3.96.040 Deferral of Compensation.
A. Types of Contributions:
1. Annual Deferrals. The plan allows Participants to defer a portion of their compensation to the plan on a pre-tax basis. These contributions made to the plan are known as Annual Deferrals subject to the limitations discussed below. Annual Deferrals also include contributions made under the age 50 catch-up provision.
2. Rollover Contribution. The plan allows Participants to make contributions to the plan when such contributions are attributable to a distribution from an Eligible Rollover Plan.
3. Transfers. If permitted by a plan, a Participant may make tax-free exchange from another eligible 457(b) plan of a governmental employer, which allow such transfers, as long as the amount transferred is not actually received by the participant prior to the transfer.
B. Deferral Procedure. Pursuant to a Voluntary Salary Deferral Agreement, each Participant’s Deferral amount shall be deducted from his or her paychecks in approximately equal increments throughout the year. The Deferral amount shall not be included as gross income on a Participant’s Federal Income Tax withholding statement (W-2 Form).
C. Maximum Deferral.
1. Primary Limitation. The maximum amount of Annual Deferrals that may be made to the plan for a Participant’s taxable year in most situations is the lesser of:
a. 100 percent of Includible Compensation or:
b.
•$11,000 in 2002
•$12,000 in 2003
•$13,000 in 2004
•$14,000 in 2005
•$15,000 in 2006
After 2006, the contributions limit will be indexed annually for inflation in $500 increments.
2. Catch-up Limitation.
a. For each one of a Participant’s last three consecutive taxable years ending before she/he attains "normal retirement age" (NRA) pursuant to 3.96.020 L, the maximum amount that may be deferred in a Plan Year will be the lesser of:
(1) Twice the amount of the maximum contribution limit; or
(2) The sum of the maximum deferral permitted for the current tax year (determined without regard to any catch-up provision), and as much of the applicable deferral limit in prior years, before (beginning after January 1, 1984) the current tax year that had not previously been used ("underutilized amount").
b. A Participant may elect to use the catch-up provision only once while employed by the Employer sponsoring the Plan, even if the Participant uses the catch-up provision in less than all of the three consecutive eligible years.
c. In applying the underutilized limitation for Includible Compensation for years prior to 2002, the limitation is 33-1/3 percent of the Participant’s Includible Compensation. To the extent an Employer did not offer a 457(b) plan to a Participant in a prior given year, no underutilized limitation is available to the Participant for that prior year, even if s/he subsequently becomes eligible to participate in the 457(b) plan of the Employer. Note that for purposes of the special 457(b) catch-up deferral, a Participant’s election of a NRA is irrevocable once deferrals have been made to the 457(b) plan utilizing the catch-up provision. The plan defines NRA as the earlier of:
(1) age 65, or
(2) the age at which a Participant could receive immediate unreduced retirement benefits from the sponsor’s defined benefit plan
(3) or, no later than age 70½.
d. Catch-up Contribution for Participants age 50 and over. The Plan is amended to allow a Participant who has attained age 50 before the close of any taxable year to make catch-up contributions in accordance with, and subject to the limitations of, Code Section 414(v), as follows: $1,000 in 2002, $2,000 in 2003, $3,000 in 2004, $4,000 in 2005, $5,000 in 2006. These amounts are indexed for inflation (in $500 increments) beginning in 2007. Catch-up contributions may not be made under this section in any year where the catch-up provision under the Catch-up Contributions for the Last Three Years is being used.
3. Veterans Make-Up Contributions. Veterans returning to employment from certain military service are entitled to have that military service be considered service with the Employer for purposes of plan contributions. Make-up contributions on behalf of re-employed veterans are neither subject to plan contribution limitations for the year made, nor are they considered in applying the limits to any other contributions made during the year. However, the make-up contributions are subject to the applicable limitations (including any previous cost-of-living adjustments that were in effect) with respect to the year the contribution relates. In calculating the amount of any make-up contributions, compensation used for such calculation is the compensation the Participant would have earned had the Participant not engaged in military service.
D. Minimum Deferral. A Participant must comply with any minimum monthly deferral requirements which may be set by the Employer from time to time on a non-discriminatory basis.
E. Changing the Amount of Deferrals. Participants may change or cancel Deferrals with respect to Compensation not yet earned, only during Open Enrollment Periods or within 30 days of receiving notice of a Plan amendment, by executing a new Voluntary Salary Deferral Agreement or written notice of cancellation. The change or cancellation shall be effective no earlier than the first day of the month following an Open Enrollment Period as specified in Section 3.96.020 M., or the first day of the pay period following notice to the Employer.
F. Temporary Suspension of Deferrals.
1. A Participant may suspend Deferrals without withdrawing from the Plan, by giving the Employer written notice. Deferrals shall automatically be suspended for any month in which there are insufficient monies available to make the entire deduction agreed upon.
2. If Deferrals are suspended by request or automatically, a Participant may reinstate Deferrals only during Open Enrollment Periods by executing a new Voluntary Salary Deferral Agreement and delivering it to the Employer. Reinstatement shall be effective on the date specified in Section 3.96.020 M., following the Open Enrollment Period.