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2.4. ERMUSR 12-12-2012 Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: Elk River Municipal Utilities Commission Theresa Slominski, Finance and Office Manager John Dietz—Chair Daryl Thompson—Vice Chair Al Nadeau—Trustee MEETING DATE: AGENDA ITEM NUMBER: December 12,2012 2.4 SUBJECT: 457(b)Plan Document DISCUSSION: In December 2005 ERMU added an alternative option for employees to invest in a 457(b)plan that had the benefit of financial advice through a financial planner, separate from the Minnesota Deferred Compensation Plan(MDCP) already offered. The plan was effective January 1, 2006 and provides for financial planning through Wenzel and Associates with an investment platform provided by ING. Regulations under Section 457(b) of the Internal Revenue Code require a written plan document, and adoption of such. MDCP provides such a written plan document for us and we must provide one for the alternate product. I have worked with the benefits attorney at Gray, Plant, Mooty to review and provide the appropriate documents for this alternative plan. Included is a resolution to adopt the Elk River Municipal Utilities Deferred Compensation Plan, as of January 1, 2006, as was the original intent, and an adoption agreement for the specifics of the plan document. The full plan document of 35 pages is not included here,however, is available upon request. ACTION REQUESTED: Adoption of the Resolution for the Elk River Municipal Utilities Deferred Compensation Plan. PINEIEI 1P Page 1 of I 'NATURE Reliable Public Power Provider POWERED To SERVE RESOLUTIONS OF THE ELK RIVER MUNICIPAL UTILITIES COMMISSION REGARDING THE ELK RIVER MUNICIPAL UTILITIES DEFERRED COMPENSATION PLAN December 12,2012 WHEREAS, employees of the Elk River Municipal Utilities Commission(the "Commission")are eligible to participate in the Minnesota Deferred Compensation Plan, an eligible deferred compensation plan for governmental employers under Section 457(b) of the Internal Revenue Code; WHEREAS, employees of the Commission expressed interest in participating in an alternative Section 457(b) plan that would allow them to receive some financial advice with respect to their investments in such plan; WHEREAS, Minnesota law permits governmental employers such as the Commission to offer an alternative Section 457(b)plan, and the personnel policies of the Commission provide for such a plan; WHEREAS, on December 13, 2005,the Commission moved to approve adoption of an alternative Section 457(b)plan proposed by Wenzel and Associates with an investment platform provided by ING; WHEREAS,the Company has been operating an alternative Section 457(b)plan since January 1, 2006; WHEREAS, regulations promulgated under Section 457(b)of the Internal Revenue Code require that an eligible Section 457(6)plan be in writing; WHEREAS,the Commission wishes formally to adopt a written plan document to govern its alternative Section 457(b)plan; and WHEREAS, a copy of the Elk River Municipal Deferred Compensation Plan has been made available to members of the Commission at its meeting of December 12, 2012. NOW, THEREFORE,BE IT RESOLVED,that the Commission hereby approves and adopts the Elk River Municipal Utilities Deferred Compensation Plan (the "Plan"), effective as of January 1, 2006; RESOLVED FURTHER, that the President of the Commission is hereby authorized to execute the Plan and to take any other action necessary or helpful for the implementation of the foregoing resolutions. Date: , 2012 ELK RIVER MUNICIPAL UTILITIES COMMISSION By: John Dietz Its: President GP3265450 vl ING SPECIMEN ADOPTION AGREEMENT FOR 457(b) DEFERRED COMENSATION PLAN FOR GOVERNMENTAL EMPLOYERS The undersigned Employer adopts the 457(b)Deferred Compensation Plan for Governmental Employers for those Employees who will qualify as Participants hereunder, to be known as the Elk River Municipal Utilities Deferred Compensation Plan (Enter Plan Name) It will be effective as of the date specified below. The Employer hereby selects the following Plan specifications: EMPLOYER INFORMATION (Plan Section 1.91 Name of Employer: Elk River Municipal Utilities Address: 13069 Orono Parkway Elk River , MN 55330 City State Zip Telephone Number: 763-441-2020 Employer Identification Number: 41 - 6005125 Location of Employer's Principal Office: IS state ❑commonwealth ❑district of Minnesota ❑other: and the Plan will be governed in accordance with retirement plan laws of the Minnesota (name of state/commonwealth). This specimen document includes a number of provisions which arc optional,or as part of which there are different options that may be selected. Such provisions are generally indicated in the Adoption Agreement. This dots not mean that other provisions may not also be optional,or that other options may not be available. The selection of appropriate options is solely the responsibility of the plan sponsor and should be done only aacr consulting with the client's own knowledgeable counsel. (5/1/09) ©2009 ING North America Insurance Corporation. Employer Fiscal Year: The 12-consecutive month period commencing on January 1 [month and day] and ending on December 31 [month and day]. PLAN INFORMATION Effective Date: This Adoption Agreement of the 457(b) Deferred Compensation Plan for Governmental Employers will: a establish a new Plan effective as of January 1, 2006 ❑ constitute an amendment and restatement in its entirety of a previously established 457(b) Plan of the Employer which was effective . Except as specifically provided in the Plan,the effective date of this amendment and restatement is Plan Year(Plan Section 1.22): The 12-consecutive month period commencing on January 1 [month and day] and ending on December 31 [month and day]. Name of Administrator(Plan Section 1.1): 1ffi Employer(Use Employer Address) ❑ Name(s) Address City State Zip Telephone Administrator's I.D. Number This specimen plan document is intended to assist you and your counsel in adopting a 457(b)plan. Modifications may be required m meet your plan's particular objectives. (5/1/09) ELIGIBILITY (Plan Section 2.11 Eligible Individuals for Purposes of Participant Deferral Contributions: Di All Employees ❑ All Employees other than the following group or groups of Employees elected below: ❑ Nonresident aliens with no U.S. source of income ❑ Employees who normally work less than 20 hours per week ❑ Students performing services for the Employer whose Compensation is not considered wages under the Federal Insurance Contributions Act("FICA") ❑ Collectively bargained employees NOTE: The group(s)specified must correspond to a group of the same designation that is defined in statutes,ordinances,rules,regulations, personnel manuals or other authority for the state or local jurisdiction of the Employer. Leased Employees For purposes of this section,the term Eligible Individual: ❑will S will not include any leased employees described in Code Section 414(n). Independent Contractors For purposes of this section,the term Eligible Individual: M Will not include Independent Contractors ❑ Will include all Independent Contractors ❑ Will include all Independent Contractors other than as specified below: This specimen plan document is intended to assist you and your counsel in adopting a 457(h)plan. Modifications may be required to meet your plan's particular objectives. (5/1/09) 3 ................................... . _. . CONTRIBUTIONS AND ALLOCATIONS Deferral of Accumulated Sick Pay,Accumulated Vacation Pay and Back Pay(Plan Section 3.1(b)): Participant may elect to defer(check all that are applicable)to the Plan: L accumulated sick pay 18 accumulated vacation pay 0 back pay Note: any amounts deferred under Section 3.1(b)of the Plan must be consistent with applicable state and local law, including,but not limited to,the terms of any collective bargaining agreements. Age 50 Plus Catch-Up Contributions(Plan Section 3.3): Age 50 Plus Catch-Up Contributions Cif will 0 will not be permitted under the Plan. Transfers into the Plan(Plan Section 3.7): Transfers into the Plan from an eligible 457 plan sponsored by another governmental employer 5)will 0 will not be permitted. Rollovers: Rollover Contributions a will 0 will not be permitted under the Plan(Plan Section 3.8). Normal Retirement Age(Plan Section 1.14): For purposes of the Special 457 Catch-Up Deferral Election tinder Section 3.2, Normal Retirement Age will be: Option I: Employer determines Normal Retirement Age The NRA is a range of age(s)beginning at: 0 the earliest retirement age at which an individual could receive unreduced benefits under the Employer's defined benefit pension plan 0 Age 65 0 Other: NOTE: Age specified can be the earlier of age 65 or,if applicable,date above at which a Participant could receive unreduced benefits from Employer's defined benefit pension Plan. This specimen plan document is intended to assist you and your counn;l in adopting a 457(6)plan. Modifications may be required to meet your plan's particular objectives. (5/1/09) 4 and ending at: ❑Age 70%: ❑Other: NOTE 1: Normal Retirement Age cannot be later than age 70 %. NOTE 2: Beginning and ending ages may be the same age,if elected by the Employer. Option 2: Participant determines Normal Retirement Age OSI the Normal Retirement Age elected by the Participant that is between: • the earlier of the earliest retirement age under the Employer's pension plan at which the Participant immediately could receive unreduced retirement benefits or age 65; and • age 70 '/s. NOTE 3: The Employer is not permitted to have more than one Normal Retirement Age for each Participant under all of the plans under Section 457(b)of the Code that it sponsors. Normal Retirement Aee for Police or Firefighters For purposes of the Special 457 Catch-Up Deferral Election under Section 3.2,Normal Retirement Age will be: ❑the earliest retirement age at which an individual could receive unreduced benefits under the Employer's pension plan ❑Age 40 ❑Age 55 ❑Age 65 ❑Age 701/2 ❑Other: NOTE: Age specified for this option generally may not be less than age 40 or more than age 70 '/:. ❑the Normal Retirement Age elected by the Participant that is between: • age 40; and • age 70 '/:. This specimen plan document is intended to assist you and your counsel in adopting a 457(b)plan. Modifications may be required to meet your plan's particular objectives. (511/09) 5 DISTRIBUTIONS Distribution Options (Plan Section 4.2(c)): 161 Joint and Survivor Annuity Q4 Lump sum $) Immediate or Deferred Annuity(including life annuities and installment payment annuities) DI) Systematic distribution option permitted under the Investment Product. fill Other: Partial Lump Sum NOTE: Distribution options selected are available to the extent permitted by applicable law and the terms of the Investment Product. In the event that a Participant does not elect a form of payment at the time that distributions are required to begin in accordance with Section 4.2,any benefits payable to the Participant will be made as follows: ❑ In the form of an Annuity payable over the Life Expectancy of the Participant that meets the requirements of Section 401(a)(9)of the code i4) Lump sum ❑ Other: Death Benefits Payable to Beneficiary(Plan Section 4.3(d)): Amounts payable to the Beneficiary may be elected by the Beneficiary in the following forms of benefit payment: aa Same distribution options as available to the Participant ❑Other: NOTE: Distribution options selected are available to the extent permitted by applicable law and the terms of the Investment Product. In the event a Beneficiary fails to make an election as to a benefit distribution option, any benefit payable to such Beneficiary will be distributed in accordance with Section 401(a)(9)of the Code. This specimen plan document is intended to assist you and your counsel in adopting a 457(b)plan. Modifications may be required to meet your plan's particular objectives. (511109) 6 Rollovers Distribution of a Participant 457 Rollover Account and a Participant Non-457 Rollover Account (Plan Section 4.1(b)): Amounts payable under a Participant 457 Rollover Account and a Participant Non-457 Rollover Account will be paid to a Participant: ❑Upon attainment of an event as described in Section 4.1 l )Upon the request of a Participant ❑Other: Unforeseeable Emergency Withdrawals(Plan Section 4.5): Unforeseeable Emergency Withdrawals N)will ❑ will not be permitted under the Plan. If Unforeseeable Emergency withdrawals are allowed by the Plan, the amount eligible for such withdrawals will consist of ¢Q The Participant Account ❑The Participant Deferral Account ❑The Participant 457 Rollover Account ❑The Participant Non-457 Rollover Account A Participant El may ❑may not take an Unforeseeable Emergency Withdrawal resulting from the illness or accident of a primary Beneficiary designated by the Participant. Small Balance Distribution(Plan Section 4.6): Small balance distributions attributable to a Participant Deferral Account will ❑will not be permitted under the Plan. Transfer of Amounts for Purchase of Service Credits in Governmental Retirement System (Plan Section 4.8) Participant Cil will ❑will not be permitted to transfer amounts under the Plan to a governmental retirement system in order to purchase service credits. This specimen plan document is intended to assist you and your counsel in adopting a 457(b)plan. Modifications may be required to meet your plan's particular objectives. (5/1109) Loans to Participants(Plan Section 4.10): Loans 0 will XI will not be permitted under the Plan. Distributions for Health Insurance and Long Term Care(Plan Section 4.11): Distributions to pay for health insurance and long term care 0 will 011 will not be permitted under the Plan. CERTIFICATION AND SIGNATURE The undersigned Employer hereby represents that it is a unit of a State or local government or an agency or instrumentality of one or more units of a State or local government as described in Code Section 414(d). This Adoption Agreement and the Plan document together constitute the Plan. The Plan is a specimen plan, not a master or prototype plan,and has not been approved by the IRS. The adoption of this Plan and related tax consequences are the responsibility of the Employer and its independent tax and legal advisors. IN WITNESS WHEREOF,the Employer hereby causes this Plan to be executed on this day of EMPLOYER: Elk River Municipal Utilities (enter name) By: This specimen plan document is intended to assist you and your counsel in adopting a 457(b)plan. Modifications may be required to meet your plan's particular objectives. (5/1/09) 8