Exh 6BAGENDA ITEM 6B
FEBRUARY 11, 2002
CITY OF ATLANTIC BEACH
CITY COMMISSIONER MEETING
STAFF REPORT
ACTION REQUESTED: Approve Resolution amending the ICMA-RC Mode1401 Qualified
Money Purchase Retirement Plan to continue to permit loans.
SUBMITTED BY: George Foster, Human Resource Manager
DATE: February 4; 2002
BACKGROUND: In 1996, the City of Atlantic Beach amended it's money purchase
plan to permit loans.
Based upon significant changes to the laws governing Code .
Section 401 money purchase plans over the past years, and
.specifically, January 1, 2002 per the Economic Growth and Tax
Relief Reconciliation Act of 2001 ("EGTRRA"), it is necessazy to
adopt a new amendment to continue to allow loans.
Loans aze a withdrawal of the employee's own funds which must
be repaid to the Plan or they become taxable to the employee.
Loans may only be repaid through the employer and may not be
repaid directly by the employee. Therefore, this change is being
recommended, upon sepazation of the employee, to prevent the
City from having to accept direct payments, deposit them, and then
issue a check to the Plan (ICMA).
The proposed amendment is identical to the current loan provisions
with the exception of Section X, Acceleration, which has been
changed to require full payment of loans upon separation or
retirement.
FUNDING: There aze no changes to funding requirements.
RECOMMENDATIONS: That the City Commission approve the Resolution and authorize
the Mayor to sign the 401 Plan Loan Guidelines to the Atlantic
Beach 401 Qualified Money Purchase Retirement Plana
ATTACHMENTS: 1. Resolution
2. Proposed Loan Guidelines
3. Current (1996) Loan Guidelines
CITY MANAGER: /
AGENDA ITEM 6B
FEBRUARY 11, 2002
RESOLUTION NO: 02-02
A RESOLUTION OF THE CITY OF ATLANTIC BEACH, FLORIDA,
AMENDING THE CITY'S ICMA 401 MONEY PURCHASE PLAN TO
PERMIT LOANS
WHEREAS, the City of Atlantic Beach (Employer) has a City Manager rendering valuable
services; and
WHEREAS, the employer has established a money purchase plan (the "Plan") for the City
Manager which serves the interest of the Employer by enabling it to provide reasonable
retirement security for the City Manager; by providing increased flexibility in its personnel
management system, and by assisting in the attraction and retention of competent personnel;
.and
WHEREAS, the employer has determined that permitting the City Manager to take loans
from the Plan will serve these objectives;
NOW THEREFORE BE IT RESOLVED that the Plan ishereby amended to permit
loans in accordance with the Loan Guidelines adopted by the Employer.
This Resolution shall take effect upon its final passage and adoption.
PASSED AND ADOPTED on this day of 2002.
Approved as to form and correctness:
Alan C. Jensen, Esquire
City Attorney
John S. Meserve
Mayor
Attested:
Maureen King, CMC
City Clerk
AGENDA ITEM 6B
FEBRUARY 11, 2002
407 LoanGuidelirzer
401 PLAN LOAN GUIDELINES
ICMA-RC Account #; 109494
Name ofEmployer: City of Atlantic Beach
I. PURPOSE
The purpose of these guidelines is to establish the terms and conditions under which the Employer will
grant loans to participants. This is the only official, Loan Program Document of the above named Plan.
II. ELIGIBILITY
Loans are available to all active employees. Loans'will not be granted to participants who have an existing,
loan in default.
..Loans are available from the followingsources: [select one or both]
Employer Contribution Account (vested balances only)
Participant Contribution Accounts .(pre- and post-tax, if applicable, including Employee
Mandatory, Employee Voluntary, Employer Rollover,. and Portable Benefits Accounts, but
excluding the Deductible Employee Contribution/Qualified Voluntary Employee Contribu-
don Account)
Loans. will be pro-rated among all the funds iri which the participant is invested at the time the loan is
made.
Loans are available £or the following purposes: [select one]
All purposes ,
^ Loans shall only be granted in the event of a participant's hardship or for the purpose of
enabling a participant to meet certain specified financial situations.. The Employer shall deter-
mine, based on all relevant facts and circumstances, that the amount of the loan is not in
excess of the amount required to relieve the financial need. For this purpose, financial need
shall include, but shall'not be limited to: unreimbursed medical expenses of the pazdcipant or .
the participant's immediate family, establishing or substantially rehabilitating the principal
residence of the participant, or paying for a college education (including graduate studies) for
the participant or hislher dependents. '
111. FREQUENCY OF LOANS [select one]
^ Participants may receive one loan per calendar yeaz. Moreover, participants may have only
one outstanding loan at a time.
.Participants may receive one loan per calendar yeaz. Moreover, no participant may have more
t}ian fvP (51 lnanc nntctan~ina arnnP rim r+
AGENDA ITEM 6B
FEBRUARY 11, 2002
I C M A RETIREMENT CORPORATION
IV. LOAN AMOUNT
The minimum loan amount is $1,000.
The ma~cimum amount of all loans to the participant from the Plan and all other plans sponsored by the
Employer that are qualified employer plans under Section 72(p) (4) of the Code. is the lesser of
(1) $50,000, reduced by the excess (if any) of
a. The highest outstandingbalance of loans during the one-year period endingon the
day before the date a loan is to be made, over
b. The outstanding balance of loans on the date the loan is to be made; or
(2) 1/2 of the participant's vested account balance.*
If a participant has any loans outstanding at the time a new loan is requested, the new loan will be limited
to the max;mum amount calculated above reduced by the total of the outstanding loans.
A loan cannot be issued for more than the above amount: The participant's requested loan amount is
subject to downward adjustment without notice due to changes in account balance between the time of
application and the time the loan is made.
* The Code & Plan document say "greater of $10,000 or 1/2 of vested account balance".
V. LENGTH OF LOAN
A loan must be repaid in substantially equal installments of principal and interest, at least monthly, over a
period that does not exceed five (5) years.
Loans for a principal residence must be repaid in substantially equal installments of principal and interest,
arleast monthly, over. no more than 30 [state number of years] years (maxi-
mum 30 yeazs).
VI. LOAN REPAYMENT PROCESS
Loans for active employees must be repaid through payroll deduction. Repayment will begin as soon as
practicable on a date determined by the Employer's payroll cycle.
Loans outstanding for former employees who aze allowed under Section X to maintain their loans or
.loans outstanding for employees on a leave of absence must be repaid on the same schedule as if payroll
deductions were still being made unless they reamortize their loans and establish a new repayment sched-
ule which provides that substantially equal payments aze made. at least monthly over the remaining period
of the loan. All repayments must be made through the Employer.
Loan payments, including loan payments from former employees, aze allocated to the same investment
Ot)ti9~detioria don he 401 Fnrnllmvnt Fnrm nr ~nrrlina rn KhP mncr rnrrrnr 4n1 ~'h~w,.r~F,.,,M .,.7,:~1,
AGENDA ITEM 6B
FEBRUARY 11, 2002
4 0 1 Loan C u i d e l i n e r
specifies contribution allocations.
The participant may pay off all or a portion of the principal interest early without penalty or additional
fee. Extra payments are applied forward to both principal and interest as specified in the original repay-
ment schedule, unless the additional payment is for the balance due.
Vll. LOAN INTEREST RATE
The rate of interest for loans of five (5) years or less will be based on prime plus 0.5%.
The rate of interest for loans for a principal residence will be based on the FHA rate
Interest rates aze determined on the last business day of the month preceding the month the loan is
disbursed. The interest rate is locked in at the time a loan is approved and, remains constant throughout
the life of the loan.
The prime interest rate is determined on the last business day of each month using The Wall Street Journal
as the source. The FHA interest race is also detemuned on the last business day of each month using a '
national rateline service as the source.
Loan interest rates for new loans. may fluctuate upwazd or downward monthly, depending on the move-
ment of the prime and FHA interest rates.
Vlil. LOAN APPLICATION PROCEDURE
All loans must be requested in writing on an application approved by the Plan Administrator. The appli-
cation must be signed by the participant. The Employer must review and approve the application..
If the participant is marred at the time of application, and spousal consent is required by the Plan for the
loan, the pazticipant's spouse must consent, in writing, to the loan and the consent must be witnessed by a
-.plan representative. or notary public. Such consent must be given within the ninety (90) day period before
the time the loan is made. Spousal consent, if required, must accompany the application in order for the '
.application to be considered complete.
The participant will be required to sign a promissory note evidencing the loan and a disclosure statement
which includes an amortization schedule prior to receiving aloan check. Loan checks will generally be
issued two business days following the receipt of a complete loan application received through 12 noon
Eastern Time. The loan check, promissory note, disclosure statement and truth-in-lending recision notice
will be sent eo the Employer, who will obtain the necessary signatures and deliver the check to the
pazticipant. All executed documents must be returned. to the Plan Administrator within 10 calendar days
from the date the check is issued.
AGENDA ITEM 6B
FEBRUARY 11, 2002
I C M A R E T I R E M E N T C O R P O fl A T I 0 N
IX. SECl1RITY/COLLATERAL
That portion of a participant's vested account balance that is equal to the amount of the loan is used as
collateral for the loan. The collateral amount may not exceed 50 percent of the participant's vested
account balance at the time the loan is taken. Only that portion of the vested account balance that corre-
sponds to the amount of the outstanding loan balance is used as collateral.
X. ACCELERATION (select one]
Allloans are due and payable in full upon separation from service.
^ All loans. are due and payable when a participant receives a distribution of all of his/her ac-
count balance after separation from service, The amount of the outstanding loan balance will
be reported as a distribution in addition to the amount of cash distributed from the plan.
^ All loans are due and payable when a participant receives a distribution ofpart of his/her
account balance after sepazadon from service. The amount of the outstanding loan balance
will reported as a distribution in addition to the amount of cash distributed from the plan.
XI. REAMORTIZATION
Any outstanding loan may be reamortized. Reamortization means changing the terms of a loan, such as
length of repayment period, interest rate, and frequency of repayments. A loari may not be reamortized to -
extend the length of the loan repayment period to more than five (S) years from the date the loan was.
priginally made, or in the. case of a loan to secure a principal residence, beyond the: number of years
specified by the Employer in Section V above.
A participant must request the reamortization of a loan in writing on a reamordzation application accept-
able to the Plan Administrator. Spousal. consent must accompany the request for reamortization when
such consent is required by the Plan. Upon processing the request, a new disclosure statement will be
sent to the Employer for endorsement by the participant and approval by the Employer. The executed
disclosure statement must be returned to the Plan Administrator within 10 calendar days from the date it
is signed. The new disclosure statement is considered an amendment to the original promissory note,
therefore a new promissory note will not be required.
A reamortization will not be considered a new loan for purposes of calculating the number of loans
outstanding or the one loan per calendaz limit.
XII. REFINANCING EXISTING LOANS
If a pazticipant has one outstanding loan, that loan may be refinanced. If a participant has more than one
outstanding loan, no loans may be refinanced. Refinancing means concurrently repaying an existing loan
and borrowing. an additional amount through a new loan.
.AGENDA ITEM 6B
FEBRUARY ll, 2002
4 0 7 Loan G u i d e l i n e s
In order to refinance an existingloan, a participant must request a new loan in writing on an application
approved by the Plan Administrator. Spousal consent must accompany the application when such consent
is required by the Plan. Such request must be made at a time when the participant is eligible to obtain a
loan as defined by the Employer in Section III above. The amount of a new loan requested for the
purpose of refinancing is subject to the loan limits specified in Section IV above.
Because refinancing is considered a new loan, only active employees may refinance an outstanding loan.
XIIL REDUCTION OF LOAN
If a participant dies and leaves an outstanding loan, the unpaid loan balance(s) will be repaid from the
account balance before any distributions are made to a beneficiary(ies). The unpaid loan amount is a
taxable distribution and may be subject to early withdrawal penalties. The participant's estate is respon-
sible for taxes or penalties on the unpaid loan amount, if any. The beneficiary is responsible for taxes due
on the amount he/she receives. A Form 1099-R will be issued to both the beneficiary and the estate for
these purposes.
XIV. LOAN DEFAULT
If a required payment of principal and interest is not made within 90 days of the date such payment is:
due,. the loan is considered in default. If a loan is in default, the loaawill be foreclosed during the calen-
daz year in which the pazticipant separates from service. However, the IRS "deems" a default to be a
distribution in the year the default occurs. Therefore, the amount of the outstanding loan at the time of
,the default, will be reported to the IRS as a distribution_in the year the default occurs even though the
loan may not be foreclosed at that time. The distribution may be subject to taxes and possibly a penalty
for eazly withdrawal.
If a participant has separated from service and defaults on a loan, then the loan will be foreclosed during
the calendaz yeaz in which the default occurs. The amount of the outstanding loan, will be reported to
the IRS as a distribution which may be subject to taxes and possibly a penalty for early withdrawal.
If the Employer has elected in Section X and the promissory note so provides, a loan becomes. due grid
payable when the participant sepazates from service. If the terms of the loan contain this provision, the
outstanding loan amount is "deemed" in default as of the date of separation from service. The amount of
the outstanding loan, .will be reported to the IRS as a distribution which may be subject to taxes and
possibly a penalty for eazly withdrawal.
If the Employer has so elected in Section X and the promissory note so provides, a loan becomes- due and
payable when the participant takes a distribution of some or all of the balance in his/her account after
. separation from service. If the terms of the loan contain such a provision and the outstanding loan balance
. is not paid prior to the distribution from the account, the outstanding loan amount will be considered in
default upon issuance of the distribution check. The amount of the outstanding loan,will be reported to
the IRS as a distribution which may be subject to taxes and possibly a penalty for early withdrawal.
Participants who have an existing loan in default will not be eligible for additional loans.
AGENDA ITEM 6B
FEBRUARY 11, 2002
I C M A RETIREMENT C O R P O R A T 10. N
XV. OE MiNIMIS ACCOUNTS ANI~ OUTSTANO1111G LOAN BALANCE
If a participant separates from service and the participant's total vested account balance, including the
outstanding loan balance, is X5,000 or less, the Plan will automatically foreclose the loan. The account.
balance remaining after the loan has been satisfied will be disbursed in accordance with De Minimis
provisions of Section 10.04 of the Plan. If this occurs, the amount of the loan, will be reported to the
IRS as part of the distribution, which may be subject to taxes and possibly a penalty for early withdrawal.
Participants who have an existing loan in default will not be eligible for additional-loans.
XVI. FEES
Fees maybe charged for various services associated with the application for and issuance of loans: AlI
applicable fees will be debited from the participant's account balance and/or from the participant's loan
repayments prior, to crediting the repayment of principal and interest to the participant's account. A
schedule of fees applicable to this Plan is available from the Plan Administrator.
XVI1. OTHER
The Employer has the right to set other terms and conditions as it deems necessary for loans from the
Plan in order to comply with any legal requirements. All terms and conditions. will be administered in a
uniform and non-discriminatory manner.
In Witness Whereof, the Employer hereby caused these Guidelines to be executed this 11th day
of February , 20•Q-Z
EMPLOYER
BY•
TITLE: .May
ATTEST:
ACCEPTED: ICMA Retirement Corporation
BY:
TITLE: Comorate Secretary -
ATTEST:
AGENDA ITEM 6B
FEBRUARY 11, 2002
ioA~ cur®r:r.rrv~s
NA1NE OF f'IAN; city 1"..aaa~r° 9 Pt a„
f. i'URfOSE
121e purlwso of these guidelines !s to establish rise terttts and conditions under winch-the Employer will grant
loans to partlcipaat9. 'i'bis is the only official Loaa Progtaut Document of the above named Plan.
Il. ELIGIBILITY
Loses arc availablc to ail active employees. Loans will eat be gran,Ged to participants who have an existing loan
in default.
Loans are availablc from the following so.°rces: [seiccc one ar both7
~ Employer Contribution Account (vested balances only}
PartiClpart Conuibutlon Accounts (pre- anti post•tax, if applicable, including Employee Irfandatory,
Employed Voluntary, Employer Rollover, and Portable Heneflts Accounts, butexciudlag the Sleduct-
lbie Employee Contribution/Qualihed Voluntary Employee Contribution Account)
Loans will be pro•ratcd among ail fire tirr+ds in which the participant is invested at the time the loan !s trade.
Loans are available for the. following purposes: (select one]
~ Atl purposes
O Loans shalt only be granted is the event of a partieipaztt's hardship or far the purpose of enabling a
participant to meet certain specified 8aancsal situations. The Er~ployar shall determine. traced on all
relevant fags and ciratmstaaces, than the amount of the Ioan is eat in e;ccess of the amount sEgstited
W relieve the rinaacial need. Par this purpose, fiasactai need shalt include, hLT rot be limited to:
uareimbursed medical expenses of the participant ~ members of the participant's immediate family,
establishing or substantially rehabilitating the pci~ipsi residence of tits participant, or paying for a
college education (including.. graduate stn&es) for cite partieipattt of hlalner dependents.
{Il. i:REQUENGY OF LOAN5
(select one) .
a parttcipartts may receive doe Ioaa per calendar year. Moreover. psrdcipaats may have only one
outstanding loan at a tiara.
l'artlcipnnis may receive one loan par calendar year. Moteever, no partictpant ~y nave more than
rive (5) loans outtaading at nee tune.
PP93F
AGENDA ITEn16B
FEBRUARX 11, 2002
1V. LOAld A~lC1UNT
Th.. minimum loan amount is 51,000.
The maximum loan amount is:
tlu;losser of:
(1) $50,000, reduced by rile eucss (if any) af:
a The highest outstanding balance of ioaus during lire one-year period ending oft
the day before the data a loan is to be made, over
b. Th: outstanding balance of loans oa the date the ldan is to be made; or
(2) SCd of the participant's vested account balance,
Yt a partleipaat has any loans outstanding as the time a new loan is requested, the new loan wlll be limixd to the
maximum amount catctciated above reduced by the total of the outs±sadia; loaat.
V. LENOTH QE I.OAt+J
A. loan toast ba repaid in substantially eq~sal instalimems of prncipal and iaierest, at least mantlsly, over a period
that dons not excoctt fi+e (5) years:
Loans for a principal tesidtttce m e repaid is snbstantiaity equal inatsllraeats of principal and interest, at least
marttltly, over no mare than 3V _ istate utanber d Years] Years (maximum 30 years).
VI. LOAN REPAYMENT PitOCESS
Loans for active employees must be repaid through payroll tiedttction. Repayment arils be•..i:t assoon as practi-
cable on a date determined by the Empioyrz's payroll cycle,
Loans outstanding for formes employees w!to are allowed wider Section X. to tuaintain their loans or loans
outstanding for etployees on alcove of absence must be repaid on the sane schahtle as iPpayroll deductions
were sti11 being made unless they reamortize rhea loans and es[abtish a new repayment schedule which provides
that substsatiaity oquai payments are made at least moodily over me remaining period of the loan. All repayttteots
toast be mado through the Eattpioyu,
Loan payments, itscittdittg loan payr.,enis from forrtiet employees, ate allocated to the earns iavesCnetd options
desixttarrd on lira 401 Enmltmeat Pocrtt ar accordtng m t'3e most eua:ent 40t change Form xRiictt specifies
conttibudon allocations..
VII. 1s7AN 1NTI;REST RATE
The rate of iatcrest for loans of flue (3) yzazs or less will be based on prima plus 0.596,
Tho rate oP irnrrost !or loans for a principal residetfce wlll be based oa the FHA{VA rate.
tptetesf rates are detertained on rte fast business day of rho month preceding the month the loan is disbursed.
'Iho iatrrest rate is locftod is at the time a leas is approved and....nm;^= coastat2 throughout the Bib of the loan.
Tho prima Intezest rate is detetmitwfl on the .last business day of each math ntiug tbs. WaII Street ]auraai
as the saurae. The FfiA/VA interest rata i3 also doietmined on tha last bnsiruss day of each tnondl using tfRe
Telerato Information Service as the source.
P-93F
AGENDA ITEM 6B
FEBRUARY 11, 2002
Loan interest rates far sew loans may fluctuate upward of downward monthly, depaatilrtg on the movement of Lhe
prime and FHAJF.A irate-~„gt rates.
The ~mploycr inay modify the mariner in which loan interest lazes wiI2 be rietersniaed, but only with respect to
future loans. .
Viii. LOAN AP{'LICATION PROCEDURE
All loans must !>e requested in writing as an application applaved by the Plan Adzniniatralor.Thc application
must be signed by the participant Ths Employer must review and approve the application.
If the paRieipant is mart#ed at the time of application, and spousal consent is required by the plan for the Loan,
the participant's spouse must consent, #n writing,. to the Loan andthe coasegt must be witnessed by apian repre-
scatative or notary pub&c. Such consent must be given within the ninety (40) day period before ti-a time the loan
is made. Spousal consent, if required, must accompany the appllcatioa in order for the application to be
coosideted complete:
The paniclpant will be regnired to sign a proutissory note. evideacirtg rbe loan and a disclosure statement which .
includes an amortization schedule prior to receiving a loan check: Loan checks will generally be #asued oa the
Friday following the receipt of a complete loan epplicatioa Tile loan check, promissory ztote, disclosuue statement.
end troth-in•landing recision notice will be sent to the Employer, wtw will obtain the necessary signatures and
deliver the circle to 1ha participant. All executed documents must be rcWttu4 to the Flan Admltilstratot within 10
calendar days from the date the check is issued.
IX. SECURITY/COLLATERAL
That portion of a participant's vested account balance that is equal. to the amotutt of the loan is used as tallateral
for the loan. Tho collaura# amount may not exceed 505b of the particpant's vested account balance at she time the
loan is taken. Only that portion of the vested account balance that corresponds to the amount ofthc outstanding
loan balance is used as collateral.
X. ACCELERATION
[select onel
O AlI loans era due and payable m full upon separation from service.
Ali loans are due and payable when a participate receives a distribution of all ofbin/her account
balance after separation fromservice. 7'he amount ofthe outstanding Ioanbalanca will be reported as
a distribution la addition to the amount of cash distributed from the plan-
O All loans arc duo and payable when aparticipant receives a distribution of pea ofhis/her aceauAt
balance after xparation froth service. The amount of the outstanding loan balance wllk reported as a
di~tdbntion in addition to the amount of cash distributed fmm the piss.
PP93F
AGENDA ITEM 6B
FEBRUARY 11, 2002
Xi. REAMOli;T1ZAT1ON
Any ounstanding loan may be reamortize:i.1'.eamordzafiott means changing flit tessrn3 of a }oan, such as length of
r'cpaymcnt period lnlrrest ram, and 8equeney of tzpayments. A iaan may not !tie teamoAized to eatrrLd the lengah of
th;, Iean repayment period m more thaw fiv~e.(,`7 Sea=s Born the due the loan was originally mach, oc inthe case ofa
loan to sect.:e a pzrncipal res9dcnrc, beyond the nmrber of yenta speci8ed'oy tbE Employer in Section V. above.
A paniapant must toques[ the re~amoctization of a loan in w-ltu;g on a reanwm¢ation applica8ea acc,~ptabla to the Plan
Administrator. Spousal consent must acCOa9pany the request fbr reamost+zation when suoh consatt is required by tl~
plan. Upon processing ttre rrXjuest, a new discL~sura statrsnent will i7o a;Lt to the Employer for endozseaaear by the
participant and approval by dre Emptoya. The executed disclosure statement aunt be re~Ad to the Plan Aderintstra-
toz within 10 calendar days from the data it is sig:ted. The new disclosure starerrerx is cosrsidered an ame+tdment tm the
anginal pn~missory note, thettftue a nrw promissory Rota tai11 not be r~rrired.
A roamortuatlon wit l not be cotrstdered a new loan forgurposes of cale~~latis>g tfta tutmber of loarss cutstanding or tks:
oztc loan per calendar limit
XU. REFINANCING F,X15TlNG t~DANS
If a partidpant has one outstandiog Ioan, that loan may be refttanced. Tf a pa-tictpanthas mote than one outstand-
ing 1aan, no tonne tttay be reFinanced. Reffrtancing means concurrentiytepaying an Cxisting loan and borrowing
an additional amount through a new lozn.
to order to refrnance an costing loan, a participant must request a new loan is writing on an applicatian approved
by the Plan Administrator. Spousal oons2nt must accompatq+ the application when snclt consort is required by rite
plan. Such taquesi must be mach at a tlma when the paticipant is eligible to obtain aloaa as de5nad by the
Employer in Seotion III. above. The amount of a new loanrequcsted for the purpose afrenaancing is subject to
the loan limits specified 9n Section lV, above.
Because a refinancing is considered a new loan, only active employxs may sefittance an outstanding loan.
X911. 9tEI~9JCT(ON OF LOAN
If a psrlicipant dies and leaves an outstanding loan, tine unpaid loan balanr? will be repaid from ilte account
balance bcfaro any distributions are made to a beneficiary.
X9V. LOAN DEFAULT
if a required payment of pslncipa! and interest is not nude within 9t} days of the date such payment is due, the
loan is cans9dorad in default, if a loan is 9n default, the loan will be foreclosed daring the calzndar year in which
ttte participans separates tram service. However, the IRS °deams" a default to be a distribution in the year the
defattit otxtrra 'Itterafare, fix amount of the autstanding iaaa at the time of the default, including accrued interest,
will ba reported W fire IRS as a distribution in ~ year the default occurs even though tltr loan may not be fore-
closed at that time. The distribution maybe eubject to taxes and possibly apenalty tbt early w#thdrawai.
!f a participant has seperated from service and defaults oa a loan. then. thz Loan will b. forer2osed during the
calendar year in which the default occurs. The amount of the outstanding loan. inrluding accrued izltesest, will tee
reported to the iR3 as a dastrlbution w!+ich may hs subject m taxes ant! possibly a penalty for early withdrawal-
PP93F
AGENDA ITEM 6B
FEBRUARY 11, 2002
if the Employer has eleUed In Section X sad the promissory nose so provides, a loan becomes due Rnd payable
when the participant separates from ser~Ece. If the terms of the loan margin this pra•rision, the outstanding loan
amauut Is "deemed" !tt defanit as of the dart of separation from service. The atmtrnt of the outstanding lawn,
iactudiag accrtred laterest, w~71 be repotted to the IRS as a distribution which may be subject to rases aad possibly
a penalty for early withdrawal.
If the Employer has so elected in Sectloa X. and the promissory Wore so provides, a rose becomes due and payable
when the participam takes a distribution of some of all of the balance in hisnter aceowrt after saparatlotl from
service. If the terms of the Ios_hs Contain such a provision anti she outstanding loan balance is not paid prior to the
distribution front the account,. the outstanding loan aaeount w311 be considered is default upon issuance of the
distribution check. The amount of the outstanding lost,, including accrued interest, will be reported so ttte 1R5
as a distribution which may be subject to taxes and possibly a penalty. for early w#hdrawal.
XV, ®l; M1N1M1S ACCOUNTS AN® OUTSTANDING LOAN BALANCE
If a participant separates from service sad the participant's total vested account balance, including the outstattdiag
loan balance, is 53,SOQ or toss, the Flan w171 automatically foreclose the loan. The account balance remaining after
the loan has been satisfied wilt ba dis#sursed la aceordanes with De Mistrals previsions of Section it7.04 of the
Plan. If this occurs, the amount of the loan, Including accrued interest, wilt be reported to ties IRS as part of the
distribution, which may be subject to faces and possibly a penalty for early withdrawal.
XVI. FEES
Fees maybe Charged for' various services associated with the agplicatfon faf anti issuaaca of loans. All applicable
fees will be debited from the partletpam's accotmt balance. A schedule of fees applicable to this Plan is available
from the Plan Adnilnlstcator,
XVII. OTHER
The Employer has rho right ro set other terms and eortdidons av it deems necessary foe loans from the Flan in
order to comply with any legal requiremettis. All terms and conditions will be administered in a uniform and
non-discriminatory manner.
In Witness Whereof, the Employer hereby caused these Guidelines to be exec~aed this 2u day of
.Tune ,14912...
EMPLOYER ACCEPTED: IC RETIREP~Af~ CORPORATION
use
TITLE: Finance .+r ~Ci .,,+t.. Rea.-~, TITLE: S~ ~X J~o.c,
73Yreotati,
''~~ ~~~eee ~~. ATTES .
ATTE57:.ltvC4r / /
PP93P