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2009-24ORDINANCE NO. 2009-24 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 II, Chapter 66, of the Code of the City of Fairfax, Virginia, are hereby amended to read in their entirety as follows: 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. Upon the disability retiree's attainment of age 65, the disability retiree's monthly allowance shall be determined without regard to the limitation described in this Section 66-345(a). In its administration of this section, the committee may require that any participant in receipt of a disability retirement allowance prior to his attainment of age 65 provide to the Committee the documentation necessary to confirm that the limits provided in this Section 66-345 are met including, but not limited to a copy of the participant's federal income tax return and documentation of the participant's social security disability and workers' compensation benefits. Should any participant refuse to submit such documentation, his retirement allowance shall be discontinued until his withdrawal of such refusal, and should such refusal continue for one year, he shall be deemed to have recovered from his disability and his benefits will be determined under Section 66-344. (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) 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 subsections (c) and (d) and (sic) 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 maybe 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; Ord. No. 2003-26, 12-9-2003) Sec. 66-366. Right to elect optional methods. (a) Each participant who retires under the provisions of sections 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 1 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 alump-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 often 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 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. With respect to distributions made after December 31, 2007, an eligible retirement plan also includes a Roth IRA described in section 408A of the IRS Code. 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 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. (4) Direct rollover. A direct rollover is a payment by the plan to the eligible retirement plan specified by the distributee. (c) Distributions to non-spouse beneficiaries This Section applies to distributions made on or after July 1, 2008. Notwithstanding anything in this article to the contrary that would otherwise limit the options of the beneficiary of a deceased participant who is not a distributee (within the meaning of this section 66-366) the committee shall, upon the request of such a beneficiary, transfer a lump sum distribution to the trustee of an individual retirement account established under section 408 of the IRS Code in accordance with the provisions of section 402(c)(11). (Code 1978, § 17-196; Ord. No. 2002-11, 6-11-2002; Ord. No. 2003-26, 12-9-2003 BE IT FURTHER ORDAINED that this ordinance shall become effective upon adoption as provided by law. INTRODUCED: September 22, 2009 PUBLIC HEARING: October 13, 2009 ENACTED: October 13, 2009 Mayor 1/ D ~ Date ATTEST: City Clerk The vote on the motion to approve was recorded as follows: VOTE: Councilwoman Cross Aye Councilman Drummond Aye Councilman Greenfield Absent Councilman Meyer Aye Councilman Rasmussen Aye Councilman Stombres Aye