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2002 Public Agency Retirement System / Retirement Plan - Amendment 1AMENDMENT TO THE LA QUINTA PARS SUPPLEMENTARY RETIREMENT PLAN The City of La Quinta PARS Supplementary Retirement Plan as amended and restated as of July 20, 1999 is hereby amended as follows: 1. Effective January 1, 2002 (except as otherwise provided), the following Appendix B is added to read as follows: "APPENDIX B GOOD FAITH EGTRRA COMPLIANCE B.1. Adoption and Effective Date of Appendix B. This Appendix B is adopted to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA"). This Appendix B is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and guidance issued thereunder. Except as otherwise provided, this Appendix B shall be effective as of the first day of the first Plan Year beginning after December 31, 2001. This Appendix B shall supersede the provisions of the Plan and Appendix A to the extent those provisions are inconsistent with the provisions of this Appendix B. B.2. New Mortality Table. Notwithstanding any other Plan provisions to the contrary, the applicable mortality table used for purposes of adjusting any benefit or limitation under Section 415(b)(2)(B), (C), or (D) of the Code is the table prescribed in Rev. Rul. 2001-62. Such table shall not be used for any other purpose under the Plan. This Section B.2 shall apply to distributions with annuity starting dates on or after December 31, 2002. B.3. Increase in Compensation Limit. The annual compensation of each Member taken into account in determining benefit accruals in any Plan Year beginning after December 31, 2001 shall not exceed $200,000. Annual compensation means compensation during the Plan Year or such other consecutive 12-month period over which compensation is otherwise determined under the Plan (the determination period). The $200,000 limit on annual compensation described in this Section B.3 shall be adjusted for cost -of -living increases in accordance with Section 401(a)(17)(B) of the Code. The cost -of -living adjustment in effect for a calendar year applies to annual compensation for the determination period that begins with or within such calendar year. NB 1 :574818.5 For purposes of determining benefit accruals in a Plan Year beginning after December 31, 2001, the annual compensation limit described in this Section B.3 for determination periods beginning before January 1, 2002 shall be $150,000 for any determination period beginning in 1996 or earlier; $160,000 for any determination period beginning in 1997, 1998, or 1999; and $170,000 for any determination period beginning in 2000 or 2001. Notwithstanding the foregoing, this Section B.3 shall not apply to any Member eligible for a higher limit on annual compensation under the transition rule described in Section 1.401(a)(17)- 1(d)(4)(ii) of the Treasury Regulations. B.4. Modification of Definition of Eligible Retirement Plan. For purposes of the direct rollover provisions in the Plan, an eligible retirement plan shall also mean an annuity contract described in Section 403(b) of the Code and an eligible plan under Section 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan. The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relation order, as defined in Section 414(p) of the Code. This Section BA shall apply to distributions made after December 31, 2001. B.5. Increase in Benefits Limit. (a) This Section B.5 shall be effective for Limitation Years ending after December 31, 2001. Notwithstanding the foregoing, this Section B.5 shall not apply to any Member eligible for higher limit on benefits under the special rule described in Section 415(b)(10) of the Code. (b) Benefit increases resulting from the increase in the limitations of Section 415(b) of the Code shall be provided to all Employees participating in the Plan who have one hour of service on or after the first day of the first Limitation Year ending after December 31, 2001. (c) The Annual Benefit payable with respect to a Member under the Plan for any Limitation Year shall not exceed the maximum permissible benefit. (d) Definitions. (i) Defined benefit dollar limitation. The "defined benefit dollar limitation" is $160,000, as adjusted, effective January 1 of each year, under Section 415(d) of the Code in such manner as the Secretary shall prescribe, and payable in the form of a straight life annuity. A limitation as adjusted under Section 415(d) will apply to Limitation Years ending with or within the calendar year for which the adjustment applies. (ii) Maximum permissible benefit. The "maximum permissible benefit" is the defined benefit dollar limitation (adjusted where required, as provided in (A) and, if applicable, in (B) or (C) below). NB 1:574818.5 2 (A) If the Member has fewer than ten Years of Participation in the Plan, the defined benefit dollar limitation shall be multiplied by a fraction, (i) the numerator of which is the number of full and partial Years of Participation in the Plan and (ii) the denominator of which is ten. (B) If the Annual Benefit of a Member begins prior to age 62, the defined benefit dollar limitation applicable to the Member at such earlier age is an Annual Benefit payable in the form of a straight life annuity beginning at the earlier age that is the actuarial equivalent of the defined benefit dollar limitation applicable to the Member at age 62 (adjusted under (A) above, if required). The defined benefit dollar limitation applicable at an age prior to age 62 is determined as the lesser of (i) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using the interest rate and mortality table (or other tabular factor) specified in the plan for early retirement calculations and (ii) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using a five percent interest rate and the applicable mortality table. Any decrease in the defined benefit dollar limitation determined in accordance with this paragraph (B) shall not reflect a mortality decrement if benefits are not forfeited upon the death of the Member. If any benefits are forfeited upon death, the full mortality decrement is taken into account. (C) If the benefit of a Member begins after the Member attains age 65, the defined benefit dollar limitation applicable to the Member at the later age is the Annual Benefit payable in the form of a straight life annuity beginning at the later age that is actuarially equivalent to the defined benefit dollar limitation applicable to the Member at age 65 (adjusted under (A) above, if required). The actuarial equivalent of the defined benefit dollar limitation applicable at an age after age 65 is determined as (i) the lesser of the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using the interest rate and mortality table (or other tabular factor) specified in the Plan for late retirement benefits, and (ii) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using a five percent interest rate assumption and the applicable mortality table. For these purposes, mortality between age 65 and the age at which benefits commence shall be ignored." NB 1:574818.5 3 2. Effective January 1, 2003, the following Appendix C is added to read as follows: "APPENDIX C MINIMUM DISTRIBUTION REQUIREMENTS C.I. Adoption and Effective Date of Appendix C. This Appendix C is adopted to reflect the final Treasury Regulations promulgated under Section 401(a)(9) of the Code. Except as otherwise provided, this Appendix C shall apply for purposes of determining required minimum distributions for calendar years beginning with the 2003 calendar year. This Appendix C shall supersede the provisions of the Plan and Appendix A to the extent those provisions are inconsistent with the provisions of this Appendix C. All distributions required under this Appendix C will be determined and made in accordance with the Treasury Regulations promulgated under Section 401(a)(9) of the Code. Notwithstanding the other provisions of this Appendix C, distributions may be made under a designation made before January 1, 1984, in accordance with Section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act ("TEFRA") and the provisions of the Plan that relate to Section 242(b)(2) of TEFRA. C.2. Time and Manner of Distribution. (a) Required Beginning Date. The Member's entire interest will be distributed, or begin to be distributed, to the Member no later than the Member's Required Beginning Date. (b) Death of Member Before Distributions Begin. If the Member dies before distributions begin, the Member's entire interest will be distributed, or begin to be distributed, no later than as follows: (i) If the Member's surviving spouse is the Member's sole Designated Beneficiary, then distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the Member died, or by December 31 of the calendar year in which the Member would have attained age 70V2, if later. (ii) If the Member's surviving spouse is not the Member's sole Designated Beneficiary, then distributions to the Designated Beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the Member died. (iii) If there is no Designated Beneficiary as of September 30 of the year following the year of the Member's death, the Member's entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the Member's death. (iv) If the Member's surviving spouse is the Member's sole Designated Beneficiary and the surviving spouse dies after the Member but before distributions to the surviving spouse begin, this Section C.2(b), other than Section C.2(b)(i), will apply as if the surviving spouse were the Member. NB 1:574818.5 4 For purposes of this Section C.2(b) and Section C.5, distributions are considered to begin on the Member's Required Beginning Date (or, if Section C.2(b)(iv) applies, the date distributions are required to begin to the surviving spouse under Section C.2(b)(i)). If annuity payments irrevocably commence to the Member before the Member's Required Beginning Date (or to the Member's surviving spouse before the date distributions are required to begin to the surviving spouse under Section C.2(b)(i)), the date distributions are considered to begin is the date distributions actually commence. (c) Form of Distribution. Unless the Member's interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the Required Beginning Date, as of the first Distribution Calendar Year distributions will be made in accordance with Sections C.3, CA and C.5 of this Appendix C. If the Member's interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of Section 401(a)(9) of the Code and the Treasury Regulations. Any part of the Member's interest which is in the form of an individual account described in Section 414(k) of the Code will be distributed in a manner satisfying the requirements of Section 401(a)(9) of the Code and the Treasury Regulations that apply to individual accounts. C.3. Determination of Amount to be Distributed Each Year. (a) General Annuity Requirements. If the Member's interest is paid in the form of annuity distributions under the Plan, payments under the annuity will satisfy the following requirements: (1) the annuity distributions will be paid in periodic payments made at intervals not longer than one year; (ii) the distribution period will be over a life (or lives) or over a period certain not longer than the period described in Section CA or C.5; (iii) once payments have begun over a period certain, the period certain will not be changed even if the period certain is shorter than the maximum permitted; (iv) payments will either be nonincreasing or increase only as follows: (A) by an annual percentage increase that does not exceed the annual percentage increase in a cost -of -living index that is based on prices of all items and issued by the Bureau of Labor Statistics; (B) to the extent of the reduction in the amount of the Member's payments to provide for a survivor benefit upon death, but only if the beneficiary whose life was being used to determine the distribution period described in Section CA dies or is no longer the Member's Beneficiary pursuant to a qualified domestic relations order within the meaning of Section 414(p) ; (C) to provide cash refunds of employee contributions upon the Member's death; or (D) to pay increased benefits that result from a plan amendment. NB 1:574818.5 5 (b) Amount Required to be Distributed by Required Beginning Date. The amount that must be distributed on or before the Member's Required Beginning Date (or, if the Member dies before distributions begin, the date distributions are required to begin under Section C.2(b)(i) or C.2(b)(ii)) is the payment that is required for one payment interval. The second payment need not be made until the end of the next payment interval even if that payment interval ends in the next calendar year. Payment intervals are the periods for which payments are received, e.g., bi- monthly, monthly, semi-annually, or annually. All of the Member's benefit accruals as of the last day of the first Distribution Calendar Year will be included in the calculation of the amount of the annuity payments for payment intervals ending on or after the Member's Required Beginning Date. (c) Additional Accruals After First Distribution Calendar Year. Any additional benefits accruing to the Member in a calendar year after the first Distribution Calendar Year will be distributed beginning with the first payment interval ending in the calendar year immediately following the calendar year in which such amount accrues. (d) Election to Allow Members or Beneficiaries to Elect 5-Year Rule. Members or Beneficiaries may elect on an individual basis whether the 5-year rule or the life expectancy rule in Sections C.2(b) and C.5 of this Appendix C applies to distributions after the death of a Member who has a Designated Beneficiary. The election must be made no later than the earlier of September 30 of the calendar year in which distribution would be required to begin under Section C.2(b) of this Appendix C, or by September 30 of the calendar year which contains the fifth anniversary of the Member's (or, if applicable, surviving spouse's) death. If neither the Member nor Beneficiary makes an election under this paragraph, distributions will be made in accordance with Sections C.2(b) or C.5 of this Appendix C. CA. Requirements For Annuity Distributions That Commence During Member's Lifetime. (a) Joint Life Annuities Where the Beneficiary Is Not the Member's Spouse. If the Member's interest is being distributed in the form of a joint and survivor annuity for the joint lives of the Member and a nonspouse Beneficiary, annuity payments to be made on or after the Member's Required Beginning Date to the Designated Beneficiary after the Member's death must not at any time exceed the applicable percentage of the annuity payment for such period that would have been payable to the Member using the table set forth in Q&A-2 of Section 1.401(a)(9)-6T of the Treasury Regulations. If the form of distribution combines a joint and survivor annuity for the joint lives of the Member and a nonspouse Beneficiary and a period certain annuity, the requirement in the preceding sentence will apply to annuity payments to be made to the Designated Beneficiary after the expiration of the period certain. (b) Period Certain Annuities. Unless the Member's spouse is the sole Designated Beneficiary and the form of distribution is a period certain and no life annuity, the period certain for an annuity distribution commencing during the Member's lifetime may not exceed the applicable distribution period for the Member under the Uniform Lifetime Table set forth in Section 1.401(a)(9)-9 of the Treasury Regulations for the calendar year that contains the annuity starting date. If the annuity starting date precedes the year in which the Member reaches age 70, the applicable distribution period for the Member is the distribution period for age 70 under the NB 1:574818.5 6 Uniform Lifetime Table set forth in Section 1.401(a)(9)-9 of the Treasury Regulations plus the excess of 70 over the age of the Member as of the Member's birthday in the year that contains the annuity starting date. If the Member's spouse is the Member's sole Designated Beneficiary and the form of distribution is a period certain and no life annuity, the period certain may not exceed the longer of the Member's applicable distribution period, as determined under this Section CA(b), or the joint life and last survivor expectancy of the Member and the Member's spouse as determined under the Joint and Last Survivor Table set forth in Section 1.401(a)(9)-9 of the Treasury Regulations, using the Member's and spouse's attained ages as of the Member's and spouse's birthdays in the calendar year that contains the annuity starting date. (c) Election to Allow Designated Beneficiary Receiving Distributions Under 5-Year Rule to Elect Life Expectancy Distributions. A Designated Beneficiary who is receiving payments under the 5-year rule may make a new election to receive payments under the life expectancy rule until December 31, 2003, provided that all amounts that would have been required to be distributed under the life expectancy rule for all Distribution Calendar Years before 2004 are distributed by the earlier of December 31, 2003 or the end of the 5-year period. C.5. Requirements For Minimum Distributions Where Member Dies Before Date Distributions Begin. (a) Member Survived by Designated Beneficiary. Except as otherwise provided, if the Member dies before the date distribution of his or her interest begins and there is a Designated Beneficiary, the Member's entire interest will be distributed, beginning no later than the time described in Section C.2(b)(i) or C.2(b)(ii), over the life of the Designated Beneficiary or over a period certain not exceeding: (i) unless the annuity starting date is before the first Distribution Calendar Year, the life expectancy of the Designated Beneficiary determined using the Beneficiary's age as of the Beneficiary's birthday in the calendar year immediately following the calendar year of the Member's death; or (ii) if the annuity starting date is before the first Distribution Calendar Year, the life expectancy of the Designated Beneficiary determined using the Beneficiary's age as of the Beneficiary's birthday in the calendar year that contains the annuity starting date. (b) No Designated Beneficiary. If the Member dies before the date distributions begin and there is no Designated Beneficiary as of September 30 of the year following the year of the Member's death, distribution of the Member's entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the Member's death. (c) Death of Surviving Spouse Before Distributions to Surviving Spouse Begin. If the Member dies before the date distribution of his or her interest begins, the Member's surviving spouse is the Member's sole Designated Beneficiary, and the surviving spouse dies before distributions to the surviving spouse begin, this Section C.5 will apply as if the surviving spouse were the Member, except that the time by which distributions must begin will be determined without regard to Section C.2(b)(i) . NB 1:574818.5 7 C.6. Definitions. (a) Designated Beneficiary. The individual who is designated as the Beneficiary consistent with the terms of the Plan and is the Designated Beneficiary under Section 401(a)(9) of the Code and Section 1.401(a)(9)-1, Q&A-4, of the Treasury Regulations. (b) Distribution Calendar Year. A calendar year for which a minimum distribution is required. For distributions beginning before the Member's death, the first Distribution Calendar Year is the calendar year immediately preceding the calendar year which contains the Member's Required Beginning Date. For distributions beginning after the Member's death, the first Distribution Calendar Year is the calendar year in which distributions are required to begin under Section C.2(b). (c) Life Expectancy. Life expectancy as computed by use of the Single Life Table in Section 1.401(a)(9)-9 of the Treasury Regulations. (d) Required Beginning Date. The April 1 of the calendar year following the later of either the calendar year in which the employee attains age 70V2 or the calendar year in which the employee retires." Executed this 5 day of /70-3 , 2003. City of La Quinta Y Name: Thomas P. Genovese Title: City Manager NB 1:574818.5 8