ADOPTED - NOVEMBER 8, 2005

Agenda Item No. 12

Introduced by the County Services Committee of the:

INGHAM COUNTY BOARD OF COMMISSIONERS

RESOLUTION AMENDING THE INGHAM COUNTY DEFERRED COMPENSATION PLAN

RESOLUTION #05-294

WHEREAS, when Deferred Compensation Plans were first authorized, IRS regulations prohibited employees from borrowing from their deferred compensation accounts, and the only provision for obtaining deferred funds was in the event of a demonstrated financial hardship; and

WHEREAS, IRS regulations have been changed to allow participants to borrow against their accounts, but at the option of the employer; and

WHEREAS, the Deferred Compensation Committee, (consisting of the Human Resources Director, the Controller, and the Director of Financial Services) is recommending that the County’s Deferred Compensation Plan be amended to allow employees to borrow from their individual accounts; and 

WHEREAS, the Plan Administrator has provided a Plan Amendment which allows employees to borrow from their individual accounts.

THEREFORE BE IT RESOLVED, the Ingham County Board of Commissioners authorizes an amendment to the Ingham County Deferred Compensation Plan to allow participants to borrow against their accounts effective December 1, 2005.

BE IT FURTHER RESOLVED, that the following Section is now added to the Ingham County Deferred Compensation Plan:

Loans to PARTICIPANTS

(a)        PLAN SPONSOR has elected to make loans available to PARTICIPANTS and has delegated                                    certain administrative duties regarding loans from the PLAN to the ADMINISTRATOR.

(b)        Any loan by the PLAN to a PARTICIPANT under this Section shall be subject to the loan        administrative procedures established by the ADMINISTRATOR as well as the following requirements:

            (i)         Loan Eligibility. Any PARTICIPANT may apply for loan under the PLAN.  A PARTICIPANT                                    who has defaulted on a previous loan from the PLAN shall not be eligible for another loan from                          the PLAN until all defaulted loans are repaid in full, including accrued interest and fees.

            (ii)        Loan Application and Loan Agreement.  A PARTICIPANT must complete and return to                                              ADMINISTRATOR a loan application.  A non-refundable application fee established by the                             ADMINISTRATOR will be deducted from the PARTICIPANT’S ACCOUNT(s) at the time of                                  loan origination.  Before a loan is issued, the PARTICIPANT must enter into a legally                                        enforceable loan agreement as provided for by the ADMINISTRATOR.

ADOPTED - NOVEMBER 8, 2005

Agenda Item No. 12

RESOLUTION #05-294

            (iii)       Loan Repayment.  The PARTICIPANT receiving a loan shall be required to furnish to                                       ADMINISTRATOR any information and authorization necessary to effectuate repayment of the           

                        loan prior to the commencement of a loan.  In the event that a payment cannot be processed                              because of lack of sufficient funds, the ADMINISTRATOR shall assess an insufficient funds                              charge, which will be deducted from the PARTICIPANT’S ACCOUNT(s). 

(iv)       Loan Term and Interest Rate.  The maximum term over which a loan may be repaid is five (5) years for other than a principal resident and fifteen (15) years for the purchase of a PARTICIPANT’S principal residence.  Each loan shall be amortized in substantially equal payments consisting of principal and interest during the term of the loan, except that the amount of the final payment may be higher or lower.  The ADMINISTRATOR shall establish the interest rate for any loan.

            (v)        Loan Frequency.  Each PARTICIPANT may have only one (1) PLAN loan outstanding at any                          given time.  A PLAN loan which is in default, even if the defaulted loan was treated as a                                                 “deemed distribution” under federal regulations, shall be treated as an outstanding loan until such                        PARTICIPANT’S account balance is offset by the amount of principal and accrued interest                              under the loan.  A PARTICIPANT will be granted a loan no more frequently than two (2) times                                    in any twelve (12) month period.

            (vi)       Default.  The PARTICIPANT must pay full amount of each loan payment (principal and                                                interest) on the date that it is due.  Failure to make such a payment by the due date, or within any                                   cure period established by the ADMINISTRATOR, shall cause the PARTICIPANT to be in                            default for the entire amount of the loan, including any accrued interest.  A loan will also be in                             default if the PARTICIPANT to be in default for the entire amount of the loan, including any                              accrued interest.  A loan will also be in default if the PARTICIPANT either refuses to execute,                          revoke, or rescind any agreement necessary to comply with the provisions of this Section or the                                     loan administrative procedures established by the ADMINISTRATOR, commences or has                                commenced against PARTICIPANT a bankruptcy case, or upon the death of the                                                          PARTICIPANT.

            (vii)      Loan Security.  By accepting a loan, the PARTICIPANT is giving a security interest in their                               vested PLAN balance as of the loan process date, together with all additions thereof, to the                               PLAN that shall at all times be equal to 100% of the unpaid principal balance of the loan                                                together with accrued interest.

            (viii)      Loan Amount.  The maximum amount of any loan permitted under the PLAN is lesser of (i) 50%                       of the PARTICIPANT’S vested account balance less any outstanding loan balances under the                           PLAN or (ii) $50,000 less the highest outstanding loan balance during the preceding one year                            period.  The ADMINISTRATOR shall establish the minimum loan amount.  The                                                            PARTICIPANT and not the ADMINISTRATOR shall at all times remain responsible for                                              ensuring that any loan received under the PLAN is in accordance with these limits with regard to                        any other loans received by the PARTICIPANT under any other plans of the PARTICIPANT’S                             employer.

ADOPTED - NOVEMBER 8, 2005

Agenda Item No. 12

RESOLUTION #05-294

            (ix)       Loan Maintenance Fee.  Until a loan is repaid in full, an annual loan maintenance fee as                                      established by ADMINISTRATOR will be deducted from the PARTICIPANT’S                                                         ACCOUNTS(s).

            (x)        Loan Default Fee.  At the time when a default occurs, a loan default fee established by                                       ADMINISTRATOR will be deducted from the PARTICIPANT’S ACCOUNT(s).

(c)        The ADMINISTRATOR shall fix such other terms and conditions necessary to the administrative          maintenance of the provisions of this Section and as necessary to comply with the IRC and regulations           there under.  

COUNTY SERVICES: Yeas:  Celentino, Copedge, De Leon, Schor, Severino, Vickers

Nays:  None          Absent:  None     Approved 11/1/05