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(a) Establishment of trust. A trust is established as part of the deferred compensation plan for the benefit of participants in the plan.
(b) Trust fund. All of the money and property, all investments made with that money and property, and all earnings, profits, increments, and other additions, less payments previously made by the Board are the deferred compensation plan trust fund.
(c) Trust fund management and legal title. The Board is responsible for managing the trust fund according to this Article. The Board has legal title to all cash and other property of the deferred compensation plan, but may transfer some incidents of ownership to the Board’s agents as provided in this Article.
(d) Exclusive benefit. The deferred compensation plan trust fund must be held for the exclusive benefit of participants and their beneficiaries, and used only to provide benefits and defray the reasonable expenses of administering the plan. Trust fund assets must not revert to the County, unless allowed under Section 457 of the Internal Revenue Code. (1998 L.M.C., ch. 23, § 1.)
Editor’s note—See County Attorney Opinion dated 7/3/00 explaining that temporary employees may participate in the County deferred compensation plan. See County Attorney Opinion dated 1/7/98 discussing the parameters within which the Board of Investment Trustees may disclose certain employee data to companies providing deferred compensation plans.
Section 2 of 1998 L.M.C., ch. 23, reads as follows: "The powers and duties of the Board of Investment Trustees regarding the Deferred Compensation Plan of Montgomery County trust take effect when all trustees accept the trust agreement in writing."
(a) General.
(1) The Board has the exclusive authority to manage the assets of the deferred compensation plan. All powers and duties required for the management of the plan trust fund are vested in the Board of Investment Trustees.
(3) Chapter 11B does not apply to the procurement of goods and services for the deferred compensation plan by the Board.
(b) Duties. The Board must:
(1) develop record keeping procedures to maintain and report on participant account balances;
(2) designate appropriate investment options to be offered to participants;
(3) designate a method of accounting for investments;
(4) designate methods of making distributions of participant account balances;
(5) make distributions to participants, former participants, or their designated beneficiaries after the Chief Administrative Officer authorizes the benefits; and
(6) incur and pay expenses to carry out the Board's responsibilities under the plan.
(c) Agents for transfer of property.
(1) The Board may register any assets in its own name or in the name of a nominee. The Board may hold any assets in bearer form. The Board or its agent must keep records that show that the investments are part of the trust fund.
(2) The Board may form a partnership under State law to hold or transfer assets as the nominee of the Board.
(3) The Board may designate in writing a trustee or trustees to hold or transfer assets as a nominee of the Board.
(4) The Board must provide that trustees or a partnership that the Board designates must act only as agents of the Board. The Board may set other conditions that the Board considers prudent.
(5) The trustees or a partnership that the Board designates may retain the services of a bank or other financial institution to conduct required business.
(d) Authorized investments.
(1) The Board must invest each participant's account in one or more of the Board-designated investment options in the manner directed by the participant.
(2) The Board may select or remove any investment options for the deferred compensation plan that the Board finds prudent under the policies set by the Board.
(3) If an investment through any combined, common, or commingled trust fund exists, the declaration of trust of that fund is a part of the deferred compensation plan trust.
(e) Trustee powers. Except as otherwise provided in this Article, the Board may:
(1) with any cash, purchase or subscribe for any investment, at a premium or discount, and retain the investment;
(2) sell, exchange, convey, transfer, lease for any period, pledge, mortgage, grant options, contract with respect to, or otherwise encumber or dispose, at public or private sale, for cash or credit or both, any part of the deferred compensation plan;
(3) subject to Section 33-61A(h)(2), sue, defend, compromise, arbitrate, compound and settle any debt, obligation, claim, suit, or legal proceeding involving the deferred compensation plan, and reduce the rate of interest on, extent or otherwise modify, foreclose upon default or otherwise enforce any debt, obligation, or claim;
(4) retain uninvested a part of the deferred compensation plan trust assets in preparation for initial investment of deferred compensation amounts or for the payment of distributions;
(5) exercise any option on any investment for conversion into another investment, exercise any rights to subscribe for additional investments, and make all necessary payments;
(6) join in, consent to, dissent from, oppose, or deposit in connection with the reorganization, recapitalization, consolidation, sale, merger, foreclosure, or readjustment of the finances of any corporation or property in which the assets of the deferred compensation plan are invested, or the sale, mortgage, pledge or lease of that property or the property of any such corporation upon such terms and conditions that the Board considers prudent; exercise any options, make any agreements or subscriptions, pay any expenses, assessments, or subscriptions, and take any other action in connection with these transactions that the Board considers prudent; and accept and hold any investment that may be issued in or as a result of any such proceeding;
(7) vote, in person or by any proxy, at any election of any corporation in whose stock the assets of the deferred compensation plan are invested, and exercise, personally or by any power of attorney, any right appurtenant to any investment held in the deferred compensation plan; and give general or specific proxies or powers of attorney with or without power of substitution;
(8) sell at a public or private sale, enter into an option to sell, mortgage, lease, partition, or exchange any real property at prices and for terms that the Board considers prudent. The Board may execute and deliver deeds of conveyance and all assignments, transfers, and other legal instruments for passing the ownership to the purchaser, free and discharge of all liens;
(9) renew or extend any mortgage, upon such terms that the Board considers prudent, and increase or reduce the rate of interest on any mortgage or modify the terms of any mortgage or of any guarantee as the Board considers prudent to protect the deferred compensation plan or preserve the value of the investment; waive any default or enforce any default in a manner that the Board considers prudent; exercise and enforce any right of foreclosure, bid on property in foreclosure, take a deed in lieu of foreclosure with or without paying a consideration, and release the obligation on the bond secured by the mortgage; and exercise and enforce in any action, suit or proceeding at law or in equity any rights or remedies in respect to any mortgages or guarantee;
(10) incur and pay expenses for agents, financial advisors, actuaries, accountants and counsel, if those expenses are incurred solely to perform the Board's duties under the deferred compensation plan;
(11) borrow, raise or lend moneys, for the purpose of the deferred compensation plan, in such amounts and upon such terms and conditions as the Board in its discretion considers prudent; for any money borrowed, issue a promissory note and secure the repayment of this note by pledging or mortgaging all or any part of the deferred compensation plan;
(12) hold, buy, transfer, surrender, and exercise all other incidents of ownership of any annuity contract;
(13) if payments to a participant or beneficiary are to be made in the form of an annuity based on one or more lives or life expectancies, buy from any legal reserve life insurance company a single premium, nontransferable annuity contract providing for the payment of the benefits;
(14) pool all or any of the assets of the deferred compensation plan trust with assets belonging to any other retirement plan trust or retiree health benefit trust created by the County, including any subtrust thereof. The Board may commingle the assets and make joint or common investments and carry joint accounts on behalf of the deferred compensation plan trust and one or more other trusts, or subtrusts, allocating undivided shares or interests in the investments or accounts, or in any pooled assets, to the trusts or subtrusts, according to the trusts’ respective interests. Any such trusts or subtrusts may be unitized for investment purposes. The Board may, subject to its fiduciary duties, offer units of such pooled trust or subtrust as an investment option. Consistent with its investment authority in this Article, the Board, or its delegate, also may buy or sell any assets or undivided interests in any trust where the assets of the deferred compensation plan trust are pooled at the prices or valuations that the Board or its delegate may determine in reasonable good faith. For the avoidance of doubt, the Board must determine that it is consistent with its fiduciary duties to participate in a pooled investment that permits the purchase or sale of its units as an investment option under another retirement plan or retiree health benefit trust created by the County; and
(15) do all acts that the Board considers necessary and exercise the powers of this Article to manage the deferred compensation plan trust. The Board may exercise all powers to manage the assets that an individual could exercise to manage property owned by the individual, except for making an individual investment selection.
(f) Prohibited transactions. The Board must not engage in any direct or indirect transaction between the trust and the County, or any entity controlled by the County, that would violate the prudent person rule (Section 33-61C) or result in the diversion of trust income or corpus in violation of the exclusive benefit rule (Section 33-144(d)). For avoidance of doubt, such a transaction does not include a transfer conducted on the terms described in Section 33-170(i) between employee benefit plan trusts or a subtrust.
(g) The Board must monitor the performance of each investment option. Monitoring may include any tests or analyses that the Board finds prudent.
(h) Payments. The Board must pay all benefits and expenses of the deferred compensation plan as directed by the Chief Administrative Officer. The Board may pay expenses incurred under paragraph (e)(10) without direction by the CAO.
(i) Benefit recipients. The Board may rely on the decision of the Chief Administrative Officer to identify the proper recipient of benefit payments.
(j) Delegation of duties. The Board may delegate its duties to the Executive Director or a similarly situated County employee as it deems appropriate and consistent with its fiduciary duties in a written policy and procedure. If the Board has prudently delegated its duties and monitored the delegation, the trustees must not be liable for an act or omission made by its delegate. (1995 L.M.C., ch. 8, § 1; 1998 L.M.C., ch. 23, § 1; 2010 L.M.C., ch. 56, § 1; 2012 L.M.C., ch. 21, § 1; 2014 L.M.C., ch. 3, § 1; 2017 L.M.C., ch. 14, §1; 2021 L.M.C., ch. 16, §1.)
Editor’s note—See County Attorney Opinion dated 1/7/98 discussing the parameters within which the Board of Investment Trustees may disclose certain employee data to companies providing deferred compensation plans.
Section 2 of 1998 L.M.C., ch. 23, reads as follows: "The powers and duties of the Board of Investment Trustees regarding the Deferred Compensation Plan of Montgomery County trust take effect when all trustees accept the trust agreement in writing."
(a) Right to amend. The County reserves the right to amend the deferred compensation plan at any time for any reason.
(b) Qualification amendments. The deferred compensation plan and any related trust agreement, investment advisory agreement, custodial agreement, annuity contract, or similar agreement may be amended at any time, either prospectively or retroactively, to conform to the Internal Revenue Code.
(c) Termination of the deferred compensation plan. The County has established the deferred compensation plan expecting to continue the plan indefinitely, but the County may terminate the plan. Any transfer of assets resulting from the termination must comply with the Internal Revenue Code.
(d) Termination of participation by a participating agency. If a participating agency decides to stop participating in the deferred compensation plan, the agency must notify the Chief Administrative Officer in writing. The Chief Administrative Officer and the agency must agree on a date for ending the agency’s participation. Any transfer of assets resulting from the termination must comply with the Internal Revenue Code. (1998 L.M.C., ch. 23, § 1.)
Editor’s noteSection 2 of 1998 L.M.C., ch. 23, reads as follows: "The powers and duties of the Board of Investment Trustees regarding the Deferred Compensation Plan of Montgomery County trust take effect when all trustees accept the trust agreement in writing."
(a) Exemption from execution, garnishment, or attachment. The right of a participant in that participant’s account balances or any other right or benefit under this Article are not subject to execution, garnishment, attachment, or any other process, and are not assignable, except under an order that qualifies as a domestic relations order under the Internal Revenue Code and meets plan requirements. The Chief Administrative Officer must establish procedures to determine whether the domestic relations order is qualified and must determine the manner and timing of distributions required under the order.
(b) Protection against fraud. A person must not knowingly make a false statement or falsify or allow another to falsify a record of the deferred compensation plan to defraud the plan. A violation of this subsection is a class A violation.
(c) Error in records, repayment, and waiver.
(1) If a change or error in the records results in any participant or beneficiary receiving from the deferred compensation plan more or less than the participant or beneficiary is entitled to receive, the error must be corrected. The payment must be adjusted to pay the correct amount. The Chief Administrative Officer must establish by regulation under method (1) reasonable procedures to correct an error, consistent with plan requirements.
(2) The plan must pay the participant or beneficiary for any underpayment. Except as provided in paragraph (3), a participant or beneficiary who receives excess payments must repay the plan.
(3) The Chief Administrative Officer must establish by regulation under method (1) procedures to waive repayment by a participant or beneficiary who the Chief Administrative Officer determines is without fault when repayment would be against equity and good conscience. The procedure must require the participant or beneficiary to apply for a waiver within 30 days after receiving actual notice of the overpayment and demand for repayment. The notice must inform the recipient about the waiver procedure. The Chief Administrative Officer must waive repayment of an overpayment that the plan made more than 3 years before notifying the participant or beneficiary about the overpayment. If the Chief Administrative Officer waives repayment, the CAO must repay the plan for the overpayment from a source that does not reduce the assets held in trust for other participants and beneficiaries.
(d) Payment of expenses. The County may contribute to the trust to cover operating expenses of the deferred compensation plan. The Board must pay operating expenses of the plan from plan assets or from County assets, as directed by the Chief Administrative Officer. A participating agency must pay the agency’s share of the operating expenses attributable to the participation of the agency’s employees. (1998 L.M.C., ch. 23, § 1; 2001 L.M.C., ch. 28, §§ 8, 15 and 16.)
Editor’s noteThe effective date of the amendments made to this section by 2001 L.M.C., ch. 28, § 8, is the same effective date as 1998 L.M.C., ch. 23, § 1.
1998 L.M.C., ch. 23, § 2, states: The powers and duties of the Board of Investment Trustees regarding the Deferred Compensation Plan of Montgomery County trust take effect when all trustees accept the trust agreement in writing.
The County may establish and maintain one or more additional deferred compensation plans for employees covered by a collective bargaining agreement. In the case of any collectively bargained plan:
(a) The certified representative must assume the duties and responsibilities of the Board, except for the requirements of Section 33-61(a), and the certified representative must assume the duties and responsibilities of the Chief Administrative Officer and the County under this Article.
(b) The Board, Chief Administrative Officer, and County have no fiduciary or other responsibility for a collectively bargained plan except as required by federal law, including any regulation, ruling, or other guidance issued under that law.
(c) The certified representative must indemnify the County and provide fiduciary liability insurance protecting itself and the County in an amount agreed to by the County and certified representative through collective bargaining.
(d) The officers of the certified representative who have direct responsibility for plan administration, and the trustees of any trust established under this Section, must:
(1) provide financial disclosure to the participants of the plan in a form and manner at least as stringent as that required of the Board; and
(2) establish and conform to a code of ethical conduct, approved by participants in the plan, at least as stringent as that required of the Board.
(e) The collectively bargained plan, and its separate trust, custodial account or annuity contract, must meet, in form and operation, all applicable requirements of the Internal Revenue Code and any regulation, ruling, or other guidance issued under that law.
(f) Any trustee or fiduciary of a collectively bargained plan must not accept any direct or indirect compensation from any person who does business with that plan. (2004 L.M.C., ch. 30, § 1.)
To comply with Section 315 of the County Charter, a firm of certified public accountants, under contract with the Council, must complete an annual independent audit of the County Plan and each Collectively Bargained Plan established and maintained by the County. The complete audit must be filed with the Council, and copies made available for public inspection. (2009 L.M.C., ch. 31, § 1.)
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