TRUST ESTABLISHMENT AND PURPOSE

SJ-MC tit. 3, div. II, ch. 3.54, pt. 2

in effect

San José Municipal Code § 3.54.100 Trust established - Name - Purpose.

3.54.100 - Trust established - Name - Purpose. A. There is hereby established an irrevocable trust, which shall be known as the police department health care trust, to: 1. Receive contributions made by the city on or after June 24, 2012, for the purpose of providing a funding source for the payment of the medical benefits described in Part 14 of Chapter 3.36, the dental benefits described Part 15 of Chapter 3.36 of this title, any other health and welfare benefits or other post-employment benefits other than pensions as approved by city for retirees and dependents. 2. Receive contributions made by police department employees on or after July 24, 2012, for the purpose of providing a funding source for the payment of medical benefits described in Part 14 of Chapter 3.36, the dental benefits described Part 15 of Chapter 3.36 of this title, and any other health and welfare benefits or other post-employment benefits other than pensions as approved by city for retirees and dependents. 3. Make distributions from the trust fund for the health and welfare benefits provided for in the plan to retirees and dependents and for the reasonable expenses of administering the trust and the plan. B. Participation in, and any coverage under, the trust shall not constitute nor be construed as a commitment to provide a specific type or level of benefit; nor shall the trust constitute a specific, accrued or vested benefit for any specific employee, retiree, or dependent. C. The city intends that the income accruing to the trust shall be excluded from city income for tax purposes, as such trust income is derived from the exercise of an essential governmental function, as provided for under Section 115(1) of the IRC, Revenue Rulings 77-261 and 90-74, and other relevant guidance. (Ord. 29065.)

San José Municipal Code § 3.54.110 Trust fund.

3.54.110 - Trust fund. The trustees shall have exclusive authority and control over the administration and management of the trust fund, the investment of trust assets, and disbursements from the trust fund, pursuant to the provisions of this chapter. The trustees shall receive and accept for the purposes hereof all contributions described herein and shall hold, invest, reinvest, manage, administer, and distribute property and the increments, proceeds, earnings, and income solely to meet OPEB obligations and to fund health and welfare benefits under the plan as described herein. (Ord. 29065.)

San José Municipal Code § 3.54.120 Exclusive benefit.

3.54.120 - Exclusive benefit. A. This trust is created for the sole and exclusive purpose of funding health and welfare benefits for retirees and dependents under the plan. No portion of the principal or income of this trust shall revert to the city except in a manner consistent with the irrevocability of contributions under the IRC and GASB 43 and/or GASB 45, or shall be used for or diverted to any purpose other than meeting the city's obligations to provide the health and welfare benefits described in Parts 14 and 15 of Chapter 3.36 and any other health and welfare benefits as approved by the city council and the payment of reasonable expenses of the plan and the trust. Trust assets shall not be used to satisfy the claims of any creditor of the city or the trustees. B. At no time shall any part of the trust fund be used for, or diverted to, for purposes other than for the exclusive purpose of funding health and welfare benefits for retirees and their eligible dependents, as applicable, as provided herein and under the plan, and for defraying the reasonable expenses of administering the trust and the plan. No part of the trust's net earnings may inure to the benefit of a private person. Private parties do not participate in, or benefit from, the operation of the trust. C. All investments, receipts, disbursements, and other transactions thereunder may be maintained in a common account, which contributions shall be used solely for the payment of benefits, expenses and other charges properly allocable to the trust. (Ord. 29065.)

San José Municipal Code § 3.54.130 Taxation.

3.54.130 - Taxation. The trust provides no guaranty that payments or reimbursements to employees, former employees, retirees, or dependents will be tax-free. The trustees may obtain a ruling from the internal revenue service concerning the federal tax treatment of the trust's income. The ruling concerning federal tax treatment of the trust's income may not be cited or relied upon by the city whatsoever as precedent concerning any other matter relating to the city's health plan(s) (including post-retirement health plans). The trustees and the city may also obtain a ruling from the Internal Revenue Service concerning whether contributions to the city's health plan(s) and/or payments from the city's health plan(s) (including reimbursements of medical expenses) are excludable from the gross income of employees, former employees, retirees or dependents, under the IRC. (Ord. 29065.)

San José Municipal Code § 3.54.140 Group trust.

3.54.140 - Group trust. The trust fund may participate under Section 401(a)(24) of the IRC in a qualified group trust that meets the requirements of Section 401(a) of the IRC in accordance with Revenue Ruling 81-100, as amended by Revenue Rulings 2004-67 and 2011-1, or other relevant guidance. (Ord. 29065.)

Source: City of San José, Municipal Code (Municode Library, library.municode.com)URL: https://library.municode.com/ca/san_jose/codes/code_of_ordinances?nodeId=TIT3PE_IIREPL_CH3.54PODEHECATRFU_PT2TRESPUFetched: 11/1/2026