Resolution No. 2010-127RESOLUTION NO. 2010-127
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON AMENDING THE SECTION 45`7 DEFERRED
COMPENSATION PLAN TO PERMIT EMPLOYEE LOANS AND
EXECUTING A LOAN GUIDELINES AGREEMENT
WHEREAS, the City of Vernon maintains a Section 457 deferred
compensation plan for its employees, which is administered by the
International City Management Association (ICMA) Retirement
Corporation; and
WHEREAS, the Director of Personnel has recommended a change
in the deferred compensation plan to permit employees to take loans
from the deferred compensation plan; and
WHEREAS, the City Council of the City of Vernon desires to
permit employees to take loans from the deferred compensation plan; and
WHEREAS, the'execution of a Loan Guidelines Agreement with
the ICMA Retirement Corporation is necessary to permit the ICMA
Retirement Corporation to make loans to employees from the deferred
compensation plan
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon hereby
authorizes the deferred compensation plan to make loans to employees
and approves the Loan Guidelines Agreement, a copy of which is
attached hereto as Exhibit A.
SECTION 2: The City Council of the City of Vernon hereby
authorizes the Mayor or Mayor Pro-Tem to execute the Loan Guidelines
Agreement for, and on behalf of, the City of Vernon; and the City
Clerk, or Deputy City Clerk, is hereby authorized to attest thereto.
SECTION 3: The City Council of the City of Vernon hereby
authorizes the City Administrator, or his designee, to take whatever
actions are deemed necessary or desirable for the purpose of
implementing and carrying out the purposes of this Resolution: and the
transactions herein approved or authorized.
SECTION 4: The City Clerk of the City of Vernon shall
certify to the passage, approval and adoption of this Resolution, and
the City Clerk of the City of Vernon shall cause this Resolution and
the City Clerk's certification to be entered in the File of
Resolutions of the Council of this City.
APPROVED AND ADOPTED this 20th day of September, 2010.
Name: Hilario Gonzales
Title: Mayor
A
ATXEST:
City Clerk
2
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
)
ss
I, Willard G. Yamaguchi, City Clerk of the City of Vernon, do
hereby certify that the foregoing Resolution, being Resolution
No. 2010-127, was duly passed, approved and adopted by the City Council'
of the City of Vernon at a regular meeting of the City Council duly
held on Monday, September 20, 2010, and thereafter was duly signed by
the Mayor or Mayor Pro-Tem of the City of Vernon.
Executed this '>�4 day of September 2010, at Vernon, California.
(SEAL)
Will rd G Y ma u hi, City Clerk
3
EXHIBIT A
LOAN GUIDELINES AGREEMENT FOR A
RETIREMENT PLAN
icmARC
Building Retirement Security
ICMA - RC
INSTRUCTIONS
(Please refer to the previous section, "A Guide to Implementing a Loan Program")
These Loan Guidelines must be completed before loans can be made from your retirement plan. You should consider each option
carefully before making your selections because your selections will apply to all loans made while the selection is in effect. If you
later change any provision, the changes will apply only to loans made after the change is adopted. Loans in existence at the time of
any future changes will continue to operate under the guidelines that were in effect at the time the loan was originally made.
Note: If loans are available to your employees from other plans (e.g. other Section 457 deferred compensation plans or other Sec-
tion 401 plans), calculation of the maximum loan amount must consider the aggregate of all loans from all 401 and 457 plans
in which the employee participates. See the Maximum Loan Amount Worksheet on page 7 of A Guide to Implementing a Loan
Program, found in this packet.
2
Loan Guidelines Agreement
Name of Plan (please state the Employer's complete name, including state):
CITY OF VERNON, CALIFORNIA
Plan Type: 171401(a) Money Purchase Plan 171401 Profit -Sharing Plan 91457 Deferred Compensation Plan
ICMA-RC Plan Number: 301376
1. Purpose
The purpose of these guidelines is to establish the terms and conditions under which the Employer will grant loans to participants. This is
the only official Loan Provision Document of the above named Plan.
11. Eligibility
Loans are available to all active employees. Loans will not be granted to participants who have an existing loan in default.
Loans will be pro -rated among all the funds in which the participant is invested at the time the loan is made.
For 401 plans only:
Loans are available from the following sources: [select one or both]
0 Employer Contribution Account (vested balances only)
C� Participant Contribution Accounts (pre- and post -tax, if applicable, including Employee Mandatory, Employee Voluntary,
Employer Rollover, and Portable Benefits Accounts, but excluding the Deductible Employee Contribution/Qualified Volun-
tary Employee Contribution Account)
For Roth 401(k) plans only:
A participant's Designated Roth Account balance can be used to secure a participant loan.
Designated Roth Account balances [select one]
0 will not (default option) be available as a source for loans under the Plan.
[� will be available as a source for loans under the Plan. (Note: Using the Roth source for loans may have negative tax con-
sequences for participants.)
For all plan types:
Loans are available for the following purposes: [select one]
2 All purposes
C3 Loans shall only be granted in the event of a participant's hardship or for the purpose of enabling a participant to meet
certain specified financial situations. The employer shall approve the participant's loan application after determining, based
on all relevant facts and circumstances, that the amount of the loan is not in excess of the amount required to relieve the fi-
nancial need. For this purpose, financial need shall include, but not be limited to: unreimbursed medical expenses of the par-
ticipant or members of the participant's immediate family, establishing or substantially rehabilitating the principal residence
of the participant, or paying for a college education (including graduate studies) for the participant or his/her dependents.
3
ICMA - RC
Ill. Frequency of loans [select one]
0 Participants may receive one loan per calendar year. Moreover, participants may have only one (1) outstanding loan at a time.
I� Participants may receive one loan per calendar year. Moreover, no participant may have more than five (5) loans outstanding
at one time.
IV. Loan amount
The minimum loan amount is $1,000.
The maximum amount of all loans to the participant from the plan and all other plans sponsored by the Employer that are qualified
employer plans under section 72(p) (4) of the Code is the lesser of-
(1) $50,000, reduced by the highest outstanding balance of all loans from any 401 or 457 plans for that participant during
the one-year period ending on the day before the date a loan is to be made, or
(2) one half of the participant's vested account balance, reduced by the current outstanding balance of all 401 and 457 loans
from all plans for that participant.
If a participant has any loans outstanding at the time a new loan is requested, the new loan will be limited to the maximum amount calcu-
lated above reduced by the total of the outstanding loans.
A loan cannot be issued for more than the above amount. The participant's requested loan amount is subject to downward adjustment
without notice due to market fluctuation between the time of application and the time the loan is made.
V. Length of loan
A loan must be repaid in substantially equal installments of principal and interest, at least monthly, over a period that does not
exceed five (5) years.
Loans for a principal residence must be repaid .in substantially equal installments of principal and interest, at
least monthly, over a period that does not exceed FIVE [state number of years] years (maximum 30 years).
VI. Loan repayment process
Loan repayments for active employees must be through (choose one):
(� Payroll deduction only.
L� ACH debit only.*
(� Employee may choose either payroll deduction or ACH debit.*
If payroll deduction repayment is allowed, and the employee wishes to use this method, the employee must notify the Employer
so that the Employer can ensure that repayment will begin as soon as practicable on a date determined by the Employer's payroll
cycle. Failure to begin payroll deduction in a timely way could lead to the employee's loan entering delinquency status. Payroll
deduction should begin within two payroll cycles following the employee's receipt of the loan. ,
* Please note a $20 processing fee will be assessed to a participants ICMA-RC account when a scheduled loan repayment(s) via ACH is
rejected due to insufficient funds, invalid bank account information, or account closure in the participants designated payment account.
4
Loan Guidelines Agreement
Repayments through payroll deduction will be sent via check or wire by the Employer to ICMA-RC on the following cycle
(choose one):
171 Weekly (52 per year)
l3 Bi-weekly (26 per year)
171 Semi-monthly (24 per year)
C3 Monthly (12 per year)
If ACH debit repayment is allowed, debits from the employee's designated bank account will begin approximately one month fol-
lowing the date the employee's signed ACH authorization form is received and processed by ICMA-RC, or, in the case of online
loans, approximately one month following the date the loan check has been cleared for payment. Debits will normally be made on
a monthly basis.
Loans outstanding for former employees or employees on a leave of absence must be repaid on the same schedule as if payroll
deductions were still being made unless they reamortize their loans and establish a new repayment schedule that provides that sub-
stantially equal payments are made at least monthly over the remaining period of the loan.
Loan payments, including loan payments from former employees, are allocated to the participant's current election of investment
options on file with ICMA-RC.
The participant may pay off all or a portion of the principal and interest early without penalty or additional fee. Extra payments
are applied forward to both principal and interest as specified in the original repayment schedule, unless the additional payment is
for the balance due.
VII. Loan interest rate
The rate of interest for loans of five (5) years or less will be based on prime plus 0.5%.
The rate of interest for loans for a principal residence will be based on the FHA/VA rate.
Interest rates are determined on the last business day of the month preceding the month the loan is disbursed. The interest rate is
locked in at the time a loan is approved and remains constant throughout the life of the loan.
The prime interest rate is determined on the last business day of each month using www.nfsn.com as the source. The FHA/VA
interest rate is also determined on the last business day of each month using www.bankofamerica.com as the source.
Loan interest rates for new loans taken in different months may fluctuate upward or downward monthly, depending on the move-
ment of the prime and FHA/VA interest rates.
The employer may modify the manner in which loan interest rates will be determined, but only with respect to future loans.
Vill. Loan application procedure
Loans must be requested using the following method (check one):
(� Online only: All loans must be requested online by employees through ICMA-RC's Account Access site at
www icmarc.org, with Employer pre -authorization as outlined in italics below.
If an employee is married at the time of application, and spousal consent is required by the Plan for the loan, the employ-
ee's spouse must consent, in writing, to the loan and the consent must be witnessed by a plan representative or notary
public. Such consent must be received in writing by ICMA-RC no more than ninety (90) days before the loan request is
submitted through Account Access.
The promissory note, truth -in -lending rescission notice and disclosure statement are presented to the employee online
through Account Access at the time the employee submits the loan request. The employee confirms receipt and acceptance
of these documents by clicking on the affirmative buttons on the Account Access program.
5
ICMA - RC
The employer hereby authorizes all future loans requested through the online process via Account Access, as well as any requests
that employees submit on paper forms, pending review of the application by ICMA-RC. Notice of loan issuance will be provided
to the Employer via reports posted on the EZLink site.
The loan amount will generally be redeemed from the employee's account on the same day as the employee's successful
submission of the loan request through Account Access, if it is submitted prior to 4:00 p.m. ET on a business day. If not
the loan amount will be redeemed on the next business day following submission. The loan check is generally issued on
the next business day following redemption, and will be mailed directly to the employee. The employee's presentment of
the loan check for payment constitutes an acknowledgment that the employee has received and read the loan disclosure
information provided by ICMA-RC and agrees to the terms therein.
Loan repayment will begin as soon as practicable following the employee's presentment of the loan check for payment.
I� Online and through Direct Loan application: All loans must be requested either online by employees through
ICMA-RC's Account Access site at www icmarc.org, or through the Direct Loan application, both of which require pre -
authorization by the Employer as outlined in italics below.
If an employee is married at the time of application, and spousal consent is required by the Plan for the loan, the employ-
ee's spouse must consent, in writing, to the loan and the consent must be witnessed by a plan representative or notary
public. Such consent must be received in writing by ICMA-RC no more than ninety (90) days before the loan request is
submitted through Account Access. In the case of the Direct Loan Application, spousal consent should be sent along with
the application.
The promissory note, truth -in -lending rescission notice and disclosure statement are mailed to the employee along with
the issued loan check. The employee confirms receipt and acceptance of these documents and terms at the time the en-
dorsed check is presented for payment.
The Employer hereby authorizes all future loans requested through the online process via Account Access, as well as any requests
that employees submit on paper forms, pending review of the application by ICMA-RC. Notice of loan issuance will be provided
to the Employer via reports posted on the EZLink site.
The loan amount will generally be redeemed from the employee's account on the same day as either ICMA-RC's receipt
of a loan application (complete and. in good order), or the employee's successful submission of the loan request through
Account Access, if it is submitted prior to 4:00 p.m. ET on a business day. If not, the loan amount will be redeemed on the
next business day following submission. The loan check is generally issued on the next business day following redemption,
and will be mailed directly to the employee. The employee's presentment of the loan check for payment constitutes an ac-
knowledgment that the employee has received and read the loan disclosure information provided by ICMA-RC and agrees
to the terms therein.
Loan repayment will begin as soon as practicable following the employee's presentment of the loan check for payment.
I3 Direct Loan application only: All loans must be requested through the Direct Loan application, which requires pre -
authorization by the Employer as outlined in italics below.
If an employee is married at the time of application, and spousal consent is required by the Plan for the loan, the employ-
ee's spouse must consent, in writing, to the loan and the consent must be witnessed by a plan representative or notary
public.Such consent must be received in writing by ICMA-RC along with the Direct Loan Application.
The promissory note, truth -in -lending rescission notice and disclosure statement are mailed to the employee along with
the issued loan check. The employee confirms receipt and acceptance of these documents at the time the endorsed check is
presented for payment.
The employer hereby authorizes all future loans requested on paper forms, pending review of the application by ICMA-RC. Notice
of loan issuance will be provided to the Employer via reports posted on the EZLink site.
The Than amount will generally be redeemed from the employee's account on the same day as ICMA-RC's receipt of a loan
application (complete and in good order).
Loan Guidelines Agreement
The loan check will generally be issued from the employee's account on the next business day following redemption. The
loan check will be mailed directly to the employee. The employee's presentment of the loan check for payment constitutes
an acknowledgment that the employee has received and read the loan disclosure information provided by ICMA-RC and
agrees to the terms therein.
Loan repayment will begin as soon as practicable following the employee's presentment of the loan check for payment.
Loan application through the Employer: All loans must be requested in writing on an application approved by the plan
administrator. The application must be signed by the participant. The Employer must review and approve each partici-
pant's application.
The participant will be required to sign a promissory note evidencing the loan and a disclosure statement that includes
an amortization schedule prior to receiving a loan check. Loan checks will generally be issued on the next business day
following ICMA-RC's receipt of a complete .loan application. The loan check, promissory note, disclosure statement and
truth -in -lending rescission notice will be sent to the employer, who will obtain the necessary signatures and deliver the
check to the participant. All executed documents must be returned to ICMA-RC within 10 calendar days from the date
the check is issued.
IX. Security/Collateral
That portion of a participant's account balance that is equal to the amount of the loan is used as collateral for the loan. The col-
lateral amount may not exceed 50 percent of the participant's account balance at the time the loan is taken. Only the portion of the
account -balance that corresponds to the amount of the outstanding loan balance is used as collateral.
X. Acceleration [select one]
171 All loans are due and payable in full upon separation from service.
i All loans are due and payable when a participant receives a distribution of all of his/her account balance after separa-
tion from service. The amount of the outstanding loan balance will be reported as a distribution in addition to the
amount of cash distributed from the plan.
CI All loans are due and payable when a participant receives a distribution of part of his/her account balance after separa-
tion from service. The amount of the outstanding loan balance will be reported as a distribution in addition to the
amount of cash distributed from the plan.
XI. Reamortization
Any outstanding loan may be reamortized. Reamortization means changing the terms of a loan, such as length of repayment peri-
od, interest rate, and frequency of repayments. A loan may not be reamortized to extend the length of the loan repayment period to
more than five (5) years from the date the loan was originally made, or in the case of a loan to secure a principal residence, beyond
the number of years specified by the employer in Section V above.
A participant must request the reamortization of a loan in writing on a reamortization application acceptable to the plan adminis-
trator. Upon processing the request, a new disclosure statement will be sent to the employer for endorsement by the participant and
approval by the employer. The executed disclosure statement must be returned to the plan administrator within 10 calendar days
from the date it is signed. The new disclosure statement is considered an amendment to the original promissory note, therefore a
new promissory note will not be required.
A reamortization will not be considered a new loan for purposes of calculating the number of loans outstanding or the one loan per
calendar year limit.
7
ICMA - RC
XI1. Refinancing existing loans
If a participant has one outstanding loan, that loan may be refinanced. If a participant has more than one outstanding loan, no
loans may be refinanced. Refinancing means concurrently repaying an existing loan and borrowing an additional amount through
a new loan. Refinancing includes any situation in which one loan replaces another loan and the term of the replacement loan does
not exceed the latest permissable term of the replaced loan.
In order to refinance an existing loan, a participant must request this in writing on an application approved by the plan administra-
tor. Such request must be made at a time when the participant is eligible to obtain a loan as defined by the employer in Section III
above. The amount of the additional loan amount requested for the purpose of refinancing is subject to the loan limits specified in
Section IV above.
Because a refinancing is considered a new loan, only active employees may refinance an outstanding loan.
XI11. Reduction of Loan
If a participant dies prior to full repayment of the outstanding loan(s), the outstanding loan balance(s) will be deducted from the
account prior to distribution to the beneficiary(ies). The unpaid loan amount is a taxable distribution and may be subject to early
withdrawal penalties. The participant's estate is responsible for taxes or penalties on the unpaid loan amount, if any. A beneficiary
is responsible for taxes due on the amount he or she receives. A Form 1099 will be issued to both the beneficiary and the estate for
these purposes.
XIV. Deemed Distribution
Loan repayments must be made in accordance with the plan document, plan loan guidelines, and as reflected in the promissory
note signed by the participant. If a scheduled payment is not paid within 30, 60, and/or 90 days of the due date, a notice will be
sent to both the employee and the employer.
A loan will be deemed distributed when a scheduled payment is still unpaid at the end of the calendar quarter following the calen-
dar quarter in which the payment was due. If the total amount of any delinquent payment is not received by ICMA-RC by the end
of the calendar quarter following the calendar quarter in which they payment was due, the loan is considered a taxable distribution,
and the principal balance, in addition to any accrued interest, is reported as a distribution to the IRS. However, no money is paid
in this distribution, because the participant already has the loan proceeds.
The loan is deemed distributed for tax purposes, but it is not an actual distribution and therefore remains an asset of the partici-
pant's account. Interest continues to accrue. The outstanding loan balance and accrued interest are reported on the participant's
account statement.
Repayment of a deemed distribution will not change or reverse the taxable event.
The loan continues to be outstanding, and to accrue interest, until it is repaid or offset using the participant's account balance. An
offset can occur only if the participant is eligible to receive a distribution from the plan as outlined in the plan document.
Participants are required to repay any outstanding loan which has been deemed distributed before they can be eligible for a new
loan. The deemed distribution and any interest accrued since the date it became a taxable event is taken into account when deter-
mining the maximum amount available fora new loan. New loans must be repaid through payroll deduction.
0
Loan Guidelines Agreement
The employer is obligated by federal regulation to comply with the loan guideline requirements applicable to participant loans, and
to ensure against deemed distribution by monitoring loan repayments, regardless of the method of repayment, and by advising em-
ployees if loans are in danger of being deemed distributed. The tax -qualified status or eligibility of the entire plan may be revoked
in cases of frequent repayment delinquency or deemed distribution.
XV. Fees
Fees may be charged for various services associated with the application for and issuance of loans. All applicable fees will be debited
from the participant's account balance and/or from the participant's loan repayments prior to crediting the repayment of principal
and interest to the participant's account. A schedule of fees applicable to this plan is specified in ICMA-RC's current publication of
Making Sound Investment Decisions. A Retirement Investment Guide.
XVI. Other
The employer has the right to set other terms and conditions as it deems necessary for loans from the plan in order to comply with
any legal requirements. All terms and conditions will be administered in a uniform and non-discriminatory manner.
In Witness Whereof, the employer hereby caused these Guidelines to be executed this
of
EMPLOYER
By:
Title:
Attest:
20
9
Accepted: ICMA RETIREMENT CORPORATION
By:
Title:
Attest:
day
SUGGESTED RESOLUTION
Ic MAC
Building Retirement Security
OFFICE OF THE CITY CLERK
4305 Santa Fe Avenue, Vernon, California 90058
Telephone (323) 583-8811
September 21, 2010
ICMA-RC
Attn: New Business Analyst
777 North Capitol Street NE
Washington, DC 20002-4240
Re: Loan Guidelines Agreement
To Whom It May Concern:
Transmitted herewith are two partially executed agreements, as referenced above, approved by
City Council on September 20, 2010, through Resolution No. 2010-127.
Upon complete execution, please return one fully executed original agreement to the
undersigned.
If you have any questions regarding this matter, please call Ms. Martha Valenzuela, at (323) 583-
8811 ext. 226.
Very t ly yours,
WIL ARD . Y I G C
City Clerk
WGY:dj
c: Martha Valenzuela
Resolution No. 2010-127
Agreement File No. 10-066
F-cfusivefy Industfiaf
LOAN GUIDELINES AGREEMENT FOR A
RETIREMENT PLAN
ICMAR,C
Building Retirement Security
ICMA - RC
INSTRUCTIONS
(Please refer to the previous section, "A Guide to Implementing a Loan Program")
These Loan Guidelines must be completed before loans can be made from your retirement plan. You should consider each option
carefully before making your selections because your selections will apply to all loans made while the selection is in effect. If you
later change any provision, the changes will apply only to loans made after the change is adopted. Loans in existence at the time of
any future changes will continue to operate under the guidelines that were in effect at the time the loan was originally made.
Note: If loans are available to your employees from other plans (e.g. other Section 457 deferred compensation plans or other Sec-
tion 401 plans), calculation of the maximum loan amount must consider the aggregate of all loans from all 401 and 457 plans
in which the employee participates. See the Maximum Loan Amount Worksheet on page 7 of A Guide to Implementing a Loan
Program, found in this packet.
2
Loan Guidelines Agreement
Name of Plan (please state the Employer's complete name, including state):.
CITY OF VERNON, CALIFORNIA
Plan Type: 401 (a) Money Purchase Plan 401 Profit -Sharing Plan 457 Deferred Compensation Plan
ICMA-RC Plan Number: 301376
1. Purpose
The purpose of these guidelines is to establish the terms and conditions under which the Employer will grant loans to participants. This is
the only official Loan Provision Document of the above named Plan.
11. Eligibility
Loans are available to all active employees. Loans will not be granted to participants who have an existing loan in default.
Loans will be pro -rated among all the funds in which the participant is invested at the time the loan is made.
For 401 plans only:
Loans are available from the following sources: [select one or both]
0 Employer Contribution Account (vested balances only)
Participant Contribution Accounts (pre- and post -tax, if applicable, including Employee Mandatory, Employee Voluntary,
Employer Rollover, and Portable Benefits Accounts, but excluding the Deductible Employee Contribution/Qualified Volun-
tary Employee Contribution Account)
For Roth 401(k) plans only:
A participant's Designated Roth Account balance can be used to secure a participant loan.
Designated Roth Account balances [select one]
171 will not (default option) be available as a source for loans under the Plan.
173 will be available as a source for loans under the Plan. (Note: Using the Roth source for loans may have negative tax con-
sequences for participants.)
For all -plan types:
Loans are available for the following purposes: [select one]
Z All purposes
Loans shall only be granted in the event of a participant's hardship or for the purpose of enabling a participant to meet
certain specified financial situations. The employer shall approve the participant's loan application after determining,.based
on all relevant facts and circumstances, that the amount of the loan is not in excess of the amount required to relieve the fi-
nancial need. For this purpose, financial need shall include, but not be limited to: unreimbursed medical expenses of the par-
ticipant or members of the participant's immediate family, establishing or substantially rehabilitating the principal residence
of the participant, or paying for a college education (including graduate studies) for the participant or his/her dependents.
3
ICMA - RC
Ill. Frequency of loans [select one]
(� Participants may receive one loan per calendar year. Moreover, participants may have only one (1) outstanding loan at a time.
Participants may receive one loan per calendar year. Moreover, no participant may have more than five (5) loans outstanding
at one time.
IV. Loan amount
The minimum loan amount is $1,000.
The maximum amount of all loans to the participant from the plan and all other plans sponsored by the Employer that are qualified
employer plans under section 72(p) (4) of the Code is the lesser of:
(1) $50,000, reduced by the highest outstanding balance of all loans from any 401 or 457 plans for that participant during
the one-year period ending on the day before the date a loan is to be made, or
(2) one half of the participant's vested account balance, reduced by the current outstanding balance of all 401 and 457 loans
from all plans for that participant.
If a participant has any loans outstanding at the time a new loan is requested, the new loan will be limited to the maximum amount calcu-
lated above reduced by the total of the outstanding loans.
A loan cannot be issued for more than the above amount. The participant's requested loan amount is subject to downward adjustment
without notice due to market fluctuation between the time of application and the time the loan is made.
V. Length of loan
A loan must be repaid in substantially equal installments of principal and interest, at least monthly, over a period that does not
exceed five (5) years.
Loans for a principal residence must be repaid in substantially equal installments of principal and interest, at
'least monthly, over a period that does not exceed FIVE [state number of years] years (maximum 30 years).
VI. Loan repayment process
Loan repayments for active employees must be through (choose one):
(� Payroll deduction only.
I� ACH debit only.*
Employee may choose either payroll deduction or ACH debit.*
If payroll deduction repayment is allowed, and the employee.wishes to use this method, the employee must notify the Employer
so that the Employer can ensure that repayment will begin as soon as practicable on a date determined by the Employer's payroll
cycle. Failure to begin payroll deduction in a timely way could lead to the employee's loan entering delinquency status. Payroll
deduction should begin within two payroll cycles following the employee's receipt of the loan. ,
* Please note a $20 processing fee will be assessed to a participant's ICMA-RC account when a scheduled loan repayment(s) via ACH is
rejected due to insuf dent funds, invalid bank account information, or account closure in the participant's designated payment account.
4
Loan Guidelines Agreement
Repayments through payroll deduction will be sent via check or wire by the Employer to ICMA-RC on the following cycle
(choose one):
I� Weekly (52 per year)
Bi-weekly (26 per year)
l� Semi-monthly (24 per year)
Monthly (12 per year)
If ACH debit repayment is allowed, debits from the employee's designated bank account will begin approximately one month fol-
lowing the date the employee's signed ACH authorization form is received and processed by ICMA-RC, or, in the case of online
loans, approximately one month following the date the loan check has been cleared for payment. Debits will normally be made on
a monthly basis.
Loans outstanding for former employees or employees on a leave of absence must be repaid on the same schedule as if payroll
deductions were still being made unless they reamortize their loans and establish a new repayment schedule that provides that sub-
stantially equal payments are made at least monthly over the remaining period of the loan.
Loan payments, including loan payments from former employees, are allocated to the participant's current election of investment
options on file with ICMA-RC.
The participant may pay off all or a portion of the principal and interest early without penalty or additional fee. Extra payments
are applied forward to both principal and interest as specified in the original repayment schedule, unless the additional payment is
for the balance due.
VII. Loan interest rate
The rate of interest for loans of five (5) years or less will be based on prime plus 0.5%
The rate of interest for loans for a principal residence will be based on the FHA/VA rate.
Interest rates are determined on the last business day of the month preceding the month the loan is disbursed. The interest rate is
locked in at the time a loan is approved and remains constant throughout the life of the loan.
The prime interest rate is determined on the last business day of each month using www.nfsn.com as the source. The FHA/VA
interest rate is also determined on the last business day of each month using www.bankofamerica.com as Ithe source.
Loan interest rates for new loans taken in different months may fluctuate upward or downward monthly, depending on the move-
ment of the prime and FHA/VA interest rates.
The employer may modify the manner in which loan interest rates will be determined, but only with respect to future loans.
Vill. Loan application procedure
Loans must be requested using the following method (check one):
l� Online only: All loans must be requested online -by employees through ICMA-RC's Account Access site at
wwwicmarc.org, with Employer pre -authorization as outlined in italics below.
If an employee is married at the time of application, and spousal consent is required by the Plan for the loan, the employ-
ee
's spouse must consent, in writing, to the loan'and the consent must be witnessed by a plan representative ,or notary
public. Such consent must he received in writing by ICMA-RC no more than ninety (90) days before the loan request is
submitted through Account Access.
The promissory note, truth -in -lending rescission notice and disclosure statement are presented to the employee online
through Account Access at the time the employee submits the loan request. The employee confirms receipt and acceptance
of these documents by clicking on the affirmative buttons on the Account Access program.
ICMA - RC
The employer hereby authorizes all future loans requested through the online process via Account Access, as well as any requests
that employees submit on paper forms, pending review of the application by ICMA-RC. Notice of loan issuance will. be provided
to the Employer via reports posted on the EZLink site.
The loan amount will generally be redeemed from the employee's account on the same day as the employee's successful
submission of the loan request through Account Access, if it is submitted prior to 4:00 p.m. ET on a business day. If not,
the loan amount will be redeemed on the next business day following submission. The loan check is generally issued on
the next business day following redemption, and will be mailed directly to the employee. The employee's presentment of
the loan check for payment constitutes an acknowledgment that the employee has received and read the loan disclosure
information provided by ICMA-RC and agrees to the terms therein.
Loan repayment will begin as soon as practicable following the employee's presentment of the loan check for payment
Online and through Direct Loan application: All loans must be requested either online by employees through
ICMA-RC's Account Access site at www.icmarc.org, or through the Direct Loan application, both of which require pre -
authorization by the Employer as outlined in italics below.
If an employee is married at the time of application, and spousal consent is required by the Plan for the loan, the employ-
ee's spouse must consent, in writing, to the loan and the consent must be witnessed by a plan representative or notary
public. Such consent must be received in writing by ICMA-RC no more than ninety (90) days before the loan request is
submitted through Account Access. In the case of the Direct Loan Application, spousal consent should be sent along with
the application.
The promissory note, truth -in -lending rescission notice and disclosure statement are mailed to the employee along with
the issued loan check. The employee confirms receipt and acceptance of these documents and terms at the time the en-
dorsed check is presented for payment.
The Employer hereby authorizes all future loans requested through the online process via Account Access, as well as any requests
that employees submit on paper forms, pending review of the application by ICMA-RC. Notice of loan issuance will be provided
to the Employer via reports posted on the EZLink site.
The loan amount will generally be redeemed from the employee's account on the same day as .either ICMA-RC's receipt
of a loan application (complete and. in good order), or the employee's successful submission of the loan request through
Account Access, if it is submitted prior to 4:00 p.m. ET on a business day. If not, the loan amount will be redeemed on the
next business day following submission. The loan check is generally issued on the next business day following redemption,
and will be mailed directly to the employee. The employee's presentment of the loan check for payment constitutes an ac-
knowledgment that the employee has received and read the loan disclosure information provided by ICMA-RC and agrees
to the terms therein.
Loan repayment will begin as soon as practicable following the employee's presentment of the loan check for payment.
Direct Loan application only: All loans must be requested through the Direct Loan application, which requires pre -
authorization by the Employer as outlined in italics below.
If an employee `is married at the time of application, and spousal consent is required by the Plan for the loan, the employ-
ee's spouse must consent, in writing, to the loan and the consent must be witnessed by a plan representative or notary
public. Such consent must be received in writing by ICMA-RC along with the Direct Loan Application.
The promissory note, truth -in -lending rescission notice and disclosure statement are mailed to the employee along with
the issued loan check. The employee confirms receipt and acceptance of these documents at the time the endorsed check is
presented for payment. '
The employer hereby authorizes all future loans requested on paper forms, pending review of the application by ICMA-RC. Notice
of loan issuance will be provided to the Employer via reports posted on the EZLink site.
The loan amount will generally be redeemed from the employee's account on the same day as ICMA-RC's receipt of a loan
application (complete and in good order).
A
Loan Guidelines Agreement
The loan check will generally be issued from the employee's account on the next business day following redemption. The
loan check will be mailed directly to the employee. The employee's presentment of the loan check for payment constitutes
an acknowledgment that the employee has received and read the loan disclosure information provided by ICMA-RC and
agrees to the terms therein.
Loan repayment will begin as soon as practicable following the employee's presentment of the loan check for payment.
(� Loan application through the Employer: All loans trust be requested in writing on an application approved by the plan
administrator. The application must be signed by the participant. The Employer must review and approve each partici-
pant's application.
The participant will be required to sign a promissory note evidencing the loan and a disclosure statement that includes
an amortization schedule prior to receiving a loan check. Loan checks will generally be issued on the next business day
following ICMA-RC's receipt of a complete loan application. The loan check, promissory note, disclosure statement and
truth -in -lending rescission notice will be sent to the employer, who will obtain the necessary signatures and deliver the
check to the participant. All executed documents must be returned to ICMA-RC within 10 calendar days from the date
the check is issued.
IX. Security/Collateral
That portion of a participant's account balance that is equal to the amount of the loan is used as collateral for the loan. The col-
lateral amount may not exceed 50 percent of the participant's account balance at. the time the loan is taken. Only the portion of the
account -balance that corresponds to the amount of the outstanding loan balance is used as collateral.
X. Acceleration [select one]
1:1 All loans are due and payable in full upon separation from service.
All loans are due and payable when a participant receives a distribution of all of his/her account balance after separa-
tion from service. The amount of the outstanding loan balance will be reported as a distribution in addition to the
amount of cash distributed from the plan.
l� All loans are due and payable when a participant receives a distribution of part of his/her account balance after separa-
tion from service. The amount of the outstanding loan balance will be reported as a distribution in addition to the
amount of cash distributed from the plan.
XI. Reamortization
Any outstanding loan may be reamortized. Reamortization means changing the terms of a loan, such as length of repayment peri-
od, interest rate, and frequency of repayments. A loan may not be reamortized to extend the length of the loan repayment period -to
more than five (5) years from the date the loan was originally made, or in the case. of a loan to secure a principal residence, beyond
the number of years specified by the employer in Section V above.
A participant must request the reamortization of a loan in writing on a reamortization application acceptable to the plan adminis-
trator. Upon processing the request, a new disclosure statement will be sent to the employer for endorsement by the participant and
approval by the employer. The executed disclosure statement must be returned to the plan administrator within 10 calendar days
from the date it is signed. The new disclosure statement is considered an amendment to the original promissory note, therefore a
new promissory note will not be required.
A reamortization will not be considered a new loan for purposes of calculating the number of loans outstanding or the one loan per
calendar year limit.
7
ICMA - RC
XI1. Refinancing existing loans
If a participant has one outstanding loan, that loan may be refinanced. If a participant has more than one outstanding loan, no
loans may be refinanced. Refinancing means concurrently repaying an existing loan and borrowing an additional amount through
a new loan. Refinancing includes any situation in which one loan replaces another loan and the term of the replacement loan does
not exceed the latest permissable term of the replaced loan.
In order to refinance an existing loan, a participant must request this in writing on an application approved by the plan administra-
tor. Such request must be made at a time when the participant is eligible to obtain a loan as defined by the employer in Section III
above. The amount of the additional loan amount requested for the purpose of refinancing is subject to the loan limits specified in
Section IV above.
Because a refinancing is considered a new loan, only active employees may refinance an outstanding loan.
XI11. Reduction of Loan
If a participant dies prior to full repayment of the outstanding loan(s), the outstanding loan balance(s) will be deducted from the
account prior to distribution to the beneficiary(ies). The unpaid loan amount is a taxable distribution and may be subject to early
withdrawal penalties. The participant's estate is responsible for taxes or penalties on the unpaid loan amount, if any. A beneficiary
is responsible for taxes due on the amount he or she receives. A Form 1099 will be issued to both the beneficiary and the estate for
these purposes.
XIV. Deemed Distribution
Loan repayments must be made in accordance with the plan document, plan loan guidelines, and as reflected in the promissory,
note signed by the participant. If a scheduled payment is not paid within 30, 60, and/or 90 days of the due date, a noticemill be
sent to both the employee and the employer.
A loan will be deemed distributed when a scheduled payment is still unpaid at the end of the calendar quarter following the calen-
dar quarter in which the payment was due. If the total amount of any delinquent payment -is not received by ICMA-RC by the end
of the calendar quarter following the calendar quarter in which they payment was due, the loan is considered a taxable distribution,
and the principal balance, in addition to any accrued interest, is reported as a distribution to the IRS. However, no money is paid
in this distribution, because the participant already -has the loan proceeds.
The loan is deemed distributed for tax purposes, but it is not an actual distribution and therefore remains an asset of the partici-
pant's account. Interest continues to accrue. The outstanding loan balance and accrued interest are reported on the participant's
account statement.
Repayment of a deemed distribution will not change or reverse the taxable event.
The loan continues to be outstanding, and to accrue interest, until it is repaid or offset using the participant's account balance. An
offset can occur only if the participant is eligible to receive a distribution from the plan as outlined in the plan document.
Participants. -are required to repay any outstanding loan which has been deemed distributed before they can be eligible for a new
loan. The deemed distribution and any interest accrued since the date it became a taxable event is taken into account when deter-
mining the maximum amount available for a new loan. New loans must be repaid through payroll deduction.
Loan Guidelines Agreement
The employer is obligated by federal regulation to comply with the loan guideline requirements applicable to participant loans, and
to ensure against deemed distribution by monitoring loan repayments, regardless of the method of repayment, and by advising em-
ployees if loans are in danger of being deemed distributed. The tax -qualified status or eligibility of the entire plan may be revoked
in cases of frequent repayment delinquency or deemed distribution.
XV. Fees
Fees may be charged for various services associated with the application for and issuance of loans. All applicable fees will be debited
from the participant's account balance and/or from the participant's loan repayments prior to crediting the repayment of principal
and interest to the participant's account. A schedule of fees applicable to this plan is specified in ICMA-RC's current publication of
Making Sound Investment Decisions A Retirement Investment Guide.
XVI. Other
The employer has the right to set other terms and conditions as it deems necessary for loans from the plan in order to comply with
any legal requirements. All terms and conditions will be administered in a uniform and non-discriminatory manner.
In Witness Whereof, the employer hereby caused these Guidelines to be executed this _ _ v1��� day
of ___ �P , 20 I l)
EMPLOYER
By:
Title: P
Hil io S, Mayor
Attest:
"fliard 6. lWa,9Gch', ity Clerk
APPROV(�TO FORM: /
LaiOfence S. Wiener, City Attorney
9
Accepted: ICMA RETIREMENT CORPORATION
By:
Title:
Attest:
SUGGESTEDRESOLUTION
ICAAC
Building Retirement Security
LOAN GUIDELINES AGREEMENT FOR A
RETIREMENT PLAN
lCmA-RC
ICMA - RC
INSTRUCTIONS
(Please refer to the previous section, "A Guide to Implementing a Loan Program")
These Loan Guidelines must be completed before loans can be made from your retirement plan. You should consider each option
carefully before making your selections because your selections will apply to all loans made while the selection is in effect. If you
later change any provision, the changes will apply only to loans made after the change is adopted. Loans in existence at the time of
any future changes will continue to operate under the guidelines that were in effect at the time the loan was originally made.
Note: If loans are available to your employees from other plans (e.g. other Section 457 deferred compensation plans or other Sec-
tion 401 plans), calculation of the maximum loan amount must consider the aggregate of all loans from 0 401 and 457 plans
in which the employee participates. See the Maximum Loan Amount Worksheet on page 7 of A Guide to Implementing a Loan
Program, found in this packet.
Loan Guidelines Agreement
Name of Plan (please state the Employer's complete name, including state):
CITY OF VERNON, CALIFORNIA
Plan Type: 401 (a) Money Purchase Plan 401 Profit -Sharing Plan 457 Deferred Compensation Plan
ICMA-RC Plan Number: 301376
1. Purpose
The purpose of these guidelines is to establish the terms and conditions under which the Employer will grant loans to participants. This is
the only official Loan Provision Document of the above named Plan.
II. Eligibility
Loans are available to all active employees. Loans will not be granted to participants who have an existing loan in default.
Loans will be pro -rated among all the funds in which the participant is invested at the time the loan is made.
For 401 plans only:
Loans are available from the following sources: [select one or both]
0 Employer Contribution Account (vested balances only)
Participant Contribution Accounts (pre- and post -tax, if applicable, including Employee Mandatory, Employee Voluntary,
Employer Rollover, and Portable Benefits Accounts, but excluding the Deductible Employee Contribution/Qualified Volun-
tary Employee Contribution Account)
For Roth 401(k) plans only:
A participant's Designated Roth Account balance can be used to secure a participant loan.
Designated Roth Account balances [select one]
0 will not (default option) be available as a source for loans under the Plan.
l3 will be available as a source for loans under the Plan. (Note: Using the Roth source for loans may have negative tax con-
sequences for participants.)
For all plan types:
Loans are available for the following purposes: [select one]
0 All purposes
Loans shall only be granted in the event of a participant's hardship or for the purpose of enabling a participant to meet
certain specified financial situations. The employer shall approve the participant's loan application after determining, based
on all relevant facts and circumstances, that the amount of the loan is not in excess of the amount required to relieve the fi-
nancial need. For this purpose, financial need shall include, but not be limited to: unreimbursed medical expenses of the par-
ticipant or members of the participant's immediate family, establishing or substantially rehabilitating the principal residence
of the participant, or paying for a college education (including graduate studies) for the participant or his/her dependents.
3
ICMA - RC.
Ill. Frequency of loans [select one]
L� Participants may receive one loan per calendar year. Moreover, participants may have only one (1) outstanding loan at a time.
Participants may receive one loan per calendar year. Moreover, no participant may have more than five (5) loans outstanding
at one time.
IV. Loan amount
The minimum loan amount is $1,000.
The maximum amount of all loans to the participant from the plan and all other plans sponsored by the Employer that are qualified
employer plans under section 72(p) (4) of the Code is the lesser of:
(1) $50,000, reduced by the highest outstanding balance of all loans from any 401 or 457 plans for that participant during
the one-year period ending on the day before the date a loan is to be made, or
(2) one half of the participant's vested account balance, reduced by the current outstanding balance of all 401 and 457 loans
from all plans for that participant.
If a participant has any loans outstanding at the time a new loan is requested, the new loan will be limited to the maximum amount calcu-
fated above reduced by the total of the outstanding loans.
A loan cannot be issued for more than the above amount. The participant's requested loan amount is subject to downward adjustment
without notice due to market fluctuation between the time of application and the time the loan is made.
V. Length of loan
A loan must be repaid in substantially equal installments of principal and interest, at least monthly, over a period that does not
exceed five (5) years.
Loans for a principal residence must be repaid in substantially equal installments of principal and interest, at
least monthly, over a period that does not exceed FIVE [state number of years] years (maximum 30 years).
VI. Loan repayment process
Loan repayments for active employees must be through (choose one):
I� Payroll deduction only.
f ACH debit only.*
C Employee may choose either payroll deduction or ACH debit.*
If payroll deduction repayment is allowed, and the employee wishes to use this method, the employee must notify the Employer
so that the Employer can ensure that repayment will begin as soon as practicable on a date determined by the Employer's payroll
cycle. Failure to begin payroll deduction in a timely way could lead to the employee's loan entering delinquency status. Payroll
deduction should begin within two payroll cycles following the employee's receipt of the loan. I
* Please note a $20 processing fee will be assessed to a participant's ICMA-RC account when a scheduled loan repayment(s) via ACH is
rejected due to insufficient funds, invalid bank account information, or account closure in the participant's designated payment account.
4
Loan Guidelines Agreement
Repayments through payroll deduction will be sent via check or wire by the Employer to ICMA-RC on the following cycle
(choose one):
171
Weekly (52 per year)
173
Bi-weekly (26 per year)
C�
Semi-monthly (24 per year)
(�
Monthly (12 per year)
If ACH debit repayment is allowed, debits from the employee's designated bank account will begin approximately one month fol-
lowing the date the employee's signed ACH authorization form is received and processed by ICMA-RC, or, in the case of online
loans, approximately one month following the date the loan check has been cleared for payment. Debits will normally be made on
a monthly basis.
Loans outstanding for former employees or employees on a leave of absence must be repaid on the same schedule as if payroll
deductions were still being made unless they reamortize their loans and establish a new repayment schedule that provides that sub-
stantially equal payments are made at least monthly over the remaining period of the loan.
Loan payments, including loan payments from former employees, are allocated to the participant's current election of investment
options on file with ICMA-RC.
The participant may pay off all or a portion of the principal and interest early without penalty or additional fee. Extra payments
are applied forward to both principal and interest as specified in the original repayment schedule, unless the additional payment is
for the balance due.
VII. Loan interest rate
The rate of interest for loans of five (5) years or less will be based on prime plus 0.5%.
The rate of interest for loans for a principal residence will be based on the FHA/VA rate.
Interest rates are determined on the last business day of the month preceding the month the loan is disbursed. The interest rate is
locked in at the time a loan is approved and remains constant throughout the life of the loan.
The prime interest rate is determined on the last business day of each month using www.nfsn.com as the source. The FHA/VA
interest rate is also determined on the last business day of each month using www.bankofamerica.com as the source.
Loan interest rates for new loans taken in different months may fluctuate upward or. downward monthly, depending on the move-
ment of the prime and FHA/VA interest rates.
The employer may modify the manner in which loan interest rates will be determined, but only with respect,to future loans.
Vill. Loan application procedure
Loans must be requested using the following method (check one):
17 Online only: All loans must be requested online by_employees through ICMA-RC's Account Access site at
www icmarc.org, with Employer pre -authorization as outlined in italics below.
If an employee is married at the time of application, and spousal consent is required by the Plan for the loan, the employ-
ee's spouse must consent, in writing, to the loan and the consent must be witnessed by a plan representative or notary
public. Such consent must be received in writing by ICMA-RC no more than ninety (90) days before the loan request is
submitted through Account Access. -
The promissory note, truth -in -lending rescission notice.and disclosure statement are presented to the employee online
through Account Access at the time the employee submits the loan request. The employee confirms receipt and acceptance
of these documents by clicking on the affirmative buttons on the Account Access program.
A
ICMA - RC,
The employer hereby authorizes all future loans requested through the online process via Account Access, as well as any requests
that employees submit on paper forms, pending review of the application by ICMA-RC. Notice of loan issuance will be provided
to the Employer via reports posted on the EZLink site.
The loan amount will generally be redeemed from the employee's account on the same day as the employee's successful
submission of the loan request through Account Access, if it is submitted prior to 4:00 p.m. ET on a business day. If not,
the loan amount will be redeemed on the next business day following submission. The loan check is generally issued on
the next business day following redemption, and will be mailed directly to the employee. The employee's presentment of
the loan check for payment constitutes an acknowledgment that the employee has received and read the loan disclosure
information provided by ICMA-RC and agrees to the terms therein.
Loan repayment will begin as soon as practicable following the employee's presentment of the loan check for payment.
Online and through Direct Loan application: All loans must be requested either online by employees through
ICMA-RC's Account Access site at www.icmarc.org, or through the Direct Loan application, both of which require pre -
authorization by the Employer as outlined in italics below.
If an employee is married at the time of application, and spousal consent is. required by the Plan for the loan, the employ-
ee's spouse must consent, in writing, to the loan and the consent must be witnessed by a plan representative or notary
public. Such consent must be received in writing by ICMA-RC no more than ninety (90) days before the loan request is
submitted through Account Access. In the case of the Direct Loan Application, spousal consent should be sent along with
the application.
The promissory note, truth -in -lending rescission notice and disclosure statement are mailed to the employee along with
the issued loan check. The employee confirms receipt and acceptance of these documents and terms at the time the en-
dorsed check is presented for payment.
The Employer hereby authorizes all future loans requested through the online process via Account Access, as well as any requests
that employees submit on paper forms, pending review of the application by ICMA-RC. Notice of loan issuance will be provided
to the Employer via reports posted on the EZLink site.
The loan amount will generally be redeemed from the employee's account on the same day as either ICMA-RC's receipt
of a loan application (complete and. in good order), or the employee's successful submission of the loan request through
Account Access, if it is submitted prior to 4:00 p.m. ET on a business day. If not, the loan amount will be redeemed on the
next business day following submission. The loan check is generally issued on the next business day following redemption,
and will be mailed directly to the employee. The employee's presentment of the loan check for payment constitutes an ac-
knowledgment that the employee has received and read the loan disclosure information provided by ICMA-RC and agrees
to the terms therein.
Loan repayment will begin as soon as practicable following the employee's presentment of the loan check for payment.
I� Direct Loan application only: All loans must be requested through the Direct Loan application, which requires pre -
authorization by the Employer as outlined in italics below.
If an employee is married at the time of application, and spousal consent is required by the -Plan for the loan, the employ-
ee's spouse must consent, in writing, to the loan and the consent must be witnessed by a plan representative or notary
public. Such consent must be received in writing by ICMA-RC along with the Direct Loan Application.
The promissory note, truth -in -lending rescission notice and disclosure statement are mailed to the employee along with
the issued loan check. The employee confirms receipt and acceptance of these documents at the time the endorsed check is
presented for payment.
The employer hereby authorizes all future loans requested on paper forms, pending review of the application by ICMA-RC. Notice
of loan issuance will be provided to the Employer via reports posted on the EZLink site.
The Than amount will generally be redeemed from the employee's account on the same day as ICMA-RC's receipt of a loan
application (complete and in good order).
A
Loan Guidelines Agreement
The loan check will generally be issued from the employee's account on the next business day following redemption. The
loan check will be mailed directly to the employee. The employee's presentment of the loan check for payment constitutes
an acknowledgment that the employee has received and read the loan disclosure information provided by ICMA-RC and
agrees to the terms therein.
Loan repayment will begin as soon as practicable following the employee's presentment of the loan check for payment.
[� Loan application through the Employer: All loans must be requested in writing on an application approved by the plan
administrator. The application must be signed by the participant. The Employer must review and approve each partici-
pant's application.
The participant will be required to sign a promissory note evidencing the loan and a disclosure statement that includes
an amortization schedule prior to receiving a loan check. Loan checks will generally be issued on the next business day
following ICMA-RC's receipt of a complete loan application. The loan check, promissory note, disclosure statement and
truth -in -lending rescission notice will be sent to the employer, who will obtain the necessary signatures and deliver the
check to the participant. All executed documents must be returned to ICMA-RC within 10 calendar days from the date
the check is issued.
IX. Security/Collateral
That portion of a participant's account balance that is equal to the amount of the loan is used as collateral for the loan. The col-
lateral amount may not exceed 50 percent of the participant's account balance at the time the loan is taken. Only the portion of the
account -balance that corresponds to the amount of the outstanding loan balance is used as collateral.
X. Acceleration [select one]
171 All loans are due and payable in full upon separation from service.
All loans are due and payable when a participant receives a distribution of all of his/her account balance after separa-
tion from service. The amount of the outstanding loan balance will be reported as a distribution in addition to the
amount of cash distributed from the plan.
[7) All loans are due and payable when a participant receives a distribution of part of his/her account balance after separa-
tion from service. The amount of the outstanding loan balance will be reported as a distribution in addition to the
amount of cash distributed from the plan.
Xl. Reamortization
Any outstanding loan may be reamortized. Reamortization means changing the terms of a loan, such as length of repayment peri-
od, interest rate, and frequency of repayments. A loan may not be reamortized to extend the length of the loan repayment period to
more than five (5) years from the date the loan was originally made, or in the case of a loan to secure a .principal residence, beyond
the number of years specified by the employer in Section V above.
A participant must request the reamortization of a loan in writing on a reamortization application acceptable to the plan adminis-
trator. Upon processing the request, a new disclosure statement will be sent to the employer for endorsement by the participant and
approval by the employer. The executed disclosure statement must be returned to the plan administrator within 10 calendar days
from the date it is signed. The new disclosure statement is considered an amendment to the original promissory note, therefore a
new promissory note will not be required.
A reamortization will not be considered a new loan for purposes of calculating the number of loans outstanding or the one loan per
calendar year limit.
7
ICMA - RC,
XI1. Refinancing existing loans
If a participant has one outstanding loan, that loan may be refinanced. If a participant has more than one outstanding loan, no
loans may be refinanced. Refinancing means concurrently repaying an existing loan and borrowing an additional amount through
a new loan. Refinancing includes any situation in which one loan replaces another loan and the term of the replacement loan does
not exceed the latest permissable term of the replaced loan.
In order to refinance an existing loan, a participant must request this in writing on an application approved by the plan administra-
tor. Such request must be made at a time when the participant is eligible to obtain a loan as defined by the employer in Section III
above. The amount of the additional loan amount requested for the purpose of refinancing is subject to the loan limits specified in
Section IV above.
Because a refinancing is considered a new.loan, only active employees may refinance an outstanding loan.
XI11. Reduction of Loan
If a participant dies prior to full repayment of the outstanding loan(s), the outstanding loan balance(s) will be deducted from the
account prior to distribution to the beneficiary(ies). The unpaid loan amount is a taxable distribution and may be subject to early
withdrawal penalties. The participant's estate is responsible for taxes or penalties on the unpaid loan amount, if any. A beneficiary
is responsible for taxes due on the amount he or she receives. A Form 1099 will be issued to both the beneficiary and the estate for
these purposes.
XIV. Deemed Distribution
Loan repayments must be made in accordance with the plan document, plan loan guidelines, and as reflected in the promissory
note signed by the participant. If a scheduled payment is not paid within 30, 60, and/or 90 days of the due date, a notice will be
sent to both the employee and the employer.
A loan will be deemed distributed when a scheduled payment is still unpaid at the end of the calendar quarter following the calen-
dar quarter in which the payment was due. If the total amount of any delinquent payment is not received by ICMA-RC by the end
of the calendar quarter following the calendar quarter in which they payment was due, the loan is considered a taxable distribution,
and the principal balance, in addition to any accrued interest, is reported as a distribution to the IRS. However, no money is ,paid
in this distribution, because the participant already has the loan proceeds:
The loan is deemed distributed for tax purposes, but it is not an actual distribution and therefore remains an asset of the partici-
pant's account. Interest continues to accrue. The outstanding loan balance and accrued interest are reported on the participant's
account statement.
Repayment of a deemed distribution will not change or reverse the taxable event.
The loan continues to be outstanding, and to accrue interest, until it is repaid or offset using the participant's account balance. An
offset can occur only if the participant is eligible to receive a distribution from the plan as outlined in the plan document.
Participants are required to repay any outstanding loan which has been deemed distributed before they can be eligible for a new
loan. The deemed distribution and any interest accrued since the date it became a taxable event is taken into account when deter-
mining the maximum amount available for a new loan. New loans must be repaid through payroll deduction.
a
Loan Guidelines Agreement
The employer is obligated by federal regulation to comply with the loan guideline requirements applicable to participant loans, and
to ensure against deemed distribution by monitoring loan repayments, regardless of the method of repayment, and by advising em-
ployees if loans are in danger of being deemed distributed. The tax -qualified status or eligibility of the entire plan may be revoked
in cases of frequent repayment delinquency or deemed distribution.
XV. Fees
Fees may be charged for various services associated with the application for and issuance of loans. All applicable fees will be debited
from the participant's account balance and/or from the participant's loan repayments prior to crediting the repayment of principal
and interest to the participant's account. A schedule of fees applicable to this plan is specified in ICMA-RC's current publication of
Making Sound Investment Decisions: A Retirement Investment Guide.
XVI. Other
The employer has the right to set other terms and conditions as it deems necessary for loans from the plan in order to comply with
any legal requirements. All terms and conditions will be administered in a uniform and non-discriminatory manner.
In Witnes Whereof, the emloyer hereby caused these Guidelines to be executed this day
of l/ ��! , 20 (�
EMPLOYER
By:
Title:
rii 'r' G zales, Mayor
Attest:
Willard G. to guc City Clerk
APPROV( O FORM/ ,/
L&dlren6e S. Wiener, City Attorney
p
Page 1 of 1
Juarez, Debbie
From: Valenzuela, Martha
Sent: Tuesday, September 21, 2010 3:22 PM
To: Juarez, Debbie
Subject: RE: ICMA Agreement
It goes to: ICMA-RC, Attention: New Business Analyst, 777 North Capitol Street NE, Washington, DC 20002-4240
Martha S. Valenzuela
Director of Personnel
4305 Santa Fe Ave.
Vernon, CA 90058
323,583.8811 ext.226
323.826.1472 direct line
323.826.1433 fax
mvalenzuela@ci.vernon.ca.us
From: Juarez, Debbie
Sent: Tuesday, September 21, 2010 2:14 PM
To: Valenzuela, Martha
Subject: ICMA Agreement
Hi Martha. Please e-mail me the contact information so that I can prepare the letter to mail the agreements.
Thank you.
(De6orah Juarez
Records WanagementAssistant
City of Vernon - City CferC's Office
4305 Santa 'Fe Avenue
Vernon, CA 90058
(323) 583-8811
9/21/2010
LOAN GUIDELINES AGREEMENT FOR A
RETIREMENT PLAN
",4 '0�
icmARC
Building Retirement Security
ICMA - RC
INSTRUCTIONS
(Please refer to the previous section, "A Guide to Implementing a Loan Program")
These Loan Guidelines must be completed before loans can be made from your retirement plan. You should consider each option
carefully before making your selections because your selections will apply to all loans made while the selection is in effect. If you
later change any provision, the changes will apply only to loans made after the change is adopted. Loans in existence at the time of
any future changes will continue to operate under the guidelines that were in effect at the time the loan was originally made.
Note: If loans are available to your employees from other plans (e.g. other Section 457 deferred compensation plans or other Sec-
tion 401 plans), calculation of the maximum loan amount must consider the aggregate of all loans from all 401 and 457 plans
in which the employee participates. See the Maximum Loan Amount Worksheet on page 7 of Guide to Implementing Loan
Program, found in this packet.
OA
Loan Guidelines Agreement
Name of Plan (please state the Employer's complete name, including state):
CITY OF VERNON, CALIFORNIA
Plan Type: 171401(a) Money Purchase Plan 401 Profit -Sharing Plan 91457 Deferred Compensation Plan
ICMA-RC Plan Number: 301376
1. Purpose
The purpose of these guidelines is to establish the terms and conditions under which the Employer will grant loans to participants. This is
the only official Loan Provision Document of the above named Plan.
IL Eligibility
Loans are available to all active employees. Loans will not be granted to participants who have an existing loan in default.
Loans will be pro -rated among all the funds in which the participant is invested at the time the loan is made..
For 401 plans only:
Loans are available from the following sources: [select one or both]
171 Employer Contribution Account (vested balances only)
171 Participant Contribution Accounts (pre- and post -tax, if applicable, including Employee Mandatory, Employee Voluntary,
Employer Rollover, and Portable Benefits Accounts, but excluding the Deductible Employee Contribution/Qualified Volun-
tary Employee Contribution Account)
For Roth 401(k) plans only:
A participant's Designated Roth Account balance can be used to secure a participant loan.
Designated Roth Account balances [select one]
0 will not (default option) be available as a source for loans under the Plan.
17 will be available as a source for loans under the Plan. (Note: Using the Roth source for loans may have negative tax con-
sequences for participants.)
For all plan types:
Loans are available for the following purposes: [select one]
0 All purposes
[� Loans shall only be granted in the event of a participant's hardship or for the purpose of enabling a participant to meet
certain specified financial situations. The employer shall approve the participant's loan application after determining, based
on all relevant facts and circumstances, that the amount of the loan is not in excess of the amount required to relieve the fi-
nancial need. For this purpose, financial need shall include, but not be limited to: unreimbursed medical expenses of the par-
ticipant or members of the participant's immediate family, establishing or substantially rehabilitating the principal residence
of the participant, or paying for a college education (including graduate studies) for the participant or his/her dependents.
3
ICMA - RC
Ill. Frequency of loans [select one]
lM Participants may receive one loan per calendar year. Moreover, participants may have only one (1) outstanding loan at a time.
171 Participants may receive one loan per calendar year. Moreover, no participant may have more than five (5) loans outstanding
at one time.
IV. Loan amount
The minimum loan amount is $1,000.
The maximum amount of all loans to the participant from the plan and all other plans sponsored by the Employer that are qualified
employer plans under section 72(p)(4) of the Code is the lesser of:
(1) $50,000, reduced by the highest outstanding balance of all loans from any 401 or 457 plans for that participant during
the one-year period ending on the day before the date a loan is to be made, or
(2) one half of the participant's vested account balance, reduced by the current outstanding balance of all 401 and 457 loans
from all plans for that participant.
If a participant has any loans outstanding at the time a new loan is requested, the new loan will be limited to the maximum amount calcu-
lated above reduced by the total of the outstanding loans.
A loan cannot be issued for more than the above amount. The participant's requested loan amount is subject to downward adjustment
without notice due.to market fluctuation between the time of application and the time the loan is made.
V. Length of loan
A loan must be repaid in substantially equal installments of principal and interest, at least monthly,. over a period that does not
exceed five (5) years.
Loans for a principal residence must be repaid in substantially equal installments of principal and interest, at
least monthly, over a period that does not exceed FIVE [state number of years] years (maximum 30 years).
VI. Loan repayment process
Loan repayments for active employees must be through (choose one):
171 Payroll deduction only.
0 ACH debit only.*
171 Employee may choose either payroll deduction or ACH debit.*
If payroll deduction repayment is allowed, and the employee wishes to use this method, the employee must notify the Employer
so that the Employer can ensure that repayment will begin as soon as practicable on a date determined by the Employer's payroll
cycle. Failure to begin payroll deduction in a timely way could lead to the employee's loan entering delinquency status. Payroll
deduction should begin within two payroll cycles following the employee's receipt of the loan.
* Please note a $20 processing fee will be assessed to a participants ICMA-RC account when a scheduled loan repayment(s) via ACH is
rejected due to insufficient funds, invalid bank account information, or account closure in the participants designated payment account.
4
Loan Guidelines Agreement
Repayments through payroll deduction will be sent via check or wire by the Employer to ICMA-RC on the following cycle
(choose one):
0 Weekly (52 per year)
171 Bi-weekly (26 per year)
11 Semi-monthly (24 per year)
17 Monthly (12 per year)
If ACH debit repayment is allowed, debits from the employee's designated bank account will begin approximately one month fol-
lowing the date the employee's signed ACH authorization form is received and processed by ICMA-RC, or, in the case of online
loans, approximately one month following the date the loan check has been cleared for payment. Debits will normally be made on
a monthly basis.
Loans outstanding for former employees or employees on a leaved absence must be repaid on the same schedule as if payroll
deductions were still being made unless they reamortize their loans and establish a new repayment schedule that provides that sttb-
stantially equal payments are made at least monthly over the remaining period of the loan.
Loan payments, including loan payments from former employees, are allocated to the participant's current election of investment
options on file with ICMA-RC.
The participant may pay off all or a portion of the principal and interest early without penalty or additional fee. Extra payments
are applied forward to both principal and interest as specified in the original repayment schedule, unless the additional payment is
for the balance due.
VI1. Loan interest rate
The rate of interest for loans of five (5) years or less will be based on prime plus 0.5%.
The rate of interest for loans for a principal residence will be based on the FHA/VA rate.
Interest rates are determined on the last business day of the month preceding the month the loan is disbursed. The interest rate is
locked in at the time a loan is approved and remains constant throughout the life of the loan.
The prime interest rate is determined on the last business day of each month using www.nfsn.com as the source. The FHA/VA
interest rate is also determined on the last business day of each month using www.bankofamerica.com as the source.
Loan interest rates for new loans taken in different months may fluctuate upward or downward monthly, depending on the move-
ment of the prime and FHA/VA interest rates.
The employer may modify the manner in which loan interest rates will be determined, but only with respect to future loans.
Vill. Loan application procedure
Loans must be requested using the following method (check one):
171 Online only: All loans must be requested online by employees through ICMA-RC's Account Access site at
www.icmarc.org, with Employer pre -authorization as outlined in italics below.
If an employee is married at the time of application, and spousal consent is required by the Plan for the loan, the employ-
ee's spouse must consent, in writing, to the loan and the consent must be witnessed by a plan representative or notary
public. Such consent must be received in writing by ICMA-RC no more than ninety (90) days before the loan request is
submitted through Account Access.
The promissory note, truth -in -lending rescission notice and disclosure statement are presented to the employee online
through Account Access at the time the employee submits the loan request. The employee confirms receipt and acceptance
of these documents by clicking on the affirmative buttons on the .Account Access program.
5
ICMA - RC
The employer hereby authorizes all future loans requested through the online process via Account Access, as well as any requests
that employees submit on paper forms, pending review of the application by ICMA-RC. Notice of loan issuance will be provided_
to the Employer via reports posted on the EZLink site.
The loan amount will generally be redeemed from the employee's account on the same day as the employee's successful
submission of the loan request through Account Access, if it is submitted prior to 4:00 p.m. ET on a business day. If not,
the loan amount will be redeemed on the next business day following submission. The loan check is generally issued on
the next business day following redemption, and will be mailed directly to the employee. The employee's presentment of
the loan check for payment constitutes an acknowledgment that the employee has received and read the loan disclosure
information provided by ICMA-RC and agrees to the terms therein.
Loan repayment will begin as soon as practicable following the employee's presentment of the loan check for payment.
10 Online and through Direct Loan application: All loans must be requested either online by employees through
ICMA-RC's Account Access site at www.icmarc.org, or through the Direct Loan application, both of which require pre -
authorization by the Employer as outlined in italics below.
If an employee is married at the time of application, and spousal consent is required by the Plan for the loan, the employ-
ee's spouse must consent, in writing, to the loan and the consent must be witnessed by a plan representative or notary
public. Such consent must be received in writing by ICMA-RC no more than ninety (90) days before the loan request is
submitted through Account Access. In the case of the Direct Loan Application, spousal consent should be sent along with
the application.
The promissory note, truth -in -lending rescission notice and disclosure statement are mailed to the employee along with
the issued loan check. The employee confirms receipt and acceptance of these documents and terms at the time the en-
dorsed check is presented for payment.
The Employer hereby authorizes all future loans requested through the online process via Account Access, as well as any requests
that employees submit on paper forms; pending review of the application by ICMA-RC. Notice of loan issuance will be provided
to the Employer via reports posted on the EZLink site.
The loan amount will generally be redeemed from the employee's account on the same day as either ICMA-RC's receipt
of a loan application (complete and. in good order), or the employee's successful submission of the loan request through
Account Access, if it is submitted prior to 4:00 p.m. ET on a business day. If not, the loan amount will be redeemed on the
next business day following submission.. The loan check is generally issued on the next business day following redemption,
and will be mailed directly to the employee. The employee's presentment of the loan check for payment constitutes an ac-
knowledgment that the employee has received and read the loan disclosure information provided by ICMA-RC and agrees
to the terms therein.
Loan repayment will begin as soon as practicable following the employee's presentment of the loan check for payment
171 Direct Loan application only: All loans must be requested through the Direct Loan application, which requires pre -
authorization by the Employer as outlined in italics below.
If an employee is married at the time of application, and spousal consent is required by the Plan for the loan, the employ-
ee's spouse must consent, in writing, to the loan and the consent must be witnessed by a plan representative or notary
public. Such consent must be received in writing by ICMA-RC along with the Direct Loan Application.
The promissory note, truth -in -lending rescission notice and disclosure statement are mailed to the employee along with
the issued loan check. The employee confirms receipt and acceptance of these documents at the time the endorsed check is
presented for payment.
The employer hereby authorizes all future loans requested on paper forms, pending review of the application by ICMA-RC. Notice
of loan issuance will be provided to the Employer via reports posted on the EZLink site.
The loan amount will generally be redeemed from the employee's account on the same day as ICMA-RC's receipt of a loan
application (complete and in good order).
M.
Loan Guidelines Agreement
The loan check will generally be issued from the employee's account on the next business day following redemption. The
loan check will be mailed directly to the employee. The employee's presentment of the loan check for payment constitutes
an acknowledgment that the employee has received and read the loan disclosure information provided by ICMA-RC and
agrees to the terms therein.
Loan repayment will begin as soon as practicable following the employee's presentment of the loan check for payment.
[� Loan application through the Employer: All loans must be requested in writing on an application approved by the plan
administrator. The application must be signed by the participant. The Employer must review and approve each partici-
pant's application.
The participant will be required to sign a promissory note evidencing the loan and a disclosure statement that includes
an amortization schedule prior to receiving a loan check. Loan checks will generally be issued on the next business day
following ICMA-RC's receipt of a complete loan application. The loan check, promissory note, disclosure statement and
truth -in -lending rescission notice will be sent to the employer, who will obtain the necessary signatures and deliver the
check to the participant. All executed documents must be returned to ICMA-RC within 10 calendar days from the date
the check is issued.
IX. Security/Collateral
That portion of a participant's account balance that is equal to the amount of the loan is used as collateral for the loan. The col-
lateral amount may not exceed 50 percent of the participant's account balance at the time the loan is taken. Only the portion of the
account -balance that corresponds to the amount of the outstanding loan balance is used as collateral.
X. Acceleration [select one]
171 All loans are due and payable in full upon separation from service.
All loans are due and payable when a participant receives a distribution of all of his/her account balance after separa-
tion from service. The amount of the outstanding loan balance will be reported as a distribution in addition to the
amount of cash distributed from the plan.
171 All loans are due and payable when a participant receives a distribution of part of his/her account balance after separa-
tion from service. The amount of the outstanding loan balance will be reported as a distribution in addition to the
amount of cash distributed from the plan.
XI. Reamortization
Any outstanding loan may be reamortized. Reamortization means changing the terms of a loan, such as length of repayment peri-
od, interest rate, and frequency of repayments. A loan may not be reamortized to extend the length of the loan repayment period to
more than five (5) years from the date the loan was originally made, or in the case of a loan to secure a principal residence, beyond
the number of years specified by the employer in Section V above.
A participant must request the reamortization of a loan in writing on a reamortization application acceptable to the plan adminis-
trator. Upon processing the request, a new disclosure statement will be sent to the employer for endorsement by the participant and
approval by the employer. The executed disclosure statement must be returned to the plan administrator within 10 calendar days
from the date it is signed. The new disclosure statement is considered an amendment to the original promissory note, therefore a
new promissory note will not be required.
A reamortization will not be considered a new loan for purposes of calculating the number of loans outstanding or the one loan per
calendar year limit.
7
ICMA - RC
XI1. Refinancing existing loans
If a participant has one outstanding loan, that loan may be refinanced. If a participant has more than one outstanding loan, no
loans may be refinanced. Refinancing means concurrently repaying an existing loan and borrowing an additional amount through
a new loan. Refinancing includes any situation in which one loan replaces another loan and the term of the replacement loan does
not exceed the latest permissable term of the replaced loan.
In order to refinance an existing loan, a participant must request this in writing on an application approved by the plan administra-
tor. Such request must be made at a time when the participant is eligible to obtain a loan as defined by the employer in Section III
above, The amount of the additional loan amount requested for the purpose of refinancing is subject to the loan limits specified in
Section IV above.
Because a refinancing is considered a new loan, only active employees may refinance an outstanding loan.
XIII. Reduction of Loan
If a participant dies prior to full repayment of the outstanding loan(s), the outstanding loan balance(s) will be deducted from the
account prior to distribution to the beneficiary(ies). The unpaid loan amount is a taxable distribution and may be subject to early
withdrawal penalties. The participant's estate is responsible for taxes or penalties on the unpaid loan amount, if any. A beneficiary
is responsible for taxes due on the amount he or she receives. A Form 1099 will be issued to both the beneficiary and the estate for
these purposes.
XIV. Deemed Distribution
Loan repayments must be made in accordance with the plan document, plan loan guidelines, and as reflected, in the promissory
note signed by the participant. If a scheduled payment is not paid within 30, 60, and/or 90 days of the due date, a notice will be
sent to both the employee and the employer.
A loan will be deemed distributed when a scheduled payment is still unpaid at the end of the calendar quarter following the calen-
dar quarter in which the payment was due. If the total amount of any delinquent payment is not received by ICMA-RC by the end
of the calendar quarter following the calendar quarter in which they payment was due, the loan is considered a taxable distribution,
and the principal balance, in addition to any accrued interest, is reported as a distribution to the IRS. However, no money is paid
in this distribution, because the participant already has the loan proceeds.
The loan is deemed distributed for tax purposes, but it is not an actual distribution and therefore remains an asset of the partici-
pant's account. Interest continues to accrue. The outstanding loan balance and accrued interest are reported on the participant's
account statement.
Repayment of a deemed distribution will not change or reverse the taxable event.
The loan continues to be outstanding, and to accrue interest, until it is repaid or offset using the participant's account balance. An
offset can occur only if the participant is eligible to receive a distribution from the plan as outlined in the plan document.
Participants are required to repay any outstanding loan which has been deemed distributed before they can be eligible for a new
loan. The deemed distribution and any interest accrued since the date it became a taxable event is taken into account when deter-
mining the maximum amount available for a new loan. New loans must be repaid through payroll deduction.
E
Loan Guidelines Agreement
The employer is obligated by federal regulation to comply with the loan guideline requirements applicable to participant loans, and
to ensure against deemed distribution by monitoring loan repayments, regardless of the method of repayment, and by advising em-
ployees if loans are in danger of being deemed distributed. The tax -qualified status or eligibility of the entire plan may be revoked
in cases of frequent repayment delinquency or deemed distribution.
XV. Fees
Fees may be charged for various services associated with the application for and issuance of loans. All applicable fees will be debited
from the participant's account balance and/or from the participant's loan repayments prior to crediting the repayment of principal
and interest to the participant's account. A schedule of fees applicable to this plan is specified in ICMA-RC's current publication of
Making Sound Investment Decisions: A Retirement- Investment Guide.
XVI. Other
The employer has the right to set other terms and conditions as it deems necessary for loans from the plan in order to comply with
any legal requirements. All terms and conditions will be administered in a uniform and non-discriminatory manner.
In Witness Whereof, the employer hereby caused these Guidelines to be executed this
of
EMPLOYER
By:
Title:
Attest:
,20
Accepted: ICMA RETIREMENT CORPORATION
By:
Title:
Attest:
day
9
SUGGESTED RESOLUTION
Building Retirement Semior
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON AMENDING THE SECTION 457 DEFERRED
COMPENSATION PLAN TO PERMIT EMPLOYEE LOANS AND
EXECUTING A LOAN GUIDELINES AGREEMENT
WHEREAS, the City of Vernon maintains a Section 457 deferred
compensation plan for its employees, which is administered by the
International City Management Association (ICMA) Retirement
Corporation; and
WHEREAS, the Interim City Administrator has recommended a
change in the deferred compensation plan to permit employees to take
loans from the deferred compensation plan; and
WHEREAS, the City Council of the City of Vernon,desires to
permit employees to take loans from the deferred compensation plan; and
WHEREAS, the execution of a Loan Guidelines Agreement with
the ICMA Retirement Corporation is necessary to permit the ICMA
Retirement Corporation to make loans to employees from the deferred
compensation plan.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon hereby
authorizes the deferred compensation plan to make loans to employees
and approves the Loan Guidelines Agreement, a copy of which is
attached hereto as Exhibit A
.SECTION 2: The City Council of the City of Vernon hereby
authorizes the Mayor or Mayor Pro-Tem to execute the Loan Guidelines
Agreement for, and on behalf of, the City of Vernon; and the City
Clerk, or Deputy City Clerk, is hereby authorized to attest thereto.
SECTION 3: The City Council of the City of Vernon hereby
authorizes the Interim City Administrator, or his designee, to take
whatever actions are deemed necessary or desirable for the purpose of
implementing and carrying out the purposes of this Resolution and the
transactions herein approved or authorized.
SECTION 4: The City Clerk of the City of Vernon shall
certify to the passage, approval and adoption of this Resolution, and
the City Clerk of the City of Vernon shall cause this Resolution and
the City Clerk's certification to be entered in the File of
Resolutions of the Council of this City.
APPROVED AND ADOPTED this th day of , 2010.
ATTEST:
Willard G. Yamaguchi, City Clerk
Name•
Title: Mayor / Mayor Pro-Tem
- 2 -
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
I, Willard G. Yamaguchi, City. Clerk of the City of Vernon, do
hereby certify that the foregoing Resolution, being Resolution
No. was duly passed, approved and adopted by the City Council
of the City of Vernon 2010, and thereafter was duly signed
by the Mayor or Mayor Pro-Tem of the City of Vernon.
Executed this day of 2010, at Vernon, California.
( SEAL)
Willard G. Yamaguchi, City Clerk
_3-