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MEMORANDUM OF UNDERSTANDING <br />Between <br />NORTH CAROLINA DEPARTMENT OF STATE TREASURER <br />And <br />ORANGE COUNTY, NORTH CAROLINA <br /> <br />Background <br />The Supplemental Retirement Income Plan of North Carolina (the “NC 401(k) Plan”) is a defined <br />contribution retirement plan sponsored by the State of North Carolina, administered by the North <br />Carolina Department of State Treasurer (the “Department”), and overseen by the North Carolina <br />Supplemental Retirement Board of Trustees (the “Board”). The NC 401(k) Plan is available to the <br />employees of participating state and local governmental employers in North Carolina, and Orange <br />County participates in the plan. <br />Participating employers in the NC 401(k) Plan are responsible for certain aspects of plan compliance, <br />including submitting employer and employee contributions in accordance with applicable law and the <br />plan document. From 2003 to 2022, Orange County (the “County”) did not make employee <br />contributions available in two of its 26 annual payroll periods, which violated the plan document (the <br />“Compliance Error”). <br />Internal Revenue Service (“IRS”) Revenue Procedure 2021-30 describes the IRS’s Employee Plans <br />Resolution Compliance System (“EPCRS”). EPCRS includes the Voluntary Compliance Program (“VCP”), <br />which allows plans to submit proposed corrections of compliance errors to the IRS for approval. <br />In early 2022 the Department, as administrator of the NC 401(k) Plan, submitted a proposed correction <br />of the Compliance Error to the IRS using VCP (the “Original VCP Submission”). The Department retained <br />outside counsel to prepare and file the Original VCP Submission and to represent the NC 401(k) Plan at <br />the IRS. The Department communicated this fact to the County and asked for the County’s willingness <br />to cooperate with the Department and outside counsel in the Original VCP Submission, including <br />providing information relevant to the Original VCP Submission, subject to any legal, policy, and <br />confidentiality restrictions, and to assist the Department in the costs associated with outside counsel’s <br />representation to the extent such representation benefitted Orange County. The County agreed and the <br />Department, through counsel, subsequently completed the Original VCP Submission without success. <br />On May 30, 2023 the Department and County entered a memorandum of understanding to provide for <br />the costs associated with a subsequent VCP Submission. <br /> <br />Purpose <br />The Original VCP submission was unsuccessful and a subsequent VCP submission is planned to <br />commence at a future date. Through this second memorandum of agreement the Department requests <br />reimbursement for the legal costs and all related fees and expenses (including filing and attorneys’ fees) <br />associated with the Original VCP submission occurring prior to May 2023. The County will reimburse <br />such fees and costs related to the Original VCP Submission charged by outside counsel, subject to the <br />DocuSign Envelope ID: 545A4F6D-5DD6-4B21-8CEE-2AD9A6A442F1