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CITY OF MERIDIAN
DEFERRED COMPENSATION PLANS
Resolution # 142
Approved by City Council October 15,1991
General Employees Nonqualified Deferred Compensation Plan
Approved by City Council October 15, 1991
The City of Meridian is currently has two Deferred Comp plans.
American Funds Group, Salomon Smith Barney Inc, Debra Thompson is agent.
Waddell & Reed Inc., Doug Beehler is agent.
Resolution needs updated - refer to page 3.
Trustee members have changed.
Investment firm has changed name.
Current Deferred Compensation Plan Document - refer to page 3,
Needs updated to meet current federal laws.
I. Rights of Employer 1 Participant
Under current plan the employee's deferred compensation purchased through
payroll deduction would remain the property and rights of the Employer, subject
only to claims of the Employer's general creditors.
Federal Laws have changed, because of the Orange County, CA case.
II. Trustee vs. Plan Administrator
Funds at risk, Trustee (City) decides unforeseeable emergency standards.
III. Limits on maximum deferral amount 457
Current plan has old limited amounts on the amount of deferral.
Federal laws have changed on maximum deferral amount (457 140Ik).
IV. Withdrawal
Current plan withdrawal rules are very restrictive,
Federal laws have changed and given govemment employees more options,
rolling over to other tax-qualified plans or transfer plans to purchase service
credits in state derIDed benefit plans, if the plan permits (PERSI does, after
retirement of employment with the City). This would be a tax benefit for the
employee.
The Benefits Committee has been working with the current agents to get the existing
Deferred Comp Plan updated to meet federal laws and provide better service for the
employee's on the existing plans.
American Funds has does not have a Deferred Comp plan, they have not meet with the
Benefit Committee to keep us informed of federal law changes.
Waddell & Reed has given the City an old plan which does not meet federal laws; they
are in the process of updating plan.
The Benefit Committee met with Erik Jensen, who represents Valic. Erik provided the
Committee with current federal laws on deferred comp plans.
The committee has given Smith Barney and Waddell Reed the opportunity to provide the
City with their Plans.
The committee recommends the Council to approve the Service agreement with Valic.
This amendment will get the City current with all federal deferred compensation laws.
This amendment will safeguard the City and the employee's retirement investment.
Attached is a copy ofValic's Deferred Compensation Plan.
If Council approves the agreement, the Committee will set up meetings with the current
participants on the current plans. We have options to freeze the American Funds and
Waddell Reed plans, put the deferred deduction into the PERSI Choice Plan until the
Committee sets up meeting to educate the employees on the 457 and 401k plans. Human
Resource has scheduled a meeting PERSI next week. This meeting will go over the
PERSI and Choice Plan investments.
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CITY OF MERIDIAN
CURRENT DEFERRED COMPENSATION PLANS
The City of Meridian is currently has two Deferred Comp plans.
American Funds Group, Salomon Smith Barney Inc, Debra Thompson is agent.
Waddell & Reed Inc., Doug Beehler is agent.
Resolution #142 needs updated
Trustee members have changed.
Investment firm has changed name.
Current Deferred Compensation Plan Document
Needs updated to meet current federal laws.
I. No plan document from Salomon Smith Barney (SB) or Waddell & Reed (W&R).
I. SB requires the City hire an attomey to create a compensation plan document.
2. W&R is in the process of updating their plan.
V. Trustee vs. Plan Administrator
Funds at risk, Trustee (City) decides unforeseeable emergency standards.
I. SB-City receives active and past employee's statements, City has to forward.
2. WR-Employees received statements not the City.
3. SB-City must distribute payments to active and past employees on employees
account. The City has to withhold federal taxes from these payments, send
money to IRS and send past employee a 1099-R at year end.
4. WR-Handles distribution payments on active and past employees, not the City.
VI. New limits on maximum deferral amount (457 /40Ik).
Federal laws have changed on the maximum deferral amounts.
VII. Withdrawal rules are very restrictive
a. Lump Sum or Periodic withdrawal immediate
b. Lump Sum or Periodic withdrawal later
c. Decide later
Federal laws have changed and given government employees more options,
rolling over to other tax -qualified plans or transfer plans to purchase service
credits in state defined benefit plans, ifthe plan permits (PERSI does, after
retirement of employment with the City). This would be a tax benefit for the
employee.
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