20041012 2004-20ORDINANCE NO. 2004-20
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:
Sec. 66-41. 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 comt~ensation 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. In the case of a part-time participant, the annualized, full-time
equivalent compensation shall be used in this calculation in place of the actual annual
compensation.
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 subsection 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(0 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
/
$150,000.00, 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 66-167, or not
credited during a period of time classified by the city as "leave without pay," and
reinstated effective as of the earlier of the date of the participant's cessation of the
receipt of compensation following 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' within the
meaning of this section 66-41 or section 66-281.
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 committee 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 date of 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,
and
(B) December 31, 2009.
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:
(a) A direct rollover from another employer's qualified retirement plan
or tax deferred aImuity 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 payments pursuant to one or more binding, irrevocable
payroll deduction authorizations 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
payments pursuant to subsection (f)(7)(c), the minimum payment per pay period
shall be $20.00. Furthermore, if the participant ceases to receive compensation
from the city following termination of employment and 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 the participant ceases to receive
compensation from the city following termination of employment.
(g) Part time employment, as provided for in the definition of 'eligible employee'
in this section 66-41.
(h) Service credit that would have been credited prior to March 1, 2004, had the
plan permitted part-time employees to participate in the plan since inception of the Plan
provided that:
The participant is employed as an eligible employee of the city on March 1,
2004 and has at least one month of 'Qualified 2004 Service'.
The participant pays over to the Trustee an amount equal to all or a portion of
the cost of the service determined at the full actuarial rate for the cost of the
service. The full, actuarial cost of the service shall be determined in
accordance with procedures adopted by the committee intended to calculate the
cost of the service in a uniform and non-discriminatory manner.
o
The individual makes an affirmative, irrevocable election to purchase all or a
portion of the service, in writing, in a form acceptable to the Committee, on or
prior to February 28, 2005.
°
The individual completes the payment for the service within five years of the
date of the election by the Participant to purchase the service.
o
The Service to be credited is not eligible for and has not been credited under
another retirement system (with the exception of the Virginia Retirement
System).
o
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 credit provisions.
o
The participant has elected to pay over the cost of the service in one or more of
the following forms:
(a) A direct rollover from another employer's qualified retirement plan
or tax deferred annuity plan;
(b) A direct rollover or direct transfer from an eligible deferred
compensation plan established pursuant to Section 457(b) of the IRS Code; or
(c) Pre-tax payments pursuant to one or more binding, irrevocable
payroll deduction authorizations 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.
o
If the Participant elects to pay for the cost of the service by pre-tax payments
pursuant to subsection (h)(6)(c), the minimum payment per pay period shall be
$20.00.
If a participant ceases to receive compensation from the city after termination of
employment prior to completing the purchase of service, the service credit
awarded shall be pro-rated based on the payments made as of the date the
participant ceases to receive compensation from the city following termination
of employment. In the event of the participant's subsequent re-employment by
the city after cessation of receipt of compensation following termination of
employment and prior to completing the purchase of service, no additional credit
may be purchased pursuant to this Section 66-41(h). Notwithstanding the
foregoing, the participant may pay over to the Trustee, in one lump sum, an
amount necessary to purchase the balance of the credit for the service unpaid as
of the date of the participant's termination of employment.
10.
All purchases of service credit and elections by participants pursuant to this
Section 66-41(h) shall be adjusted as necessary to ensure compliance with
Section 415 of the IRS Code.
;olely 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, other than a person who
qualifies as an eligible employee under the retirement plan for police and fire employees of
the city, whose customary employment is for more than five months per year. In the discretion
of the city council, eligible employee may also mean the commissioner of the revenue, the
4
city treasurer, the general registrar of voters, and full time employees reporting to the office of
the commissioner of the revenue, the treasurer's office, and the registrar's office. Prior to
March 1, 2004, an eligible employee must be employed by the city on a full-time basis. From
and after March 1, 2004, an eligible employee includes permanent part-time employees. For
the purposes of determining eligibility conditions and benefit formulas, such individuals shall
be treated as though their date of hire were the later of March 1, 2004, and their actual date of
hire into an eligible position. In the case of an individual whose status is not clear, the
committee shall determine their status.
Full-time equivalent percentage means 100% for a full-time employee, and such lesser
percentage as is applicable for a part-time employee.
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 employees of the city, 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 2004 amendments) means credited service
earned on or after December 1, 2003 in direct connection with employment as an eligible
employee of the city.
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 Age for Full Benefits
1937 or earlier 65 years
1938 65 years, 2 months
1939 65 years, 4 months
1940 65 years, 6 months
1941 65 years, 8 months
1942 65 years, 10 months
1943--1954 66 years
1955 66 years, 2 months
1956 66 years, 4 months
1957 66 years, 6 months
1958 66 years, 8 months
1959 66 years, 10 months
1960 or later 67 years
Totally and permanently disabled means as set forth in subsection 66-84(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 66-192 for the entire year or otherwise receives credit for credited service pursuant to
this Section 66-41. 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 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, made the contributions required to be made pursuant to section
66-192(c) for the entire month or otherwise receives credit for credited service pursuant to
this Section 66-41. In the case of eligible employees who are part-time employees, service
credit shall be initially calculated as though they were full-time employees for the entire year.
The resulting credited service shall then be adjusted for the individual's full-time equivalent
percentage. For example, an individual who is employed on a half time basis would normally
receive one half of a year of service credit for each year worked. In no event shall the
amounts of service credit in any year exceed the individual's full-time equivalent percentage
multiplied by twelve months.
Cross references: Definitions generally, § 1-2.
Sec. 66-168. Deferred retirement allowance.
(a) Subject to the provisions of section 66-171, in the event of the termination of a
participant's employment with the city, other than by death, prior to his retirement
hereunder but after he has completed five or more years of credited service, there shall
be paid to such participant a monthly retirement allowance determined as hereinbelow
provided. The monthly allowance shall commence, at the election of the participant, on
the first day of any month coincident with or following the later of his date of
termination of employment or his attainment of the age of 50, but in no event later than
his attainment of his normal retirement date. Payment of the retirement allowance shall
continue on the first day of each month thereafter during his lifetime; provided,
however, that any participant shall have the right, at any time after termination of
employment and prior to the commencement of payment of a deferred retirement
allowance, to receive in a lump sum his accumulated contributions as of the date such
payment is requested, but such payment shall terminate the participant's rights to a
deferred retirement allowance under this section, and, except as otherwise provided in
this Article II, shall cancel any period of credited service previously credited to him. In
the case of a participant who is a permanent, part-time employee, the requirement of five
years of credited service stated above shall be waived and replaced with a requirement
that the individual has earned at least 3 months of service credit in at least 5 different
plan years. In the case of a participant who elected to reinstate service credit as
provided for in subsection (f) of the definition of 'credited service' in Section 66-41, the
requirement of five years of credited service stated above shall be waived.
(b) The amount of the monthly retirement allowance payable to an eligible participant under
the provisions of this section shall be determined in the same manner as provided in
section 66-101, except that credited service and average final compensation shall be
determined as of the date of the participant's termination of employment, and if the date
of commencement of the monthly retirement allowance is prior to the participant's
normal retirement date:
(1) For a participant who became an eligible employee on or before March 31,
1983, the amount of the monthly retirement allowance so determined shall be
reduced by one-sixth of one percent for each complete month in the period
6
(2)
(3)
between such commencement date and the participant's normal retirement
date;
For a participant who became an eligible employee on or after April 1, 1983,
the amount of the monthly retirement allowance so determined shall be
reduced by five-twelfths of one percent for each complete month in the period
between such commencement date and the participant's normal retirement date.
Effective January 1, 2004, for a participant who became an eligible employee
on or after April 1, 1983 and who retires on or after reaching age 50 and who
has completed 30 or more years of credited service, not including unused sick
time but including at least one month of 'Qualified 2004 Service' credited
service and average final compensation shall be computed as of the
participant's early retirement date and the amount of the monthly retirement
allowance so determined shall be reduced by one-sixth of one percent for each
complete month in the period between the participant's early retirement date
and normal retirement date.
(c) Any participant becoming entitled to an allowance under the provisions of this section
shall be entitled to elect, at the time of commencement of such allowance, to have his
allowance paid under Option 1 or Option 2 (if applicable) of section 66-126.
(Code 1978, § 17-93; Ord. No. 2003-25, 12-19-2003)
BE IT FURTHER ORDAINED that this ordinance shall become effective upon
adoption as provided by law.
INTRODUCED: September 28, 2004
PUBLIC HEARING: October 12, 2004
ENACTED: October 12, 2004
Date
ATTEST:
City Clerk
VOTE:
Councilwoman Cross absent
Councilman Greenfield aye
Councilwoman Lyon aye
Councilman Rasmussen absent
Councilman Silverthome aye
Councilmember Winter aye
1571671.v2
7