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 Countyís 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 PARTICIPANTíS 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 PARTICIPANTíS 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 PARTICIPANTíS 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 ††††††††††††††††††††††††††††††††††† ††††††††††† ďdeemed distributionĒ under federal regulations, shall be treated as an outstanding loan until such †††††††††† ††††††††††† PARTICIPANTíS 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 PARTICIPANTíS 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 PARTICIPANTíS ††††††††††††††††††††††††††† 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 PARTICIPANTíS ††††††††††††††††††††††††††††††††††††††††††† ††††††††††† 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 PARTICIPANTíS 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