Approved Agreements and Contracts 2024/08/27 MERS Defined Benefit Plan

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Defined Benefit Plan Adoption Agreement                                                     el
                                                                                       Municipal Employees’ Relirement System

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The Employer, a participating municipality or participating court within the state of Michigan, hereby
agrees to adopt and administer the MERS Defined Benefit Plan provided by the Municipal Employees’
Retirement System of Michigan, as authorized by 1996 PA 220, in accordance with the MERS Plan
Document, as both may be amended, subject to the terms and conditions herein.

                       City of Muskegon                                                              yg. 0116
I. Employer Name                                                                   Municipality

If new to MERS, please provide your municipality’s fiscal year:                      through                           .
                                                                       Month                            Month

ll. Effective Date
   Check one:

      A.     If this is the initial Adoption Agreement for this group, the effective date shall be the first day
             of                    , 20


                   (J 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):

                          [1] All prior service from date of hire
                          [] Prior service proportional to assets transferred; all service used for vesting
                          (Prior service and vesting service proportional to assets transferred
                          [No prior service but grant vesting credit
                          C1 No prior service or vesting credit
                   [1] Link this new division to division number          for purposes of determining
                       contributions (Unless otherwise specified, the standard transfer/rehire rules apply)



       B. (8) If this is an amendment of an existing Adoption Agreement (Defined Benefit division number
           All       ), the effective date shall be the first day of A 2081 (mm/yy). Please note: You only
           need to mark changes to your plan throughout the remainder of this Agreemeni.

       C. 1 If this is a temporary benefit (Defined Benefit division number(s)                                              \,
           select one of the following:

                 C] This is a temporary Benefit Window with a duration of 2-6 months. Effective dates
                    are from ___/01/___ through the last day of __/20__ (mm/vyy). Complete provisions as
                    applicable under Section IV of this form.

                 C] This is a temporary Lump Sum Buyout Program for terminated vested participants with
                    a duration of 6-24 months. Effective dates are from __/01/___ through the last day of
                   __/20___ (mm/yy). Payout will reflect___% (1-100%) of the participant’s present value of
                    accrued benefit. For example, if 40% is used, the payout will be 40% of the present value
                    of the benefit. This percentage cannot be changed once adopted.



                                                                                                                   :             {

                                                                                                                 Page 1 of 8
    Defined Benefit Plan Adoption Ag                       ent
             Cees,                                    EE,
1



        D. CJ If this is to separate employees from an existing Defined Benefit division (existing division
           number(s)                                                                         ) into a new division,
           the effective date shall be the first day of                             , 20

        E. (1 If this is to merge division(s)                             into division(s)
           the effective date shall be the first of                          , 20

        F. CJ If this is an amendment to close Defined Benefit division(s) #                        , with new
           hires, rehires, and transfers going into an existing Defined Benefit division #
           the effective date shall be                    (month/year).
           Note: Closing this Defined Benefit 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).

        G. CI this is to close Defined Contribution or Hybrid division #                          with its current
           and/or future active participants enrolling in existing DB division #                       (previously
           closed, now re-opened), the effective date shall be the first of                             , 20

               Please complete all subsequent sections of this Defined Benefit Adoption Agreement
               (including all provisions in effect) and the Addendum for Plan Freeze, Closure and
               Conversions,

        H. CJ If this is to close Defined Contribution or Hybrid division #                       with its current
            and/or future active participants enrolling in a new Defined Benefit division, the effective date
            shall be the first of                         , 20

               Please complete all subsequent sections of this Defined Benefit Adoption Agreement
               (including all provisions in effect) and the Addendum for Plan Freeze, Closure and
               Conversions.




                                                                                                               Page 2 of 8
Defined Benefit Plan Adoption Agreement

Ill. Plan Eligibility

    Division Title:
    Only those employees eligible for MERS membership may participate in the MERS Defined Benefit
    Plan. If an employee classification is included in the plan, then employees that meet this definition will
    receive service credit if they work the required number of hours to meet the service credit qualification
    defined below. All eligible employees must be reported to MERS. Please describe the specific
     classifications that are eligible for MERS within this division:


                    (For example: e.g., Full-time employees, Clerical staff, Union Employees participating in XXX union)

    This Division includes public safety employees (this information is used for actuarial purposes only, It
    does not relate to the additional tax for early distribution): CI Yes                   CI No

     To further define eligibility (select all that apply):



Temporary Employees: Those who will work for the municipality fewer t an




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                                                                                                                           OO Cy OI
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                        O
the year
Voter-Elected Officials                                                                                      [J
Appointed Officials: An official appointed to a voter-elected office                           goood
Contract Employees                                                                                           fe
Other:                                                                                                       CJ
Other 2:                                                                                                     C

      Probationary Periods (select one):
 CI Service 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, the employer will
    not report or provide service. Service will begin to accrue and contributions must be reported when
      the Probationary Period ends.
      The probationary period will be                   month(s).
       Comments:




       Service will begin with the employee’s date of hire (no Probationary Period). Effective with the date of
       hire, wages paid and any associated contributions must be submitted to MERS.




                                                                                                                                  Page 3 of 8
Form DB-002 (version 2024-04-30)
     Defined Benefit Plan Adoption Agreement
Fe



     IV. Provisions
       1. Service Credit Qualification
          To clarify how eligible employees earn service credit, please indicate how many hours per month an
          eligible employee needs to work. For example, if you require 10 eight-hour days, this would be 80
          hours per month. If an hours and days has been previously defined (like 10 seven-hour days), stating
          “70 hours” will be required. Employees must meet the definition of Plan Eligibility in order to earn
           service credit under the plan.

          To receive one month of service credit, an employee shall work (or be paid for as if working)
                         hours in a month.

         2, Leaves of Absence
           Indicate by checking the boxes below, whether the potential for service credit will be allowed if an
           eligible employee is on one of the following types of leave, regardless of meeting the service credit
           qualification criteria.
           Regardless whether an eligible employee is awarded service credit while on the selected type(s) of
           leave:
            *    MERS will skip over these months when determining the FAC amount for benefit calculations.
            *   Third-party wages are not reported for leaves of absence.
            e    Employers are not required to remit employer contributions based on leaves of absence when
                 no wages are paid by the employer.
            ¢    For contributory divisions, employee contributions are required where service credit is granted
                 and due at the time of monthly wage and contribution reporting. Employers may use the
                 following formula to calculate employee contributions: the employee’s current hourly rate (prior to
                 leave), multiplied by service credit qualification (hours) multiplied by employee contribution. For
                 example, if employees’ hourly rate is $20, the division requires 120 hours to obtain service credit,
                 and employee contributions are 5%, the calculation will look like: $20/hour X 120 X .05 = $120 in
                 employee contribution for that leave month. Employers may use another internal formula, if they
                  choose and MERS will make note of it.
                     If an alternative formula is going to be used, please describe that here:




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      ‘Short-Term Disability
       Long-Term Disability
       Workers’ Compensation
       Unpaid Family Medical Leave Act (FMLA)
                                                                                                                O




       Other:
       For example, sick and accident, administrative, educational, sabbatical, etc.

       Other 2:                                                                              cI                 ‘a
       Additional leave types as above

       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 Benefit as applicable.

     Form DB-002 (version 2024-04-30)                                                                                  Page 4 of 8
   Defined Benefit Plan Adoption Agreement

   3, Definition of Compensation
   The Definition of Compensation is used to calculate a participant’s final average compensation and is
   used in determining both employer and employee contributions. Wages paid to employees, calculated
   using the elected definition, must be reported to MERS.
   Select your Definition of Compensation:
          Base Wages              Box 1 Wages of W-2        Gross Wages         Sorinaoe Wages of Base,
     (e] Custom Definition
          (To customize your definition, please complete the Custom Definition of Compensation Addendum.)

V. Valuation-Required Provisions

   Valuation Date:                                   , 20

       1. Review the valuation results

           It is recommended that your MERS representative presents and explains the valuation results to
           your municipality before adopting. Please choose one:

          1 Our MERS representative presented and explained the valuation results to the
                                                on
                  (Board, Finance Cmte, etc.)        (mm/dd/yyyy)
           [] As an authorized representative of this municipality, |
                                                                                        (Name)
                                                       waive the right for a presentation of the results.
                                      (Title)


       This Adoption Agreement will be implemented in conjunction with a current actuarial valuation certified
        by a MERS actuary that sets contribution rates.

       Annually, the MERS actuary will conduct an actuarial valuation to determine the employers’
       contribution rates. Employers are responsible for payment of said contributions at the rate, in the form
        and at the time that MERS determines.




   Form DB-002 {version 2024-04-30)                                                                         Page 5 of 8
    Defined Benefit Plan Adoption Agreement
i




      2. Benefit Multiplier (1 %-2.5%, increments of 0.05%)                      % (max 80% for multipliers
             over 2.25%)

                Check here if multiplier will be effective for existing active members’ future service only (Bridged
                 Benefit as of effective date on page 1)
                      if checked, select one below:

                      C Termination Final Average Compensation (calculated over the members entire
                           wage history)

                      [1 Frozen Final Average Compensation (FAC is calculated twice, once for the
                         timeframe that matches the original multiplier, and once for the new multiplier)


       3. Final Average Compensation (Min 3 yr, increments of 1 yr)                        years

       4. Vesting (5 -10 yrs, increments of 1 yr)               years

       5. Normal Retirement Age will be the later of:                   (any age from 60-70), or the vesting provision
             selected above (#4).

        6. Required employee contribution (Increments of 0.01%)                            %

        7. Unreduced Early Retirement/Service Requirements:

               [1 Age 50-54                Service between 25 and 30 years

               (1 Age 55 - 65              Service between 15 and 30 years

               [1 Service only (must be any number from 20 - 30 years accrued service):
               (1 Age + Service Points (total must be from 70 — 90):              points

        8.    Other
               0 Surviving Spouse will receive 50% of Straight Life benefit without a reduction to the
                   employees’ benefit (also known as an RS50)
               O) Duty death or disability enhancement (add up to additional 10 years of service credit not to
                   exceed 30 years of service)
               C] Deferred Retirement Option Program (DROP) - If selected, complete the following:
                       «    Credited interest rate:       % (please select either 0 or 3%)
                       * The employer, if selected, will delay a Cost of Living Adjustment (GOLA) during the
                            DROP period (skip if not applicable): [7] Yes     =) No

                       *    Credited payment percentage will be:            % (enter a number from 1-100% in
                            increments of 1%) throughout the duration of the DROP period.




    Forrn DB-002 (version 2024-04-30)                                                                          Page 6 of
  Defined Benefit Plan Adoption Agreement

           1 Annuity Withdrawal Program (AWP)
                  Calculation of the actuarial equivalent of the lump sum distribution made under AWP will be
                  done using:
                  (CJ Interest rate for employee contributions as determined by the Retirement Board, or
                  (J MERS’ assumed rate of return as of the date of the distribution.

      9.   Cost-of-Living Adjustment


            (1      Allcurrent retirees as of effective date     []    Future retirees who retire after
            []      Retirees who retire between                        effective date
                          /O1/         and     /01/


             Increase of              % or $     per month        Increase of       % or $        per month

             Select one:                                         [Annual automatic increase
             [>     Annual automatic increase
             []     One-time increase

             Select one:                                          Select one:
             [J Compounding                                       [     Compounding
             [J > Non-compounding                                 (1    ~Non-compounding

             Employees must be retired        months              Employees must be retired        months
             (6-12 months, increments of 1 month)                 (6-12 months, increments of 1 month)

           [1      Check here if the existing COLA will be bridged for active participants as of the effective date
                   selected on this form. Benefits accrued for service after the effective date will have no COLA
                   increase applied.

       10. Service Credit Purchase Estimates are:
           [1] Not permitted
           O Permitted


VI. Appointing MERS as the Plan Administrator
The Employer hereby agrees to the provisions of this MERS Defined Benefit 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 Benefit
Plan Adoption Agreement, the provisions of the Plan Document control.


VII. 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
anew Adoption Agreement. The amendment of the new Agreement is not effective until approved by MERS.




   Form DB-002 (version 2024-04-30)                                                                            Page 7 of 8
      Defined Benefit Plan Adoption Agreement
{                    {eae


      VII. 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, and prohibits the use of the
                Employer’s required current service funding to finance unfunded accrued liabilities.
      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 ina
                court of competent jurisdiction;

      3.         In accordance with the Constitution and this Agreement, if at any time the balance standing to the
                Employer’s credit in the reserve for employer contributions and benefit payments is insufficient
                to pay all service benefits due and payable to the entity’s retirees and beneficiaries, the Employer
                agrees and covenants to promptly remit to MERS the amount of such deficiency as determined by
                the Retirement Board within thirty (80) days notice of such deficiency.
      A.         The Employer acknowledges that wage and service reports are due monthly, and the employee
                 contributions (if any) and Employer contributions are due and payable monthly, and must be
                 submitted in accordance with the MERS Enforcement Procedure for Prompt Reporting and
                 Payment, the terms of which are incorporated herein by reference.
       5.        Should the Employer fail to make its required contribution(s) when due, the retirement benefits due
                 and payable by MERS on behalf of the entity to its retirees and beneficiaries may be suspended
                 until the delinquent payment is received by MERS. MERS may implement any applicable interest
                 charges and penalties pursuant to the MERS Enforcement Procedure for Prompt Reporting and
                 Payment 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.        The Employer acknowledges that changes to the Employer’s MERS Defined Benefit Plan must be
                 made in accordance with the MERS Plan Document and applicable law, and agrees that MERS
                 will not administer any such changes unless the MERS Plan Document and applicable law permit
                 same, and MERS is capable of administering same.

    IX. 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 214 day of         August                 09 OM.                (Name of Approving Employer)


            Authorized signature: d, W=——
            Title:   §Frnance             O,ecectoe

       Received and Approved by the Municipal Employees’ Retirement System of Michigan

            Dated: _ 09/05/2024                    , 20        Signature:         GANA                     aD
                                                                                     (Authorized MERSignatory)




      Form DB-002 (version 2024-04-30)                                                                           Page 8 of 8

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