Berkeley Municipal Code Art. 4 Accounts and Vesting

The committee shall establish and maintain an account for each participant and inactive 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, charges against the account and all other information affecting the value of such account. (Ord. 6837-NS § 1 (part), 2005)

Subject to Section 4.39.403, 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. (Ord. 6837-NS § 1 (part), 2005)

Notwithstanding any other provisions of the plan:

A. Limitations applicable to participants.

1. The annual additions, as defined in Code Section 415(c), credited to a participant’s account for any plan year, combined with annual additions to a participant’s account in any related plan, shall not exceed the lesser of (a) $40,000 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 Code, or (b) 100% of the participant’s compensation (as defined in subsection C) 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.

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

B. 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").

C. 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. 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).

Compensation shall include any elective deferral under Section 402(g)(3), and any amount which is contributed or deferred by the employer at the election of the employee and is not includible in income by reason of Section 125, 132(f)(4) or 457 of the Code.

Notwithstanding the foregoing, for plan years beginning on or after January 1, 2008, for purposes of applying the maximum benefit limitations under this Section 4.39.403(C), 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 4.39.403(C), “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. (Ord. 7585-NS §§ 1,2, 2017; Ord. 6837-NS § 1 (part), 2005)

The trustee shall value the trust and all accounts under the plan at least once per year at the end of each plan year. The valuation shall be made in accordance with all applicable laws, shall be based on the fair market value of the assets held under the trust, and shall take into account all contributions, distributions, gains and losses, appreciation and depreciation of assets held under the trust and expenses charged to the trust. (Ord. 6837-NS § 1 (part), 2005)

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, and appreciation and depreciation, minus;

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

D. Expenses, if any, chargeable to the account. (Ord. 6837-NS § 1 (part), 2005)

A participant’s account balance shall be at all times fully vested and non-forfeitable. (Ord. 6837-NS § 1 (part), 2005)

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 (aggregated with the participant’s loans from all related plans) 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 or officers 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 legally enforceable promissory note that specifies the amount and date of the loan and the repayment schedule (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 all or part 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, and will be 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 loan may be made under this plan unless, at the time the promissory note is signed by the participant, the participant’s spouse (if any) consents to the use of the participant’s account as security for the note. Such consent must:

1. Acknowledge the effect of the consent;

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 note is renegotiated, extended, renewed or revised.

H. Shall be made under specific procedures established by the committee. Such procedures shall include but not be limited to 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 effects of a default. In the event of a default, a deemed distribution of the loan shall occur in accordance with governing Treasury regulations.

Notwithstanding subsection D above, in no event 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. 6837-NS § 1 (part), 2005)

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

If a participant becomes an inactive participant, becomes an employee who is not a police employee, and then participates in SRIP II, the balance credited to their account under this plan (as of the date of transfer) shall be transferred from this plan to SRIP II as soon as administratively feasible. After such transfer, no further benefits shall be due and payable to such person or their beneficiaries from this plan and they shall be due and payable from SRIP II. (Ord. 6837-NS § 1 (part), 2005)

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. 6837-NS § 1 (part), 2005)