HomeMy WebLinkAbout20062099 RESOLUTION
RE: APPROVE AMENDMENT TO 401(K) SAVINGS PLAN AND AUTHORIZE CHAIR TO
SIGN - PRINCIPAL FINANCIAL GROUP
WHEREAS,the Board of County Commissioners of Weld County, Colorado, pursuant to
Colorado statute and the Weld County Home Rule Charter, is vested with the authority of
administering the affairs of Weld County, Colorado, and
WHEREAS,the Board has been presented with an Amendment to the 401(K)Savings Plan
between the County of Weld, State of Colorado, by and through the Board of County
Commissioners of Weld County, and Principal Financial Group, effective January 1, 2006, with
further terms and conditions being as stated in said amendment, and
WHEREAS,after review,the Board deems it advisable to approve said amendment,a copy
of which is attached hereto and incorporated herein by reference.
NOW,THEREFORE,BE IT RESOLVED by the Board of County Commissioners of Weld
County,Colorado, that the Amendment to the 401(K)Savings Plan between the County of Weld,
State of Colorado, by and through the Board of County Commissioners of Weld County, and
Principal Financial Group be, and hereby is, approved.
BE IT FURTHER RESOLVED by the Board that the Chair be, and hereby is, authorized to
sign said amendment.
The above and foregoing Resolution was,on motion duly made and seconded, adopted by
the following vote on the 2nd day of August A.D., 2006, nunc pro tunc January 1, 2006.
,app, r)> F"-BOARD OF COUNTY COMMISSIONERS
.,� ;V1 LD CO , COLORADO
ATTEST: ,&
`�' M J eile„CFir
Weld County Clerk to the Bo?it/ � l-
� �
1 fI{�
David E. Long, Pro-Tem
BY:
Dep Cler o the Board EXCUSED
Willi H. Jerke
AP V AS m\\\F,D___
(`�nF
Robert D. Masdn
ounty A orney tJ �e(�
Glenn Vaad k
Date of signature: SP 7/0
2006-2099
PE0010
/1(1 ; PC og--/7 G
GOOD FAITH COMPLIANCE AMENDMENT TO COMPLY WITH THE 2004
FINAL REGULATIONS UNDER CODE SECTIONS 401(k) AND 401(m)
AND THE 2005 FINAL AND 2006 PROPOSED REGULATIONS
UNDER CODE SECTION 402A
This amendment of the Plan is adopted to reflect certain provisions of the 2004 final
regulations under Code Sections 401110 and 401(m) and the final and proposed regulations
under Code Section 402A. This amendment is intended as good faith compliance with the
requirements of the final and proposed regulations and is to be construed in accordance
with such regulations. This amendment shall continue to apply to the Plan, including the
Plan as later amended, until such provisions are integrated into the Plan or the good faith
compliance provisions of this amendment are specifically amended.
This amendment shall supersede any previous good faith compliance amendment and the
provisions of the Plan to the extent those provisions are inconsistent with the provisions of
this amendment.
WELD COUNTY 401(K) SAVINGS PLAN
The Plan named above gives the undersigned the right to amend it at any time. According
to that right, the Plan is amended as follows:
2004 FINAL REGULATIONS UNDER CODE SECTIONS 401(k) AND 401(m)
Except as otherwise provided, the provisions of this section of the amendment shall be
effective as of the first day of the first Plan Year beginning on or after January 1, 2006.
EXCESS AMOUNTS
This section modifies the EXCESS AMOUNTS SECTION of Article III, where applicable.
Modification of the Deferral Percentage Calculation. If a Highly Compensated Employee
participates in two or more cash or deferred arrangements of the Employer that have
different plan years, all cash or deferred arrangements for the 12-month plan year of the
plan being tested shall be treated as a single arrangement.
Modification of the Contribution Percentage Calculation. If a Highly Compensated Employee
participates in two or more plans of the Employer that include Contribution Percentage
Amounts and such plans have different plan years, all Contribution Percentage Amounts for
the 12-month plan year of the plan being tested shall be treated as a single plan.
Income on Excess Elective Deferrals (Gap Period Income). This section applies for purposes
of determining income or loss on Excess Elective Deferrals for taxable years beginning on or
after January 1, 2006 to the extent the Plan does not already provide for gap period
income.
Any Excess Elective Deferrals, in addition to any adjustment for income or loss for the
taxable year in which the excess occurred, shall be adjusted for income or loss for the gap
period between the end of such taxable year and the date of distribution. Such income or
loss allocable to the gap period shall be equal to 10% of the income or loss allocable to the
Excess Elective Deferrals for the taxable year multiplied by the number of complete months
(counting 16 days or more as a complete month) in the gap period.
Subtype 110218 I (366947)
200606201011DM3h716130$0620171-001C009-3
2006-2099
Income on Excess Contributions and Excess Aggregate Contributions (Gap Period Income).
This section applies for purposes of determining income or loss on Excess Contributions and
Excess Aggregate Contributions beginning with the 2006 Plan Year to the extent the Plan
does not already provide for gap period income.
Any Excess Contributions or Excess Aggregate Contributions, in addition to any adjustment
for income or loss for the Plan Year in which the excess occurred, shall be adjusted for
income or loss for the gap period between the end of such Plan Year and the date of
distribution. Such income or loss allocable to the gap period shall be equal to 10% of the
income or loss allocable to the applicable excess for the Plan Year multiplied by the number
of complete months (counting 16 days or more as a complete month) in the gap period.
HARDSHIP DISTRIBUTIONS
This section modifies the financial hardship withdrawal provisions of the WITHDRAWAL
BENEFITS SECTION of Article V, where applicable.
Modification of the list of events for immediate and heavy financial needs. Existing
immediate and heavy financial needs are modified as follows:
Replace (i) expenses incurred or necessary for medical care, described in Code
Section 213(d), of the Participant, the Participant's spouse, or any dependents of the
Participant (as defined in Code Section 152) with (i) expenses incurred or necessary for
medical care that would be deductible under Code Section 213(d) (determined without
regard to whether the expenses exceed 7.5% of adjusted gross income).
Replace (iii) payment of tuition, related educational fees, and room and board expenses, for
the next 12 months of post-secondary education for the Participant, his spouse, children, or
dependents with (iii) payment of tuition, related educational fees, and room and board
expenses, for the next 12 months of post-secondary education for the Participant, his
spouse, children, or dependents (as defined in Code Section 152, and for taxable years
beginning on or after January 1, 2005, without regard to Code Sections 152(b)(1), (b)(2),
and (d)(1)(B)).
Immediate and heavy financial needs shall also include:
Payments for funeral or burial expenses for the Participant's deceased parent, spouse, child,
or dependent (as defined in Code Section 152 without regard to Code Section 152(d)(1)(B)).
Expenses to repair damage to the Participant's principal residence that would qualify for a
casualty loss deduction under Code Section 165 (determined without regard to whether the
loss exceeds 10% of adjusted gross income).
Any modification made above shall not apply if it conflicts with an event already defined in
a different manner in the Plan.
ELIMINATION OF POST•HARDSHIP CONTRIBUTION LIMIT REDUCTION
This section modifies the financial hardship withdrawal suspension period provisions of the
WITHDRAWAL BENEFITS SECTION of Article V, if applicable.
If the suspension period was changed from 12 to 6 months, the reduction intheapplicable
limit under Code Section 402(g) for the next taxable year following a hardship withdrawal is
removed for distributions to which the reduced suspension period applies.
Subtype 110218 2 (366947)
200606201011DM3h716130$0620171-OO1C009-3
TERMINATION OF THE PLAN - SUCCESSOR DEFINED CONTRIBUTION PLAN
For purposes of Article VIII, the term 'successor defined contribution plan' shall not include
a plan or contract that satisfies the requirements of Code Section 403(b) or a plan described
in Code Sections 457(b) or W.
2005 FINAL REGULATIONS AND 2006 PROPOSED REGULATIONS
UNDER CODE SECTION 402A
DIRECT ROLLOVERS OF PLAN DISTRIBUTIONS
This section shall apply to distributions made alter December 31, 2005.
Modification of the definition of Eligible Retirement Plan. The definition of Eligible
Retirement Plan is modified as follows:
Eligible Retirement Plan means an eligible plan under Code Section 457(b) which is maintained
by a state, political subdivision of a state, or any agency or instrumentality of a state or
political subdivision of a state and which agrees to separately account for amounts transferred
into such plan from this Plan, an individual retirement account described in Code Section
408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan
described in Code Section 403(a), an annuity contract described in Code Section 403(b), or a
qualified plan described in Code Section 401(a), that accepts the Distributee's Eligible Rollover
Distribution. The definition of Eligible Retirement Plan shall also apply in the case of a
distribution to a surviving spouse, or to a spouse or former spouse who is the Alternate Payee
under a qualified domestic relations order, as defined in Code Section 414(p).
If any portion of an Eligible Rollover Distribution is attributable to payments or distributions
from a designated Roth account, an Eligible Retirement Plan with respect to such portion shall
include only another designated Roth account of the individual from whose Account the
payments or distributions were made under an annuity plan described in Code Section 403(a)
or a qualified plan described in Code Section 401(a), or a Roth IRA described in Code Section
408A of such individual.
Modification of the definition of Eligible Rollover Distribution. The definition of Eligible Rollover
Distribution is modified as follows:
Eligible Rollover Distribution means any distribution of all or any portion of the balance to the
credit of the Distributes, except that an Eligible Rollover Distribution does not include: Iil any
distribution that is one of a series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the Distributee or the joint lives for joint
life expectancies) of the Distributee and the Distributee's designated Beneficiary, or for a
specified period of ten years or more; (ii) any distribution to the extent such distribution is
required under Code Section 401(a)(9); (iii) any hardship distribution; (iv) the portion of any
other distributionls) that is not includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer securities); and (v) any
other distribution(s) that is reasonably expected to total less than $200 during a year.
A portion of a distribution shall not fail to be an Eligible Rollover Distribution merely because
the portion consists of after-tax employee contributions that are not includible in gross
income. However, such portion may be transferred only to an individual retirement account or
individual retirement annuity described in Code Section 408(a) or (b), or to a qualified defined
contribution plan described in Code Section 401(a) or 403(a) that agrees to separately
account for amounts so transferred, including separately accounting for the portion of such
distribution which is includible in gross income and the portion of such distribution which is
not so includible.
Subtype 110218 3
(366947)
200606201011DM3h716130$0620171-001C009-3
A portion of a distribution shall not fail to be an Eligible Rollover Distribution merely because
the portion consists of the portion of a designated Roth account that is not includible in a
Participant's gross income. However, such portion may be transferred only to a Roth IRA
described in Code Section 408A or to a designated Roth account under a qualified defined
contribution plan described in Code Section 401(a) or 403(a) that agrees to separately
account for amounts so transferred, including separately accounting for the portion of such
distribution which is includible in gross income and the portion of such distribution which is
not so includible.
If the distribution includes any portion of a designated Roth account, in determining if (v)
above applies: (i) any portion of the distribution from the designated Roth account shall not be
treated as an Eligible Rollover Distribution if it is reasonably expected to total less than S200
during a year and (ii) the balance of the distribution, if any, shall not be treated as an Eligible
Rollover Distribution if it is reasonably expected to total less than $200 during a year.
However, all Eligible Rollover Distributions are combined in determining a mandatory
distribution of an Eligible Rollover Distribution greater than $1,000 in the DIRECT ROLLOVERS
SECTION of Article X.
The following provisions of this section of the amendment shall apply only to a Plan that
includes or is amended to include Roth Elective Deferral Contributions and shall be effective
as of the date Roth Elective Deferral Contributions were added to the Plan.
ROTH ELECTIVE DEFERRAL CONTRIBUTIONS
The following definitions are added:
Pre-tax Elective Deferral Contributions means a Participant's Elective Deferral Contributions
that are not includible in the Participant's gross income at the time deferred.
Roth Elective Deferral Contributions means a Participant's Elective Deferral Contributions
that are includible in the Participant's gross income at the time deferred and have been
irrevocably designated as Roth Elective Deferral Contributions by the Participant in his
elective deferral agreement. A separate accounting record is kept for that part of a
Participants Account resulting from Roth Elective Deferral Contributions. •
The provisions of the CONTRIBUTION LIMITATION SECTION of Article III are modified as
follows:
Distributions of any Elective Deferral Contributions (plus attributable earnings), to the extent
they would reduce the Excess Amount, will be distributed from the Participant's Account
resulting from Pre-tax Elective Deferral Contributions end Roth Elective Deferral
Contributions on the same basis as the distribution of Excess Amounts in the EXCESS
AMOUNTS SECTION of Article III.
ROLLOVERS FROM OTHER PLANS
The following provisions are effective for distributions made after December 31, 2005.
Direct Rollovers. If the Plan accepts a direct rollover of an Eligible Rollover Distribution from
a qualified plan described in Code Section 401(a) or 403(a), the Eligible Rollover Distribution
shall include any portion of a designated Roth account.
Subtype 110218 4 (366947)
200606201011DM3h716130$0620171-0o1C009-3
Participant Rollover Contrtutions from Other Plans. If the Plan accepts a Participant
contribution of an Eligible Rollover Distribution from a qualified plan described in Code
Section 401(a) or 403(a), the Eligible Rollover Distribution shall include any portion of a
designated Roth account to the extent the portion of the designated Roth account
distributed would otherwise be includible in a Participant's gross income.
This amendment is made an integral part of the aforesaid Plan and is controlling over the
terms of said Plan with respect to the particular items addressed expressly therein. All
other provisions of the Plan remain unchanged and controlling.
Unless otherwise stated on any page of this amendment, eligibility for benefits and the
amount of any benefits payable to or on behalf of an individual who is an Inactive
Participant on the effective date(s) stated above, shall be determined according to the
provisions of the aforesaid Plan as in effect on the day before he became an Inactive
Participant.
Signing this amendment, the undersigned, as plan sponsor, has made the decision to adopt
this plan amendment. The undersigned is acting in reliance on their own discretion and on
the legal and tax advice of their own advisors, and not that of any member of the Principal
Financial Group or any representative of a member company of the Principal Financial
Group.
Signed this n day of $ r ., &Yv0 4?
l For the Employer
•
Sra eile
Title 08/02/2006
1161 t'ect'x
IMPS
`Weld County Clerk to the Board
BY:
L(\—
Dep y Cler\e' to the Board
Subtype 110218 5 (366947)
200606201011DM3h716130$0620171-001C009-3
r o66•-do99
Summary of Final and Proposed Regulations under IRC 401(k), 401(m)
and 402A - Items Impacting Plan Documents and Administration
Effective Date
The final and proposed regulations are generally effective for plan years beginning on or after
January I, 2006.
Gap Period Income
Under prior rules,the refunds from failed Average Deferral Percentage(ADP)and Average
Contribution Percentage(ACP)tests were only required to include the gain or loss in earnings
for the plan year, The gains or losses experienced from the end of the plan year and before the
date of distribution(referred to as the"gap period")could be disregarded. The final regulations
provide that these refunds must now include the gain or loss earned during the gap period.
In addition, newly proposed regulations also require gap period income on deferrals in excess of
the 401(k) Elective Deferral limit. In anticipation of the finalization of the proposed regulations,
the amendment includes gap period income for these excesses, as well,
Hardship Withdrawals
The list of hardship events was expanded to include:
• Funeral expenses:
•
• Medical expenses for a non-custodial child; and
• Certain expenses relating to the repair of damage to an employee's principal residence.
Medical hardship expenses will not include nonprescription drugs or medicine(other than
insulin).
As previously required, participants seeking hardship withdrawals must first exhaust all available
resources available from your plan(s)before a hardship withdrawal can be taken. The final
regulations updated the list of available resources to also include dividends under an Employee
Stock Ownership Plan(ESOP).
If the suspension period following a hardship withdrawal was reduced to 6 months, the 401(k)
Elective Deferral limit reduction for the taxable year following the year of a hardship withdrawal
has been eliminated. Previously,the limit was reduced by the amount of the hardship
withdrawal. if the suspension period did not change and is still a 12-month period, the limit will
still need to be adjusted in the following taxable year.
200606201011DM3h716130$0620171-001C009-3
•
Summary of Final and Proposed Regulations under IRC 401(k), 401(m)
and 402A - Items Impacting Plan Documents and Administration
Bottom-Up and Targeted QNECs
Restrictions have been placed on how much Qualified Noneleetive Contributions(QNECs)may
be used in the Average Deferral Percentage(ADP)or Average Contribution Percentage(ACP)
test. These limits are applied if the QNEC contributions are not uniform for all plan members
and made in a way that may give more of the contribution to a certain group (referred to as a
"targeted" group). Previously, all QNECs could be included in the ADP or ACP test.
Under the new rules,the amount of QNECs that can be included in the ADP or ACP test is
generally limited to 5%of compensation. QNECs in connection with a prevailing wage
obligation under the Davis-Bacon Act can be included in the tests in an amount equal to 10%of
compensation.
Disproportionate Matching Contributions
Restrictions have also been placed on the amount of matching contributions that may be included
in the Average Deferral Percentage(ADP) or Average Contribution Percentage(ACP) test, in a
manner similar to the QNEC contributions.
Under the new rules the amount of matching contributions that can be included in either the ADP
or ACP test is generally limited to 5%of compensation or 100%of deferrals. If a match is
greater than these limitations, then a mathematical test using representative rates will determine
how much of the match can be used in the tests.
Automatic Enrollment
The final regulations clarify that there is no limit on the percentage of compensation that could
be used as the default for automatic enrollment.
Highly Compensated Employees (HCE) deferring to more than one 401(k)
plan of an employer
All compensation and contributions made for HCEs to multiple plans of an employer with
different plan years must be tested based on the time period applicable under each plan being
tested. As a result of this change,the amounts included may vary between plans depending upon
the test periods.
Prior to this, the same contribution and compensation amounts were used for all tests.
If refunds are necessary, only contributions made to the plan needing refunds will be distributed.
If the amount of the refund exceeds the contributions made to that plan during the plan year
being tested, the additional amount will be refunded to the other HCEs in that plan.
200606201011DM3h716130$0620171-001C009-3
Summary of Final and Proposed Regulations under IRC 401(k), 401(m)
and 402A - Items Impacting Plan Documents and Administration
Safe Harbor 401(k) Plans
The final regulations provided clarification on a couple issues related to Safe Harbor 401(k)
plans.
First, a plan year for a safe harbor 401(k)plan can be less than 12 months if certain requirements
are met. Under the new rules, if you change your plan year resulting in a short plan year, you are
able to retain the plan's safe harbor status if your plan was a safe harbor plan for the two plan
years surrounding the short year. In addition, if the plan year following the short plan year is not
a l2-month period, you must continue to make safe harbor contributions for a full 12-month
period following the short plan year.
Second, if your plan terminates you are still required to fund your safe harbor contributions up
through the date of termination, and Average Deferral Percentage(ADP)and Average
Contribution Percentage(ACP)testing, if applicable,will be required if the plan year is less than
12 months.
Testing of ESOP Plans
The requirement to test ESOP and Non-ESOP plans separately for Average Deferral Percentage
(ADP)and Average Contribution Percentage(ACP) nondiscrimination testing was eliminated.
However, this does not apply to other testing, including coverage testing. For those purposes,
the ESOP and Non-ESOP portions of a plan are still tested separately.
Successor Plan Definition
The term successor plan has been changed to"Alternative Defined Contribution plan". This
definition does not include 403(b)or 457(h)/(f)plans.
Roth Elective Deferral Contributions
The final regulations allow a 401(k)plan to include both pre-tax and Roth elective deferral
contributions. Recently,the IRS issued additional regulations that apply specifically to Roth
elective deferral contributions. Plan provisions that were modified to comply with these
regulations include:
• The definitions of Eligible Retirement Plan, Eligible Rollover Distribution,and Elective
Deferral Contributions(expanded to define both Pre-tax and Roth),
• The order of refund for 415 limit excess amounts,and
• Allowable rollover contributions.
200606201011DM3h716130$0620171-001C009-3
Hello