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Ordinance No. 2023-0286C CLE • M, CITY OF CLERMONT mod« ORDINANCE NO.2023-028 AN ORDINANCE OF THE CITY OF CLERMONT, LAKE COUNTY, FLORIDA, APPROVING AMENDMENT ONE TO THE 401(A) CITY OF CLERMONT DEFINED CONTRIBUTION RETIREMENT PLAN FOR EMPLOYEES; AMENDING THE VESTING PROVISION OF THE PLAN TO FIVE (5) YEARS AND THE "BREAK-IN SERVICE" RULES; PROVIDING FOR THE REPEAL OF ORDINANCES OR PARTS OF ORDINANCES IN CONFLICT HEREWITH; PROVIDING FOR A SEVERABILITY CLAUSE; PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, by Ordinance No.: 315-C, the City Council of the City of Clermont adopted the defined contribution retirement plan for City employees to include the approval an adoption agreement to implement the plan; and WHEREAS, for purposes of recruitment and retention of employees, the City Council finds that it is in the best interest of the City of Clermont to reduce the vesting period from ten (10) years to five (5) years and revise the "break-in service" rules. NOW, THEREFORE, BE IT ORDAINED by the City Council of the city of Clermont, Florida, as follows: SECTION 1: The City Council of the City of Clermont, Florida does hereby approve and authorizes the Mayor to execute Amendment One to the 401(A) City of Clermont Defined Contribution Retirement Plan Adoption Agreement attached hereto and incorporated herein as Exhibit "A". All other provisions of the Adoption Agreement as adopted by Ordinance No.: 315-C shall remain unchanged and in full force and effect. The City Council further authorizes the City Manager to perform any and all acts necessary and appropriate to implement Amendment One adopted hereunder. SECTION 2: CONFLICT AND REPEAL Any portion of the City Code, the City Land Development Code or any ordinance or resolution or part thereof in conflict with this ordinance is hereby repealed to the extent of such conflict. SECTION 3: SEVERABILITY It is declared to be the intent of the City Council that, if any section, subsection, sentence, clause, phrase, or portion of this Ordinance is for any reason held invalid or unconstitutional by a court of competent jurisdiction, such portion shall be deemed a separate, distinct and independent provision, and such holding shall not affect the validity of the remaining portions hereof. SECTION 4: EFFECTIVE DATE This Ordinance shall be published as provided by law and shall become law and shall be effective as of October 10, 2023. First Reading this 26th day of September, 2023. Second Reading this 1 Oth day of October, 2023. 6 CLER ' NT CITY OF CLERMONT 0—dc ORDINANCE NO.2023-028 PASSED AND ADOPTED by the City Council of the City of Clermont, Lake County, Florida on this 10th day of October, 2023. CITY OF CLERMONT Tim Murry, M�or ATTEST: Tracy Ackroyd Howe, MMC City Clerk APPROVED AS -TO FORM AND LEGALITY: Exhibit A AMENDMENT NUMBER ONE TO THE 401(A) CITY OF CLERMONT DEFINED CONTRIBUTION PLAN BY THIS AGREEMENT, 401(a) City of Clermont Defined Contribution Plan (herein referred to as the "Plan") is hereby amended as follows; Effective October 10, 2023, except as otherwise provided herein: 1. The section of the Adoption Agreement entitled "VESTING" is amended as follows: 17. VESTING OF PARTICIPANT'S INTEREST — EMPLOYER CONTRIBUTIONS (Plan Section 6.4(b)) a. [ ] N/A (no Employer contributions; skip to Question 19) b. [X] The vesting provisions selected below apply. Section B of Appendix A can be used to specify any exceptions to the provisions below. NOTE: The Plan provides that contributions for converted sick leave and/or vacation leave are fully Vested. Vesting for Employer contributions other than matching contributions c. [ ] N/A (no Employer contributions (other than matching contributions); skip to f.) d. [ ] 100% vesting. Participants are 100% Vested in Employer contributions (other than matching contributions) upon entering Plan. e. [X] The following vesting schedule, based on a Participant's Years of Service (or Periods of Service if the elapsed time method is selected), applies to Employer contributions (other than matching contributions): 1. [ ] 6 Year Graded: 0-1 year-0%; 2 years-20%; 3 years-40%; 4 years-60%; 5 years-80%; 6 years-100% 2. [ ] 4 Year Graded: 1 year-25%; 2 years-50%; 3 years-75%; 4 years-100% 3. [ ] 5 Year Graded: 1 year-20%; 2 years-40%; 3 years-60%; 4 years-80%; 5 years-100% 4. [ ] Cliff: 100% vesting after (not to exceed 15) years 5. [X] Other graded vesting schedule (must provide for full vesting no later than 15 years of service; add additional lines as necessary) Years (or Periods) of Service Percentage 0-4 vears of service 0 % 5 vears of service 100 % Vesting for Employer matching contributions f. [X] N/A (no Employer matching contributions) g. [ ] The schedule above will also apply to Employer matching contributions. h. [ ] 100% vesting. Participants are 100% Vested in Employer matching contributions upon entering Plan. i. [ ] The following vesting schedule, based on a Participant's Years of Service (or Periods of Service if the elapsed time method is selected), applies to Employer matching contributions: 1. [ ] 6 Year Graded: 0-1 year-0%; 2 years-20%; 3 years-40%; 4 years-60%; 5 years-80%; 6 years-100% 2. [ ] 4 Year Graded: 1 year-25%; 2 years-50%; 3 years-75%; 4 years-]00% 3. [ ] 5 Year Graded: ] year-20%; 2 years-40%; 3 years-60%; 4 years-80%; 5 years-100% 4. [ ] Cliff: 100% vesting after (not to exceed 15) years 5. [ ] Other graded vesting schedule (must provide for full vesting no later than 15 years of service; add additional lines as necessary) Years (or Periods) of Service Percentage NOTE: If any Part-time/Seasonal/Temporary Employees who are not covered under Social Security are participating in this Plan as a Social Security Replacement Plan, any contributions used to satisfy the minimum contribution requirements of Question 24.e. will be 100% vested. Effective October 10, 2023, except as otherwise provided herein: 2. The section of the Adoption Agreement entitled "APPENDIX A" is amended as follows: A. Special effective dates (leave blank if not applicable): a. [X] Special effective date(s): Special Effective Date October 10, 2023: The Emplover elects to no longer apply Break;n-Service rules for Rehired Employees. Rehired Employees are to be treated as new hires, in accordance with Sections 3.2 and 3.5 of the base plan document. For the period prior to October 10, 2023, beginning July 1, 2022, the Employer applied Break -in -Service rules for rehired employees in compliance with selections in Appendix A. Section B. Subsection c.l .a and c.l .b, related to the application of "rule of parity" provisions for eligibility and vesting purposes. Any Former Employee who had been a Participant and was reemployed by the Employer, that Employee was treated as a Participant as of their reemployment date. . For periods prior to the specified special effective date(s), the Plan terms in effect prior to its restatement under this Adoption Agreement will control for purposes of the designated provisions. A special effective date may not result in the delay of a Plan provision beyond the permissible effective date under any applicable law. (The Employer has reliance on the IRS Opinion Letter only if the features described in the preceding sentence constitute protected benefits within the meaning of Code Section 411(d)(6) and the regulations thereunder, and only if such features are permissible in a "Cycle 3" preapproved plan, i.e., the features are not specifically prohibited by Revenue Procedure 2017-41 (or any superseding guidance) B. Other permitted elections (the following elections are optional): a. [ ] No other permitted elections The following elections apply (select one or more): b. [X] Deemed 125 compensation (Plan Section 1.23). Deemed 125 compensation will be included in Compensation and 415 Compensation. c. [ ] Break -in -Service Rules. The following Break -in -Service rules apply to the Plan.(select 1. or 2.) 1. [ ] Reemployed after five (5) 1-Year Breaks in Service ("rule of parity" provisions) (Plan Section 3.5(e)). The "rule of parity" provisions in Plan Section 3.5(d) will apply for (select one or both): a. [ ] eligibility purposes b. [ ] vesting purposes 2. [ ] Break -in -Service rules for rehired Employees. The following Break -in -Service rules set forth in Plan Sections 3.2 and 3.5 apply: (select one or both) a. [ ] all Break -in -Service rules set forth in such Sections. b. [ ] only the following: (specify which provisions apply to the Plan) d. [ ] Beneficiary if no beneficiary elected by Participant (Plan Section 6.2(f)). In the event no valid designation of Beneficiary exists, then in lieu of the order set forth in Plan Section 6.2(f), the following order of priority will be used: (specify an order of beneficiaries; e.g., children per stirpes, parents, and then step -children). e. [ ] Joint and Survivor Annuity/Pre-Retirement Survivor Annuity. If the Plan applies the Joint and Survivor Annuity rules, then the normal form of annuity will be a joint and 50% survivor annuity (i.e., if 31.i. or 31.j. is selected) and the Pre -Retirement Survivor Annuity will be equal to 50% of a Participant's interest in the Plan unless selected below (select 1. and/or 2.) 1. [ ] Normal form of annuity. Instead of a joint and 50% survivor annuity, the normal form of the qualified Joint and Survivor Annuity will be: (select one) a. [ ] joint and 100% survivor annuity b. [ ] joint and 75% survivor annuity c. [ ] joint and 66 2/3% survivor annuity 2. [ ] Pre -Retirement Survivor Annuity. The Pre -Retirement Survivor Annuity (minimum Spouse's death benefit) will be equal to 50% of a Participant's interest in the Plan unless a different percentage is selected below: (select one) a. [ ] 100% of a Participant's interest in the Plan. b. [ ] °/" (may not be less than 50%) of a Participant's interest in the Plan. f [ ] Limitation Year (Plan Section 1.30). The Limitation Year for Code §415 purposes will be (must be a consecutive twelve month period) instead of the "determination period" for Compensation. g. [ ] 415 Limits when 2 defined contribution plans are maintained (Plan Section 4.4). If any Participant is covered under another qualified defined contribution plan maintained by the Employer or an Affiliated Employer, or if the Employer or an Affiliated Employer maintains a welfare benefit fund, as defined in Code §419(e), or an individual medical account, as defined in Code §415(1)(2), under which amounts are treated as "annual additions" with respect to any Participant in this Plan, then the provisions of Plan Section 4.4(b) will apply unless otherwise specified below: 1. [ ] Specify, in a manner that precludes Employer discretion, the method under which the plans will limit total "annual additions" to the "maximum permissible amount" and will properly reduce any "excess amounts": h. [ ] Recognition of Service with other employers (Plan Sections 1.40 and 1.55). Service with the following employers (in addition to those specified at Question 15) will be recognized as follows (select one or more): Contribution Eligibility Vesting Allocation 1. [ ] Employer name: a. [ ] b. [ ] c. [ ] 2. [ ] Employer name: a. [ ] b. [ ] c. [ ] 3. [ ] Employer name: a. [ ] b. [ ] c. [ ) 4. [ ] Employer name: a. [ ] b. [ ] c. [ ] 5. [ ) Employer name: a. [ ] b. [ ] c. [ ] 6. [ ] Employer name: a. [ ] b. [ ] c. [ ] Limitations 7. [ ] The following provisions or limitations apply with respect to the a. [ ] b. [ ] c. [ ] recognition of prior service: (e.g., credit service with X only on/following 1/1/19) i. [X] Other vesting provisions. The following vesting provisions apply to the Plan (select one or more): 1. [X] Special vesting provisions. The following special provisions apply to the vesting provisions of the Plan: Pre -amendments vestine schedule is as follows: 0-4 vears of service - 0%. 5 vears of service - 50%. 6 vears of service - 60%. 7 vears of service - 70%. 8 vears of service - 80%. 9 vears of service - 90% and 10 vears of service - 100% (must be definitely determinable and satisfy the parameters set forth at Question 17) 2. [X] Pre -amendment vesting schedule. (Plan Section 6.4(b)). If the vesting schedule has been amended and a different vesting schedule other than the schedule at Question 17 applies to any Participants, then the following provisions apply (must select one of a. — d.): Applicable Participants. The vesting schedules in Question 17 only apply to: a. [ ] Participants who are Employees as of (enter date). b. [X] Participants in the Plan who have an Hour of Service on or after October 10, 2023 (enter datep. ] Participants (even if not an Employee) in the Plan on or after (enter date). d. [ ] Other: (e.g., Participants in division A. Must be definitely determinable.) j. [ ] Minimum distribution transitional rules (Plan Section 6.8(e)(5)) NOTE: This Section does not apply to (1) a new Plan, (2) an amendment or restatement of an existing Plan that never contained the provisions of Code §401(a)(9) as in effect prior to the amendments made by the Small Business Job Protection Act of 1996 (SBJPA), or (3) a Plan where the transition rules below do not affect any current Participants. The "required beginning date" for a Participant is: 1. [ ] April 1 st of the calendar year following the year in which the Participant attains age 70 1/2. (pre-SBJPA rules continue to apply) 2. [ ] April 1 st of the calendar year following the later of the year in which the Participant attains age 70 1 /2 or retires (the post-SBJPA rules), with the following exceptions (select one or both; leave blank if both applied effective as of January 1, 1996): a. [ ] A Participant who was already receiving required minimum distributions under the pre-SBJPA rules as of (may not be earlier than January 1, 1996) was allowed to stop receiving distributions and have them recommence in accordance with the post-SBJPA rules. Upon the recommencement of distributions, if the Plan permits annuities as a form of distribution then the following apply: 1. [ ] N/A (annuity distributions are not permitted) 2. [ ] Upon the recommencement of distributions, the original Annuity Starting Date will be retained. 3. [ ] Upon the recommencement of distributions, a new Annuity Starting Date is created. b. [ ] A Participant who had not begun receiving required minimum distributions as of (may not be earlier than January 1, 1996) may elect to defer commencement of distributions until retirement. The option to defer the commencement of distributions (i.e., to elect to receive in-service distributions upon attainment of age 70 1 /2) applies to all such Participants unless selected below: 1. [ ] The in-service distribution option was eliminated with respect to Participants who attained age 70 1 /2 in or after the calendar year that began after the later of (1) December 31, 1998, or (2) the adoption date of the restatement to bring the Plan into compliance with the SBJPA. k. [ ] Other spousal provisions (select one or more) 1. [ ] Definition of Spouse. The term Spouse includes a spouse under federal law as well as the following: 2. [ ] Automatic revocation of spousal designation (Plan Section 6.2(g)). The automatic revocation of a spousal Beneficiary designation in the case of divorce does not apply. 3. [ ] Timing of QDRO payment. A distribution to an Alternate Payee shall not be permitted prior to the time a Participant would be entitled to a distribution. 1. [ ] Applicable law. Instead of using the applicable laws set forth in Plan Section 9.4(a), the Plan will be governed by the laws of: in. [ ] Total and Permanent Disability. Instead of the definition at Plan Section 1.50, Total and Permanent Disability means: (must be definitely determinable). n. [ ] Inclusion of Reclassified Employees (Plan Section 1.17(a)). The Employer does not exclude Reclassified Employees subject to the following provisions: (leave blank if not applicable): o. [ ] Claims procedures (Plan Section 2.10). The claims procedures forth in Plan Section 2.10(a) — (b) apply unless otherwise elected below or unless the Administrator has operationally adopted alternative procedures. 1. [ ] The claims procedures set forth in Plan Section 2.10(c) — (g) apply instead of Plan Section 2.10(a). 2. [ ] The claims procedures set forth in Plan Section 2.10(c)-(g) apply as follows: (specify which provisions apply and/or modified) p. [ ] Age 62 In -Service Distributions For Transferred Money Purchase Assets (Plan Section 6.11) In-service distributions will be allowed for Participants at age 62. (applies only for Transfer Accounts from a Money Purchase Pension Plan) (skip this question if the Plan is a Money Purchase Pension Plan or if in-service distributions are already permitted for Transferred Accounts at Question 34) Limitations. The following limitations apply to these in-service distributions: 1. [ ] The Plan already provides for in-service distributions and the restrictions set forth in the Plan (e.g., minimum amount of distributions or frequency of distributions) are applicable to in-service distributions at age 62. 2. [ ] N/A (no limitations) 3. [ ] The following elections apply to in-service distributions at age 62 (select one or more): a. [ ] The minimum amount of a distribution is $ (may not exceed $1,000). b. [ ] No more than distribution(s) may be made to a Participant during a Plan Year. c. [ J Distributions may only be made from Accounts which are fully Vested. d. [ ] In-service distributions may be made subject to the following provisions: (must be definitely determinable and not subject to discretion). q. [ ] QLACs. (Plan Section 6.8(e)(4) A Participant may elect a QLAC (as defined in Plan Section 6.8(e)(4)) or any alternative form of annuity permitted pursuant to a QLAC in which the Participant's Account has been invested. The Employer executes this Amendment on the date specified below. City of Clermont Date: By: EMPLOYER AMENDMENT NUMBER ONE TO 401(A) CITY OF CLERMONT DEFINED CONTRIBUTION PLAN SUMMARY PLAN DESCRIPTION MATERIAL MODIFICATIONS INTRODUCTION This is a Summary of Material Modifications regarding the 401(a) City of Clermont Defined Contribution Plan ('Plan"). Unless stated otherwise, the modifications described in this summary are effective as of October 10, 2023. This is merely a summary of the most important changes to the Plan and information contained in the Summary Plan Description ("SPD") previously provided to you. It supplements and amends that SPD so you should retain a copy of this document with your copy of the SPD. If you have any questions, contact the Administrator. If there is any discrepancy between the terms of the Plan, as modified, and this Summary of Material Modifications, the provisions of the Plan will control. SUMMARY OF CHANGES ARTICLE V - VESTING: What is my vested interest in my account? In order to reward employees who remain employed with the Employer for a long period of time, the law permits a "vesting schedule" to be applied to certain contributions that your Employer makes to the Plan. This means that you will not be entitled ('bested") in all of the contributions until you have been employed with the Employer for a specified period of time. 100% vested contributions. You are always 100% vested (which means that you are entitled to all of the amounts) in your accounts attributable to the following contributions: rollover contributions Vesting schedules. Your 'bested percentage" for certain Employer contributions is based on vesting Periods of Service. This means at the time you stop working, your account balance attributable to contributions subject to a vesting schedule is multiplied by your vested percentage. The result, when added to the amounts that are always 100% vested as shown above, is your vested interest in the Plan, which is what you will actually receive from the Plan. Employer Contributions Your 'bested percentage" in your account attributable to Employer contributions is determined under the following schedule. You will always, however, be 100% vested in these contributions if you are employed on or after your Normal Retirement Age or if you die or become disabled. Vesting Schedule Nonelective Contributions Periods of Service Percentage 0-4 years of service 0% 5 years of service 100% Pre -Amendment Schedule. However, the vesting schedule in the Plan has been amended. If you have completed 3 Periods of Service with your Employer as of the expiration of the election period, you may elect to have your 'bested percentage" determined under the pre -amendment vesting schedule. Your election period will commence on the adoption date of the amendment changing vesting and will end 60 days after the later of (a) the adoption date of the amendment, (b) the effective date of the amendment, or (c) the date you receive written notice of the amendment from your Employer or Administrator. However, if the vesting pre -amendment vesting schedule below applies to any Participants, then the schedules above under "Vesting schedules" will only apply to Participants in the Plan who have an Hour of Service on or after October 10, 2023. Special Vesting Provisions Pre -amendments vesting schedule is as follows: 0-4 years of service - 0%, 5 years of service - 50%, 6 years of service - 60%, years of service - 70%, 8 years of service - 80%, 9 years of service - 90% and 10 years of service - 100% Contact the Plan Administrator for additional information if you are not sure if this affects you.