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The base salary and compensation of any employee taken into account under this chapter for any year shall not exceed the limit set forth in the Internal Revenue Code, Section 401(a)(17), as adjusted for cost-of-living increases in accordance therewith. 2. A new section to be known as "Section 2.62.052 Loans to employees." is enacted, so that said section shall read as follows: 2.62.052 Loans to Employees. In accordance with and subject to any terms, conditions and procedures set forth in guidelines adopted by the board of trustees, or as amended by the board from time to time, loans shall be made available to all employees for whom an investment account has been established under Section 2.62.051 on a reasonably equivalent basis. Any such loan shall be treated as an investment of the employee's investment account, and all payments of principal and interest made by the employee shall be credited only to the employee's investment account. B. Loans must be adequately secured and bear a reasonable rate of interest. No loan shall exceed the lesser of (1) $50,000, reduced by the excess, if any, of the highest outstanding balance of any loans to the employee under this Section 2.62.052 and under any other retirement system maintained by the city during the one year period ending on the day before such loan is made, over the outstanding balance of such loans on the day such loan is made, or (2) one-half of the employee's investment account. The term and payment schedule of each loan shall satisfy the repayment period and level amortization requirements of the Internal Revenue Code, Section 72(p), and the regulations thereunder. Each loan shall be evidenced by a legally enforceable agreement which demonstrates compliance with the requirements of this Section 2.62.052(C). In the event of default, the loan will be foreclosed, and the outstanding balance thereof may be offset against any portion of the employee's investment account used as security, upon the occurrence of a distributable event under Section 2.62.152. 3. Section 2.62.152(E) is repealed and a new Section 2.62.152(E) is enacted in lieu thereof, so that said section, as so amended, shall read as follows: On or after January 1, 2002, a distributee may elect, at the time and in the manner prescribed by the board of trustees, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee in an investment account, except that an eligible rollover distribution does not include any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint