ESSENTIAL GOVERNMENT FUNCTION IRREVOCABLE TRUST AGREEMENT
FOR
TREDYFFRIN TOWNSHIP
This Essential Government Function Irrevocable Trust Agreement (“Trust Agreement”) is made
by and between Tredyffrin Township (“Employer”) and Warren Hyams, Richard Veith and Bert
Dalby as trustees (“Trustees”) to provide post-retirement life and medical benefits to eligible
employees and eligible retirees, and their spouses, dependents and beneficiaries.
RECITALS
WHEREAS, the Employer is a political subdivision of the Commonwealth of
Pennsylvania exempt from federal income tax under the Internal Revenue Code of 1986, as
amended (the “Code”); and
WHEREAS, the Employer provides eligible employees and eligible retirees, as such
individuals are defined under the applicable collective bargaining agreement(s), Tredyffrin
Township Employee Handbook(s) and insurance plan document(s) identified in Exhibit A hereto,
as such Exhibit may be amended from time to time, (hereinafter referred to as "Participants"),
and their Spouses, Dependents and Beneficiaries, with post-retirement life and medical
benefits, through insurance or otherwise, in accordance with such collective bargaining
agreement(s), Tredyffrin Township Employee Handbook(s) and insurance plan document(s)
(individually or collectively, the “Plan”); and
WHEREAS, the Employer seeks to accumulate assets in this Trust to fund the long-term
obligations of the Employer for post-retirement life and medical benefits under the Plan; and
WHEREAS, the Employer hereby declares that an essential governmental function and
integral part of its exempt activities is to assist Participants, their Spouses, Dependents and
Beneficiaries by making contributions to, and accumulating assets in, this Trust, a segregated
fund, to fund the long-term post-retirement life and medical benefits obligations of the Employer
under the Plan; and
WHEREAS, the Employer intends that the income accruing on contributions made by
the Employer to the Trust is exempt from federal income tax pursuant to Section 115 of the
Code; and
WHEREAS, the Employer intends that contributions to, and benefit payments from, the
Trust on behalf of Participants, their Spouses, Dependents and Beneficiaries will not be
includable in the income of such individuals pursuant to Sections 106 and 105(b) of the Code;
and
WHEREAS, the authority to conduct the general operation and administration of the
Plan is vested in the Employer, and the Employer has the authority to enter into and shall be
subject to the duties and responsibilities set forth in this Trust Agreement;
NOW, THEREFORE, the parties agree as follows:
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ARTICLE 1
Definitions
1.1
Definitions. For the purposes of this Trust Agreement, the following terms shall have the
meanings set forth below, unless otherwise expressly provided.
(a)
“Beneficiary” means the Spouse, Dependents, person and/or persons, as
applicable, designated by a Participant pursuant to the terms of the Plan, who will
receive benefits payable in the event of the Participant’s death.
(b)
"Board of Supervisors" means the Board of Supervisors of Tredyffrin
Township.
(c)
“Dependent” means an individual who is a person described as such in the
applicable collective bargaining agreement(s), Tredyffrin Township Employee
Handbook(s) or insurance plan document(s).
(d)
“Funding Vehicles” means one or more investments selected by the Trustees
pursuant to their approved investment plan.
(e)
“Spouse” means the Participant’s lawful spouse as determined under the laws
of the state in which the Participant has his or her primary place of residence and
the terms of the Plan.
(f)
“Trust” or “Trust Fund” means those assets, described in Article 2.1 of this
Trust Agreement, held by the Trustees at any time pursuant to this Trust
Agreement.
ARTICLE 2
Establishment of the Trust
2.1.
The Trust is hereby irrevocably established as of _______________ ___, 20___ for the
exclusive benefit of Participants, and their Spouses, Dependents and Beneficiaries. The
Trust Fund shall consist of the Funding Vehicles, any cash received by the Trustees, any
other assets held pursuant to the terms of this Trust Agreement, and any increments to
the above assets.
The Trust is intended to be a separate trust to accommodate advance funding of other
post-employment benefits (“OPEB”) as described in Government Accounting Standards
Board Statements Nos. 43 and 45 (“GASB 43 and 45”), as amended or superseded.
Accordingly, as provided in this Trust Agreement, the assets of the Trust Fund are
dedicated to providing benefits to Participants, their Spouses, Dependents and
Beneficiaries and are legally protected from creditors of the Employer and Plan
administrator. The terms of this Trust Agreement shall be interpreted in a manner that
permits the Employer to use a discount rate based on the expected investment return of
the Trust Fund for purposes of determining OPEB liabilities under GASB 43 and 45.
2.2
The Trust Fund is not insured by the Federal Deposit Insurance Corporation (FDIC), is
not a deposit or other obligation of the Trustees and is not guaranteed by the Trustees.
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The value of the Trust Fund is subject to investment risks, including possible loss of
principal.
ARTICLE 3
Construction
3.1
The Trust will be administered in the Commonwealth of Pennsylvania, and its validity,
construction, and all rights hereunder shall be governed by the laws of Pennsylvania. All
contributions to the Trust Fund shall be deemed to occur in Pennsylvania.
3.2
The singular form of words shall be read as the plural where appropriate.
3.3
If any provision of this Trust Agreement shall be held illegal or invalid for any reason,
such determination shall not affect the remaining provisions, and such provisions shall
be construed to effectuate the purpose of this Trust.
3.4
The Plan and this Trust Agreement shall be read and construed together. By signing
this Trust Agreement, the Employer represents to the Trustees that the Plan conforms to
and is consistent with the provisions of this Trust Agreement. Should the Plan need to be
amended to conform to the provisions of this Trust Agreement, the Employer is
responsible for making such amendments. The Plan will not affect the Trustees’
obligations under this Trust Agreement.
ARTICLE 4
Benefits
4.1
This Trust may provide benefits to a Participant, the Participant’s Spouse, Dependents
and Beneficiaries pursuant to the terms of the Plan.
4.2
The Trustees shall provide benefits by cash payment to the appropriate parties. This
Trust may reimburse the Employer and/or Participants, their Spouses, Dependents or
Beneficiaries for insurance premiums or other payments expended for permissible
benefits described under the Plan. The Trust may directly pay to a vendor or service
provider any permissible benefits described under the Plan. However, the Trustees shall
have no duty to determine the rights or benefits of any person having or claiming an
interest under the Plan or this Trust Agreement. The Trustees shall make distributions
for benefits as directed by the Employer. If applicable, the Employer shall be responsible
for withholding and filing all appropriate tax information relating to the Plan.
4.3
Benefits may be paid from the Trust once it has been established for ten years and it has
reached a minimum 50% funding level of the most recent GASB 45 actuarial valuation.
If the funding level of the Trust should fall below 50% in a subsequent year (e.g., the
funding level is at 48% of the most recent GASB 45 actuarial valuation in the twelfth year
of the Trust), the Trustees shall have the discretion to pay benefits from the Trust
despite the funding level being below 50%.
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ARTICLE 5
General Duties
5.1
There shall be at all times not less than one (1) and not more than three (3) Trustees,
who shall be appointed by the Board of Supervisors and who shall have consented to
serve. Actions of the Trustees shall be by majority vote. Minutes shall be kept of all
meetings and actions taken.
5.2
It shall be the duty of Trustees to hold title to assets held in respect of the Plan in
Trustees’ names. The Trustees shall not be under any duty to compute the amount of
contributions to be paid by the Employer or to take any steps to collect such amounts as
may be due to be held in trust under the Plan.
5.3
The Trustees are authorized to take any action set forth below with respect to the Trust:
(a)
Accept instructions from the Employer regarding the allocation, distribution or
other disposition of the assets of the Trust and all matters relating thereto;
(b)
Appoint an investment advisor and/or a custodian and contract for the services of
an accountant or auditor. The fees for any such services shall be paid from the
Trust Fund, so long as they are reasonable in amount.
(c)
Employ such agents and counsel, including legal counsel, as the Trustees
determine to be reasonably necessary to manage and protect the assets held in
the Trust, to handle controversies that may arise under this Trust Agreement, or
to defend themselves successfully against allegations of a fiduciary breach, and
to pay such agents and counsel their compensation from the Trust Fund unless
such compensation is otherwise paid by the Employer;
(d)
Commence, maintain, or defend any litigation necessary in connection with the
administration of the Trust, except that the Trustees shall not be obligated to do
so unless they are indemnified to their satisfaction against all expenses and
liabilities sustained or anticipated by reason thereof;
(e)
Hold part or all of the Trust uninvested as may be necessary or appropriate to
meet current obligations;
(f)
Exercise all proxies solicited in regard to mutual funds and common or collective
investment funds, if applicable;
(g)
Take all other acts necessary for the proper administration of the Trust.
ARTICLE 6
Investments
6.1
The Trustees have the sole and absolute discretion over the investment of assets held in
the Trust.
6.2
The Trustees shall have full responsibility for the selection of the Funding Vehicles and
the management, disposition, and investment of the Plan assets held in the Trust Fund.
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The assets of the Trust shall be invested in Funding Vehicles pursuant to the investment
plan approved by the Trustees.
6.3
The Trustees shall not be responsible or liable for any loss or expense which may arise
from or result from compliance with any direction from the Employer to purchase any
assets, nor shall the Trustees be responsible or liable for any loss or expense which may
result from the Trustees’ refusal or failure to comply with any direction to hold title,
except if the same shall involve or result from the Trustees’ intentional misconduct. The
Trustees may refuse to comply with any direction from the Employer, in the event that
the Trustees, in their sole and absolute discretion, deem such direction illegal.
6.4
The Employer hereby indemnifies and holds harmless the Trustees from any and all
actions, claims, demands, liabilities, losses, damages or reasonable expenses of
whatsoever kind and nature in connection with or arising out of (i) any action taken or
omitted in good faith by the Trustees in accordance with the directions of the Employer
or any of their agents or subagents hereunder, or (ii) any disbursements of any part of
the Trust made by the Trustees in accordance with the directions of the Employer.
Notwithstanding anything to the contrary herein, the Employer shall have no
responsibility to Trustees under the foregoing indemnification if the Trustees intentionally
or recklessly fail to perform any of the duties undertaken by them under the provisions of
this Trust.
6.5
The Trustees hereby indemnify and hold harmless the Employer from any and all
actions, claims, demands, liabilities, losses, damages and reasonable expenses of
whatsoever kind and nature in connection with or arising out of the Trustees’ willful
misconduct, or recklessness with respect to the Trustees’ duties under this Trust.
6.6
The Trustees are responsible for reading any and all prospectuses, specimen and final
contracts, proposals and/or other materials which disclose information pertaining to
applicable charges, interest rates, terms and conditions of any contract between the
Plan or Trust and any party, including contracts related to the Funding Vehicles.
6.7
The Trustees shall not be liable for any loss which results from the exercise of
investment control by the Employer, or a designated investment manager.
6.8
No one providing investment advice to the Plan, Employer, Participant, Beneficiary or
other party is acting as an agent of the Trustees.
ARTICLE 7
Contributions
7.1
The Employer shall contribute amounts to the Trust in its sole and absolute discretion.
7.2
Subject to Article 2.1, Employer contributions under the Plan, all investment income and
realized and unrealized gains and losses, and forfeitures allocable thereto will be held in
trust for the exclusive benefit of Participants and their Spouses, Dependents and
Beneficiaries participating in the Plan.
7.3
The Trustees shall receive all contributions paid or delivered to it hereunder and shall
hold, invest, reinvest and administer such contributions pursuant to this Trust
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Agreement, without distinction between principal and income. The Trustees shall not be
responsible for the calculation or collection of any contribution under the Plan.
7.4
No amount in any account maintained under this Trust shall be subject to transfer,
assignment, or alienation, whether voluntary or involuntary, in favor of any creditor,
transferee, or assignee of the Employer, the Trustees, any Participant, or the Spouse,
Dependents or Beneficiaries of any Participant.
7.5
Upon the satisfaction of all liabilities under the Plan to provide benefits, any amount of
Employer contributions, plus accrued earnings thereon, remaining in the Trust Fund
shall be returned to the Employer.
7.6
The discontinuance of contributions to the Trust Fund shall not terminate the Trust. The
Trustees shall continue to administer the Trust in accordance with this Trust Agreement
until its obligations are discharged and satisfied.
ARTICLE 8
Other Plans
8.1
If the Employer adopts, in addition to the initial Plan, one or more other Plans providing
life, sickness, accident, medical, disability, or other similar welfare benefits, the Employer
may designate the Trust to hold the assets of such other Plans. The Employer or, if so
designated by the Employer, an investment manager or another agent of the Employer,
may, subject to the terms of this Trust Agreement, direct the Trustees to hold hereunder
contributions from such other Plans.
8.2
The Trustees may commingle for investment purposes the contributions received under
such other Plan or Plans with the contributions previously received by the Trust, but the
books and records of the Employer shall at all times show the portion of the Trust Fund
allocable to each Plan. Moreover, the term “Plan” as used herein shall be deemed to
refer separately to each other Plan.
ARTICLE 9
Accounting
9.1
The Trustees shall maintain, or cause to be maintained, accurate records and detailed
accounts of all investments, receipts, disbursements, earnings, and other transactions
related to the Trust, and those records shall be available at all reasonable times to the
Employer.
9.2
All records and accounts maintained by the Trustees with respect to the Trust shall be
preserved for such a period as may be required under any applicable law. Upon the
expiration of such period, the Trustees may destroy such records and accounts after
notifying the Employer in writing of its intentions and transferring to the Employer any
such records and accounts which the Employer requests. The Trustees shall have the
right to preserve all records and accounts in original form or in any such media as it
chooses.
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9.3
As of the close of each Plan year or at such other times as shall be agreed by the
Trustees and Employer, the Trustees shall file with the Employer an accounting of the
activities of the Trust, including a record of the investments, receipts, disbursements and
other transactions during the Plan year and the fair market value of the assets of the
Trust, determined according to procedures customarily used by the Trustees or
procedures agreed to by the Trustees and Employer.
ARTICLE 10
Miscellaneous Provisions
10.1
Until advised to the contrary by the Employer, the Trustees shall assume that the Trust
is exempt from federal, state, local and foreign income taxes. The Trustees shall not be
responsible for filing any federal, state, local or foreign tax and information returns
relating to any Plan or the Trust other than information returns required as a result of any
distribution from the Trust.
The Trustees shall promptly notify the Employer of any taxes levied upon or assessed
against the Trust. If the Trustees do not receive written instructions within thirty (30)
days of the notification, the Trustees will pay the tax from the Trust. If the Employer
wishes to contest the tax assessment, it must give appropriate written instructions to the
Trustees within thirty (30) days of notification. The Trustees shall not be required to
bring any legal actions or proceedings to contest the validity of any tax assessments
unless the Trustees have been indemnified to their satisfaction against loss or expense
related to such actions or proceedings, including reasonable attorneys’ fees.
10.2
The Trustees shall not be entitled to compensation for their services in respect to the
Trust. However, the Trustees shall be reimbursed for expenses reasonably incurred by
them in the administration of the Plan and/or the Trust. All such expenses, including,
without limitation, reasonable fees of accountants and legal counsel to the extent not
otherwise reimbursed, shall constitute a charge against and shall be paid from the Trust
upon the direction of the Employer.
10.3
The Employer shall have the right at all reasonable times during the terms of the Trust
and for three (3) years after the termination of this Trust to examine documents of
Trustee relating to this Trust and Trustees' performance hereunder.
10.4
The Trustees shall at all times be bonded, the cost of which shall be paid from the Trust
unless paid by the Employer.
10.5
To the extent permitted by applicable law, neither the Trustees nor the Employer shall be
liable for any failure or delay in the performance of its obligations under this Trust
Agreement arising out of or caused, directly or indirectly, by circumstances beyond its
reasonable control, including acts of God; earthquakes; fires; floods; wars; civil or
military disturbances; sabotage; epidemics; riots; interruptions, loss or malfunction of
utilities, computer (hardware or software) or communications services; accidents; and
acts of civil or military authority or government actions.
10.6
Failure of either party to insist upon strict compliance with any of the conditions of this
Trust Agreement shall not be construed as a waiver of any of such conditions, but the
same shall remain in full force and effect. No waiver of any provision of this Trust
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Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether
or not similar, nor shall any waiver constitute a continuing waiver.
10.7
Unless the context clearly indicates to the contrary, a reference to a statute, regulation,
document, or provision shall be construed as referring to any subsequently enacted,
adopted, or re-designated statute or regulation or executed counterpart.
ARTICLE 11
Amendment and Termination
11.1
This Trust Agreement may be amended at any time by written agreement signed by the
Employer and the Trustees, provided that such amendment shall not operate to violate
any applicable law or regulation.
11.2
The Employer reserves the right to terminate a Plan at any time. Upon such termination,
the applicable part of the Trust shall be distributed by the Trustees in accordance with
the directions from the Employer. Trustee is under no obligation to review written
instructions for compliance with the Plan document. From the date of termination of the
Plan until the final distribution of the Trust Fund, the Trustees shall continue to have all
the powers provided under this Trust Agreement with respect to the assets of such Plan
held in the Trust.
11.3
Any Trustee may resign at any time by written instrument delivered to the Board of
Supervisors giving notice of such resignation, which shall be effective at the option of the
Trustee not later than 60 days after actual receipt of such notice by the Board of
Supervisors. Any Trustee may be removed at any time by the Board of Supervisors by
written instrument delivered to the Trustee, which shall be effective immediately upon
actual receipt of such notice by the Trustee unless such notice specifies a different
effective date.
11.4
The Trustees are authorized to reserve such sum of money as it may deem advisable for
payment of its reasonable fees and expenses in connection with the settlement of its
accounts and other proper expenses of the Trust as it may incur under this Article 11
and Article 12.1. Any balance of such reserve remaining after payment of such fees and
expenses shall be paid to the successor trustee or the Employer, as appropriate.
ARTICLE 12
Successor Trustee
12.1
In the event of resignation or removal of all Trustees, the Trustees shall deliver all assets
of the Trust to their successor trustee as soon as they have been notified in writing by
the Employer that a successor trustee has been named. Should no successor trustee
be named by the Board of Supervisors within thirty (30) days after the resignation or
removal of all of the Trustees, the Finance Committee of the Board of Supervisors shall
be deemed to be the successor trustee.
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ARTICLE 13
Limited Effect of Plan and Trust
13.1
Neither the establishment of the Plan nor the Trust, nor any modification thereof, the
creation of any fund or account, nor the payment of any benefits, shall be construed as
giving to any person covered under the Plan or other person any legal or equitable right
against the Trustees, the Employer, or any officer or employee thereof, except as may
otherwise be expressly provided in the Plan or in this Trust Agreement.
ARTICLE 14
Protective Clause
14.1
Neither the Employer nor the Trustees shall be responsible for the validity of any
contract of insurance or other arrangement maintained in connection with the Plan, or for
the failure on the part of the insurer or provider to make payments provided by such
contract, or for the action of any person which may delay payment or render a contract
void or unenforceable in whole or in part.
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IN WITNESS WHEREOF, the Employer and the Trustees have executed this Trust
Agreement by their respective duly authorized officers, as of the date first hereinabove
mentioned.
EMPLOYER:
TRUSTEES:
_____________________________
Name: Michelle H. Kichline
_____________________________
Name: Warren Hyams
_____________________________
Name: John P. DiBuonaventuro
_____________________________
Name: Richard Veith
_____________________________
Name: Paul Olson
_____________________________
Name: Bert Dalby
_____________________________
Name: Philip Donahue
WITNESS:
_____________________________
Name: Michael C. Heaberg
_____________________________
Name:
_____________________________
Name: Kristen K. Mayock
_____________________________
Name: Evelyn Richter
WITNESS:
_____________________________
Name:
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Exhibit A
1.
2.
Collective Bargaining Agreements between Tredyffrin Township and the Tredyffrin
Township Police Association
1.1
1995-1997
1.2
1998-2000
1.3
2001-2003
1.4
2004-2008
1.5
2009-2011
1.6
2012-2015
Collective Bargaining Agreements between Tredyffrin Township and the Tredyffrin
Municipal Employee Association
2.1
3.
July 1, 2012 – June 30, 2016
Tredyffrin Township Employee Handbook (Health Insurance Policy (Retirement)),
effective November 26, 2007, as revised from time to time
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