20020611 2002-12ORDINANCE NO. 2002- 12
AN ORDINANCE AMENDING CERTAIN SECTIONS OF
ARTICLE II, CHAPTER 66 OF THE CODE OF THE CITY
OF FAIRFAX, VIRGINIA, PERTAINING TO THE
RETIREMENT PLAN FOR GENERAL EMPLOYEES.
BE IT ORDAINED, by the City Council of the City of Fairfax, that the following
specified Sections and Subsections of Article II, Chapter 66, of the Code of the City of
Fairfax, Virginia, are hereby amended to read in their entirety as follows:
66-41. Definitions
Compensation means, for any eligible employee, the full base compensation
paid to him by the city excluding overtime or other compensation not a part of the set scale
for an established normal working period and excluding contributions by the city to any
employee benefit plan other than this plan. Compensation shall include, without duplication,
contributions picked up under section 66-192(c) on behalf of the eligible employee, and shall
include any salary deferrals made to plans maintained by the city pursuant to section 125 or
132(f) of the IRS Code, but shall not include contributions by the city pursuant to section 66-
193. In cases where compensation includes maintenance or other perquisites, the committee
shall fix the value of that part of the compensation not paid in money. Notwithstanding the
foregoing, "compensation" shall not include (1) any item not specified in Section 1.415-
2(d)(2) of the Treasury Regulations or (2) any item which is listed in Section 1.415-2(d)(3) of
the Treasury Regulations.
In addition to other applicable limitations set forth in the plan, and
notwithstanding any other provision of the plan to the contrary, for plan years beginning on or
after January 1, 1994, the annual compensation for each employee taken into account under the
plan shall not exceed the OBRA '93 annual compensation limit. The OBRA '93 annual
compensation limit is $150,000, as adjusted by the secretary of the treasury for increases in the
cost of living in accordance with section 401(a)(17)(b) of the IRS Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over
which compensation is determined (the determination period) beginning in such calendar year.
If a determination period consists of fewer than 12 months, the OBRA '93 annual compensation
limit will be multiplied by a fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
the limitation
compensation
For plan years beginning on or after January 1, 1994, any reference in this plan to
under section401(a)(17) of the IRS Code shall mean the OBRA '93 annual
limit set forth in this provision.
If compensation for any prior determination period is taken into account in
determining a participant's benefits accruing in the current plan year, the compensation for that
prior determination period is subject to the OBRA '93 annual compensation limit in effect for
that prior determination period. For this purpose, for determination periods beginning before the
first day of the first plan year beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000.
The annual compensation of each participant taken into account in determining
benefit accruals for any plan year beginning after December 31, 2001 shall not exceed $200,000,
as adjusted for cost-of-living increases in accordance with section 401(a)(17)(b) of the IRS Code.
Annual compensation means compensation during the plan year or the determination period.
The cost-of-living adjustment in effect for a calendar year applies to annual compensation for the
determination period that begins with or within such calendar year.
1
Credited service means, for any participant as of any date, the period or
periods prior thereto during which he shall have been in full-time employ of the city,
exclusive of:
(a) Any period of employment prior to his date of becoming a participant if he did
not become a participant within 90 days after his earliest opportunity to do so; and
(b) Any period of employment prior to the date of any withdrawal of the
participant's accumulated contributions in accordance with the provisions of division 7
of this article.
In addition to his period or periods of full-time employment, the credited service of a
participant shall include any period of his:
(c) Vacation, or any other absence from employment for which the participant
shall receive full compensation;
(d) Leave of absence without pay specifically authorized by the city under general
rules uniformly applicable to all employees similarly situated; and
(e) Service in the Armed Forces of the United States, provided the participant
entered such service directly from the employ of the city, was honorably discharged
from such service, and was re-employed by the city during a period when his right to
re-employment with the city was protected by law, to the extent credit for service is
required to be given pursuant to section 414(u) of the IRS Code and the Uniformed
Services Employment and Reemployment Rights Act.
Solely for purposes of calculating a benefit (other than a disability retirement allowance)
becoming effective April 1, 1983, or later, the credited service of a participant shall also
include his completed months of unused sick leave at time of termination of employment,
based on 173 hours of unused sick leave constituting one completed month; provided, in no
event shall the inclusion of unused sick leave as credited service affect the calculation of the
participant's compensation or average final compensation.
IRS Code means the Internal Revenue Code of 1986, as amended from time to
time.
Plan Year means the twelve-month period ending on the last day of June.
Year of credited service means a plan year during which an eligible employee
is employed on a substantially full time basis and makes the contributions required to be made
pursuant to section 66-192 for the entire year. Notwithstanding the foregoing, for purposes of
determining the amount of a participant's retirement benefit pursuant to sections 66-101, 66-
102 and 66-104, a participant shall receive credit for 1/12th of a year of credited service for
each month during which the participant was an eligible employee for the entire month, was
employed on a substantially full time basis and made the contributions required to be made
pursuant to section 66-192(c) for the entire month.
Sec. 66-106. Benefit limitation.
(a) If a disability allowance is payable before a disability retiree's attainment of
age 65, in no event shall the total amount of monthly plan allowance exceed: 75 percent of the
amount of his average final compensation at time of disability, less the total of the following
amounts:
(1)
(2)
Workers' compensation, if any, on account of such disability;
Benefits, if any, from Social Security on account of such disability;
(3)
disability;
Benefits, if any, from the Virginia Retirement System on account of such
(4) The remuneration, if any, received by a retired participant for personal services
rendered by him in any gainful occupation.
(b) Beginning with the January 1, which is at least 12 full months after the
effective date of an allowance, an amount of average final compensation usable for the
purposes of this section shall be redetermined each January 1 and such redetermined amount
shall be applicable for the ensuing year. Such redetermined amount shall be the amount of
average final compensation at time of termination of covered employment increased by any
percentage increase in the inflation index for the period from the October immediately
preceding the effective date of the benefit to the October immediately preceding such January
1.
(c) The employer provided annual retirement benefit payable to any participant
shall not exceed the maximum benefit allowed under section 415 of the IRS Code, as
amended from time to time and which is specifically incorporated herein by reference.
Notwithstanding the foregoing, if the participant is a participant in any other qualified defined
benefit pension plan sponsored by the city, his pension benefit under such other plan shall be
aggregated with his projected benefit under the plan, and the benefit under the plan shall be
reduced, to the extent necessary, so that the aggregate of such benefits does not exceed the
limitations set forth in section 415 of the IRS Code. Effective only for plan years ending prior
to July 1, 2000, if the participant is a participant in one or more qualified defined contribution
plans sponsored by the city, his benefit under the plan shall be reduced, to the extent
necessary, so that the sum of the defined benefit fraction and the defined contribution fraction
does not exceed one. For this purpose, "defined benefit fraction" and "defined contribution
fraction" shall be the fractions described in section 415(e) of the IRS Code as in effect prior to
July 1, 2000.
Sec. 66-126. Right to elect optional methods.
(a) Each participant who retires under the provisions of section 66-81, 66-82 or
66-83, shall have the right at his retirement date to elect to have his retirement allowance
payable under either Option 1 or Option 2 as hereinafter set forth in lieu of the retirement
allowance otherwise provided for in division 4 of this article. Each participant who retires
under the provisions of section 66-84 shall have the right at his retirement date to elect to have
his retirement allowance payable under Option 1 as hereinafter set forth in lieu of the
retirement allowance thereafter otherwise provided for in division 4 of this article, provided,
however, that the allowance continued to the participant's contingent annuitant after the death
of the participant may not exceed one-half of the allowance payable to the participant prior to
his death. The amount of any optional retirement allowance shall be the actuarial equivalent
of the amount of such retirement allowance that otherwise would have been payable to the
participant as provided for in division 4 of this article. In computing the amounts payable
under optional methods of payment, the 1984 actuarial equivalent tables of the Virginia
Retirement System shall be used, extended as needed using the Unisex Pensions 1984
Mortality Table together with interest of 3.38 percent annually, compounded annually. A
participant shall make such an election by written request to the committee on forms
furnished by the committee. Any such election shall not become effective until the
participant's date of retirement, and after retirement allowance payments have commenced,
no further elections will be permitted under any circumstances.
Option 1. Joint and last survivor option. Under such rules and regulations as the
committee shall adopt, a participant may elect to receive a reduced retirement allowance
during his lifetime and have such reduced retirement allowance (or a designated fraction
thereof) continued after his death to a designated contingent annuitant, for the lifetime of the
contingent annuitant; provided, however, that if the contingent annuitant is not the spouse of
the participant, such contingent annuitant must be 40 years of age or older at the time of the
designation.
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Option 2. Equating option. Under such rules and regulations as the committee shall
adopt, if a participant retires prior to the date or dates on which his benefits under the Virginia
Retirement System and/or his monthly benefits under the Social Security Act are expected to
commence, he may elect to receive an increased allowance initially, the amount of which will
be decreased in predetermined amounts and at predetermined dates in order to provide to as
great an extent as possible a level lifetime total retirement income when such adjusted
allowance payments under the plan are added to his anticipated benefits under the Virginia
Retirement System and Social Security.
(b) Each participant who terminates employment and elects to receive a refund of
his accumulated contributions pursuant to section 66-167 may elect to receive either a lump
sum payment of the accumulated contributions or a direct rollover provided the distribution is
an eligible rollover distribution. For these purposes:
(1) Eligible rollover distribution: An eligible rollover distribution is any distribution
of all or any portion of the balance to the credit of the distributee, 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 life expectancies) of the
distributee and the distributee's designated beneficiary, or for a specified period of ten
years of more.
(2) Eligible Retirement Plan: An eligible retirement plan is an individual retirement
account described in section 408(a) of the IRS Code, an individual retirement annuity
described in section 408Co) of the IRS Code, or a qualified trust described in section
401(a) of the IRS Code, that accepts the distributee's eligible rollover distribution.
However, in the case of an eligible rollover distribution to the surviving spouse of a
participant or former participant, an eligible retirement plan is an individual retirement
account or individual retirement annuity. With respect to distributions made after
December 31, 2001, an eligible retirement plan shall also mean an annuity contract
described in section 403(b) of the IRS Code, an annuity plan described in section 403(a)
of the IRS Code and an eligible plan under section 457(b) of the IRS Code which is
maintained by a state, political subdivision of a state, or any agency or instrumentality of
a state or political subdivision of a state and which agrees to separately account for
amounts transferred from this plan. The definition of"eligible retirement plan" shall also
apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse
who is the alternate payee under a qualified domestic relations order, as defined in
section 414(p) of the IRS Code.
(3) Distributee: A distfibutee includes a participant or former participant. In
addition, the participant's or former participant's surviving spouse and the participant's
or former participant's spouse or former spouse who is the alternate payee under a
qualified domestic relations order, as defined in section 414(p) of the IRS Code, are
distributees with regard to the interest of the spouse or former spouse.
(4) Direct Rollover: A direct rollover is a payment by the plan to the eligible
retirement plan specified by the distributee.
Sec. 66-127. Minimum distribution requirements.
Notwithstanding any other provision in the plan to the contrary, distribution shall be
made only in accordance with regulations prescribed by the Internal Revenue Service under
section 401(a)(9) of the IRS Code. To the extent required by those regulations, distribution of
benefits shall comply with the following limitations:
(a) Except as otherwise provided below, distribution shall begin not later than the
calendar year (the "commencement year") in which the participant reaches age 70-1/2 or in
which he subsequently retires. Distribution shall be made over the life of the participant or the
lives of the participant and his beneficiary, and/or 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, all as described in Section 1.401(a)(9)-1 of the Treasury Regulations, or, if
shorter, the alternate period described in Section 1.401(a)(9)-2 of the Treasury Regulation.
(b) A required distribution shall be deemed to have been made during the
commencement year if actually made by the following April 1, but such delayed distribution
shall not change the amount of such distribution, and the distribution otherwise required during
the subsequent calendar year shall be calculated as if the first distribution had been made on the
last day of the commencement year.
(c) Benefits paid prior to the commencement year shall reduce the aggregate amount
subject to (but shall not otherwise negate) the minimum distribution requirements described
herein.
(d) Nothing contained in this section shall prevent distribution of annuity benefits
providing for non-increasing payments (except as otherwise permitted in Section 1.401(a)(9)-1)
of the Treasury Regulations), payments beginning not later than the commencement year (except
as provided in (c) above) and payable at least annually over a period permitted by this section
(for which purpose, if benefit commencement under the annuity precedes the commencement
year, each relevant life expectancy shall be based on the individual's attained age as of his
birthday occurring in the calendar year in which benefit commencement occurs). Any benefits
accruing after the commencement year shall be treated as a separate identifiable component
distributable in accordance with this section beginning in the payment year following the year of
accrual.
(e) With respect to distributions under the plan made for calendar years beginning on
or after January 1, 2001, the plan will apply the minimum distribution requirements of section
401(a)(9) of the IRS Code in accordance with the Treasury Regulations under section 401(a)(9)
of the IRS Code that were proposed on January 17, 2001, notwithstanding any provision of the
plan to the contrary. This amendment shall continue in effect until the end of the last calendar
year beginning before the effective date of final regulations promulgated under section 401(a)(9)
of the IRS Code, or such other date as may be specified in guidance published under the IRS
Code.
Sec. 66-147. Death before retirement.
(e) The term "dependent child" means a child until his death or his marriage or his
attainment of age 23 years, whichever occurs first; provided, however, that the age 23
maximum shall be extended for any child who has been deemed physically or mentally
incompetent by a state court of competent jurisdiction (or by the plan), for as long as such
incompetency exists.
Sec. 66-212. Administrative committee.
(h) All acts and determinations of the committee shall be duly recorded by the
secretary thereof and all such records, together with such other documents as may be
necessary for the administration of the plan, shall be preserved in the custody of such
secretary. Such records and documents shall at all reasonable times be open for inspection
and for the purpose of making copies in accordance with applicable Virginia law.
Notwithstanding the foregoing, minutes of closed meetings, personnel documents, medical
records of employees, and any records or documents addressing the benefit issues of
individual employees shall not be made available for inspection and copying. The records of
the proceedings of the committee shall be conclusive proof of the facts of the operation of the
plan.
Sec. 66-254. Payment of minimum benefit.
If any retirement allowance payable under the plan would be at a rate of less than
$10.00 per month, such allowance may be, at the discretion of the committee, paid at less
frequent intervals, including a single lump sum payment, in such amounts so that the value of
such payments is the actuarial equivalent of the monthly allowance that otherwise would be
payable. The committee will not approve the election of any optional method of payment
under section 66-126 if the resultant monthly allowance would be less than $10.00 before or
after the death of the participant. Effective for benefit payments commencing on or after July
1, 2002, if any retirement allowance payable under the plan would be at a rate of less than
$75.00 per month, such allowance may be, at the discretion of the committee, paid at less
frequent intervals, including a single lump sum payment, in such amounts so that the value of
such payments is the actuarial equivalent of the monthly allowance that otherwise would be
payable. The committee will not approve the election of any optional method of payment
under section 66-126 if the resultant monthly allowance would be less than $75.00 before or
after the death of the participant.
Sec. 66-255. Assignment of benefits prohibited.
(a) Except insofar as may be contrary to any applicable law, no benefit hereunder
shall be subject in any manner to alienation, anticipation, sale, transfer, assignment, pledge,
encumbrance, garnishment, attachment, execution or levy of any kind.
(b) However, the prohibitions of the preceding sentence shall not apply to, and the
city shall fully recognize the creation, assignment or recognition of a right to any benefit
payable with respect to a participant pursuant to a "qualified domestic relations order."
(c) For the purposes hereof, a "qualified domestic relations order" is a judgment,
decree or order made pursuant to a state domestic relations law which relates to the provision
of child support, alimony payments or marital property rights and:
(1) Which clearly specifies:
ao
The names, social security numbers, dates of birth and last known mailing
addresses of the participant and each payee covered by the order;
bo
The amount or percentage of the participant's benefits to be paid by this plan to
each payee (or the manner in which such amount or percentage is to be
determined);
c. The number of payments or period to which such order relates; and
d. The name of the plan;
and
(2)
a.
b°
Co
do
That does not:
Require this plan to provide increased benefits than would otherwise be
payable absent the order;
Require the payment to the same benefits to any payee which are payable to
another payee pursuant to a prior qualified domestic relations order;
Require the plan to provide a type or form of benefit or benefit option not
otherwise provided under the plan;
Provide for payment of benefits to a payee that commence before the
commencement of benefit payments to the participant;
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go
and
Provide for payment of benefits to a payee over a period longer than the lifetime
of the participant;
Allow a payee to designate a beneficiary to receive payments following the death
of the payee; and
Provide for the designation of the payee as the surviving spouse for purposes of
receipt of all or a portion of any surviving spouse benefit payable pursuant to
section 66-147;
(3)
a.
b°
That specifically provides that:
Upon the death of the payee while benefits are in pay status and prior to the death
of the participant, the payments being made to the payee will thereafter be paid to
the participant; and
No portion of any death benefit under section 66-170 will be paid to the payee
upon the death of the participant prior to commencement of benefit payments if a
surviving spouse benefit is payable to the then-surviving spouse of the participant
pursuant to section 66-147.
Adopted this 11 th day of June, 2002.
This Ordinance shall become effective as provided by law.
INTRODUCED:
PUBLIC HEARING:
ADOPTED:
May 28, 2002
June 11, 2002
June 11, 2002
Councilman Coughlan
Councilman Greenfield
Councilman Lederer
Councilman Rodio
Councilman Rasmussen
Councilman Silverthorne
VOTE:
Aye
Aye
Absent
Aye
Aye
Absent
ATTEST:
Date