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HomeMy WebLinkAboutMINUTES - 05161989 - 1.37 TO: BOARD OF SUPERVISORS ��^^ � FROM: Harry D . Cisterman, Director of Personnel COrlt�`a1�3`7 - Costa DATE: May 2 , 1989 County SUBJECT: Amendment of 457 Deferred Compensation Plan SPECIFIC REQUEST(S) OR RECOMMENDATIONS) & BACKGROUND AND JUSTIFICATION Recommendation: Adopt amended County Deferred Compensation Plan, copy attached, established under Section 457 of the Internal Revenue Code. Background: The County's Deferred Compensation Progam requires plan amendments due to federal tax reform changes in the areas of mimimum retirement age, catch-up provisions, and payment options at retirement. Further, the plan requires an amendment to incorporate the Deferred Compensation Program as approved in Board Resolutions 87/687 and 88/407 (Compensation for County Officers and Management and Local 512, Social Service Staff Specialist Unit respectively). These amendments are necessary to allow The Hartford to administer the County's Deferred Compensation Plan in accordance with the regulations established under Section 457 of the Internal Revenue Code. Fiscal Impact: None PJ2:BO457 CONTINUED ON ATTACHMENT: YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S) ACTION OF BOARD ON MAY T 6 1989 APPROVED AS RECOMMENDED OTHER VOtE OF SUPERVISORS _L'_ UNANIMOUS (ABSENT ) I HEREBY CERTIFY THAT THIS IS A TRUE AYES: NOES: AND CORRECT COPY OF AN ACTION TAKEN ABSENT: ABSTAIN: AND ENTERED ON THE MINUTES OF THE BOARD i OF SUPERVISORS ON THE DATE SHOWN. originating dept : Personnel - Benefits Division I1�nv p �e gnon CC: County Administrator ATTESTED MAY 1 6 Iggq Auditor-Controller Phil Batchelor, Cterk of the Board(if County Counsel Supervisors and CountyAdmic`st;ator 83 . DEPUTY CONTRA COSTA COUNTY DEFERRED COMPENSATION PLAN Table of Contents Section1. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Section2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Section3. Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Section4. Investment Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Section5. Participant's Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Section6. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Section7. Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Section8. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Section 9. Plan-To-Plan Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Section10. Enrollment Periods . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 CONTRA COSTA COUNTY DEFERRED COMPENSATION PLAN SECTION 1. PURPOSE. This Deferred Compensation Plan is established as a part of the Deferred Compensation Plan of Contra Costa County, to encourage the acceptance and retention of offices and employments with the County by permitting County employees to defer a portion of their compensation in order to obtain certain income tax benefits, and to provide for certain retirement, disability, and death benefits, as permitted by Section 457 of the Internal Revenue Code (26 USC §457), and California Government Code Section 53213. SECTION 2. DEFINITIONS. 2.1 "Administrator" means County or its duly authorized designee for that purpose who shall exercise the discretion or other functions given to the Employer under the terms of the Plan. 2.2 "Beneficiary" means any person designated by the Participant to receive ' a pension, annuity, death benefit, or other benefit under the provisions of this Plan, by reason of such Participant's death. 2.3 "Compensation" means all wages, salaries, vacation pay, or sick leave pay for services rendered, without deduction for any portion thereof deferred under the provisions of this Plan or for any amounts contributed to a tax deferred annuity plan pursuant to IRC Section 403(A)(b). 2.4 "County" means the County of Contra Costa or any other governmental entity of which the Contra Costa County Board of Supervisors is the governing body. 2.5 "Deferred Retirement Date" means the date beyond the Normal Retirement -1- Date specified in 2.7 which is designated by the Participant. Such date shall not exceed the earlier of (i) the attainment of the Employer's mandatory retirement age or (ii) the date on which the Participant incurs a Termination of Employment, but under no circumstances shall be later than the date that the par- ticipant attains age 70k. 2.6 "Employee" means any officer, permanent full time, permanent part time, or project employee of the County, excluding independent contractors, whose compensation is fixed by the Board of Supervisors or pursuant to statute and who is paid by the County. 2.7 "Employer contribution" means a contribution authorized by Board resolution to be made by the County governed by the Board to the Plan and allocated to a Participant' s account pursuant to Section 3.10. 2.8 "Normal retirement age" means age 50, or that age between the ages of 50 and 70 designated by the participant for the purposes of this Plan. 2.9 "Participant" means any employee who enters into a Participant Agreement under this Plan. 2.10 "Participation Agreement" means the written contract by which an employee and the County agree that the employee shall become a Participant under this Plan and to defer a portion of the employee's compensation accordingly. 2.11 "Plan" means the Contra Costa County Deferred Compensation Plan expressed herein. 2.12 "Plan year" means calendar year. SECTION 3. PARTICIPATION. 3.1 Any employee may become a Participant under the Plan. The employee becomes a Participant upon the effective date of a Participation_. Agreement -2- between the employee and the County. The Participation Agreement shall include the Participant's designation of the method by which benefits under the Plan are to be paid, and the time when such payments shall begin. These designations shall become irrevocable 30 days after the Participant's separation from County service. 3.2 The effective date of the Participation Agreement or any modification thereof shall be the first day of the calendar month following acceptance by the County. No compensation other than for services provided on or after the effective date of the Participation Agreement shall be deferred under the Plan. 3.3 All the provisions of the Plan are incorporated by this reference into any Participation Agreement executed hereunder. 3.4 The Participation Agreement shall continue in full force and effect for the calendar year or portion thereof after its effective date, and from year to year thereafter until terminated. 3.5 The Participation Agreement shall specify the amount to be deferred under the Plan out of the compensation otherwise payable to the employee for each month's service. (1) The amount deferred shall not be less than $50 per month. (2) Except as provided in paragraph (3), the maximum that may be deferred for the taxable year, including any employer contributions pursuant to Section 3.10, shall not exceed the lesser of: (A) $7,500, or (B) 33 1/3 percent of the Employee's includible compensation; reduced by any amount excludable from the Employee's gross income from the taxable year under Section 403(b) of the Internal Revenue Code (public school employee annuities). For taxable years beginning on or after January 1, 1989 said $7,500 -limit shall be reduced by amounts deferred under, any qualified _cash -3- i or deferred arrangement (§ 401(k)) , Simplified Employer Plans, § 408(k)(6) , or § 501(c)(18) plans. The term "includible compensation" means compensation for services performed for the County which (taking into account Sections 457 and 403(b) of the Internal Revenue Code) is currently includible in gross income. The formula for computing maximum contributions is a reciprocal formula in which each dollar deferred reduces the compensation base from which the deferred amount is calculated. (3) For the last three taxable years ending before the Participant attains normal retirement age, the ceiling set forth in paragraph (2) shall be the lesser of -- (A) $15,000, reduced by any amount excludable from the Employee's gross income for the taxable year under Section 403(b) of the Internal Revenue Code, or (B) the sum of -- (i) the ceiling established for purposes of paragraph (2) for the taxable year (determined without regard to this paragraph) , plus (ii) so much of the ceiling established for purposes of paragraph (2) for taxable years before the taxable year as has not theretofore been used under paragraph (2) or this paragraph. 3.6 There shall be no deferral of compensation when the amount payable for a month's service less all other deductions, including advanced pay, is less than the amount specified to be deferred. 3.7 A Participant may modify the Participation Agreement as to the amount of monthly compensation to be deferred by filing a written direction with the County. Such modification may increase, decrease, or renew such deferral and is effective only as to compensation earned from the first day of the calendar month following filing of the written direction and acceptance by the County. -4- 3.8 Deferral of compensation under a Participation Agreement may be terminated by the County or the Participant, provided that the, terminating party gives written notice to the other party before the first day of the month in which such termination is to be effective and at least 15 days prior to such effective date; Termination has no effect respecting compensation deferred prior to the effective date thereof, or any debits or credits to the Participant's account which remains subject to payment only as provided in the Plan. Deferral of compensation shall terminate upon a Participant's separation from County service. 3.9 From time to time a Participant may designate a Beneficiary to receive any sums which may become payable under the Plan upon the death of the Participant. A Participant also may designate a Contingent Beneficiary, who shall be entitled to receive any sums payable upon the death of the Participant if the primary beneficiary does not survive the Participant. Any such designation shall be by a written instrument (including, but not limited to a Participation Agreement) filed by the Participant with the County. Any such designation may be modified by written instrument filed by the Participant with the County. In the absence of any effective designation or in the event of the death of all designated Beneficiaries, the Beneficiary shall be the estate of the Participant. 3.10 County Contribution. The Board of Supervisors may by resolution provide for the County to make contributions to the Plan allocated to the Participant account of designated employees. Such County contributions may be in such amounts and subject to such terms and conditions, including but not limited to, conditions affecting employee eligibility to receive County contributions and termination of County contributions, as determined by the Board in its sole discretion. SECTION 4. INVESTMENT FUND. - 4.1 The County shall establish and- maintain a fund as a convenient method of setting aside a portion of its assets, to provide a measure of the benefits to -5- which Participants may become entitled, and to meet its obligations under the Plan. This fund is referred to herein as the "Investment Fund". The assets of the Investment Fund shall be invested only in such investments as in the opinion of the County are allowed under the Constitution and statutes of the State of California. 4.2 As required by federal law the Investment Fund shall at all times remain a part of the general assets of the County and shall remain available for the payment of County debts. Neither the existence of the Plan nor of the Investment Fund shall be deemed to create a trust and the County shall at all times be the legal and beneficial owner of all assets of the Investment Fund. Neither the existence of the Plan nor of the Investment Fund shall entitle any Participant to any claim or lien against the assets of the Investment Fund. Participants and their beneficiaries shall have only the right to distribution in accordance with the provisions of the Plan. SECTION 5. PARTICIPANT'S ACCOUNT. 5.1 For the purpose of measuring and determining its obligations under the Plan to Participants and their beneficiaries, the County shall establish and maintain an account for every Participant. Each Participant Account shall be credited monthly with an amount equal to the deferred income of the Participant attributable to the preceding month. Each Participant Account shall further be credited or debited, as the case may be, quarterly, with an amount equal to the Investment Fund earnings, gains, losses, penalties and expenses for the preceding calendar quarter attributable to that undivided portion of the Investment Fund reflected by the average daily balance in the Participant Account for such quarter. The end of each calendar quarter as to which Participant Accounts are so adjusted is the "valuation date" of such Participant Accounts. 5.2 Without regard to the amount of compensation deferred by a Participant, the County's obligations to the Participant or beneficiary thereof are limited to an amount equal to the balance in the Participant's Account upon the valuation date coinciding with or next preceding the occurrence. of the condition giving -6- rise to a right to distribution, plus earnings or gains and less losses, pena- lties and expenses attributed thereto until the balance is paid in full . It is a condition of this Plan that the County is not subject to any liability to any Participant or beneficiary thereof on account of any losses, penalties or expenses incurred by the Investment Fund and charged to the Participant's Account or for any failure of the Investment Fund to obtain earnings or gains. In con- sideration of these conditions, the Participant and beneficiary will have credited to the Participant's Account, an amount equal to the Investment fund net earnings or gains for the preceding calendar quarter, if any, attributable to that undivided portion of the Investment Fund reflected by the average daily balance of the Participant' s Account for such quarter. SECTION 6. DISTRIBUTIONS. 6.1 Participants and their beneficiaries are entitled to distribution by the County subject to the conditions contained in the Plan. The amounts payable shall be equal in dollar value to the amount stated in the Participant's account upon the valuation date coinciding with or next preceding the commencement of distribution; together with such income and subject to such losses and expenses as may be attributable to such account thereafter, less any payments or settle- ments hereunder. All payments shall be subject to any State or Federal taxes required to be withheld. Distribution otherwise authorized shall commence not later than 90 days after written demand, but in any event not later than the later of: (a) 60 days after the close of the plan year in which the participant or former participant attains (or would have attained) normal retirement age; or (b) 60 days after the close of the plan year in which the participant separates from service, dies, or becomes disabled; and (c) after December 31, 1988, in no event shall distributions commence later than April 1st of the calendar year following the calendar year in which :theparticipant attains age 70k. -7- 6.2 The following conditions give rise to a right to distribution: (a) Participant's separation from County service; or (b) Until 30 days after separation a Participant may elect to postpone the distribution of his interest under the plan to a date specified by such Participant, provided that such specified date is not later than 60 days after the close of the calendar year in which the Participant will attain normal retirement age. A Participant who defers distribution of his interest under the plan also may elect that if such Participant dies or becomes disabled prior to the deferred distribution date he has elected, the Participant's interest in the plan shall commence to be paid after determination of death or disability by the County. 6.3 Unless a terminated Participant's interest in the Plan is automatically transferred to another plan in accordance with Section 9, a Participant may designate the method of distribution of his interest under the plan, provided that the method of payment is one of the following methods: (a) A single lump sum payment; (b) Consecutive monthly payments over a period certain not extending beyond the life expectancy of the Participant or the joint life and last survivor expectancy of the Participant and his beneficiary (such life expectancy to be determined as of the date of separation from County service); provided that if the beneficiary is not the participant's surviving spouse, the balance remaining of the participant's interest less all payments made, 15 years after the participant's death, shall be paid to the beneficiary in a lump sum; and further provided that no period certain may be selected which would result in an an- ticipated amount being paid to the Participant (based on the expected return multiple described in Treas. Reg. §1.72-9 as of the commencement of payments) which would be less than 1/2 (2/3 after December 31, 1988) of the maximum that could have been payable to the -Participant if no provision were made for payment -8- to a beneficiary. Subject to the foregoing, the following installment payment options may be selected by Participant. Option 1. Payments for a specified period. Amounts payable in equal installments over a period of three (3) to thirty (30) years. Option 2. Life annuity. An annuity payable during the life-time of the Participant or his Beneficiary if this option is selected under Section 3.9. Option 3. Life. annuity with period certain guaranteed. An annuity payable during the lifetime of the Participant, or his Beneficiary, if this option is selected under Section 3.9 with the guarantee that if at his death payments have not been made for the guaranteed period as elected, payments will continue to the Beneficiary. The guaranteed period to be elected must be either ten (10) , fifteen (15) , or twenty (20) years. Option 4. Joint and survivor annuity. An annuity payment during the lifetime of the Participant and a secondary payee named by the Participant. Option 5. Unit Refund Life Annuity. An annuity payment during the lifetime of the Participant. Upon death of the Participant, a lump sum will be paid to his named Beneficiary for an amount equal to: the original balance of the Participant's account when the annuity commenced, less the amount of annuity payments already paid to the Participant. Option 6. Freeze. Notwithstanding any provisions of this Section, a terminating employee may elect to leave the funds, assets, and any accumulations in his Participant Account until such time as he would otherwise receive the benefits in accordance with his stated preference as provided in this Plan. (c) A combination of the methods specified under Options 1-6 above. 6.4 Upon the death of a Participant, and subject to Section 6.5, the County shall pay his beneficiary in the manner stated in the Participation Agreement. 6.5 Other payments: (a) If a Participant fails to designate a method of distribution, payment of the Participant's entire interest under the Plan shall be made in a single lump sum within 60 days after the close of the Plan year in which the Participant separates from service. (b) Notwithstanding any other provisions of the Plan, the County, in its discretion, may at any time discharge in full its obligations under the Plan to any Participant by distributing to the Participant, or following the death of the Participant by distributing to his Beneficiary, a sum equal to the amount stated in the Participant's account record upon the next preceding valuation date. (c) Notwithstanding a Participant's designation of the method by which distributions under the Plan are to be paid or of the time when such payments shall begin, the County, in its discretion for the purpose of enforcing requirements of the Plan, the Internal Revenue Code, or the regulations of the Internal Revenue Service, may determine the method by which distributions under the Plan are to be paid and the time when such payments shall begin and end. 6.6 Emergency withdrawals: In cases of financial hardship resulting from unforeseeable emergency, a Participant may request withdrawal not exceeding an amount necessary to meet the financial emergency, regardless of whether payments have commenced under the plan, without regard to his entitlement to distribution hereunder. An unforeseeable emergency is defined as severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent of the Participant, loss of the Participant's property due_ to casualty or other similar extraordinary . and . unforeseeable -10- circumstances arising as a result of events beyond the control of the Participant. The circumstances that will constitute an unforeseeable emergency will depend upon the facts of each case, but in any case payment may not be made to the extent that such hardship is or may be relieved: (a) Through reimbursement or compensation by insurance or otherwise, (b) By liquidation of the participant's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or (c) By cessation of deferrals under the plan. Examples of what are not considered to be unforeseeable emergencies include the need to send a participant's child to college or the desire to purchase a home. The County Administrator or his designee shall determine whether the conditions for an emergency withdrawal are met. If the Administrator gives written approval to an emergency withdrawal he shall authorize a lump sum payment to the Participant limited to that amount necessary to meet the financial emergency but not exceeding the amount stated in the Participant's Account on the date of the Administrator's determination, and the amount stated in the Par- ticipant's Account shall be reduced accordingly. 6.7 Where payments are authorized in monthly installments, the County Administrator or his designee shall determine the amount of said installments and the basis on which they are determined including the maximum period for which they may be allowed. Such monthly installments may be measured by and equal to the sum of any amounts obtainable by the County through any method of monthly settlement available on a sum equal to the amount payable, provided that the maximum period of such payments shall be the same both for women and for men of _.. equal ages. The Coun.ty_.may segregate such amount in _a separate interest bearing - -11- account determined by the County. 6.8 Notwithstanding any other provisions of the Plan, the County may require any Participant or Beneficiary to submit an application or claim for distribution to the County in form satisfactory to the County, prior to the commencement of any payments to any such person: SECTION 7. ADMINISTRATION. 7.1 The County Administrator may promulgate regulations which shall govern the interpretation and administration of the Plan. 7.2 Differences of opinion concerning .the rights and duties of participants, beneficiaries, or the County, under the Plan, including its interpretation and administration, shall be determined after hearing by the County Administrator and such decision shall be final . 7.3 Investments: Any or all amounts in the Investment Fund may be paid over and delivered to a bank, trust company, savings and loan association, or other institution for investment in any manner permitted by Government Code §53609. Any agreement for such investments shall provide; but need not be limited to, the following: (a) That the County shall remain the legal and beneficial owner of all amounts delivered and any gains or earnings thereon and neither the existence of the Plan nor the investment fund shall be deemed to create a trust or limit use by the County of the funds therein for general County purposes. (b) That the institution shall hold all certificates, annuity policies and other documents evidencing ownership of such Investment Fund assets and shall maintain such records, including the account record of each Participant, as may be agreed upon from time to time by the institution and the County. -12- (c) That no less frequently than annually, the institution shall furnish the County with written reports showing the amounts in the Investment Fund and the balance in each Participant's Account. 7.4 Expenses attributable to investment of all or any part of the Investment Fund, and from and after January 1 , 1982, all County expenses attributable to administration of the Plan, shall be charged to the Investment Fund and shall be taken into account quarterly in determining the Fund's earnings, gains and losses. SECTION 8. MISCELLANEOUS. 8.1 Each Participant shall be deemed to have assented to all of the terms and conditions of the Plan. No Participant or beneficiary may sell , transfer, assign, hypothecate, or otherwise dispose of all or any part of his rights under the Plan, and any attempt to do so shall be void. 8.2 This Plan may be amended or terminated by the County at any time. No amendment or termination of the Plan shall reduce or impair the rights of any Participant or Beneficiary which have already accrued. Upon termination of the Plan, the County may make payments to Participants or Beneficiaries equal to all amounts payable, under such part of Section 6 as the County may elect. 8.3 This Plan shall not be construed directly or indirectly as giving any Participant any right to continue his employment with the County or any other right or cause of action in law or equity against the County, except with respect to distributions expressly provided for herein. 8.4 The plan shall be binding upon and shall inure to the benefit of the County, its successors and assigns, all Participants and Beneficiaries and their heirs, successors and legal representatives. 8.5 Any notice or other communication required or permitted under the Plan shall be. in writing, and if directed to the County shall be sent to the County -13- Administrator and if directed to a Participant or to a Beneficiary shall be sent to such Participant or Beneficiary at his last known address as it appears on the records of the County Director of Personnel. 8.6 Deductions for employee contributions to retirement associations and for Federal Insurance Contribution Act (Social Security) purposes shall be made without reference to compensation deferred pursuant to this Plan. Salary serving as basis for computation of retirement benefits shall be that salary due before deduction of any deferred compensation, as determined by the County Employees Retirement Law of 1937, as amended. 8.7 The County does not warrant any tax benefit nor any financial benefit under the Plan, or the financial soundness of any investment including custodial accounts. Without limitation to the foregoing, the County and its officers, employees and agents shall be held harmless by the Participant and any beneficiary from, and shall not be subject to any liability on account of, the Federal or State tax consequences, or any other consequences of any determination as to the amount of compensation to be deferred, the method by which distribu- tions under the Plan are paid, the persons to whom such distributions are paid, the amount of distributions paid, or the commencement or termination of distribution. 8.8 The County, its officers, employees, and agents shall be held harmless by the Participant and any Beneficiary from, and shall not be subject to any liability hereunder, for all acts performed in good faith. 8.9 This Plan and any Participant Agreement hereunder are entered into in the County of Contra Costa and are subject to the laws of the State of California. 8.10 Amendment. This Plan is intended to comply, and shall be construed in accordance with Section 457 of the Internal Revenue Code. The County shall have the right to amend the Plan to the extent that may be desirable or necessary to conform the Plan-to -the re.quirements of Section 457 -of the Internal Revenue Code -14- and any other applicable law, regulation or ruling, including amendments that are retroactive to the effective date of the Plan. SECTION 9. PLAN-TO-PLAN TRANSFERS. 9.1. A Participant's interest will automatically be transferred to another deferred compensation plan upon occurrence of the following conditions: (a) The Participant separates from County service. (b) The Participant accept employment with a qualified entity within the State of California. (c) The transferee entity has adopted an eligible deferred compensation plan under Section 457 of the Internal Revenue Code which provides for the acceptance of transfers of deferred compensation from other eligible plans. (d) The Participant becomes a Participant . under the deferred compensation plan of the transferee entity. (e) The Participant requests transfer of his interest in the Plan to the plan of his new employer. 9.2 Transfer of a Participant's interest to another deferred compensation plan terminates all rights of the Participant and of any beneficiary of a Participant under this Plan. 9.3 As part of this Plan, Contra Costa County will accept transfers of amounts from other eligible deferred compensation plans, subject to the terms and conditions of this Plan, upon the execution of a Participation Agreement by the transfer Participant. Such transferred amounts shall be merged with the investment fund and an account for the transfer Participant shall be credited with an amount equal. to the transferred amount. -15- 4 ' SECTION 10. ENROLLMENT PERIODS. : 10.1 When the Plan is first made available, an Employee shall have thirty (30) days from the date participation in the Plan is offered to him to effect an election to participate. Such election shall be effective only for pay periods commencing in the month subsequent to the month in which an Employee makes the election to participate in the Plan. 10.2 Any person who becomes an Employee after this Pian is first made available shall have the option, within thirty (30) days after becoming an employee, to effect an initial election to participate in the Plan. Such election shall only be effective for pay periods commencing in the month subsequent to the month in which an Employee makes the election to participate in the Plan. 10.3 Any Employee who does not file an initial election, pursuant to 10.1 or 10.2 shall have the right to elect participation during enrollment periods which will be held monthly with respect to compensation not yet earned. Such election shall be effective only for pay periods commencing in the month following the month in which the Employee makes the election to participate in the Plan. -16-