Agreement - ICMA-RC - 2013-04-18 MAY-01-2013 11 35 FROM COSTA MESA SAN DIST TO 12026826439 P.05/10
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EXHIBIT A. r a
Name of Plan(please state the Employer's complete name,including state);
Costa Mesa Sanitary District, California
Plan Type: 0 401(a) Money Purchase Plan ❑ 401 Profit-Sharing Plan 0 457 Deferred Compensation Plan
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ICMA-RC Plan Number 305727
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 Provision Document of the above named Plan,
II. Eligibility
Loans are available to all active employees. Loans will nor be granted to participants who have an existing loan in default.
Loans will be pro-rated among all the funds in which the participant is invested at the time the loan is made.
For 401 plans only:
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Loans are available from the following sources: [select one or both]
0 Employer Contribution Account (vested balances only)
0 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 Volun-
tary Employee Contribution Account)
For Roth 401(k)plans only;
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A participant's Designated Roth Account balance can be used to secure a participant loan.
Designated Roth Account balances (select one) •
0 will not(default option) be available as a source for loans under the Plan.
3 will be available as a source for loans under the Plan, (Note:Using the Roth source for loans may have negative tax conse-
quences for participants.)
For all plan types:
Ill. Loan Purpose
Loans arc available for the following purposes and must be requested in the corresponding method (select one):
0 All purposes
Online and Loans by Call Center:All loans must be requested either online by employees through ICMA-RC's Account
Access site at www.icmarc.org or directly over the phone with an Investor Services associate(via the Loans by Call Center
• service), both of which require preauthorization by the Employer as outlined in italics under Section IV. Application Process.
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l i Hardship Only: •
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 approve the participant's loan application after determining,based •
on all relevant facts and circumstances, chat the amount of the loan is not in excess of the amount required to.rclievc the fi-
nancial need, For this purpose, financial need shall include, but not he limited to: unreimbursed medical expenses of the par-
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I l 117 A - It I.
ticipant or members of 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 his/her dependents,
(Notes Online or Loans by Call Center not applicable with this option. Participant must complete the loan application
for employer approval.)
IV. Application Process
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If an employee is married at the time of the application and your plan'has elected the Qualified Joint and Survivor
Annuity Option,spousal consent is required for the loan.The employee'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 received in writing
by ICMA-RC no more than ninety(90) days before the loan request is submitted through Account Access. In the case
of the Direct Loan Application, spousal consent should be sent along with the application.
The promissory note, truth-in-lending rescission notice,and disclosure statement are mailed to the employee along
with the issued loan check. The employee confirms receipt and acceptance of these documents and terms at the time
the endorsed check is presented for payment.
The Employer hereby ae rhorizes all future loans requested through the online process via Account Access, as well as any re-
quests that employees.submit on paper forms,pending review of the application by ICMA-RC. Notice of loan issuance will be
provided to the Employer via reports posted on the EZLink.site.
The loan amount will generally be redeemed from the employee's account on the same day as either ICMA-RC receipt
of loan application (complete and in good order), the completion oFa loan request via telephone with an Investor
Services representative, or the employee's successful submission of the loan request through Account Access,if it is
submitted prior to 4;00 p,m. ET on a business day. If not the loan amount will be redeemed on the next business day
following submission.The loan check is generally issued on the next business day following redemption, and will be
mailed directly to the employee. The employee's.presentment of the loan check For payment constitutes an acknowl-
edgment that the employee has received and read the loan disclosure information provided by ICMA-RC and agrees to
the terms therein.
Loan repayment will begin as soon as practicable following the employee's presentment of the loan check for payment.
V. Frequency of loons (select one)
la Participants may receive one loan per calendar year. Moreover,participants may have only one(I)outstanding loan ar a time.
0 Participants may receive one loan per calendar year, Moreover, no participant may have more than five(5) loans outstanding
at one time.
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VI. loon amount •
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The minimum loan amount is$1,000.
The maximum amount of all loans to the participant from the plan and all other plans sponsored by the Employer that are qualified em-
ployer plans under section 72(p)(4) of the Cock is the lesser of
(I) $50,000, reduced by the highest outstanding balance of all loans from arty 401 or 457 plans for that participant during
the one-year period ending on the day before the date a loan is to be made, or
• (2) one half of the participant's vested account balance, reduced by the current outstanding balance of all 401 and 457 loans
from all plans for that participant.
If a participant has any loans outstanding at the time a new loan is requested, the new loan will be limited to the maximum amount calcu-
lated 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 market fluctuation between the rime of application and the time the loan is made.
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Lon"? t.rumarlines Agreement
VII. Length of loan •
A loan must be repaid in substantially equal installments of principal and interest, at least monthly, over a period that does net
exceed five(5) years.
Loans fora principal residence must be repaid in substantially equal installments of principal and interest,at
least monthly, over a period that does not exceed five IS)years [state number of years] years (maximum 30 years).
VIII. Loan repayment process
Loan repayments for active employees must be through:
10 Payroll deduction only.
PLG42(2) = 2
l, ACH debit only.•
PLG42(z)=o •
Employee may choose either payroll deduction or ACH debit.'"
PLG42(2) = t
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* Please note a $20 processing fee will be assessed to a participant's ICMA-RC account when a scheduled loan repayment(s) via
ACH is rejected due ro insufficient funds, invalid bank account information, or account closure in the participant's designated
payment account.
If payroll deduction repayment is allowed,.and the employee wishes to use this method, the employee must notify the Employer
so that the Employer can ensure that repayment will begin as soon as practicable on a date determined by the Employer's payroll
cycle. Failure to begin payroll deduction in a timely way could lead to the employee's loan entering delinquency status. Payroll
deduction should begin within two payroll cycles following the employee's receipt of the loan.
Repayments through payroll deduction will be sent via check or wire by the Employer to ICMA-RC on the following cycle
(choose one):
Weekly (52 per year)
Bi-weekly(26 per year)
Semi-monthly (24 per year)
CI Monthly (12 per year)
If ACH debit repayment is allowed, debits from the employee's designated bank account will begin approximately one month fol-
lowing the dare the employee's signed ACW authorization form is received and processed by ICMA-RC, or, in the ease of online
loans,approximately one month following the date the loan check has been cleared for payment. Debits will normally be made on
a monthly basis.
Loans outstanding for former employees or employees on a leave of absence must be repaid on the same schedule as if payroll
deductions were still being made unless they reamorriac their loans and establish a new repayment schedule that provides that sub-
stantially equal payments are made at least monthly over the remaining period of the loan.
Loan payments, including loan payments from former employees, are allocated to the participant's current election of investment
options on file with ICMA-RC.
The participant may pay off all or a portion of the principal and interest early without penalty or additional fee. Extra payments are
applied forward to both principal and interest as specified in the original repayment schedule, unless the additional payment is for
the balance due.
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ICMA - RC
IX. 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/VA rare.
Interest rates are 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 www,nfsn_eom as the source.The FHAIVA
interest rate is also determined on the last business day of each month using www.bankofamerica_com as the source.
Loan interest rates for new loans taken in different months may Fluctuate upward or downward monthly,depending on the move-
ment of the prime and FHA/VA interest rates.
The employer may modify the manner in which loan interest rates will be determined, but only with respect to future loans.
X. Security/Colloterxtil •
That portion oFa participant's account balance that is equal to the amount of the loan is used as collateral for the loan. The collat-
eral amount may not exceed 50 percent of the participant's account balance at the rime the loan is taken. Only the portion of the
account-balance that corresponds to the amount of thr outstanding loan balance is used as collateral.
XI. Acceleration (select one)
13 All loans are due and payable in full upon separation from service. •
13 All loans are due and payable when a participant receives a distribution of all of his/her account balance after separa-
. non 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 of part of his/her account balance after separa-
tion 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.
XII. Rearnortizc Lion
Any outstanding loan may be reamortized. Reamortizarion means changing the terms of a loan.such as length of repayment peri-
od, interest rate, and frequency of repayments. A loan may not be reamortizcd to extend the length of the loan repayment period to
more than five (5) years from the dare the loan was originally 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 reamorrizario'n of a loan in writing on a reamortization application acceptable to the plan adminis-
trator.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 dare 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 rcamortization will not be considered a new loan for purposes of calculating the number of loans outstanding or the one loan per
calendar year limit.
XIII. Refinancing existing loons
If a participant 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. Refinancing includes any situation in which one loan replaces another loan and the term of the replacement loan does
not exceed the latest permissable term of the replaced loan, •
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The 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 the additional loan amount requested for the purpose of refinancing is subject to the loan limits specified in
Section IV above,
Because a refinancing is considered a new loan, only active employees may refinance an outstanding loan. Residential loans are not
eligible for refinance,
XIV. Reduction of Loon
If a participant dies prior to full repayment of the outstanding loan(s), the outstanding loan balance(s) will be deducted from the
account prior to distribution to the bencficiary(ies). The unpaid loan amount is a taxable distribution and may be subject to early
withdrawal penalties.The participant's estate is responsible For taxes or penalties on the unpaid loan amount, if any.A beneficiary
is responsible for taxes due on the amount he or she receives. A Form 1099 will be issued to both the beneficiary and the estate for
these purposes.
XV. Deemed Distribution
Loan repayments must be made in accordance with the plan document, plan loan guidelines, and as reflected in the promissory
note signed by the participant. If a scheduled payment is not paid within 30, 60, and/or 90 days of the due date, a notice will be
sent to both the employee and the employer.
A loan will be deemed distributed when a scheduled payment is still unpaid at the end of-the calendar quarter Following the calen-
dar quarter in which the payment was due. if the total amount of any delinquent payment is nor received by ICMA-RC by the end
of the calendar quarter following the calendar quarter in which they payment was due, the loan is considered a taxable distribution,
and the principal balance, in addition to any accrued interest, is reported as a disrriburion to the IRS. However, no money is paid
in this distribution,because the participant already has the loan proceeds.
The loan is deemed.distributed for tax purposes, but it is nor an actual distribution and therefore remains an asset of the partici-
pant's account, Interest continues to accrue. The outstanding loan balance and accrued interest are reported on file participant's
account statement.
Repayment of a deemed distribution will not change or reverse the taxable event.
The loan continues to be outstanding, and to accrue interest, until it is repaid or offset using the participant's account balance.An
offset can occur only iFthe participant is eligible to receive a distribution From the plan as outlined in the plan document.
Participants arc required to repay any outstanding loan which has been deemed distributed before they can be eligible for a new
loan. The deemed distribution and any interest accrued since the date it became a taxable event is taken into account when deter-
mining the maximum amount available for a new loan. New loans must be repaid through payroll deduction.
The employer is obligated by federal regulation to comply with the loan guideline requirements applicable to participant loans,and
to ensure against deemed distribution by monitoring loan repayments, regardless of the method of repayment,and by advising em-
ployees if loans are in danger of being deemed distributed. The tax-qualified status or eligibility of the entire plan may be revoked
in cases of frequent repayment delinquency or deemed distribution.
XVI. Fees
Fees may be charged for various services associated with the application for and issuance of loans. All 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 specified in ICMA-RC's current publication of
Making Sound Investment Decisions.-A Retirement Investment Guide.
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ICMA - RC ,
•XVII. Other
The employer has the right to ser 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 1 8th _ day
or April , 20 13
EMPL9 D' Acccp : ICMA RETIREMENT C9R!'ORATION
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a : 'es`-e I:\ " -oa •• 'President `
Title: .y..,� Title: l �r,�
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Attest: �_ A„,,,, . Attest; / -
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`=�. , • �' bt7r ct Clerk
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