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09. Resolution 4369 - ICMA - RC Trust ResolutionAgenda -October 6,1997 AGENDA ITEM 9 - RESOLUTION 4369-ICMA-RC TRUST RESOLUTION BACKGROUND/CONSIDERATION: Available to all employees of the City, a deferred compensation plan through the International City Manager's Association Retirement Corporation is offered. This is the City Manager's primary source of retirement planning and funding. Previous documents adopting this plan are now outdated in terms of new IRS rulings and federal legislation. Previous accounts were held in the name of the employee but the funds were actually the City's. This has caused problems with several thousands of employees when certain governmental agencies raided these funds to pay offtheir debts or to purchase junk bonds. This led the City Manager's Association to seek remedies to this undesirable problem. The new document creates a trust to hold plan assets as required by the new federal legislation. This trust is similar to dedicated trusts established by governmental units for various purposes, such as holding pension fund assets or providing for perpetual care of cemetery plots. In order to be eligible to participate in the Retirement Trust, each employer must adopt the Declaration of Trust by resolution of the City Council. There are four types of resolutions for this item but we have offered the type that is most appropriate for our employee accounts and the City. This resolution adopts the deferred compensation plan document and appoints ICMA-RC to administer to the plan. Through this document the City also executes the Declaration of Trust of the ICMA Retirement Trust. The City will no longer hold title to the employee plan assets. These assets will be for the exclusive benefits of the employee participants and beneficiaries. Agenda -October 6, 1997 RECOMMENDATION: I highly recommend this correction and change in the administration of funds. A change in reporting these assets will likely be forthcoming. Until that is received, all governmental units are advised to follow the recommendations of their auditors and may be reporting the assets as a trust account. A RESOLUTION AMENDING THE ICMA RETIREMENT CORPORATION DEFERRED COMPENSATION PLAN. WHEREAS, The City of Kalispell has employees rendering valuable services; and WHEREAS, The City of Kalispell has established a deferred compensation plan for such employees that serves the interest of the City of Kalispell by enabling it to provide reasonable retirement security for its employees, by providing increased flexibility in its personnel management system, and by assisting in the attraction and retention of competent personnel; and WHEREAS, The City of Kalispell has determined that the continuance of the deferred compensation plan will service these objectives; and WHEREAS, Amendments to the Internal Revenue code have been enacted that require changes to the structure of and allow enhancements of the benefits of the deferred compensation plan: NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF KALISPELL, MONTANA AS FOLLOWS: SECTION I. That the City of Kalispell hereby amends and restates the deferred compensation plan in the form of the ICMA Retirement Corporation Deferred Compensation Plan and Trust. SECTION II. That the assets of the Plan shall be held in trust, with the City of Kalispell serving as trustee, for the exclusive benefit of the Plan participants and their beneficiaries, and the assets shall not be diverted to any other purpose. SECTION III. That the Trustee's beneficial ownership of Plan assets held in the ICMA Retirement Trust shall be held for the further exclusive benefit of the Plan participants and their beneficiaries. SECTION IV. That the Plan will not permit loans. j\wp\res\ICMA -1- SSCTIOR V. This Resolution shall become effective immediately following its passage by the City Council and approval by the Mayor. PASSED AND APPROVED BY THE CITY COUNCIL AND THE MAYOR OF THE CITY OF KALISPELL, THIS 6th DAY OF OCTOBER, 1997. Douglas D. Rauthe, Mayor ATTEST Debbie Gifford, CMC Clerk of Council jiwplres\ICMA - z -