Berkeley Municipal Code Art. 4 Accounts and Vesting

The committee shall establish and maintain an account for each participant in which shall be recorded the amount of such participant’s share of the employer’s contribution, income or loss of the trust, withdrawals and all other information affecting the value of such account. (Ord. 6748-NS § 1, 2003)

Upon making an employer contribution to the trust, the employer shall notify the committee or its designee in writing as to the amount of each such contribution made on behalf of each participant. The committee or its designee shall then allocate such contributions to the accounts of the participants for whom such contributions were made.

The above notwithstanding, the amount of employer contributions for any participant shall not exceed in any one plan year the sum of $30,000 plus any permissible cost-of-living adjustments under regulations issued by the Secretary of Treasury pursuant to the provisions of Section 415(d) of the Internal Revenue Code. (Ord. 6748-NS § 1, 2003)

4.38.402(A) Limitation on allocations to participants.

Notwithstanding any other provisions of the plan:

A. Limitations applicable to participants in defined contribution plans only.

1. The annual additions, as defined in Internal Revenue Code Section 415(c)(2), credited to a participant’s accounts (exclusive of any amounts credited in accordance with Section 4.38.403) for any plan year commencing on or after January 1, 1988 shall not exceed the lesser of (a) $30,000 or such larger amount, as may be specified by the Secretary of Treasury or their delegate on account of increases in the cost-of-living as provided in Section 415(d) of the Internal Revenue Code of 1986 as amended (Code), or (b) 25% of the participant’s compensation (as defined in subsection D for purposes of this section, and subsections B and C of this plan) for such year.

2. In the case of any participant who also participates in a related plan (such a plan shall mean any defined contribution plan (as defined in Section 415(k) of the Code), other than this plan, maintained by the employer, including, if applicable, after December 31, 1985 any welfare benefit fund that is defined in Section 419(e) of the Code) the sum of their annual addition under the plan and their annual additions under all related plans for any plan year commencing on or after January 1, 1988, shall not exceed the lesser of (a) the amount set forth in subparagraph A1(a) above or (b) 25% of the sum of (1) the participant’s compensation for such year and (2) their remuneration for such year. The compensation limitation referred to in subparagraph (b) shall not apply to any contribution for medical benefits (within the meaning of Section 401 (h) or Section 419A(f)(2) of the Code) which is otherwise treated as an annual addition under Section 415(l)(1) or Section 419A(d)(2) of the Code.

3. To the extent necessary to satisfy the limitations of paragraphs A1 and A2 above, the committee shall reduce the net contribution it would otherwise make for the participant’s benefit for the applicable plan year.

B. The combined limitations applicable to participants who also participate in a defined benefit plan are repealed for plan years beginning on and after January 1, 2000.

C. Adjustments on account of excessive credits. If the amount credited to a participant’s accounts for any plan year would exceed the amount permitted under the limitations of subsection A. above, corrections will be made, as determined by the committee pursuant to the Employee Plans Compliance Resolution System described in Revenue Procedure 2016-51, as may further be modified by the Internal Revenue service from time to time (collectively, "EPCRS").

D. Code Section 415 compensation definition. Participant’s compensation for the purposes of this section shall mean a participant’s earned income, wages, salaries, bonuses and fees for professional services, and other amounts received for personal services actually rendered in the course of employment with the employer maintaining the plan and excluding the following:

1. Employer contributions to a plan of deferred compensation which are not included in the employee’s gross income for the taxable year in which contributed, or employer contributions under a simplified employee pension plan to the extent such contributions are deductible by the employee, or any distributions from a plan of deferred compensation;

2. Amounts realized from the exercise of a non-qualified stock option, or when restricted stock (or property) held by the employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture;

3. Amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option;

4. Other amounts which received special tax benefits, or contributions made by the employer (whether or not under a salary reduction agreement) toward the purchase of an annuity described in Section 403(b) of the Code (whether or not the amounts are actually excludable from the gross income of the employee).

Notwithstanding the foregoing, for plan years beginning on and after January 1, 1998, compensation shall include any amount that would have been included in the foregoing description, but for the participant’s election to defer payment under Section 125, 402(e)(3), 402(h)(1)(B), 403(b), or 457(b) of the Code and certain contributions described in Section 414(h)(2) of the Code that are picked up by the employing unit and treated as employer contributions. Effective for plan years beginning on and after January 1, 2001, compensation shall also include any amount that is not included in the participant’s taxable gross income pursuant to Section 132(f) of the Code. For plan years beginning on or after January 1, 2008, for purposes of applying the maximum benefit limitations under this Section 4.38.402(A), compensation shall also include compensation paid by the later of 2½ months after an employee’s severance from employment with the Employer or the end of the plan year that includes the date of the employee’s severance from employment, if, absent a severance from employment, such payment would have been paid to the employee while the employee continued in employment with the Employer, and is regular compensation for services during the employee’s regular working hours, compensation for services outside the employee’s regular working hours (such as overtime or shift differential), commissions, bonuses or other similar compensation. In addition, effective for plan years beginning on an after January 1, 2008, compensation may not exceed the amount described in Code section 401(a)(17).

For plan years beginning after December 31, 2008, the plan will treat Differential Wage Payments as Compensation for all Plan contributions and benefit purposes. For purposes of this Section 4.38.402(A).D, “Differential Wage Payments” means any payment that is (i) made by the Employer to an individual with respect to any period during which they are performing service in the uniformed services (as defined in chapter 43 of title 38, United States Code) while on active duty for a period more than 30 days; and (ii) represents all or a portion of the wages the individual would have received from the Employer if they were performing services for the Employer.

A participant’s compensation for any limitation year is the compensation actually paid or includable in gross income during such year. (Ord. 7584-NS §§ 2, 3, 2017; Ord. 6748-NS § 1, 2003)

The trustee shall value the trust at least once per year at the end of each plan year. The valuation shall be made in accordance with all applicable laws. (Ord. 6748-NS § 1, 2003)

The value of each participant’s account shall be equal to:

A. All contributions made to the participant’s account, adjusted for;

B. Earnings and net investment gain or loss, minus;

C. Any amounts withdrawn in accordance with the plan; and

D. Expenses, if any, chargeable to the account. (Ord. 6748-NS § 1, 2003)

A participant’s account balance shall be at all times fully vested and non-forfeitable. (Ord. 6748-NS § 1, 2003)

If a financial emergency arises from such causes as sickness of a participant or their family, layoff, divorce, or dissolution of marriage, need to provide adequate housing, need to provide for education of children or dependents, or such other financial need deemed acceptable by the committee, the committee, in its sole discretion and upon written application of such participant, may make a loan or loans to such participant in an amount aggregating under this plan or any other plan (related plan) maintained by the employer not in excess of the lesser of (1) $50,000 reduced by the excess (if any) of the highest outstanding balance of loans during the one year period ending on the day before the loan is made, over the outstanding balance of loans from the plan on the date the loan is made, or (2) 50% of the participant’s vested account, provided that such loans:

A. Are available to all participants on a reasonably equivalent basis, and in the same percentage of their vested balances;

B. Are not made available to highly compensated employees, officers, or shareholders in an amount greater than the amount made available to other employees;

C. Are adequately secured by up to 50% of a participant’s vested account balance;

D. Will in all events be due and payable in substantially level payments made not less frequently than quarterly in five years or less (unless the loan is used to acquire a dwelling which is used or to be used within a reasonable time as the principal residence of the participant);

E. Are evidenced by the borrowing participant’s promissory note (including, in the case of a married participant, spousal consent to such loan) for a fixed term bearing interest at a rate commensurate with the prevailing interest rate charged on similar commercial loans by persons in the business of lending money;

F. If a valid consent has been obtained in accordance with subsection G. below, then, notwithstanding any other provision of this plan, upon distribution of a participant’s account, all notes are due and payable, and total amounts unpaid, including principal and interest, will be deducted from the amount distributed, but only if such reduction is used as a repayment of the loan. If less than 100% of the participant’s vested account is payable to the surviving spouse, then the account shall be adjusted by first reducing the vested account by the amount of the security used as repayment of the loan, and then determining the benefit payable to the surviving spouse;

G. Notwithstanding the above, no portion of a participant’s account may be used as security for a loan unless, at the time the security interest is entered into, the participant’s spouse (if any) consents to the use of the participant’s account as security. Such consent must:

1. Acknowledge the effect of the consent; and

2. Be signed within the 90 day period ending on the date on which the loan is to be so secured; and

3. Be witnessed by a plan representative or notary public.

Such consent shall thereafter be binding with respect to the consenting spouse or any subsequent spouse with respect to that loan.

A new consent shall be required if the account is used for renegotiation, extension or renewal, or other revision for the loan;

H. Shall be made under specific procedures established by the administrative committee. Such procedures shall include the basis on which loans will be approved or denied; the limitations, if any, on the types and amounts of loans offered; and the events constituting a default and the steps that will be taken to preserve plan assets in the event of such default.

Notwithstanding subsection D. above, in no event, except as may otherwise be required by ERISA, may the interest rate charged for a loan exceed any limit established under the applicable state usury law. Such loan shall be treated as an earmarked investment of the borrowing participant who shall be entitled to all earnings or losses thereon. (Ord. 6748-NS § 1, 2003)

If a prior participant in the Supplementary Retirement and Income Plan I elects to commence participation in this plan, such participant’s account in the Supplementary Retirement and Income Plan I shall be transferred to this plan as of the participation date as defined in Section 4.38.201 herein.

On or about January 1, 2005, or as soon thereafter as administratively feasible, the trustee shall transfer, in a plan-to-plan transfer of assets and liabilities, an amount equal to the sum of the account balances of the police employees who become participants in the Supplementary Retirement and Income Plan III ("SRIP III") on January 1, 2005, and who have account balances in this plan as of December 31, 2004. The account balances shall be valued as of December 31, 2004 (plus applicable earnings and losses incurred to the date of transfer). Each police employee with an account balance in this plan as of December 31, 2004 whose account is transferred to SRIP III shall be credited with the same account balance as of January 1, 2005 in SRIP III. The accounts shall remain invested as the police employees designated under this plan until the police employee affirmatively changes their investment election in accordance with procedures established by the committee for SRIP III. No change in investment elections will be permitted during any necessary "black out" period that is administratively necessary to transfer the account balances.

If an employee becomes a participant in this plan and previously was a participant in SRIP III as a police employee, the balance credited to their account in SRIP III (as of the date of transfer) shall be transferred from SRIP III to this plan as soon as administratively feasible. After such transfer, all benefits related to such transfer shall be due and payable from this plan and not from SRIP III. (Ord. 6838-NS § 4 (part), 2005; Ord. 6748-NS § 1, 2003)

Subject to the committee’s powers and duties under the plan, participants shall direct the investments of funds allocated to their accounts. The committee or its authorized agent(s) shall designate the time and manner of the selection and the specific investment options available to participants.

Notwithstanding the foregoing or any other provision of this plan, the committee reserves its right to direct the investment of any and all plan assets if, for any reason, the committee determines that such action is necessary to fulfill its fiduciary duties. (Ord. 6748-NS § 1, 2003)