20031209 2003-26ORDINANCE NO. 2003- 26
AN ORDINANCE AMENDING CERTAIN SECTIONS OF
ARTICLE III, CHAPTER 66 OF THE CODE OF THE CITY OF
FAIRFAX, VIRGINIA, PERTAINING TO THE RETIREMENT
PLAN FOR PUBLIC SAFETY EMPLOYEES
BE IT ORDAINED, by the City Council of the City of Fairfax, that the following
specified Sections and Subsections of Article III, Chapter 66, of the Code of the City of
Fairfax, Virginia, are hereby amended to read in their entirety as follows:
Sec. 66-281. Definitions.
For the purposes of this article, the following words and phrases shall have the meanings
respectively ascribed to them by this section, unless otherwise required by the context:
Accumulated contributions means, for any participant as of any date, the total obtained by
accumulating each individual contribution of the participant, with interest from the July 1 next
following the date such contribution was made to the first day of the month of the date as of
which the computation is made. The interest to be credited to each participant's contributions
for each 12-month period commencing on July 1 and ending on the following June 30 shall be
determined by the committee each year on the basis of the actual net yield of the fund for such
period, provided, however, that in no event shall the rate of interest credited for any such 12-
month period be less than four percent per annum.
Actuarial equivalent means a benefit with a reserve equal to the reserve of another benefit.
Average final compensation means for any participant, as of any date, the average annual
compensation of the participant during the three consecutive years of his credited service
during which his compensation was highest or during the entire period of his credited service
if less than three years.
Beneficiary means any person who is receiving or designated to receive a plan benefit by
reason of the plan participation of another person.
City means the City of Fairfax, Virginia, or any municipal corporation successor thereto, or
the authority of the city having the power to appoint an employee to office or employment.
Committee means the administrative committee provided for in division 9 of this article.
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 66-432(c) on behalf of the eligible employee and shall include any salary
deferrals made to plans maintained by the city pursuant to sections 125 or 132(0 of the IRS
Code, but shall not include contributions by the city pursuant to section 66-433. 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
$150,000.00, 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.
For plan years beginning on or after January 1, 1994, any reference in this plan to the
limitation under section 401(a)(17) of the IRS Code shall mean the OBRA '93 annual
compensation 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 $150,000.00.
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 $200,000.00,
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.
Contingent annuitant means the person designated by a participant to receive retirement
benefits, after the death of the participant, under the joint and last survivor option of division
5 of this article.
Contributions means the payments to the fund by the city and/or the participants as provided
for in this article.
Credited service means, for any participant as of any date, the period or periods prior thereto
during which he shall have been in the 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) Subject to subsection (f) below, 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 reemployed by the city during a period when his right to
reemployment 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.
(f) Service that was previously cancelled in accordance with section 66-407 and
reinstated effective as of the earlier of the date of the participant's termination of
employment or completion of repayment of withdrawn contributions, under the
following conditions:
1. The participant has at least one month of 'Qualified 2004 service'.
2. The participant has repaid all or a portion of the contributions withdrawn plus
interest on such contributions as determined in subparagraph 3.
3. Interest has been charged on the participant's previously withdrawn
contributions at an annual rate of 5.0% or such other rate as the Board may
subsequently establish for these purposes, compounded bi-weekly. The interest
has been charged from the date of withdrawal to the earlier of the participant's
termination of employment or completion of the repayment.
4. Redeposit of the withdrawn contributions, plus interest, has been made on or
before the later of the following two dates:
(a) Five years after the participant has been reemployed by the city as an
Eligible Employee, and
(b) December 31, 2008.
5. The Service to be reinstated is not eligible for and has not been credited under
another retirement system (with the exception of the Virginia Retirement
System).
6. The participant has completed and executed in a timely manner any and all
forms the Committee deems necessary for the reasonable operation and
administration of these service reinstatement provisions.
7. The participant has elected to repay the withdrawn contributions in one of the
following forms:
2
o
(a) A direct rollover from another employer's qualified retirement plan
or tax deferred annuity plan of the total amount of the withdrawn contributions,
plus interest;
(b) A direct rollover or direct transfer from an eligible deferred
compensation plan established pursuant to Section 457(b) of the IRS Code of
the total amount of the withdrawn contributions, plus interest; or
(c) Pre-tax installment payments pursuant to a binding, irrevocable
payroll deduction authorization between the City and the participant. If the
participant enters into such an authorization, the participant contributions will
be picked up by the City, as described in Section 414(h)(2) of the IRS Code
and deducted from the pay of the contributing participant as a salary reduction
contribution and paid by the City to the Trustee with reasonable promptness.
If the Participant elects to repay the withdrawn contributions by pre-tax
installment payments pursuant to subsection (f)(7)(c), the minimum payment
per pay period shall be $20.00. Furthermore, if the participant terminates
employment prior to completing the payment of the withdrawn contributions,
the service credit awarded shall be pro-rated based on the payments made as of
the date of termination of employment.
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.
Eligible employee means any person regularly employed by the city on a full-time basis as a
member of the police department with police powers (except an animal control officer with
police powers) or as a salaried member of the department of fire and rescue services (fire
service uniform personnel), whose customary employment is for more than five months per
year. Eligible employee also means any former eligible employee who, as a result of a
disability incurred while an eligible employee, is no longer able to continue in employment
described in the preceding sentence and is now regularly employed by the city on a full-time
basis (and for more than five months per year) in other employment.
Fund means the trust fund created under the terms of the trust agreement, consisting of the
cash, securities and other assets held by the trustee pursuant to the terms of the plan.
Inflation index means the Consumer Price Index for All Urban Consumers, All Items, U.S.
City Average, as published by the Bureau of Labor Statistics of the United States Department
of Labor.
IRS Code means the Internal Revenue Code of 1986, as amended from time to time.
Participant means an eligible employee or a former eligible employee who has become
eligible to participate in the plan as provided in division 2 of this article, and is prospectively
entitled to future benefits under the terms of the plan.
Plan means the Retirement Plan for Police and Fire Employees of the City of Fairfax,
Virginia, as now contained in this article or as duly amended.
Plan year means the 12-month period ending on the last day of June.
Qualified 2004 Service (for the purposes of the January 1, 2004 amendments) means credited
service earned on or after December 1, 2003 in direct connection with employment as an
eligible employee of the City of Fairfax.
Reserve means the present value of all payments to be made on account of any plan benefit,
based upon such reasonable tables of experience and interest as the committee shall adopt,
from time to time, after consulting with its actuary.
Social Security full retirement age means the age at which there is no reduction in Social
Security benefits based upon the following table:
TABLE INSET:
Year Born
1937 orearlier
1938
1939
1940
1941
Age for Full Benefits
65 yrs.
65 yrs., 2 mos.
65 yrs., 4 mos.
65 yrs., 6 mos.
65 yrs., 8 mos.
1942 65 yrs., 10 mos.
1943--1954 66 yrs.
1955 66 yrs., 2 mos.
1956 66 yrs., 4 mos.
1957 66 yrs., 6 mos.
1958 66 yrs., 8 mos.
1959 66 yrs., 10 mos.
1960 or later 67 yrs.
Totally and permanently disabled means as set forth in subsection 66-323(b).
Trust agreement means the agreement entered into between the city and the trustee pertaining
to the administration of the fund.
Trustee means the financial institution appointed by council to hold in trust and invest the
fund, as provided for in division 8, which may, from time to time, be acting in that capacity
under the terms of the trust agreement.
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 66-432 for the entire year. Notwithstanding the foregoing, for purposes of determining
the amount of a participant's retirement benefit pursuant to sections 66-321 and 66-323, a
participant shall receive credit for one-twelfth 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 66-432 for the entire month.
(Code 1978, § 17-151; Ord. No. 2002-11, 6-11-2002)
Cross references: Definitions generally, § 1-2.
Sec. 66-341. Normal retirement allowance.
A participant, upon retirement at his normal retirement date in accordance with section 66-
321, shall receive a monthly retirement allowance which shall commence on such retirement
date and shall be continued on the first day of each month thereafter during his lifetime. The
amount of each such monthly retirement allowance shall be computed in accordance with
subsection (a) or (b) of this section, whichever is applicable:
(1)
The amount of monthly retirement allowance for a participant who became an
eligible employee on or before March 31, 1983, shall be one-twelfth of the
amounts below, where:
With respect to any allowance payment falling due before the participant's
Social Security full retirement age, the sum of subsections (1)a. 1. and 2. of
this section, where:
Is two percent of the participant's average final compensation at his
date of retirement, multiplied by his number of years of credited
service at such date, not in excess of a specified maximum number of
years. For retirements effective before January 1, 2004, the maximum
number of years is 30. For retirements effective on or after January 1,
2004, the maximum number of years is 30 plus years or partial years
of credited service attributable to eligible unused sick leave time, in
accordance with section 66-13(b)(2)(f); and
Is one-half of one percent of such average final compensation,
multiplied by such credited service, not in excess of 20 such years.
bo
With respect to any allowance payment falling due on or after the
participant's Social Security full retirement age, the sum of subsections
(1)b. 1. and 2. of this section, where:
1. Is one-half of one percent of such average final compensation,
multiplied by such credited service, not in excess of a specified
maximum number of years. For retirements effective before January
1, 2004, the maximum number of years is 30. For retirements
effective on or after January 1, 2004, the maximum number of years
(2)
(3)
is 30 plus years or partial years of credited service attributable to
eligible unused sick leave time, in accordance with section 66-
13(b)(2)(f);
2. Is one-half of one percent of such average final compensation
multiplied by such credited service not in excess of 20 years.
The amount of monthly retirement allowance for a participant who became an
eligible employee on or after April 1, 1983, shall be one-twelfth of the amount
below, where:
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With respect to any allowance payment due before the participant's 55th
birthday, 2 1/2 percent of the participant's average final compensation at his
date of retirement, multiplied by his number of years of credited service at
such date.
With respect to any allowance payment due on or after the participant's 55th
birthday but before the participant's Social Security full retirement age, 1.5
percent of such average final compensation, multiplied by such credited
service.
Co
With respect to any allowance payment falling due on or after the
participant's Social Security full retirement age, 1.3% for participants who
have at least one month of 'Qualified 2004 Service' and one-half of one
percent for all other participants of such average final compensation
multiplied by such credited service.
For purposes of determining the amount of a participant's monthly retirement
allowance under this division 4 of this article, the number of years of his credited
service shall include completed months of credited service in excess of a period of
completed years as a fractional part of a year.
(Code 1978, § 17-181)
Sec. 66-345. 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 the disability retiree's average final compensation at time of disability, less the total of the
following amounts:
(1) Workers' compensation, if any, on account of such disability;
(2)
Benefits, if any, from Social Security on account of such disability. Any disabled
participant who receives a Social Security disability award payable on January 1,
2004 or later and who notifies the city in writing, or in such other form as is
accepted by the Committee, of the award within 60 days of the date of the
communication to the participant by the Social Security Administration of the
receipt of the award shall have Social Security disability allowance offsets applied
on a prospective only basis, In the case of an individual who provides notification
later than the 60 day grace period, benefits shall be adjusted retroactive to the
effective date of the award, with interest at rate or rates as determined by the
Committee.
(3) Benefits, if any, from the Virginia Retirement System on account of such
disability;
(4) The remuneration, if any, received by such 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.
(d) No benefit shall be deemed in violation of the limitation expressed in subsection (c) of
this section if:
(1) The amount of the benefit does not exceed the accrued benefit of the participant at
the end of the last limitation year commencing prior to January 1, 1983; or
(2)
The amount of the benefit does not exceed $10,000.00 for the plan year, and the
employer has not at any time maintained a defined contribution plan in which the
participant participated. For purposes of this plan, the term "limitation year" shall
mean the plan year unless a different limitation year is designated by council by
resolution.
(e) In the case of an eligible employee who has less than ten years of service with the city,
the limitations set forth in subsection (c) and (d) of this section and shall be reduced by
multiplying them by a fraction, the numerator of which is the number of years of service (or
parts thereof) completed by the eligible employee with the city, and the denominator of which
is ten.
(f) 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
this section. 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, the terms "defined benefit fraction" and "defined
contribution plan fraction" shall be the fractions described in Section 415(e) of the Internal
Revenue Code.
(g) To the extent that the limitation set forth herein may be from time to time adjusted by
regulations or other publications issued by the secretary of the treasury or his delegate, such
adjusted amounts shall be substituted for the amounts set forth in this section, provided that
no such adjustment shall reduce a participant's accrued benefit unless such adjustment is
required to preserve the qualified status of this plan. To the extent that the limitations under
this section become unnecessary by amendment of law, the limitations shall be deemed
inoperative under this plan.
(Code 1978, § 17-185; Ord. No. 2002-11, 6-11-2002)
Sec. 66-347. Benefit redetermination after retirement.
Effective July 1, 1983, and beginning with the July 1, which is at least four full months after
the effective date of a monthly benefit, the amount of the benefit shall be redetermined
effective each July 1, and such redetermined amount shall be payable for the ensuing year.
The term "the amount of the benefit otherwise payable" means the monthly amount of benefit
which would be payable disregarding these provisions redetermining benefit amounts after
retirement; provided, for a retirement effective before April 1, 1983, such monthly amount
shall not be less than the monthly amount in effect as of July 1, 1983. In no event shall a
redetermined benefit amount ever be less than the amount of the benefit otherwise payable.
Such redetermined amount shall be the amount of the benefit otherwise payable increased by
the lesser of the percents in subsections (1), (2), (3),(4) or (5) as applicable of this section as
follows:
(1)
Five percent annually, compounded annually, for the number of years, and fraction
of a year measured in completed months, from the effective date of the benefit, or
April 1, 1983, if later, to the April 1 before the current July; or
(2)
For a participant who became an eligible employee on or before March 31,
1983, the percentage increase in the inflation index for the period from the
month next preceding the effective date of the benefit, or March 1983 if later,
to the March next preceding the current July; or
(3)
For a participant who became an eligible employee on or after April 1, 1983,
and for benefit redeterminations effective before January 1, 2004, one-half of
the percentage increase in the inflation index for the period from the month
next preceding the effective date of the benefit to the March next preceding
the current July.
(4)
For a participant who became an eligible employee on or after April 1, 1983 and
who retired prior to April 1, 2003 and for benefit redeterminations effective on or
after January 1, 2004, one-half the percentage increase in the inflation index for
the period from the month next preceding the effective date of the benefit to March
2003; plus the percentage increase in the inflation index for the period March 2003
to the March next preceding the current July.
(5)
For a participant who became an eligible employee on or after April 1, 1983 and
who retired on or after April 1, 2003, the percentage increase in the inflation index
for the period from the month next preceding the effective date of the benefit to the
March next preceding the current July.
(Code 1978, § 17-187)
Sec. 66-366. Right to elect optional methods.
(a) Each participant who retires under the provisions of section 66-321 or 66-322, 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 66-323 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, except as noted, 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,
except that the pop up feature described in connection with Option I shall be provided without
an additional actuarial reduction to the benefit of the participant. 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. Pop Up Feature: For participants electing Option 1, if the designated contingent
annuitant dies and the retired participant is still alive, the retirement allowance payable to the
participant shall be changed (pop-up) thereafter to the amount that would have been payable
had the retired participant elected a retirement allowance payable for the participant's lifetime
only, as defined in division 4 of this article. The revised monthly amount payable to the
retired participant shall become due and payable at the later of the first of the month following
the date of death of the contingent annuitant and January 1, 2004. Should the contingent
annuitant die on the first day of a month, this clause shall be implemented as though the death
had occurred on the second day of the month.
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 66-407 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)
(2)
(3)
(4)
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 often years of more.
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 408(b) 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.
Distributee. A distributee 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.
Direct rollover. A direct rollover is a payment by the plan to the eligible retirement
plan specified by the distributee.
(Code 1978, § 17-196; Ord. No. 2002-11, 6-11-2002)
Sec. 66-367. 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 regulations.
(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.
(f) Minimum Distribution Requirements after December 31, 2002
(i) General
(A) Effective Date. The provisions of this Section 66-367(f) will
apply for purposes of determining required minimum distributions for calendar years beginning
with the 2003 calendar year.
(B) Precedence. The requirements of this Section 66-367(f) will take
precedence over any inconsistent provisions of the Plan.
(C) Requirements of Treasury Regulations Incorporated. All
distributions under this Section 66-367 will be determined and made in accordance with the
Treasury regulations under Section 401 (a)(9) of the Code.
(ii) Time and Manner of Distribution.
(A) Required Beginning Date. The participant's entire interest will be
distributed, or begin to be distributed, to the participant no later than the participant's required
beginning date.
(B) Death of Participant Before Distributions Begin. If the participant
dies before distributions begin, the participant's entire interest will be distributed, or begin to be
distributed, no later than as follows:
I. If the participant's surviving spouse is the participant's
sole designated beneficiary, then distributions to the surviving spouse will begin by December 31
of the calendar year immediately following the calendar year in which the participant died, or by
December 31 of the calendar year in which the participant would have attained age 70 1/2, if
later.
II. If the participant's surviving spouse is not the participant's
sole designated beneficiary, then distributions to the designated beneficiary will begin by
December 31 of the calendar year immediately following the calendar year in which the
participant died.
III. If there is no designated beneficiary as of September 30 of
the year following the year of the participant's death, the participant's entire interest will be
distributed by December 31 of the calendar year containing the fifth anniversary of the
participant's death.
IV. If the participant's surviving spouse is the participant's
sole designated beneficiary and the surviving spouse dies after the participant but before
distributions to the surviving spouse begin, this Section 66-367 (f)(ii)(B), other than Section
66-367(f)(ii)(B)(I), will apply as if the surviving spouse were the participant.
For purposes of this Section 66-367(f)(ii)(B) and Section 66-367(f)(iv), unless Section
66-367(f)(ii)(B)(IV) applies, distributions are considered to begin on the participant's required
beginning date. If Section 66-367(f)(ii)(B)(iv) applies, distributions are considered to begin on
the date distributions are required to begin to the surviving spouse under Section
66-367(f)(ii)(B)(I). If distributions under an annuity purchased from an insurance company
irrevocably commence to the participant before the participant's required beginning date (or to
the participant's surviving spouse before the date distributions are required to begin to the
surviving spouse under Section 66-367(f)(ii)(B)(I)), the date distributions are considered to begin
is the date distributions actually commence.
(C) Forms of Distributions. Unless the participant's interest is
distributed in the form of an annuity purchased from an insurance company or in a single sum on
or before the required beginning date, as of the first distribution calendar year distributions will
be made in accordance with Section (iii) and (iv) of this Section 66-367(0. If the participant's
interest is distributed in the form of an annuity purchased from an insurance company,
distributions thereunder will be made in accordance with the requirements of Section 401(a)(9)
of the Code and the Treasury regulations.
(iii) Required Minimum Distributions During Participant's Lifetime.
(A) Amount of Required Minimum Distribution for Each Distribution
Calendar Year. During the participant's lifetime, the minimum amount that will be distributed
for each distribution calendar year is the lesser of:
I. The quotient obtained by dividing the participant's
account balance by the distribution period in the Uniform Lifetime Table set forth in Section
1.401(a)(9)-9 of the Treasury regulations, using the participant's age as of the participant's
birthday in the distribution calendar year; or
II. If the participant's sole designated beneficiary for the
distribution calendar year is the participant's spouse, the quotient obtained by dividing the
participant's account balance by the number in the Joint and Last Survivor Table set forth in
Section 1.401(a)(9)-9 of the Treasury regulations, using the participant's and spouse's attained
ages as of the participant's and spouse's birthdays in the distribution calendar year.
(B) Lifetime Required Minimum Distributions Continue Through
Year of Participant's Death. Required minimum distributions will be determined under this
Section (iii) beginning with the first distribution calendar year and up to and including the
distribution calendar year that includes the participant's date of death.
(iv) Required Minimum Distributions After Participant's Death.
(A) Death On or After Date Distributions Begin.
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I. Participant's Survived by Designated Beneficiary. If the
participant dies on or after the date distributions begin and there is a designated beneficiary, the
minimum amount that will be distributed for each distribution calendar year after the year of the
participant's death is the quotient obtained by dividing the participant's account balance by the
longer of the remaining life expectancy of the participant or the remaining life expectancy of the
participant's designated beneficiary, determined as follows:
a. The participant's remaining life expectancy is
calculated using the age of the participant in the year of death, reduced by one for each
subsequent year.
b. If the participant's surviving spouse is the
participant's sole designated beneficiary, the remaining life expectancy of the surviving spouse is
calculated for each distribution calendar year after the year of the participant's death using the
surviving spouse's age as of the spouse's birthday in that year. For distribution calendar years
after the year of the surviving spouse's death, the remaining life expectancy of the surviving
spouse is calculated using the age of the surviving spouse as of the spouse's birthday in the
calendar year of the spouse's death, reduced by one for each subsequent calendar year.
c. If the participant's surviving spouse is not the
participant's sole designated beneficiary, the designated beneficiary's remaining life expectancy
is calculated using the age of the beneficiary in the year following the year of the participant's
death, reduced by one for each subsequent year.
II. No Designated Beneficiary. If the participant dies on or
after the date distributions begin and there is no designated beneficiary as of September 30 of the
year after the year of the participant's death, the minimum amount that will be distributed for
each distribution calendar year after the year of the participant's death is the quotient obtained by
dividing the participant's account balance by the participant's remaining life expectancy
calculated using the age of the participant in the year of the death, reduced by one for each
subsequent year.
(B) Death Before Date Distributions Begin.
I. Participant Survived by Designated Beneficiary. If the
participant dies before the date distributions begin and there is a designated beneficiary, the
minimum amount that will be distributed for each distribution calendar year after the year of the
participant's death is the quotient obtained by dividing the participant's account balance by the
remaining life expectancy of the participant's designated beneficiary, determined as provided in
Section 66-367(f)(iv)(A).
II. No Designated Beneficiary. If the participant dies before
the date distributions begin and there is no designated beneficiary as of September 30 of the year
following the year of the participant's death, distribution of the participant's entire interest will
be completed by December 31 of the calendar year containing the fifth anniversary of the
participant's death.
III. Death of Surviving Spouse Before Distributions to
Surviving Spouse Are Required to Begin. If the participant dies before the date distributions
begin, the participant's surviving spouse is the participant's sole designated beneficiary, and the
surviving spouse dies before distributions are required to begin to the surviving spouse under
Section 66-367(I')(ii)(B)(I), this Section 66-367(f)(iv)(B) will apply as if the surviving spouse
were the participant.
(v) Definitions.
(A) Designated Beneficiary. The individual who is designated as the
participant's beneficiary and is the designated beneficiary trader Section 401 (a)(9) of the Internal
Revenue Code and Section 1.401 (a)(9)-l, Q&A-4, of the Treasury regulations.
(B) Distribution calendar year. A calendar year for which a minimum
distribution is required. For distributions beginning before the participant's death, the first
distribution calendar year is the calendar year immediately preceding the calendar year which
contains the participant's required beginning date. For distributions beginning after the
participant's death, the first distribution calendar year is the calendar year in which distributions
are required to begin under Section 66-367(f)(ii)(B). The required minimum distribution for the
11
participant's first distribution calendar year will be made on or before the participant's required
beginning date. The required minimum distribution for other distribution calendar years,
including the required minimum distribution for the distribution calendar year in which the
participant's required beginning date occurs, will be made on or before December 31 of that
distribution calendar year.
(C) Life expectancy. Life expectancy as computed by the use of the
Single Life Table in Section 1.401(a)(9)-9 of the Treasury regulations.
(D) Participant's account balance. The account balance as of the last
Valuation Date in the calendar year immediately preceding the distribution calendar year
(valuation calendar year) increased by the amount of any contributions made and allocated or
forfeitures allocated to the account balance as of the dates in the valuation calendar year after the
Valuation Date and decreased by distributions made in the valuation calendar year after the
Valuation Date. The account balance for valuation calendar year includes any amounts rolled
over or transferred to the plan either in the valuation calendar year or in the distribution calendar
year if distributed or transferred in the valuation calendar year.
of the Plan.
(E)
Required beginning date. The date specified in Section 66-367(a)
(Ord. No. 2002-11, 6-11-2002)
Sec. 66-432. Contributions by the participants.
(a) Except as provided in subsection (c) of this section, each eligible employee who became
an eligible employee on or before March 31, 1983, shall contribute to the plan for each pay
period after July 20, 1976, during which he is a participant and for which he receives
compensation, an amount equal to 5.5 percent of his compensation for such pay period;
provided, however, that no contributions shall be made by a participant after he has completed
30 years of credited service. Except as provided in subsection (c) of this section, each eligible
employee who became an eligible employee on or after April 1, 1983, shall contribute to the
plan for each pay period during which he is a participant and for which he received
compensation, an amount equal to 3.5 percent of his compensation for such pay period. Each
eligible employee who became an eligible employee on or after April 1, 1983, shall contribute
7.0 percent of the employee's compensation for pay periods that occur in 2004 or any
subsequent year.
(b) Except as provided in subsection (c) of this section, the contributions of each participant
shall be deducted by the city from the participant's compensation and all amounts so deducted
in any calendar month shall be paid to the trustee on or before the 20th day of the next
succeeding month. The city may collect the contributions of the participants in any reasonable
manner that produces the correct aggregate contributions over a 12-month period.
(c) As of January 1, 1985, the city shall make the contributions described in subsections (a)
and (b) of this section, and such contributions shall be treated as employer contributions in
determining tax treatment under the Internal Revenue Code of the United States. Such
contributions are being made by the city in lieu of contributions by the participants. Such
contributions shall be paid from the same source of funds as used in paying the compensation
of eligible employees. Contributions made by the city under this subsection shall be treated
for all purposes other than income taxation in the same manner and to the same extent as
contributions by participants made prior to January 1, 1985. No provision of the plan shall be
construed so as to permit or extend an option to eligible employees or receive the
contributions made by the city pursuant to this subsection directly instead of having them
contributed to the plan. Notwithstanding any contractual or other provisions, the wages of
eligible employees shall be reduced by the amount of contributions picked up by the city
pursuant to this subsection.
(Code 1978, § 17-227)
BE IT FURTHER ORDAINED that this ordinance shall become effective upon
adoption as provided by law.
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INTRODUCED: November 25, 2003
PUBLIC HEARING: December 9, 2003
ENACTED: January 1, 2004
J. Cross
J. Greenfield
G. Lyon
G. Rasmussen
S. Silverthome
P.Winter
Vote
Aye
Aye
Aye
Abstained
Aye
Aye
MAYOR
ATTEST:
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