01-0889R

RESOLUTION AUTHORIZING AND RATIFYING CHANGES TO THE DEFERRED COMPENSATION PLAN AND ADMINISTRATIVE CONTRACTS INVOLVING THE PLAN.

BY COUNCILOR FENA:

        BE IT RESOLVED, that the proper city officials, including the deferred compensation commission, acting through reasonable procedures are authorized to implement or ratify, within the time required by law, to the extent allowed by law, any city deferred compensation plan and any agreement to which the city is a party which agreement concerns the operation or administration of a deferred compensation plan, so that it contains substantially the terms and conditions set out in Public Document No. _____ on file with the city clerk.



STATEMENT OF PURPOSE:   The Internal Revenue Code was recently amended to allow certain changes in deferred compensation plans. The public document is an amendment and restatement of the city of Duluth's deferred compensation plan and trust which incorporates these changes.

Tax law changes have affected government deferred compensation plans including the city of Duluth plan. Government plans now have the same deferral limits, benefit payment flexibility and portability as 401(k), 403(b) or IRA plans (under Section 408). However, two important differences allow distributions in government plans before age 59½ without the 10% excise tax, and employees in government plans may "catch up" as they near retirement age.

The plan and trust are effective January 1, 2002.