NUMB:
980689
VERS:
SUBSTITUTE 1
REF:
XXBY:
THE CHAIR
TITLE:
A substitute charter ordinance relating to a deferred compensation plan.
SECS:
5-50-3 am
5-50-4 am
ANLS:
- Analysis -
Prior to the enactment of the federal Small Business Job Protection Act, all accounts deferred, all property and rights purchased with such amounts deferred and all income attributable to such amounts, property or rights, had to remain the sole property and right of the employer subject only to the claims of the employer's general creditors. The use of a trust that protected plan assets from the claims of the employer's general creditors was prohibited. Under the Small Business Job Protection Act, all amounts deferred under an eligible s. 457 of the Internal Revenue Code plan maintained by a state or local government employer must be held in trust for the exclusive benefit of the employes. The trust requirement must be put in place in later than January 1, 1999. This charter ordinance amends enabling legislation by which the city established its deferred compensation plan to comply with the requirements of federal law. The charter ordinance clarifies that the anti-alienation provisions of s. 66.81, Wis. Stats., apply to plan assets.
BODY:
The Mayor and Common Council of the City of Milwaukee do ordain as follows:
Part 1. Section 5-50-3 and 4 of the charter is amended to read:
5-50. Deferred Compensation Plan.
3. INVESTMENT OF FUNDS. All amounts of compensation deferred under the plan, all property and rights purchased with such amounts, and all income attributable to such amounts, property or rights shall [[remain, until available to the participant or other beneficiary, solely the property and the rights of the city, without being restricted to the provision of the benefits under the plan, subject only to the claims of the city's general creditors. Except as otherwise required under s. 457 of the Internal Revenue Code, such compensation, property, rights and income shall not be available for use by the city for any legally permissible public purpose]] >>be held in trust for the exclusive benefit of participants and beneficiaries as provided in s. 457 of the Internal Revenue Code. For purposes of this subsection, custodial accounts and contracts described in s. 457(g) of the Internal Revenue Code shall be treated as trusts<< . Such compensation, property, rights and income shall [[not be subject to investment restrictions for lawful city investments established by s. 66.04, Wis. Stats., but rather may be invested in the manner authorized deferred compensation funds under s. 881.01(1), Wis. Stats.]] >>be invested at the discretion of the board in the manner authorized for deferred compensation funds under s. 881.01(1), Wis. Stats. Such compensation, property, rights and income shall be held subject to the anti-alienation provisions contained in s. 66.81, Wis. Stats.<<
4. ADMINISTRATION. The common council may >>by ordinance<< establish a board to supervise the plan. >>The board shall serve as a fiduciary under s. 881.01(1), Wis. Stats., with respect to assets of the plan.<< The board may promulgate such rules as may be necessary to supervise and direct such plan and to secure approval of the Internal Revenue Service so that amounts of compensation deferred by a participant will be includable in the income of the participant or his or her beneficiary only when such amounts are paid or otherwise made available. Proper city officers are authorized to execute on behalf of the city such agreements as are formulated by the board in the implementation of the plan. [[The city treasurer shall be custodian of deferred compensation held by the city under the plan.]] Deferred compensation held [[by]] >>in the name of<< the city >>or the custodian for the exclusive benefit of the participants and beneficiaries<< in accordance with the plan shall be invested at the direction of the board in accordance with the requirements of law. The comptroller shall prescribe accounting procedures for the plan. Whenever the city shall so contract with other employers, the board shall jointly administer 2 or more separate deferred compensation plans.
Part 2. This is a charter ordinance and shall take effect 60 days after its passage and publication, unless within such 60 days a referendum petition is filed under s. 66.01(5), Wis. Stats., in which event this ordinance shall not take effect until submitted to a referendum and approved by a majority of the electors.
LRB:
APPROVED AS TO FORM
____________________________
Legislative Reference Bureau
Date: _____________________
CATT:
IT IS OUR OPINION THAT THE ORDINANCE
IS LEGAL AND ENFORCEABLE
___________________________________
Office of the City Attorney
Date: _____________________
ZDPT:
City Attorney
TEH:kef\ordinanc\5-50dc
3/17/98 12890
DFTR:
LRB98347.1
CW
9/8/98