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HomeMy WebLinkAbout~Master - Agreement for filing for Private Letter Ruling for Utility Retirement Fund RESOLUTION NO. 02-563 RESOLUTION AUTHORIZING DIRECTOR OF FINANCE TO ENTER INTO AN AGREEMENT WITH DELOITTE AND TOUCHE TO FILE FOR A PRIVATE LETTER RULING FOR THE CITY OF AMES WHEREAS, when the City's Utility Retirement System was converted to a defined contribution plan in 1997,the City purchased annuity contracts from the Principal Financial Group to fund the outstanding pension benefits for retired employees; and, WHEREAS, in 2001, the Principal Group converted from a mutual holding company to a publicly traded stock company in a process referred to as demutualization; and, WHEREAS, when the demutualization was finalized, the City received 17,507 shares of stock, however, since the City may not hold equities, the stock was sold and the City received proceeds of$361,860; and, WHEREAS, the City Council directed the Director of Finance and the City Treasurer to engage a pension attorney to review the distribution options and the effect on the qualified status of the plan; and, WHEREAS, the firm of Deloitte and Touche was engaged to look at options and then presented same to the Utility Retirement Advisory Board; and, WHEREAS,the Utility Retirement Board recommended that the funds be distributed to the active members as of September 30, 1997,using the original distribution formula,however,the City Attorney indicated that he would not recommend that unless it was done by a method that would provide assurance that the qualified tax status of the plan would not be placed at risk; and, WHEREAS,Deloitte and Touche was asked to provide a proposal for distribution that will provide assurance that the tax status of the plan would not be affected; and, WHEREAS, Deloitte and Touche advised that the City will need to file for a Private Letter Ruling and receive prior approval from the Internal Revenue Service; and, WHEREAS,the City has received an engagement letter from Deloitte and Touche outlining the process and the costs to proceed with the distribution,which will be approximately$40,000 plus expenses; and, WHEREAS,the Utility Retirement Advisory Board recommended that the City engage the firm of Deloitte and Touche to proceed with the necessary steps to complete the distribution by a method that will not place the qualified tax status of the plan at risk,at a cost not to exceed$40,000 plus expenses (to be deducted from the proceeds). NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Ames, Iowa, that the Director of Finance is hereby authorized to enter into an agreement with Deloitte and Touche,at a cost not to exceed$40,000 plus expenses,to file for a Private Letter Ruling and possible plan amendments with the IRS, and to provide any additional services related to the distribution of Principal Financial stock sale proceeds,with the costs to be deducted from the stock sale proceeds. ADOPTED THIS 22nd day of October, 2002. Diane R. Voss, City Clerk Ted Tedesco,Mayor Introduced by: Cross Seconded by: Goodhue Voting aye: Cross, Goodhue, Hoffman, Quirmbach, Vegge, Wirth Voting nay: None Absent: None Resolution declared adopted and signed by the Mayor this 22nd of October, 2002.