§ 2-412.2. Deferred compensation plan.

Purpose.

To provide retirement income and other deferred benefits to city employees and the employees' beneficiaries in accordance with the provisions of Section 457 of the Internal Revenue Code of 1986, as amended (the "code"). The deferred compensation plan provides the employee an opportunity to build a retirement investment, while reducing today's taxes. Federal and state income taxes are deferred until they are withdrawn from the plan.

Scope.

This policy applies to all full-time employees and all regularly scheduled part-time salaried employees.

Practice.

The city reserves the right to amend or terminate the Section 457 Plan at any time. The designated contact for this plan is the accounting administrator. The city's plan is administered by the International City Management Association Retirement Corporation (ICMA-RC) and/or the Illinois Public Pension Fund Association (IPPFA) Benefits.

An eligible employee may enter into the program at any time by completing an enrollment form. The enrollment form and informational packet is available in the accounting administrator/city treasurer's office. The employee's enrollment will become effective on the first payroll period in the month following the requested action.

An employee is allowed to select his or her investment preference, payment options, and his or her contribution level subject to code based limits. Please contact the accounting administrator/city treasurer, if you have questions.

Once an employee is enrolled into the program the employee has the option to amend their contribution levels prospectively, terminate their participation in the program, and re-enter the program at any time. The changes will become effective on the first payroll period in the month following the requested action.

The enrollment form will also allow an employee to designate a beneficiary to which the account will be paid in the event the employee dies prior to withdrawing all assets from his or her account. The employee may change their beneficiary at any time and such change will be effective immediately.

The employee is authorized to transfer money into the city's Section 457 Plan from another tax qualified retirement arrangement and out of the city's Section 457 Plan to another tax-qualified arrangement, provided that the other arrangements allow such transfers and the transfer complies with code limitations.

All contributions made to the plan by employees shall be nonforfeitable and employees will be one hundred (100) percent vested in their account balances.

An employee may withdraw assets from his or her account in the following situations:

A.

Retirement (termination of employment following attainment of age sixty-five (65)).

B.

Severance or termination of employment.

C.

Unforeseeable emergency (subject to strict IRS guidelines) involving circumstances of severe financial hardship resulting from a sudden unexpected illness, accident or disability or loss of property due to extraordinary unforeseeable circumstances.

D.

Small balance account withdrawal with a balance of less than one thousand dollars ($1,000.00) and no contributions for the two-year period ending on the date of distribution.

E.

After age seventy and one-half (70½) even with no severance or termination of employment.

The city's Section 457 Plan prohibits Roth (after tax) contributions.

Questions.

Questions regarding this policy and the Section 457 Plan should be directed to the accounting administrator/city treasurer or the city administrator.

(Ord. No. 84-2016, § II(Exh. A), 9-6-2016)

Editor's note

Ord. No. 84-2016, § II(Exh. A), adopted Sep. 6, 2016, repealed the former § 2-412.2 and enacted a new section as set out herein. The former § 2-412.2 pertained to similar subject matter and derived from Ord. No. 3-2014, § V, adopted Jan. 21, 2014.