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HomeMy WebLinkAbout744_Modifying Defined Contribution Plan OMRFTulsa County Clerk - EARLENE WILSON Doc # 03075039 Pgs 1 b/p 7021/2418-2418 Receipt # 657715 05/27/03 Fee 13.00 000657715007 CITY OF OWASSO, OKLAHOMA ORDINANCE NUMBER 744 AN ORDINANCE AMENDING THE EMPLOYEE RETIREMENT SYSTEM DEFINED CONTRIBUTION PLAN OF THE CITY OF OWASSO, OKLAHOMA; PROVIDING FOR EFFECTIVE DATE, LIMITATIONS ON CONTRIBUTIONS INCREASE IN COMPENSATION LIMITS, ROLLOVER OF PLAN DISTRIBUTIONS, ROLLOVER FROM OTHER PLANS, AND REQUIRED MINIMUM DISTRIBUTIONS; REPEALING ALL ORDINANCES IN PARTS OF ORDINANCES IN CONFLICT HEREWITH; AND PROVIDING A SEVERABILITY AND SAVING CLAUSE. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF OWASSO, OKLAHOMA THAT: Section One: The Employee Retirement System Defined Contribution Plan of the City of Owasso, Oklahoma, is hereby amended as shown on the attached Exhibit "A", which is incorporated herein by reference. Section Two: All ordinances or parts of ordinances in conflict herewith are hereby repealed. Section Three: If any part, article section or subsection of this ordinance shall be held invalid or unconstitutional for any reason, such holding shall not be construed to impair or invalidate the remainder of this ordinance, notwithstanding such holding. Section Four: This ordinance shall become effective thirty (30) days from the date of first publication as provided by state law. PASSED, APPROVED AND ADOPTED by the City Council of the City of Owasso, By: Michael Helm, Mayor APPROVED AS TO FORM: Isl Steohen P. Grav Stephen P. Gray, City Attorney ATTEST: Isl Marcia Boutwell Marcia Boutwell, City Clerk CITY OF OWASSO, OKLAHOMA By: Isl Michael Helm Michael Helm. Mayor Affidavit Of Publication OWASSO REPORTER STATE OF OKLAHOMA, TULSA COUNTY, ss: BiB R. Retherford, of lawful age, being duly sworn and authorized, says that he is the publisher of the Owasso Reporter, a weekly newspaper published in the City of Owasso, Tulsa County, Oklahoma, a news- paper qualified to publish legal notices, advertise- ments and publications as provided in Section 106 of Title 25, Oklahoma Statutes 1971 and 1983 as amended, and thereafter, and complies with aU other requirements of the laws of Oklahoma with reference to legal publications. That said notice, a true copy of which is attached hereto, was published in the regular edition of said newspaper during the period and time of publication and not in a supplement, on the following dates: Subscribed and sworn to before me this 28th My Commission expires: PUBLISHER'S FEE $ 70.40 AN ORDINANCE AMENDING THE EMPLOYEE RETIRE- MENT SYSTEM DEFINED CONTRIBU- TION PLAN OF THE CITY OF OWASSO, OKLA- HOMA; PROVIDING FOR EFFECTIVE DATE, LIMI- TATIONS ON CONTRIBU- TIONS, INCREASE IN COMFENSATION UMITS, ROLLOVER at' PLAN DISTRIBUTIONS, ROLLOVER FROM OTH- ER PLANS, AND REQUIRED MINIMUM DISTRIBUTIONS: REPEALING ALL ORDI- NANCES OR PARTS OF ORDINANCES IN CON- FLICT HEREWITH; AND PROVIDING A SEVER- ABILITY AND SAVING CLAUSE. BE IT ORDAINED BY THE CITY OF OWASSO, OKLA- HOMA THAT: Secfion One: The Employee Retirement System Defined Contribution Plan of the City of Owasso, Oklahoma, is hereby amended as shown on the attached Exhibit ~A", which is incorporated herein by refer. enCB. Section Two: All ordinances or parts of ordinances in contlict herewith are hereby repealed. Section Three: If any part. arti- cle section or subsection of this ordinance shall be held invalid or unconstitutional for any rea. son, such holding shall not be construed to impair or invali- date the remainder of this ordi- nance, notwithstanding such holding. Section Four: This ordinance shall become effective (30) days from the date of first pubh- cc:tiiof1 as provided ~y state law. PASSE::J MJO A?PROVED AND ADOPTED by the City Council of the City of Owasso, Oklahoma this 18th day of March, 2003. CITY OF OWASSO, OKLAHOMA OrDINANCE NUMBER 744 Published in the Owasso Reporter, Owasso. Tulsa County, Oklahoma, March 27, 2003. MEMORANDUM TO: THE HONORABLE MAYOR & CITY COUNCIL CITY OF OWASSO FROM: MICHELE DEMPSTER HUMAN RESOURCE DIRECTOR SUBJECT: IRS CHANGES TO OMRF RETIREMENT PLANS ORDINANCE #743 — AMENDING DEFINED BENEFIT PLAN ORDINANCE #744 — AMENDING DEFINED CONTRIBUTION PLAN DATE: March 12, 2003 BACKGROUND: Two OMRF plans are offered to city employees. Both plans are IRS qualified retirement plans. The first plan is a Defined Benefit plan which is the mandatory retirement plan for all full -time employees who do not participate in the Police and Fire Retirement system. The City and participating employees contribute to the plan and upon retirement an employee's retirement benefits are based on a calculation including the average of their last 60 months salary and his/her years of service. The second OMRF plan is a Defined Contribution plan which is an optional supplemental retirement plan available to all full -time employees. Employees participating in the Defined Contribution plan can contribute up to 12% of their base wages and the City will match up to 2% of the employee's base wages $0.50 on the dollar. Employees select investment options on an individual basis. Periodically the Internal Revenue Service modifies rules and regulations regarding qualified retirement plans. When this occurs we are required by the IRS to incorporate these modifications into our plans. The Economic Growth and Tax Relief Reconciliation Act of 2001 ( EGTRRA) included modifications affecting the Defined Benefit Plan and the Defined Contribution plan. A summary of plan changes which are a result of EGTRRA are attached. These changes will not result in an increase in cost to the City. The modifications do include an increase in limitations on Plan Benefits and an increase in Compensation limits. However these limits were already at a level that did not affect our employees. RECOMMENDATION: Staff is recommending approval of Ordinance #743 amending the OMRF Defined Benefit plan and Ordinance #744 amending the OMRF Defined Contribution Plan. ATTACHMENT: Summary of Plan Changes Ord. #743 & Ord. #744 [b] 2002 EGTRRA Plan Amendment Defined Benefit Plan— Summary of Plan Changes Limitations on Plan Benefits The IRS has increased the limits for maximum plan benefit amounts payable to a participant each year. This change has no real impact to the employer or employee unless the annual pension amount would have been greater than $140,000. Increase in Compensation Limit The IRS has increased the limit for recognized salary of Increase in Compensation Limit plan participants. The maximum was $170,000, but is now $200,000 under this change. This change will have no impact until or unless an employee's salary exceeds $170,000. Direct Rollovers of Plan Distributions The IRS has expanded the list of plan types to which a Direct Rollovers of Plan Distributions and Rollovers participant can transfer monies. This change has not from other Plans cost impact to the employee or employer. It will allow an employee, for example, to transfer a plan distribution to a 457 account, if they wish. New Mortality Tables This requires the use of specific mortality tables for Required Minimum Distributions adjusting any benefit or limitation under Code Section 415. This change has no real impact to the employer or employee unless the annual pension amount would have been greater than the $140,000, using the new mortality tables. Defined Contribution Plan — Summary of Plan Changes Limitations on Contributions The IRS has increased the limits for maximum plan contributions by the employee and employer. This change has no cost impact to the employer, but would allow an employee to contribute greater amounts in to the retirement plan if desired —up to $40,000 per year or 100% of salary . Increase in Compensation Limit The IRS has increased the limit for recognized salary of plan participants. The maximum was $170,000, but is now $200,000 under this change. This change will have no impact until or unless an employee's salary exceeds $170,000. Direct Rollovers of Plan Distributions and Rollovers The IRS has expanded the list of plan types which a from other Plans participant can transfer monies to and from. This change has no cost impact to the employee or employer. It will allow, for example, an employee to transfer IRA account balances to their OMRF account. Required Minimum Distributions The IRS has always required a terminated employee to begin receiving money from their retirement account by the age of 70 %. The method of calculating the minimum amount that must be paid each year has been relaxed, lowering the required amount. This change benefits all participants by lowering the amount they must be paid. However, participants can still choose to receive more than the required minimum.