§ 62-162. Loans to participants.

(a)

Amount available. A participant who is an employee of the city may borrow, on written application to the plan administrator and on approval by the service provider under such uniform rules as the plan administrator shall adopt, an amount which, when added to the outstanding balance of any other loans to the participant from the plan and any qualified plan under section 401(a) maintained by the city does not exceed the lesser of:

(1)

Fifty percent of the participant's accounts; or

(2)

Fifty thousand dollars reduced by the amount, if any, by which the highest outstanding balance of loans from the plan during the one-year period ending on the day before the date on which the loan is made exceeds the outstanding balance of loans from the plan on the date on which such loan was made.

For purposes of the foregoing limit, all plans of the city shall be treated as a single plan to the extent required by section 72 of the code. The minimum amount of a loan made pursuant to this subsection (a) shall be $1,000.00.

(b)

Terms. In addition to such rules and regulations as the plan administrator may adopt, all loans shall comply with the following terms and conditions:

(1)

Application. An application for a loan by a participant shall be made in writing to the plan administrator, whose action in approving or disapproving the application shall be final.

(2)

Number of loans. No more than one loan may be made by the plan to a participant in any one-year period and no more than five loans may be outstanding at any time. No loan shall be approved if an existing loan from the plan to the participant is in default to any extent.

(3)

Note and security. Each loan shall be evidenced by a promissory note executed by the participant and delivered to the trust and shall be adequately secured.

(4)

Term. The period of repayment for any loan shall be arrived at by mutual agreement between the plan administrator and the participant, but that period shall not exceed five years unless the loan is to be used in conjunction with the purchase of the principal residence of the participant. If a participant enters the uniformed services of the United States and retains re-employment rights under law, repayments shall be suspended and interest shall cease to accrue during the period of leave, and the period of repayment shall be extended by the number of months of leave in the uniformed services. If a participant is on a city-approved, bona fide leave of absence without pay, loan payments may be suspended for the period of leave but not to exceed one year; however, the loan must be repaid by the original loan repayment date.

(5)

Interest rate. The interest rate to be charged on loans shall be determined at the time of the loan application and shall be a reasonable rate for loans which would be made under a methodology established by the plan administrator for similar circumstances. The interest rate so determined for purposes of the plan shall be fixed for the duration of each loan.

(6)

Repayment. Payments of principal and interest will be made by payroll deductions or in a manner agreed to by the participant and the plan administrator in periods of unpaid leave or former employees in substantially level amounts, but no less frequently than quarterly, sufficient to amortize the loan over the repayment period. Loan repayments shall be paid to the trust as soon as practicable but in no event later than the 15th business day of the month following the month in which such amounts would otherwise have been payable from payroll to the participant in cash.

(7)

Prepayment. The participant shall be permitted to repay the loan in full at any time prior to maturity, without penalty. Additionally, a participant may make a partial prepayment of the outstanding loan balance. However, such partial prepayments will not change the monthly payment.

(8)

Foreclosure. If a loan is not repaid in accordance with the terms contained in the promissory note and a default occurs, the plan may execute upon its security interest in the participant's account to satisfy the debt; however, the plan shall not levy against any portion of the loan account until such time as a distribution of the account could otherwise be made under the plan.

(9)

Other terms and conditions. The plan administrator shall fix such other terms and conditions of the loan as it deems necessary to comply with legal requirements, to maintain the status of the plan as an eligible deferred compensation plan under section 457(b) of the code, or to prevent the treatment of the loan for tax purposes as a distribution to the participant. The plan administrator, in its discretion for any reason, may establish other terms and conditions of the loan, not inconsistent with the provisions of this section. Any additional rules or restrictions as may be necessary to implement and administer the loan program shall be in writing and communicated to employees. Such further documentation is hereby incorporated into the plan by reference.

(c)

Participant loan accounts. Upon the service provider's determination of eligibility for plan loans pursuant to this section and the administrative committee rules, an amount not in excess of the loan shall be transferred from the participant's other investment funds, described in section 62-160(d) to the participant's loan account as of the accounting date immediately preceding the agreed upon date on which the loan is to be made. The assets of a participant's loan account may be invested and reinvested only in promissory notes received by the plan from the participant as consideration for a loan permitted by subsection (a) of this section of the plan or in cash. Un-invested cash balances in a participant's loan account shall not bear interest. No person who is otherwise a fiduciary of the plan shall be liable for any loss, or by reason of any breach, that results from the participant's exercise of such control.

(d)

Loans to former employees. To the extent required by law and under such rules as the plan administrator shall adopt, loans may also be made available on a reasonably equivalent basis to any beneficiary or former employee who maintains an account balance under the plan.

(Ord. No. 4319-11, § 1, 2-22-2011)