plans From plan may only be rolled over to the assets between (to and from) retire- individuals in employer -sponsored Various Types of same type of plan or a Traditional ment plans (401, 403(b), governmen- retirement plans and IRA owners Plans IRA. tal 457 plans) and Traditional IRAs. provides opportunity to consolidate retirement savings and further Amounts may not be rolled over incentive for individuals to accumu- from a Traditional IRA (other than a late funds on a tax -deferred basis "conduit" IRA) to any type of for retirement. employer plan. Purchase of Amounts under 457 plans cannot be Allows you to transfer 457 assets, on Many employees work for multiple Service Credits transferred or used to purchase a pre-tax basis, to purchase service state or local government employers in Governmental service credits under defined bene- credits in a defined benefit pension during their careers. Gives you the Defined Benefit fit pension plans. plan, or to repay the defined benefit flexibility to use all or a portion of Pension Plans pension plan a prior refund of your 457 account balance to employee contributions. increase your benefit under your defined benefit pension plan. Note: the receiving defined benefit pension plan must allow transfers from 457 plans before such a trans- fer can be made. Expansion of Unlike surviving spouses of 401 plan Allows surviving spouses to roll Expanding rollover options provides Spousal participants, surviving spouses of distributions from plan in which the the surviving spouse with more Rollovers deceased 457 plan participants may deceased spouse participated to a flexibility. not roll distributions into any other 401, 403(b) or 457 plan in which the retirement plan or IRA. surviving spouse participates. Distributions may also be rolled into a Traditional IRA.