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Home My WebLink About2011 03 14 Consent 200 Resolution 2011-07 Allow Loans Against The Employee's 457 Deferred Compensation Retirement Plan COMMISSION AGENDA Consent X Informational ITEM 200 Public Hearing Regular March 14, 2011 MGR. /DEPT. Regular Meeting Authorization The City Manager and Finance Department requests the Commission approve REQUEST: Resolution 2011-07 to allow loans against the employee’s 457 Deferred Compensation retirement plan. Additionally, to authorize the City Manager and Finance and Administrative Services Director to execute any and all documentations required by Nationwide on behalf of the City of Winter Springs to facilitate such loans. SYNOPSIS: To gain approval from the City Commissioners to add the loan option to the agreements with Nationwide. This will provide the ability for active City employees to borrow, with limitations, from their personal individual deferred compensation plan account(s). This action doesn’t effect or relate to the City of Winter Springs’ Defined Benefit Plan. CONSIDERATIONS: The City currently provides employees the opportunity to save for their retirement through deferred compensation plans offered by Nationwide Retirement Solutions, Inc (NRS). These plans are commonly known as a “457 Plan” to reflect the section of the IRS code that provides for the offering of such a plan. Section 457 provides that eligible governmental 457(b) plans may permit loans to Participants. This option must be approved by the City Commissioners to implement the loan programs. Based on the current economic environment, the City Manager and Finance and Administrative Services Director, (Plan Administrator), proposes the approval of the option of providing the employees the ability to borrow from their 457 plan accounts, with stipulations and limitations that are provided in the loan agreement. Nationwide will administer and approve the loans. This will provide an additional resource for employees who are facing financial hardships and will be a means to attract, retain and motivate employees. Program highlights include: Allows eligible employees to borrow from their 457 plan funds. Loans will be administered by Nationwide. Maximum loan term is five years. Participants will be able to borrow for any cause; one outstanding loan at a time, the maximum term over which a loan may be repaid is five (5) Years. Loans for principle residence must be repaid within 15 years. The minimum loan amount is $1,000; maximum loan is 50% of the account balance(s) or $50,000, whichever is less. Loan repayments must be made by direct withdrawal (ACH) from employee’s bank Accounts or payroll deduction (26 per year). Terminating employees may continue to make monthly payments through ACH, unless They withdraw their entire balance. Processing fees, administrative fees, delinquents fees, or taxable events may be Incurred. The current interest rate is Prime + 1.0% for Nationwide. The City has no responsibility for any outstanding loans taken by employees. FISCAL IMPACT: This action will have no fiscal impact to the City. COMMUNICATION EFFORTS: This Agenda Item has been forwarded to the Mayor and City Commission; City Manager; City Attorney/Staff; placed in Press Packets; placed in the City Hall (Lobby) City Commission Meeting binder; and will be available on the City’s Website, LaserFiche, and the City’s Server. Additionally, information related to this Agenda Item has been sent to media/press representatives who have requested Agendas/Agenda Item information, all Homeowner’s Associations on file with the City, all individuals who have requested Agendas/Agenda Item information, Department Directors; and also posted outside City Hall; posted inside City Hall with additional copies available for the general public; and posted at five (5) different locations around the City. RECOMMENDATION: It is the recommendation of the City Manager and the Finance Department that the City Commission approve Resolution 2011-07 to allow loans from the employees 457 Deferred Compensation Plan and to authorize the City Manager and City Attorney to prepare and execute any and all documentations required by Nationwide on behalf of the City of Winter Springs to facilitate such loans. ATTACHMENTS: Resolution No. 2011-07 Participant Loan Administrative Procedures Loans to Participants Amendment to Plan Document • RESOLUTION NO. 2011 -07 A RESOLUTION BY THE CITY OF WINTER SPRINGS, FLORIDA, TO APPROVE THE 457 DEFERRED COMPENSATION LOAN GUIDELINES AGREEMENT WITH NATIONWIDE RETIREMENT SOLUTIONS, INC. ATTACHED HERETO AS EXHIBIT "A"; AUTHORIZING THE CITY MANAGER TO IMPLEMENT THE LOAN GUIDELINES; PROVIDING FOR REPEAL OF PRIOR INCONSISTENT RESOLUTIONS, SEVERABILITY RESTRICTION, AND AN EFFECTIVE DATE. WHEREAS, the City of Winter Springs has established a 457 deferred Compensation Retirement Plan ( "Plan ") for City employees; and WHEREAS, the City Commission previously adopted Resolution 2011 -04 permitting eligible participants in the Plan to take loans from the Plan in accordance with applicable loan guidelines; and WHEREAS, the City currently has two 457 deferred compensation programs for eligible City employees and within the Plan; and WHEREAS, in furtherance of Resolution 2011 -04 and this Resolution, the City Commission now desires to approve the loan guidelines with Nationwide Retirement Solutions, Inc., third party administrator, to administer the loans under the United States Conference of Mayors Deferred Compensation Program offered by the City; and WHEREAS, this Resolution is in the best interests of the City employees and the citizens of Winter Springs, Florida; and NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of Winter Springs, Seminole County, Florida, as follows: Section 1. Recitals. The foregoing recitals are hereby fully incorporated herein by this reference and are deemed a material part of this Resolution. Section 2. Loan Guidelines. The City Commission hereby authorizes City employees to take loans from the Plan in accordance with the Loan Guidelines Agreement attached hereto as EXHIBIT "A" and fully incorporated herein by this reference ( "Agreement "). The City Manager is hereby authorized to execute said Agreement and to execute such other documents necessary to implement the Agreement. Further, the City Manager is also authorized to adopt administrative rules in furtherance of and consistent with the Agreement. • Section 3. Repeal of Prior Inconsistent Resolutions. All prior resolutions or parts of • resolutions in conflict herewith are hereby repealed to the extent of the conflict. Section 4. Severability Restriction. If any section, subsection, sentence, clause, • phrase, word, or portion of this resolution or Agreement is for any reason held invalid or unconstitutional by any court of competent jurisdiction, this Resolution and Agreement shall be deemed terminated and null and void. • • • Section 5. Effective Date. This Resolution shall become effective immediately upon adoption by the City Commission of the City of Winter Springs. DONE AND ADOPTED in regular session of the City Commission of the City of Winter Springs, Florida, this 14 day of March, 2011. CITY OF WINTER SPRINGS, FLORIRA .9/ _ ATTEST: • ND ' >1 ORENZO - LUACES, City Clerk Approve • as to legal form and sufficiency for The Winter Springs only: / v ANTHONY A. GARGANESE, City Attorney • City of Winter Springs • • Resolution 2011 -07 Page 2 of 2 • •