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Agenda Item Review Form
Muskegon City Commission
Commission Meeting Date: February 14, 2023 Title: MERS- Police
Command DC employee
contribution rate
Submitted By: Kenneth D. Grant Department: Finance
Brief Summary: The City seeks to adopt the Police Command Defined Contribution Plan Employee’s
Contribution rate as negotiated per their contract.
Detailed Summary & Background:
The Finance Department wants permission to sign a Defined Contribution Plan Adoption
Agreement to increase the employee contribution rate for Police Command as follows:
A police command defined benefit employee shall effective January 1, 2023:
Employees shall contribute 9% of their compensation towards the defined benefit plan as
defined by MERS. The previous contribution rate was 6%.
Goal/Focus Area/Action Item Addressed: Sustainability in financial practices
Amount Requested: Amount Budgeted:
Fund(s) or Account(s): Fund(s) or Account(s):
Recommended Motion: To approve the required employee contribution 9% for Police Command
Defined Benefit plan.
Approvals: Guest(s) Invited / Presenting
Immediate Division Head [_] Information Technology CJ
Other Division Heads L] Communication CO Yes UO
Legal Review CJ No i
For City Clerk Use Only:
Commission Action:
MERS Defined Contribution Plan Adoption Agreement
Municipal Employees’ Retirement System
233
The Employer, a participating municipality or court within the state of Michigan that has adopted MERS
coverage, hereby establishes the following Defined Contribution Plan provided by MERS of Michigan, as
authorized by 1996 PA 220 in accordance with the MERS Plan Document.
City of Muskegon
I. Employer Name Municipality #: 6116
Division name
Note: This division should reflect how you currently define employees who are eligible to participate, for
example, All full-time Employees, New hires after 1/1/2019, etc.
ll. Effective Date
Check one:
A. CI If this is the initial Adoption Agreement for this group, the effective date shall be the first day
of ,20_
1) This municipality or division is new to MERS, so vesting credit prior to the initial MERS
effective date by each eligible employee shall be credited as follows (choose one):
[ Vesting credit from date of hire © No vesting credit
[1] This division is for new hires, rehires, and transfers of current Defined Benefit*® division
# and/or current Hybrid division #
B. @ If this is an amendment of an existing Adoption Agreement (existing division number
110192 ), the effective date shall be the first day of January , 20.23
Note: You only need to mark changes to your plan throughout the remainder of this Agreement.
C. [1 If this is to separate employees from an existing Defined Contribution division (existing division
number(s) ) into a new division,
the effective date shall be the first day of __, 20
D. [1 If this is to merge division(s) into division(s) , the
effective date shall be the first of , 20
E. (1 If this is an amendment to close Defined Benefit division(s) # or Hybrid
division(s) with new hires, rehires, and transfers going into existing Defined
Contribution division # , the effective date shall be (month/year).
Note: Closing this Defined Benefit or Hybrid division(s) will change future invoices to a flat
dollar amount instead of a percentage of payroll, as provided in your most recent annual
actuarial valuation.
(The amount may be adjusted for any benefit modifications that may have taken place since then).
MERS Defined Contribution Plan Adoption Agreement
pai
suaeene
Ill. Plan Eligibility
Only those employees eligible for MERS membership may participate in the MERS Defined Contribution
Plan. lf an employee classification is included in the plan, then employees that meet this definition are
required to participate in the plan and earn time toward vesting. All eligible employees must be reported
to MERS reported to MERS and earn time toward vesting. Some excluded classifications require
additional information below. Please describe the specific classifications that are eligible for MERS within
this division:
Police Command
(For example: e.g., Full-time employees, Clerical staff, Union Ernployees participating in XXXX union)
This Division includes public safety employees: CI Yes CI No
To further define eligibility (select all that apply):
DOIN Oy Ci
0
OOO) Oo Oo
Temporary Employees: Those who will work for the municipality fewer than
months in total
Part-Time Employees: Those who regularly work fewer than per
CO
Seasonal Employees: Those who are employed for tasks that occur at specific times of
the year 0
Voter-Elected Officials UJ
Appointed Officials: An official appointed to a voter-elected office CI
Contract Employees O
Other: [J
Other 2:
Probationary Periods (select one):
CI Contributions will begin after the probationary period has been satisfied. Probationary periods
are allowed in one-month increments, no longer than 12 months. During this probationary period,
contributions will not be reported and service toward vesting will begin when probationary period has
ended.
The probationary period will be month(s).
Comments:
Contributions will begin with the employee’s date of hire (no Probationary Period). Effective with the
date of hire, wages and any associated contributions must be submitted to MERS.
MERS Defined Contribution Plan Adoption Agreement
lV. Provisions
1. Leaves of Absence
Regardless of whether an employee is earning a wage while on the following types of leave:
° Third-party wages are not used in determining contributions for periods of leave.
e Vesting under elapsed time continues to accrue even if wages are not earned and contributions
are zero.
Note: Employers who determine vesting based on an “hours-reported” method, should report
actual worked hours for the month where there was a leave.
Types of leave include:
© Short Term and Long Term Disability
e Workers Compensation
e Unpaid Family Medical Leave Act (FMLA)
Leaves of absence due to military service are governed by the federal Uniformed Services
Employment and Reemployment Rights Act of 1994 (USERRA), IRC 414(u), effective January 1, 2007,
IRC 401(a)(37). Military reporting requires historical wage and contribution reporting for Defined
Contribution as applicable.
2. Definition of Compensation
The Definition of Compensation selected must be used when determining both employer and
employee contributions. Employers may include wage information along with employee and employer
contributions when submitting wage/contribution reports to MERS.
Select your Definition of Compensation: F
(J
|_|Base Wages CJ
|_| Box 1 Wages of W-2 [cross Wages €
Keeping Custom wage definition, no \
[custom Definition chan eS ie
(To customize your definition, please complete the Custom Definition of Compensation Addendum.)
3. Forfeiture
A forfeiture occurs when a participant separates from employment prior to meeting the associated
elapsed time (or hours reported) to receive vesting. The percentage of his/her employer contribution
account balance that has not vested as of the date of termination will forfeit after 12 consecutive
months following the termination date reported by the employer, or earlier, if the System distributes the
participant’s vested portion. MERS will utilize any available forfeiture balance as an automatic funding
source applied to reported employer contributions at the time of reporting.
4. Vesting
Vesting will be credited using (check one):
O Elapsed time method — Employees will be credited with one vesting year for each 12 months of
continuous employment from the date of hire.
O Hours reported method — Employees will be credited with one vesting year for each calendar
year in which hours are worked
EEO
Form MD-070 (version 2022-12-06) Page 3 of 5
MERS Defined Contribution Plan Adoption Agreement
Vesting schedule will be (check one):
i) Immediate
i) Cliff vesting (fully vested after a specified number of years, not to exceed 15 years)
willbe ____ years.
Oo Graded Vesting (the % of vesting acquired after employment for the designated number of
years, not to exceed 10 years; or, where full vesting is attained between 10 and 20 years,
graded vesting must commence no later than 3 years of service)
li Vested] 1) I YearsiofiService
In the event of disability or death, an employee’s (or his/her beneficiary’s) entire employer contribution
account shall be 100% vested, to the extent that the balance of such account has not previously
been forfeited.
Normal Retirement Age (presumed to be age 60 unless otherwise specified)
If an employee is still employed with the municipality at the age specified here, their entire employer
contribution balance will become 100% vested regardless of years of service.
5, Contributions
a. Contributions will be submitted (check one):
Contributions will be remitted according to Employer's “Payroll Period” which represents the
actual period amounts are withheld from participant paychecks, or within the month during which
amounts are withheld.
O Weekly Oo Semi-Monthly (twice each month)
a Bi-Weekly (every other week) | Monthly
b. Employer Contributions
Required Employee Contributions and Employer Contributions are outlined using associated
Contribution Addendum for MERS Defined Contribution (MD-073).
Cc. Post-tax voluntary employee contributions are allowable into a Defined Contribution account
subject to Section 415(c) limitations of the Internal Revenue Code.
6. Loans: 1) shall be permitted PXShall not be permitted
If Loans are elected, please refer to the Defined Contribution & 457 Loan Addendum.
7. Rollovers from qualified plans are permitted and the plan will account separately for pre-tax and
post-tax contributions and earnings thereon.
V. Appointing MERS as the Plan Administrator
The Employer hereby agrees to the provisions of this WERS Defined Contribution Plan Adoption Agreement
and appoints MERS as the Plan Administrator pursuant to the terms and conditions of the Plan. The
Employer also agrees that in the event of any conflict between the MERS Plan Document and the MERS
Defined Contribution Plan Adoption Agreement, the provisions of the Plan Document control.
Ea
Form MD-070 (version 2022-12-06) ~ Page 4 of §
MERS Defined Contribution Plan Adoption Agreement
SSSR ca END ae Oe RT MT ae RE ee
VI. Modification of the terms of the Adoption Agreement
If the Employer desires to amend any of its elections contained in this Adoption Agreement, including
attachments, the Governing Body or Chief Judge, by resolution or official action accepted by MERS,
must adopt a new Adoption Agreement. The amendment of this Agreement is not effective until
approved by MERS.
Vil. Enforcement
1. The Employer acknowledges that the Michigan Constitution of 1963, Article 9, Section 24, provides
that accrued financial benefits arising under a public Employer's retirement plan are a contractual
obligation of the Employer that may not be diminished or impaired.
2. The Employer agrees that, pursuant to the Michigan Constitution, its obligations to pay required
contributions are contractual obligations to its employees and to MERS and may be enforced in a
court of competent jurisdiction;
3. The Employer acknowledges that employee contributions (if any) and employer contributions must be
submitted in accordance with the MERS Reporting and Contribution Enforcement Policy, the terms of
which are incorporated herein by reference;
4. The Employer acknowledges that late or missed contributions will be required to be made up,
including any applicable gains, pursuant to the Internal Revenue Code;
5. Should the Employer fail to make its required contribution(s) when due, MERS may implement
any applicable interest charges and penalties pursuant to the MERS Reporting and Contribution
Enforcement Policy and Plan Document Section 79, and take any appropriate legal action, including
but not limited to filing a lawsuit and reporting the entity to the Treasurer of the State of Michigan in
accordance with MCL 141.1544(d), Section 44 of PA 436 of 2012, as may be amended.
6. It is expressly agreed and understood as an integral and non-severable part of this Agreement
that Section 43 of the Plan Document shall not apply to this Agreement and its administration or
interpretation. In the event any alteration of the terms or conditions of this Agreement is made
or occurs, under Section 43 or other plan provision or law, MERS and the Retirement Board, as
sole trustee and fiduciary of the MERS plan and its trust reserves, and whose authority is non-
delegable, shall have no obligation or duty to administer (or to have administered) the MERS Defined
Contribution Plan, to authorize the transfer of any defined benefit assets to the MERS Defined
Contribution Plan, or to continue administration by MERS or any third-party administrator of the
MERS Defined Contribution Plan.
Vill. Execution
Authorized Designee of Governing Body of Municipality or Chief Judge of Court
The foregoing Adoption Agreement is hereby approved by City of Muskegon on
the 4th day of Ecbruqnee 20 9> . (Name of Approving Employer)
ee
Title: Finance, Diecchoe
/ OC) be
Received and Approved by the Municipal Employees’ Retirement System of Michigan
Dated: _02/16/2023 20 Signature: & ‘
(Authorized MERS Signatory)
[esata Scan caarynbeer
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Form MD-070 (version 2022-12-06) Page 5 of 5
Contribution Addendum for
MERS Defined Contribution (and DC portion of Hybrid) Municipal Employees’ Retirement System
This is an Addendum to the Adoption Agreement completed by City of Muskegon #6116
Name of Participating Empioyer
for Police Command of 110192 ;
Employee Group Division Code
The Addendum modifies the MERS Defined Contribution Adoption Agreement. Please complete this
addendum for each contribution structure associated with the covered employee group.
Required Employee Contribution structure to DC (subject to Internal Revenue Code 415(c) limitations)
Select one:
[@ Employees are required to contribute per payroll period:
Percentage 9 % OR flat dollar amount $
CJ Employees are required to contribute within the following range for each payroll:
Percentage range from % to % OR dollar amount range $ to $
Direct Required Employee Contributions: [@) Pre-tax [1 After-tax
The Participating Employer will make matching contributions into the Defined Contribution Plan based on
(CHECK ALL THAT APPLY):
CJ Each Employee’s election to defer salary under the MERS 457 program (or any other qualified plan
outside of MERS).
[J Each Employee’s one-time election of required employee contributions for MERS Defined Contribution.
"Page 1 of2
Contribution Addendum for NV MUL
MERS Defined Contribution (and DC portion of Hybrid) Municipal Employees’ Retirement System
The Participating Employer elects to make contributions as follows (check and complete Matching, Non-
Matching, or both as applicable):
C] Matching Contributions
The Employer elects the following matching contribution formula:
[] Percentage: For each payroll period in which Employee contributions described above are made, the
Participating Employer will contribute % of the Employee contribution amount.
For example, if an Employer elects a 50% match, then for every $10 the participant defers to the
Program, the Employer will contribute $5 to the Program.
(J Flat Dollar: For each payroll period in which Employee contributions described above are made, the
Participating Employer will contribute no more than $ per payroll period.
Employer Cap: The Employer elects to establish a cap on its matching contributions, so that the
match amount cannot exceed a certain amount. The Employer elects the following cap on its matching
contribution:
C] Flat Dollar Cap: In no event will matching contributions made on behalf of a participant exceed a flat
dollar amount equal to $ per
[J Cap Equal to Percentage of Total Compensation: In no event will matching contributions made
on behalf of a participant exceed % of the participant’s IRS Section 401(a)(17) includable
compensation as defined by the Employers’ Adoption Agreement (cannot exceed 100% of
participant’s income).
YI Non-Matching Contributions
The Employer hereby elects to make contributions to the participants’ accounts without regard to a
participant’s contribution amount (check one):
CJ Annuak: A one-time annual contribution of $ or % of compensation per participant.
Pay Period: $ or 13% of compensation per participant for each payroll period.
"Page 2 of2
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