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Resolution 2731-01 " \., ,-,. BENEFITSCORP, INC. RESOLUTION NO. 2731-01 SECTION 457 ELIGIBLE DEFERRED COMPENSATION PLAN FOR GOVERNMENTAL EMPLOYERS The Employer named below hereby establishes (or, as applicable, amends and restates) a Deferred Compensation Plan for eligible Employees as provided in this Adoption Agreement and the accompanying BenefitsCorp Section 457 Eligible Deferred Compensation Plan document. A. EMPLOYER INFORMATION. 1. EMPLOYER'S NAME AND ADDRESS: South Tahoe Public Utility District 1275 Meadow Crest Drive South Lake Tahoe, CA 96150 2. TELEPHONE NUMBER: 530-544-6474 3. TAX 10 NUMBER: 94-1337914 4. NAME OF PLAN: South Tahoe Public Utility District Deferred Compensation Plan and Trust. 5. NAME OF PLAN ADMINISTRATOR (the Employer unless another person(s) is appointed as set forth in section 3.02 of the Plan): General Manager, Chief Financial Officer and Human Resources Director. B. EFFECTIVE DATE. (Check box 1 OR box 2 and fill in the blank(s).) 1. [] This is a new Plan having an effective date of 2. [ X] This is an amended and restated Plan. The effective date of the original Plan was September 1, 1977. The effective date of the amended and restated Plan is Jan. 1 It, 2002. -1- C. -.. '-' \.., CUSTODY OF ASSETS. (Check each box that applies.) Internal Revenue Code ("Code") 9 457(g) shall be satisfied by setting aside plan assets for the exclusive benefit of participants and beneficiaries, as follows: 1. [ x] in a trust pursuant to the provisions of Article V of the Plan. The Employer, or certain employees (or holders of certain positions with Employer) as named on page 6 of this Adoption Agreement shall be the Trustee. 2. [ ] in a trust pursuant to a separate written trust agreement entered into between the Employer and the bank or trust company named on page 5 of this Adoption Agreement. 3. [ ] in one or more annuity contracts meeting the requirements of Code 9 401 (t). 4. [ ] in a custodial account meeting the requirements of Code 9401(f), pursuant to a separate written agreement with the Custod ian named on page 4 of this Adoption Agreement. D. ELIGIBLE EMPLOYEES. (Check each box that applies.) 1. "Employee" shall mean: [ X ] any full-time employee working 40 or more hours per week [ X ] any permanent part-time employee working fewer than 40 hours per week 2. 3. [] any seasonal, temporary or similar part-time employee 4. [ X ] any elected or appointed official 5. [] any independent contractor who performs services for and receives any type of compensation from the Employer (or any agency, department, subdivision or instrumentality of the Employer) for whom services are rendered. If Box 0.4 is not checked, elected or appointed officials will not be treated as Employees and will not be eligible to participate in the Plan, without regard to whether they are treated as common- law employees or independent contractors for other purposes.' The following are the additional requirements or limitations, if any, for one or more of the specified class(es) of employees to be eligible to participate in the Plan: New Plan participants must have completed six months service with the District. -2- E. FICA REPLACEMENT ("3121") PLAN. Not Applicable '-' Check the applicable box(es) if this Plan is a retirement system provkJing FICA replacement retirement benefits pursuant to regulations under Code ~ 3121 (b)(7)(F) for [ ] full time employees and/or [ ] part-time employees, and complete the following. (Check each box that applies.) 1. [] The Employer shall make an annual contribution to each Participant's account equal to percent of such Participant's Compensation.-. 2. [] Each Participant is required to make an annual contribution of _ percent of Compensation. (Note: The total percentage of 1 and 2 must '!qual at least 7.5%.) In the event that this Plan is a retirement system providing FICA replacement retirement benefits as described above, all references to Unforeseeable Emergency distributions in the plan document shall be null and void. F. ROLLOVERS. (Check each box that applies.) 1. [ X ] Rollovers from eligible Code ~~ 457(b) plans SHALL BE allowed. 2. [] Rollovers from plans qualified under Code ~~ 401 (a), -403(a) and 403(b) SHALL BE allowed. \., 3. [] Rollovers from Individual Retirement Accounts and Annuities described in Code ~~ 408(a) and (b) SHALL BE allowed. G. PARTICIPANT LOANS. (Check Box 1 OR Box 2.) 1. [] The Administrator MAY direct the Trustee to make Participant loans in accordance with Article 9 of the Plan. 2. [ X ] The Administrator MAY NOT direct the Trustee to make Participant loans in accordance with Article 9 of the Plan. H. QUALIFIED DOMESTIC RELATIONS ORDERS. Box 2.) (Check Box 1 OR 1. [ X ] The Plan SHALL accept qualified domestic relations orders as provided in section 12.02 of the Plan. 2. [] The Plan SHALL NOT accept qualified domestic relations orders as provided in section 12.02 of the Plan. ~ -3- '-' This Plan and Adoption Agreement was passed and adopted at a duly held Regular Meeting of the Board of Directors of the South Tahoe Public Utility District on the 20 day of December 2001 by the following vote: Ayes: Directors Wallace, Schafer, Becker, Jones, Mosbacher Noes: None Absent: None EMPLOYER'S AUTHORIZED SIGNORS: ~.u)~ President of the Board South Tahoe Public Utility District By: Date: / :;;;>h.OM / . ( \. ~ -4- CUSTODIAN Not Applicable '-' [Complete this section only if box C.4. on page 2 was checked.] Employer has elected to meet the trust requirement of Code ~ 457(g) by setting plan assets aside for the exclusive benefit of participants and beneficiaries in a custodial account meeting the requirements of Code ~ 401 (f). The bank or trust company custodian named below shall be the "deemed trustee". of plan assets held pursuant to the custodial agreement. A. Effective , the following named bank or trust company is hereby appointed as custodian of all or a portion of the assets of the Employer's ~ 457 Deferred Compensation Plan: B. INDIVIDUAL(S) AU1HORIZED TO ISSUE INSTRUCTIONS TO CUSTODIANITRUSTEE: This appointment is duly signed on behalf of the Employer and the Custodian. \.. EMPLOYER [Signature] [Title] [Date] CUSTODIAN [Signature] [Title] [Date] \. -5- '7 TRUSTEE '-' A. Effective January 1, 2001, the following is hereby appointed as trustee for and accepts the trust created by the Employer's ~ 457 Deferred Compensation Plan: Complete this section A. 1. only if box C. 1. on page 2 was checked. [ ] The Employer or [ X ] The following named positions: General Manager, Chief Financial Officer, and Human Resources Director. Complete this section A. 2. only if box C. 2. on page 2 was checked. [ ] The following named bank or trust company: B. NAME(S) OF EMPLOYEE(S) AUTHORIZED TO ISSUE INSTRUCTIONS TO TRUSTEE: General Manager, Chief Financial Officer, and Human Resources Officer. These positions are presently held by Robert G. Saer, Rhonda McFarlane, and Nancy Hussmann. \" This Trustee appointment is duly signed on behalf of the Employer and the Trustee. EMPLOYER ~W~ President of the Board South Tahoe Public Utility District TRUSTEES ~-!~ Robert G. Ba"er, General Manager ~~"L \'"Y'.C ~~'.O"-V"V,-",---~ Rhonda McFarlane, Chief Financial Officer ~Q f1~ kJu;QL1JY'Cl Afi../' Nan y Hus mann, Human Resources Director '-' 12-20-01 [Date] -6- ~ \., ... RESOLUTION NO. 2731-01 ~+. ~ >t BenefitsCorp *~ rho I'tlwl'rofl'arl.Mriil(fs, " Great-West/BenefitsCorp EGTRRA Implementation Package Resolutions Adopted This December 20 ,2001 Name of Plan Sponsor: South Tahoe Public Utility District Name of Plan: South Tahoe Public Utility District Deferred Compensation Plan and Trust Name of Board or Committee Authorized to Amend the Plan: South Tahoe Public Utility District Board President, Duane Wallace Resolution Resolved, that with respect to the above referenced eligible 457 plan, each of the amendments attached hereto is adopted effective January 1, 2002 or such other effective date as indicated on the pages attached. Further resolved that the appropriately authorized persons shall cause the plan document to be amended to reflect these new provisions. Signatures of Board/Committee ~~~ . ~ --Pres )rL9 ''If- 5 ~ BenefitsCorp ~ ThePml"'I'nfPa/'tnaing'. ~ Great-West/BenefitsCorp EGTRRA Implementation Package Issue #1 : Elective Deferral and Catch-up Limits; Repeal of Coordination Name of Plan Sponsor: South Tahoe Public Utility District South Tahoe Public Utility District Name of Plan; Deferred Canpensation Plan and Trust Issue EGTRRA permits the maximum regular deferral limit to be the lesser of 100% of includible compensation or $11,000 in 2002, plus $1,000 per year up to $15,000 in 2006, then indeved ir $500 Increments, Catch-up contributions during the three years prior to normal retirement age may be increased from $15,000 to twice the regular elective deferral limit. Deferrals to other types of elective deferral plans, such as 401 (k) and 403(b), are no longer required to reduce the amount that can be contributed to the 457plan. II. Discussion Adopting these provisions requires the plan to delete "$7,500" each place it J appears and insGrt "tre applicable dollar amount" in section 457(e)(15). Likewise, the catch-up limit would be amended by deleting the $15,000 cap and inserting "twice the applicable limit set forth in section 457(e)(15)," Delete all references to the "33 1/3" of includible compensation limit and insert "100%." Delete all language reducing deferrals to the 457 plan by amounts contributed to other elective deferral plans. III. Great-WestlBenefitsCorp Comments These are favorable changes for participants, and allow for greater account growth. IV. Staff Recommendation Staff recommends these changes. V. Board/Committee Decision W Adopt these provisions effective January 1, 2002 D Do not adopt these provisions .I 6 '-' ~ BenefitsCorp ~ Thel'a/l'erafPar/rmnllfl'W Great-West/BenefitsCorp EGTRRA Implementation Package Issue #2: Additional Contributions for Participants Age 50 and Over Name of Plan Sponsor: South Tahoe Public Utility District South Tahoe Public Utilitv District Name of Plan: Deferred Canpo--nsation Pl~ and Trust I. Issue \., EGTRRA permits employees who turn age 50 or over during the calendar year to contribute an additional amount into the plan for all plan years . except during the three years prior to normal retirement age while they are utilizing the regular 457 catch-up provision. New Code section 414(v) sets out the additional amount applicable to 457 plans. The additional amount is $1,000 in 2002, increasing $1,000 each year up to $5,000 in 2006. This additional amount is then indexed in $500 increments based upon cost-of- living. II. Discussion Adopting this provision requires an amendment to the plan document allowing employees age 50 and over to contribute additional amounts as allowed under new Code section 414(v), subject to section 414(v)(6)(C) which states that the age 50 catch-up is not available during the three years the participant is utilizing regular 457 catch-up. III. Great-WestJBenefitsCorp Comments This is a favorable change for participants, and allows for greater account growth. IV. Staff Recommendation Staff recommends this change. V. Board/Committee Decision ~ This provision is adopted effective January 1, 2002. D This provision is not adopted. \.. 7 ~ BenefitsCorp ~ The Pm",rafParlnmillg<w ..,J Great-WestlBenefitsCorp EGTRRA Implementation Package Issue #3: Flexible 457 Distributions; Required Minimum Distributions Name of Plan Sponsor: South Tahoe Public Utility District South Tahoe Public Utility District Name of Plan: Deferred Compensation Plan and Trust I. Issue EGTRRA permits 457 plan assets to remain tax deferred until actually distributed from the plan. Under amended section 457(a), the participants' account balances are no longer taxable when "made available." The special distribution rules under 457(d) are repealed such that payments are no longer required to be paid in substantially non-increasing amounts paid at least annually. Non-spouse beneficiaries may now take distributions over life expectancy, not just 15 years, II. Discussion Adopting these provisions requires deleting plan language taxing a participant's A 457 account balance at separation from service prior to an amount being paid to ..., the participant or other beneficiary. The provisions requiring an irrevocable election at separation from service and requiring annual payments in substantially non-increasing amounts paid at least annually must be deleted. All current irrevocable elections should be treated as null and void. Amend the plan to comply with the new minimum distribution regulations. III. Great-WestlBenefitsCorp Comments While making this change will provide participants with greater flexibility, it will involve additional work by the plan sponsor and Great-WestlBenefitsCorp when participants request changes to existing irrevocable election dates and/or payment amounts, Great-West will permit up to two changes in payout amounts per calendar year from each participant, free of charge, Subsequent changes in the same calendar year may involve an additional fee paid by the participant. IV. Staff Recommendation V. Board/Committee Decision ~ These provisions are adopted effective January 1, 2002. D These provisions are not adopted. ..J 8 '-' ~\ BenefitsCorp *~ ThCPnwertV'Purtncrillg'''' Great-West/BenefitsCorp EGTRRA Implementation Package Issue #4: In-Service Transfers for Purchase of DB Plan Service Credits Name of Plan Sponsor: Sout.~ Tahoe Public Utility District South Tahoe Public Utility District Name of Plan: Deferred Canpensation Plan and Trust I. Issue EGTRRA permits the plan to allow 457 plan participants to request a trustee-to-trustee transfer of assets from their 457 account to a governmental defined benefit plan for the purchase of permissible service credit (as defined in section 415(n)(3)(A)) under such plan or a repayment to which section 415 does not apply by reason of subsection (k)(3) thereof. II. Discussion \., Adopting this provision requires the plan to be amended to include a provision allowing trustee-to-trustee transfers pursuant to new Code section 457(e)(17. III. Great-WestlBenefitsCorp Comments This is a favorable change for participants, allowing them to transfer assets from their 457 plan account to purchase permissible service credit as allowed under new Code section 457(e)(17) with pre-tax dollars. IV. Staff Recommendation V. Board Decision W Adopt this provision effective January 1, 2002. D Do not adopt this provision. '" 9 ~ BenefitsCorp ~ The POlL'ero! Pnrtncring'v .,J Great- West/BenefitsCorp EG TRRA Implementation Package Issue #5: Rollovers From Employer-Sponsored Plans and IRAs Name of Plan Sponsor: South Tahoe Public utility District South Tahoe Public Utility District Name of Plan: Deferred Carroensation Plan and Trust I. Issue EGTRRA permits the plan to accept rollover contributions from other types of employer-sponsored plans, including 401(a), 401(k), and 403(b) plans, and IRAs pursuant to new Code section 457(e)(16) and revised section 402(c)(8)(B) defining eligible retirement plan. II. Discussion Adopting this provision requires the plan to be amended to separately account for the dollars rolled into the plan and to determine when participants will be allowed to take distributions from their rollover accounts. Rollovers into the 457 plan from .. .j a 401(a), 401(k), 403(b) or an IRA are subject to the 10% premature distribution ...., penalty tax if distributed from the 457 plan prior to age 59 '!h III. Great-WestlBenefitsCorp Comments This change allows participants to consolidate assets from plans of previous employers and personallRAs, and allows for greater account growth within the 457 plan. While this is generally regarded as a favorable provision, there may be additional fees for recordkeeping services to accommodate rollovers from multiple sources other than IRC Section 457 Plans. IV. Staff Recommendation V. Board/Committee Decision D Adopt this provision effective January 1, 2002 and allow participants to request distributions from their rollover account (1) _at any time, or (2) [TI Do not adopt this provision vJ 10 \.,. r~ BenefitsCorp ~ The Pow"ro! Pam..ring'" Great-West/BenefitsCorp EG TRRA Implementation Package Issue #6: Qualified Domestic Relations Orders (QDROs) Name of Plan Sponsor: South Tahoe Public Utility District South Tahoe Public utility District Name of Plan; Deferred Canpensation Plan and Trust I. Issue EGTRRA permits the plan to accept qualified domestic relations orders pursuant to amended IRC section 414(p)(11) to transfer all or a portion of a participant's account to an alternate payee pursuant to divorce. The plan may provide for immediate payments to alternate payees and tax report such distributions to former spouse alternate payees. II. Discussion \., Adopting this provision will require a plan that is currently accepting divorce orders pursuant to the Conforming Equitable Distribution Order (CEDO) private letter rulings to delete the CEDO language and replace it with a QDRO provision meeting the requirements of 414(p)(11). Plans that have not previously accepted divorce orders must add the new provision to the plan. III. G reat-WestlBenefitsCorp Comments This is a favorable change for participants and alternate payees, and greatly simplifies plan administration and tax reporting. It should also reduce the number of alternate payee accounts set up under the plan. IV. Staff Recommendation V. Board/Committee Decision ~ W Adopt this provision effective January 1, 2002 for all previous divorce decrees accepted by the Plan that meet (or are amended to meet) the new requirements, as well as all future qualified orders. D Do not adopt this provision. 11 ~~ -K ~ BenefitsCorp ~ The Powl'ro! PaI'ITwrirlg<. oJ Great-West/BenefitsCorp EGTRRA Implementation Package Issue #7: Mandatory Cash-out of Small Account Balances Name of Plan Sponsor: Name of Plan: South Tahoe Public Utility District South Tahoe Public utility District Deferred Canpensation Plan and Trust I. Issue Plans are allowed to cash out small account balances (typically $5,000 or less) without the participant's consent upon separation from service. EGTRRA requires Treasury to issue regulations within three years of the date of enactment that will require all plans with a mandatory cash-out provision to designate an IRA provider to receive unclaimed small accounts. If the participant does not request the distribution in cash or direct it to another plan or IRA, the plan must send all amounts of $1,000 or more to the designated I RA provider and determine the default option for such amounts to be invested in. II. Discussion Each plan sponsor must determine whether the plan will allow small accounts to remain in the 457 plan when a participant separates from service until age 70 ~. If the plan sponsor chooses to force immediate cash outs of small account balances at separation from service, the plan must provide that, upon issuance of Treasury regulations, such amounts will be sent to a designated IRA provider and the default option to receive these amounts. .J III. Great-WestlBenefitsCorp Comments It will be up to three years before the Treasury issues regulations requiring plans to transfer mandated cash-out amounts to an IRA provider, The only accounts that will be transferred are those of participants who refuse to take the cash or tell the plan where to send the money. Great-West/BenefitsCorp will make an IRA product available to our plan sponsors when the regulations are issued, and will advise of any fees applicable to the IRA product when it is available. IV. Staff Recommendation V. Board/Committee Decision I;(l Adopt a mandatory cash-out provision for amounts of $5,000 or less, taking the ~ entire account balance, including rollovers, into consideration. D Do not adopt this provision. ~ 12 \." r~ BenefitsCorp ~ ThePtlwernff'artnerillg'" Great-WestlBenefitsCorp EGTRRA Implementation Package Issue #8: 457 Plan Loans Name of Plan Sponsor: South Tahoe Public Utility District South Tahoe Public utility District Deferred Canpensation Plan and Trust Name of Plan: I. Issue EGTRRA does not contain any provision allowing loans to participants from their 457 plan accounts. The Treasury is expected to issue regulations in the near future that will either permit or prohibit such loans. II. Discussion \., Adopting a provision to allow participant loans from a 457 plan would have to be contingent upon and consistent with Treasury regulations permitting such loans. Loans should be account reduction loans with repayments made via payroll deduction. The number of outstanding loans per participant should be limited. III. Great-WestlBenefitsCorp Comments Our experience with loans under 401 (k) plans is that participants may damage their future retirement security if repayments are not made by payroll deduction and they default on the payments. If your plan has a fee structure that is sensitive to asset levels, the availability of loans may impact your plan administrative fees by reducing plan assets by 5%-10% in the first year if loan demand is high. The positive impact of 457 plans may be a reduction in the number of unforeseeable emergency requests. Each plan sponsor will have to carefully weigh the benefits and drawbacks of offering a loan provision. If this provision is adopted, we suggest each participant be permitted no more than two outstanding loans at anyone time. Great-West charges a fee to initiate the loan, and to service the loan each year. These fees vary from plan to plan depending on the type and number of investment options under your plan. A specific fee basis will be quoted for your plan before this provision is effective. IV. Staff Recommendation '" 13 v. Board/Committee Decision D Adopt a plan loan provision to become effective the later of the date specified in Treasury regulations or the date set forth in a plan loan policy adopted by this Board. W Do not adopt this provision. ..J .J ..J 14