13J
1 Ordinance No. 2013-----2
3
4 An Ordinance Amending Sec. 16.14(a); Sec. 16-16; Sec.
5 16-19; Sec. 16-22; and Sec. 16-23, Of The South Miami
6 Pension Plan To Provide For Compliance With The
7 Internal Revenue Code.
8
9
10 WHEREAS, on January 29, 2011 an application was filed with the Internal
11 Revenue Service for a Favorable Determination Letter regarding the qualified status of
12 the Plan under Section 401 (a) of the Internal Revenue Code; and
13 WHEREAS, on May 29, 2013, the Internal Revenue Service issued a Favorable
14 Determination Letter, finding that the Plan complies with all qualification requirements;
15 and
16 WHEREAS, the Favorable Determination Letter is subject to the timely adoption
17 of the amendments provided herein, and
18 WHEREAS, the trustees of the South Miami Pension Plan have requested and
19 approved such amendments as being in the best interests of the participants and
20 beneficiaries as well as improving the administration of the plan, and
21 WHEREAS, the City Mayor and City Commission has received and reviewed an
22 actuarial impact statement related to these change and attached as such; and
23 WHEREAS, the City Commission deems it to be in the public interest to provide
24 these changes to the pension plan and to the pension plan for its employees;
25 NOW, THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITY
26 COMMISSION OF THE CITY OF SOUTH MIAMI, FLORIDA, THAT:
Page 1 of 27
1 Section 1. Section 16-14(a) of the South Miami Code of Ordinances is hereby
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
amended by adding a new paragraph (3) as follows:
Sec. 16-14. Pension benefits and retirement date.
(a) Retirement date. The normal retirement date with full unreduced
pension benefits for a participant, shall be as follows:
(3) Vesting of benefits upon Normal Retirement Oate. Any
provision of this plan to the contrary notwithstanding, a
Member's accrued benefit shall become 100% vested upon
the attainment of the Normal Retirement Date.
Section 2. Section 16-16 of the South Miami Code of Ordinances is hereby
amended by adding a new subsection (e) as follows:
Sec. 16-16. Death of a participant.
.em. Oeath while performing USERRA-qualified active military service -
In the case of a Member who dies on or after January 1, 2007 while
performing "Qualified Military Service" under Title 38, United States
Code, Chapter 43, Uniformed Services Employment and
Reemployment Rights Act ("USERRA") within the meaning of
Section 414(u) of the Internal Revenue Code, any "additional
benefits" (as defined by Section 401 (a)(37) of the Internal Revenue
Code) provided under the Plan that are contingent upon a
Member's termination of employment due to death shall be
determined as though the Member had resumed employment
immediately prior to his death. With respect to any such "additional
benefits," for vesting purposes only, credit shall be given for the
period of the Member's absence from covered employment during
"Qualified Military Service".
Page 2 of 27
1 Section 3. Section 16-19 of the South Miami Code of Ordinances is hereby
2 amended to read as follows:
3 Sec. 16-19. Contributions.
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
(a)
(d)
Each participant shall contribute in each calendar year towards the
cost of the participant's pension an amount equal to three (3)
percent of the participant's earnings. With the exception of police
officer participants, no participant shall make any contributions
toward the cost of any past service pension to which the participant
is entitled under this plan. The employer shall contribute the
balance of the cost, actuarially determined, of providing the benefits
of the plan. The employer's contributions shall be deposited into the
pension plan on at least a quarterly basis. Effective October 1,
1995, the pension contribution for all general employee
participants, including those general employees that are now
members of the retirement system, shall be increased from three
(3) percent to five (5) percent of earnings. Effective October 1,
2001, the pension contribution for all general employee
participants, including those general employees that are now
members of the plan, shall be increased from five (5) percent to
seven (7) percent of earnings. Police officer participant including
bargaining unit employees, that are now members of the plan and
any police officers who join the plan in the future shall, effective
October 1, 1993, have their contribution increased from three (3)
percent to five (5) percent of earnings. Effective October 1, 2001,
police officer participants shall contribute 7.5 percent of earnings.
(4) 415(c) Limitations. To the extent applicable, all employee
contributions shall be in accordance with Subsection 415(c)
of the Internal Revenue Code and all regulations thereunder,
which Subsections and regulations are incorporated herein
by reference.
Rollover option. A participant eligible to receive a refund of
contributions may elect, at the time and in the manner prescribed
by the pension board, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by
the participant in a direct rollover. For the purposes of this section,
Page 3 of 27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
the follmving words and phrases shall have the follmving' meanings
indicated:
(1 )
(2)
(3)
(4)
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:
a.
b.
c.
Any distribution that is one of a series of substantially
equal payments (not less 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 distributees designated beneficiary, or for a
specified period of ten years or more;
Any distribution to the extent such distribution is
required under section 401 (a)(9) of the Internal
Revenue Code; and
The portion of any distribution that is not includable in
gross income.
Eligible retirement plan is an individual retirement account
described in section 408(a) of the Internal Revenue Code,
an individual retirement annuity described in section 408(b)
of the Internal Revenue Code, an annuity plan described in
section 403(a) of the Internal Revenue Code, or a qualified
trust described in section 401 (a) of the Internal Revenue
Code, that accepts the distributees eligible rollover
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement
plan as an individual retirement account or individual
retirement annuity.
Distributee includes an employee or former employee. In
addition, the employee's or former employee's surviving
spouse is a distributee 'Nith regard to the interest of the
spouse.
Direct rollover is a payment by the plan to the eligible
retirement plan specified by the distribute.
Page 4 of 27
1 Section 4. Section 16-22(b) of the South Miami Code of Ordinances is hereby
2 amended to read as follows:
3 Sec. 16-22. Amendment and termination of pension plan.
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
(b) The employer may terminate this pension plan at any time by
repealing the provisions of this article in a public meeting. In such
event the board of trustees shall take the necessary steps to have
all the funds held by the plan applied to the purchase of immediate
or deferred annuities, as the case may be, in the following order of
priority and in accordance with the provisions of section 16-23, if
applicable:
(1) An immediate annuity on the normal forms of pension for
each employee participant who has retired or has attained
normal retirement date but who has not retired, in an amount
equal to the amount of basic benefit to which the participant
is entitled or would have been entitled if the participant had
retired immediately prior to such termination.
(2) A deferred annuity on a full cash refund form of pension
commencing at normal retirement date for each participant
who has not reached normal retirement date, for each
disabled participant, and for each former employee who is a
terminated participant and has not elected a cash payment
as provided in Option 1 of section 16-17; in an amount of the
participant's contributions paid to and received by the plan,
with credited interest of three (3) percent per annum from the
end of the year in which contributions were received to the
date basic benefits commence.
(3) A temporary annuity ending on normal retirement date for
each disabled participant in an amount equal to the basic
benefits being received under section 16-15
(4) A deferred annuity on the life annuity form commencing at
normal retirement date for each terminated participant as
defined in section 16-17 in an amount equal to the amount
the participant is entitled to under section 16-17 and deferred
annuity commencing at normal retirement date for each
disabled participant and each participant in an amount equal
Page 5 of 27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
to the amount the participant would be entitled to under
section 16-17 if the date of termination of employment less
the amount of benefit applicable to him in subsection (b)
above.
(5) A deferred annuity on the life annuity form commencing at
normal retirement date for each participant who has not
reached normal retirement date in an amount equal to the
amount of basic benefit the participant would be entitled to if
the participant's normal retirement date were the date of
termination of this plan less the amount of benefit applicable
in subsections (2), (3) and (4) above.
Provided, however, that if there are insufficient funds to provide any
category of such annuities, the amount of annuity to be provided for each
participant in that category shall be reduced by a uniform percentage. If by
reason of actuarial error the purchase of such annuities as is provided for
in subsections (1), (2), (3), (4) and (5) above does not exhaust the funds,
any excess shall be paid to such employer.
For police officer participants all benefits shall be fully funded in
accordance with the provisions of Chapter 185, Florida Statutes upon
such termination of this plan. The board shall determine the date of
distribution and the asset value required to fund all of the nonforfeitable
police officer benefits. The board shall inform the city, if additional assets
are required, in which event the city shall continue to financially support
the retirement plan until all nonforfeitable police officer benefits have been
fully funded.
A member's accrued benefit shall become 100% fully vested (non-
forfeitable) upon the termination of this plan.
Section 5. Section 16-23 of the South Miami Code of Ordinances is hereby
amended to read as follows:
37 Sec. 16-23. Limitation of pension benefit paymentCompliance with the
38 Internal Revenue Code.
39
40 (a) Any provision in this plan to the contrary nohvithstanding, during the
41 ten year period follmving the date the plan is initiated the benefits provided
Page 6 of 27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
hereunder by the employer's contributions \vith respect to its Poventy five
(25) highest paid employees on the date the plan is initiated who then
become or who may thereafter become participants and whose pension
benefit at normal retirement date 'Nill exceed one thousand five hundred
dollars ($1,500.00) annually will be subject to the following conditions:
(1) The benefits payable to any such employee or his survivor
(in the event of the death after retirement) shall not exceed those
purchasable by the larger of a. and b.:
a. Twenty thousand dollars ($20,000.00).
b. Twenty (20) percent of the average regular annual
compensation up to fifty thousand dollars ($50,000.00) of
any such employee multiplied by the numbers of years the
plan is in effect.
(2) As long as this plan remains in full effect and its full current
costs have been met, the provisions of this section shall not restrict
the payments of either full pension benefits to any retired
participant or full survivor's benefits on account of any deceased
participant.
(3) In the event of termination of this plan, the terms and
conditions of Florida Statutes 185.37, entitled "Termination of Plan
and Distribution of Fund" shall govern for police officer participants.
(b) In no event maya participant's annual benefit exceed the lesser of:
(1) Ninety thousand dollars ($90,000.00) (adjusted for cost of
living in accordance with Internal Revenue Code (IRC) Section
415(d), but only for the year in which such adjustment is effective),
Sf
(2) One hundred (100) percent of the average annual
compensation for the participant's three (3) highest paid
consecutive years; however, benefits of up to ten thousand dollars
($10,000.00) a year can be paid without regard to the one hundred
(100) percent limitation if the total retirement benefits payable to a
participant under all defined benefit plans (as defined in IRC
Section 414 U)) maintained by the city for the present and any prior
year do not exceed ten thousand dollars ($10,000.00) and the city
has not at any time maintained a defined contribution plan (as
Page 7 of 27
1 defined in IRC Section 414(i)) in which the employee was a
2 participant.
3
4 (3) If the member has less than ten (10) years of service 'Nith
5 the city (as defined In IRC Section 415(b)(5) and as modified by
6 IRC Section 415(b)(6)(D)), the applicable limitation in paragraph (1)
7 or paragraph (2) of this subsection shall be reduced by multiplying
8 such limitation by a fraction, not to exceed one. The numerator of
9 such fraction shall be the number of years, or part thereof, of
10 service 'Nith the city; the denominator shall be ten (10) years.
11
12 (4) For purposes of this subsection, the "annual benefit" means
13 a benefit payable annually in the form of a straight life annuity 'Nith
14 no ancillary or incidental benefits and with no member or rollover
15 contributions. To the extent that ancillary benefits are provided, the
16 limits set forth in paragraphs (1) and (2) above will be reduced
17 actuarially, using an interest rate assumption equal to the greater of
18 five (5) percent or the interest rate used in the most recent annual
19 actuarial valuation, to reflect such ancillary benefits.
20
21 (5) Except 'Nith respect to distributions on or after January 1,
22 1997 to "Qualified Police Officers," as that term is defined in
23 Section 415(b)(2)(G) of the Code, if distribution of retirement
24 benefits begins before age sixty two (62), the dollar limitation as
25 described above shall be reduced actuarially using an interest rate
26 assumption equal to the greater of five (5) percent or the interest
27 rate used in the most recent annual actuarial valuation; provided
28 however, retirement benefits shall not be reduced belmN seventy
29 five thousand dollars ($75,000.00) if payment of benefits begins at
30 or after age fifty five (55) and not below the actuarial equivalent of
31 seventy five thousand dollars ($75,000.00) if payment of benefits
32 begins before age fifty five (55). If retirement benefits begin after
33 age sixty five (65), the dollar limitation of above shall be increased
34 actuarially using an interest assumption equal to the lesser of five
35 (5) percent or the interest rate used in the most recent annual
36 actuarial valuation. For purposes of this subsection, the "average
37 annual compensation for a participant's three (3) highest paid
38 consecutive years" shall mean the participant's greatest aggregate
39 compensation during the period of three (3) consecutive years in
40 \Nhich the individual 'Nas an active participant of the plan.
41
42 (c) Distributions in plan years beginning after December 31, 1986.
43 Benefit payments to a participant must commence no later than the April 1
44 of the calendar year immediately follo'J'ling the calendar year in which the
Page 8 of 27
1 participant attains age seventy and one half (70%), or 'Nith respect to plan
2 years beginning on or after January 1, 1997, the later of (i) the calendar
3 year in VJhich the participant attains age seventy and one half (70%), or (ii)
4 the calendar year in which the participant retires. For participants whose
5 benefits commence after April 1 of the calendar year following the
6 calendar year in which the participant attains age seventy and one half
7 (70%), such participant's benefit amount (including any additional benefit
8 v'Ihich is accrued after such date) shall be actuarially increased for the
9 period between (i) April 1 of the calendar year follm.ving the calendar year
10 in which the participant attains age seventy and one half (70%) (or the end
11 of the plan year in which any additional benefit is accrued) and (ii) the
12 participant's benefit commencement date. Such actuarial increase shall be
13 determined using the interest and mortality assumptions used for the
14 purposes of actuarial equivalence, and may be offset to the extent an
15 actuarial increase is otherwise provided due to delayed retirement.
16
17 (1) Distributions to a participant shall not extend beyond the life
18 of the member or the lives of the member and his designated
19 beneficiary, or over a period not extending beyond the life
20 expectancy of the member or the life expectancy of the member
21 and his designated beneficiary.
22
23 (2) If distribution has commenced to a participant, and such
24 participant dies before receiving such entire interest, the remainder
25 of such interest shall be distributed over a period at least as rapidly
26 as under the method of distribution in effect prior to such
27 participant's death.
28
29 (3) In the event distributions have not commenced to a
30 participant prior to the participant's death, the entire interest of the
31 participant shall be distributed '<vithin five (5) years after the death of
32 such participant. Hm.vever, such fire year rule shall not apply if any
33 portion of the participant's interest is payable to a designated
34 beneficiary, where such portion will be distributed over the life of
35 such designated beneficiary, or over a period not extending beyond
36 the life expectancy of such beneficiary beginning not later than one
37 year after the date of the participant's death or such later date as
38 the Secretary of the Treasury may by regulations prescribe. If the
39 designated beneficiary is the surviving eligible spouse of the
40 participant, the date on which the distributions 'llouid be required to
41 begin shall not be earlier than the date on which the participant
42 would have attained age seventy and one half (70%). If the
43 surviving eligible spouse dies before payments are required to
Page 9 of 27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
(a)
commence, the five year rule shall be applied as if the surviving
eligible spouse were the participant.
Maximum Amount of Retirement Income.
(1) The limitations of this Subsection (a) shall apply in limitation
years beginning on or after July 1, 2007, except as otherwise
provided herein, and are intended to comply with the
requirements of the Pension Protection Act of 2006 and shall
be construed in accordance with said Act and guidance
issued thereunder. The provisions of this Subsection (a)
shall supersede any provision of the Plan to the extent such
provision is inconsistent with this Subsection.
The Annual Pension as defined in Paragraph (2) below
otherwise payable to a Member at any time shall not exceed
the Dollar Limitation for the Member multiplied by a fraction
whose value cannot exceed one, the numerator of which is
the Member's number of years (or part thereof, but not less
than one year) of service with the City and the denominator
of which is 10. For this purpose, no more than one year of
service may be credited for any Plan Year. If the benefit the
Member would otherwise accrue in a limitation year would
produce an Annual Pension in excess of the Dollar
Limitation, the benefit shall be limited (or the rate of accrual
reduced) to a benefit that does not exceed the Dollar
Limitation.
(2) "Annual Pension" means the sum of all annual benefits,
payable in the form of a straight life annuity. Benefits
payable in any other form shall be adjusted to the larger of:
a. For limitation years beginning on or after July 1, 2007
(I) the straight life annuity (if any) payable to the
Member under the Plan commencing at the
same Annuity Starting Date as the Member's
form of benefit, or
(II) the actuariallv equivalent straight life annuity
commencing at the same Annuity Starting
Date, computed using a 5.00% interest rate
and the mortality basis prescribed in Code
Section 415(b )(2)(E)(v).
Page 10 of 27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
(3)
b. For limitation years beginning before July 1, 2007
(I) the actuarially equivalent straight life annuity
commencing at the same Annuity Starting
Date, computed using the interest rate and
mortality basis specified by the Board of
Trustees for determining Actuarial Equivalence
under the Plan for the particular form of
payment, or
(II) the actuarially equivalent straight life annuity
commencing at the same Annuity Starting
Date, computed using a 5.00% interest rate
and the mortality basis prescribed in Code
Section 415(b )(2)(E)(v).
No actuarial adjustment to the benefit shall be made for
benefits that are not directly related to retirement benefits
(such as a qualified disability benefit, preretirement
incidental death benefits, and postretirement medical
benefits); or the inclusion in the form of benefit of an
automatic benefit increase feature, provided the form of
benefit is not subject to §417(e)(3) of the Internal Revenue
Code and would otherwise satisfy the limitations of this
Subsection (a), and the amount payable under the form of
benefit in any Limitation Year shall not exceed the limits of
this Subsection (a) applicable at the annuity starting date, as
increased in subsequent years pursuant to § 415(d) of the
Code. For this purpose, an automatic benefit increase
feature is included in a form of benefit if the form of benefit
provides for automatic, periodic increases to the benefits
paid in that form.
"Dollar Limitation" means, effective for the first limitation year
beginning after January 1, 2001, $160,000, automatically
adjusted under Code Section 415(d), effective January 1 of
each year, as published in the Internal Revenue Bulletin, and
payable in the form of a straight life annuity. The new
limitation shall apply to limitation years ending with or within
the calendar year of the date of the adjustment, but a
Member's benefits shall not reflect the adjusted limit prior to
January 1 of that calendar year. The Dollar Limitation shall
Page 11 of 27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
'26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
be further adjusted based on the age of the Member when
the benefit begins as follows:
a. For Annuity Starting Dates in limitation years
beginning on or after July 1, 2007
(I) If the Annuity Starting Date for the Member's
benefit is after age 65
(i) If the Plan does not have an
immediately commencing straight life
annuity payable at both age 65 and the
age of benefit commencement
The Dollar Limitation at the Member's
Annuity Starting Date is the annual
amount of a benefit payable in the form
of a straight life annuity commencing at
the Member's Annuity Starting Date that
is the actuarial equivalent of the Dollar
Limitation with actuarial equivalence
computed using a 5.00% interest rate
assumption and the mortality basis
prescribed in Code Section
415(b)(2)(E)(v) for that Annuity Starting
Date (and expressing the Member's age
based on completed calendar months
as of the Annuity Starting Date).
(ii) If the Plan does have an immediately
commencing straight life annuity
payable at both age 65 and the age of
benefit commencement
The Dollar Limitation at the Member's
Annuity Starting Date is the lesser of
(aa) the Dollar Limitation multiplied by
the ratio of the annual amount of the
adjusted immediately commencing
straight life annuity under the Plan at the
Member's Annuity Starting Date to the
annual amount of the adjusted
immediately commencing straight life
annuity under the Plan at age 65, both
Page 12 of 27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
(II)
determined without applvinq the
limitations of this Subsection (a), and
(bb) the limitation determined under
Subclause (3)a.(I)(i) of this
Subsection(a). For this purpose, the
adjusted immediately commencing
straight life annuity under the Plan at the
Member's Annuity Starting Date is the
annual amount of such annuity payable
to the Member, co'mputed disregarding
the Member's accruals after age 65 but
including actuarial adjustments even if
those actuarial adjustments are used to
offset accruals; and the adjusted
immediately commencing straight life
annuity under the Plan at age 65 is the
annual amount of such annuity that
would be payable under the Plan to a
hypothetical Member who is age 65 and
has the same Accrued Benefit as the
Member.
Except with respect to a Member who is a
"Qualified Member" as defined in Section
415(b)(2)(H) of the Code, for benefits (except
survivor and disability benefits as defined in
Section 415(b)(2)(I) of the Code), if the Annuity
Starting Date for the Member's benefit is
before age 62
(i) If the Plan does not have an
immediately commencing straight life
annuity payable at both age 62 and the
age of benefit commencement
The Dollar Limitation at the Member's
Annuity Starting Date is the annual
amount of a benefit payable in the form
of a straight life annuity commencing at
the Member's Annuity Starting Date that
is the actuarial equivalent of the Dollar
Limitation with actuarial equivalence
computed using a 5.00% interest rate
assumption and the mortality basis
Page 13 of 27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
b.
prescribed in Code Section
415(b)(2)(E)(v) for that Annuity Starting
Date (and expressing the Member's age
based on completed calendar months
as of the Annuity Starting Date).
(ij) If the Plan does have an immediately
commencing straight life annuity
payable at both age 62 and the age of
benefit commencement
The Dollar Limitation at the Member's
Annuitv Starting Date is the lesser of
(aa) the Dollar Limitation multiplied by
the ratio of the annual amount of the
adjusted immediately commencing
straight life annuity under the Plan at the
Member's Annuity Starting Date to the
annual amount of the adjusted
immediately commencing straight life
annuity under the Plan at age 62, both
determined without applying the
limitations of this Subsection (a), and
(bb) the limitation determined under
Subclause (3)a.(II)(i) of this Subsection
.c&
For Annuity Starting Dates in limitation years
beginning before July 1, 2007
Page 14 of 27
1
2
3
4
5
6
7
8
9
10
11
12
Age as of Annuity:
Starting Date:
Over 65
62 to 65
Less than 62
(4)
Adjustment of Dollar Limitation:
The smaller of: (a) the actuarial equivalent of the
limitation for age 65, comQuted
using the interest rate and mortality:
basis sQecified by: the Board of
Trustees for determining actuarial
equivalence under the Plan, or
{b} the actuarial equivalent of the
limitation for age 65, comQuted
using a 5.00% interest rate and the
mortality: basis Qrescribed in Code
Section 415{b}{2}{E}{v}.
Any: increase in the Dollar Limitation determined in
accordance with this QaragraQh shall not reflect a mortality:
decrement between age 65 and the age at which benefits
commence if benefits are not forfeited uQon the death of the
Member. If any: benefits are forfeited uQon death, the full
mortality: decrement is taken into account.
No adjustment.
The smaller of: {a} the actuarial equivalent of the
limitation for age 62, comQuted
using the interest rate and mortality:
basis sQecified by: the Board of
Trustees for determining actuarial
equivalence under the Plan, or
{b} the actuarial equivalent of the
limitation for age 62, comQuted
using a 5.00% interest rate and the
mortality: basis Qrescribed in Code
Section 415{b }{2}{E}{v}.
This adjustment shall not aQQIY: to any: "Qualified Member"
as defined in Section 415{b }{2}{H}, nor to survivor and
disability: benefits as defined in Section 415{b H2}{1} of the
Code.
With respect to Subclause (3)(A)(I)(i), Subclause (3)(A)(II)(i)
and Subparagraph (3)(8) above, no adjustment shall be
made to the Dollar Limitation to reflect the probability of a
Member's death between the Annuity Starting Date and age
62, or between age 65 and the Annuity Starting Date, as
applicable, if benefits are not forfeited upon the death of the
Member prior to the Annuity Starting Date. To the extent
benefits are forfeited upon death before the Annuity Starting
Date, such an adjustment shall be made. For this purpose,
no forfeiture shall be treated as occurring upon the
Page 15 of 27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
Member's death if the Plan does not charge Members for
providing a qualified preretirement survivor annuity, as
defined in Code Section 417(c), upon the Member's death.
(5) The term "limitation year" is the 12 month period which is
used for application of the limitations under Code Section
415 and shall be the calendar year.
(6) The limitations set forth in this Subsection (a) shall not apply
if the Annual Pension does not exceed $10,000 provided the
Member has never participated in a Defined Contribution
Plan maintained by the City.
(7) Cost-of-living adjustments in the Dollar Limitation for benefits
shall be limited to scheduled annual increases determined
by the Secretary of the Treasury under Section Subsection
415(d) of the Code.
(8) In the case of a Member who has fewer than 10 years of
participation in the Plan, the Dollar Limitation set forth in
Paragraph (3) of this Subsection (a) shall be multiplied by a
fraction -(i) the numerator of which is the number of years
(or part thereof) of participation in the Plan, and (ii) the
denominator of which is 10.
(9) Any portion of a Member's benefit that is attributable to
mandatory Member contributions (unless picked-up by the
City) or rollover contributions, shall be taken into account in
the manner prescribed in the regulations under Section 415
of the Code.
(10) Should any Member participate in more than one defined
benefit plan maintained by the City, in any case in which the
Member's benefits under all such defined benefit plans
(determined as of the same age) would exceed the Dollar
Limitation applicable at that age, the accrual of the Member's
benefit under this Plan shall be reduced so that the
Member's combined benefits will equal the Dollar Limitation.
(11) For a Member who has or will have distributions
commencing at more than one annuity starting date, the
Annual Benefit shall be determined as of each such annuity
starting date (and shall satisfy the limitations of this Section
as of each such date), actuarially adjusting for past and
Page 16 of 27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
0.
future distributions of benefits commencing at the other
annuity starting dates. For this purpose, the determination of
whether a new starting date has occurred shall be made
without regard to § 1.401 (a)-20, Q&A 10(d), and with regard
to §1.415(b)1(b)(1)(iii)(B) and (C) of the Income Tax
Regulations.
(12) The determination of the Annual Pension under Paragraph
(2)a.(I) of this Subsection (a) shall take into account (in the
manner prescribed by the regulations under Section 415 of
the Code) social security supplements described in §
411 (a)(9) of the Internal Revenue Code and benefits
transferred from another defined benefit plan, other than
transfers of distributable benefits pursuant §1.411(d)-4,
Q&A-3(c) of the Income Tax Regulations.
(13) The above limitations are intended to comply with the
provisions of Section 415 of the Code, as amended, so that
the maximum benefits provided by plans of the City shall be
exactly equal to the maximum amounts allowed under
Section 415 of the Code and regulations thereunder. If there
is any discrepancy between the provisions of this Subsection
(a) and the provisions of Section 415 of the Code and
regulations thereunder, such discrepancy shall be resolved
in such a way as to give full effect to the provisions of
Section 415 of the Code. The value of any benefits forfeited
as a result of the application of this Subsection (a) shall be
used to decrease future employer contributions.
(14) For the purpose of applying the limitations set forth in
Sections 401(a)(17) and 415 of the Internal Revenue Code,
Compensation shall include any elective deferral (as defined
in Code Section 402(g)(3) of the Internal Revenue Code),
and any amount which is contributed or deferred by the
employer at the election of the Member and which is not
includible in the gross income of the Member by reason of
Section 125 or 457 of the Internal Revenue Code. For
limitation years beginning on and after January 1, 2001, for
the purposes of applying the limitations described in this
Subsection (a), compensation paid or made available during
such limitation years shall include elective amounts that are
not includible in the gross income of the Member by reason
of Section 132(f)(4) of the Internal Revenue Code. For
limitation years on or after July 1, 2007, compensation shall
Page 17 of 27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
(b)
(c)
include payments that otherwise qualify as compensation
and that are made by the later of: (a) 2 and % (two and one-
halD months after severance from employment with the
employer, and (b) the end of the limitation year that includes
the date of severance.
Required Beginning Date.
Notwithstanding any other provIsion of the Plan, payment of a
participant's retirement benefits under the Plan shall commence not
later than the participant's Required Beginning Date, which is
defined as the later of:
-April 1 of the calendar year that next follows the calendar year in
which the participant attains or will attain the age of 70% years; or
-April 1 of the calendar year that next follows the calendar year in
which the participant retires.
Required Minimum Distributions.
(1) 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 as defined in
Subsection (b) of this Section 16-23.
(2) Death of participant Before Distributions Begin.
a. 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%, 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
Page 18 of 27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
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.
b. The participant's entire interest shall be distributed as
follows:
(I) Participant Survived bv Designated
Beneficiarv. If the participant dies before the date
distribution of his or her interest begins and there is a
designated beneficiary, the participant's entire interest
will be distributed, beginning no later than the time
described in Subparagraph (2)a. above, over the life
of the designated beneficiary or over a period certain
not exceeding:
(i) unless the annuity starting date is before
the first distribution calendar year, the life
expectancy of the designated beneficiary
determined using the beneficiary's age as of
the beneficiary's birthday in the calendar year
immediately following the calendar year of the
participant's death; or
(ii) if the annuity starting date is before the
first distribution calendar year, the life
expectancy of the designated beneficiary
determined using the beneficiary's age as of
the beneficiary's birthday in the calendar year
that contains the annuity starting date.
(II) No Designated Beneficiarv. 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
Page 19 of 27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
containing the fifth anniversary of the participant's
death.
c. Death of Swviving Spouse Before Distributions to
Surviving Spouse Begin. In any case in which (i) the
participant dies before the date distribution of his or her
interest begins, Oi) the participant's surviving spouse is the
participant's sole designated beneficiary, and (iii) the
surviving spouse dies before distributions to the surviving
spouse begin, Subparagraphs (2)a. and 2b. above shall
apply as though the surviving spouse were the participant.
(3) Requirements For Annuitv Distributions That Commence
During participant's Lifetime.
a. Joint Life Annuities Where the Beneficiary Is Not the
participant's Spouse. If the participant's interest is being
distributed in the form of a joint and survivor annuity for the
joint lives of the participant and a nonspousal beneficiary,
annuity payments to be made on or after the participant's
Required Beginning Date to the designated beneficiary after
the participant's death must not at any time exceed the
applicable percentage of the annuity payment for such
period that would have been payable to the participant using
the table set forth in Q&A-2 of Section 1.401(a)(9)-6 of the
Treasury regulations. If the form of distribution combines a
joint and survivor annuity for the joint lives of the participant
and a nonspousal beneficiary and a period certain annuity,
the requirement in the preceding sentence will apply to
annuity payments to be made to the designated beneficiary
after the expiration of the period certain.
b. Period Certain Annuities. Unless the participant's
spouse is the sole designated beneficiary and the form of
distribution is a period certain and no life annuity, the period
certain for an annuity distribution commencing during the
participant's lifetime may not exceed the applicable
distribution period for the participant under the Uniform
Lifetime Table set forth in Section 1.401(a)(9)-9 of the
Treasury regulations for the calendar year that contains the
annuity starting date. If the annuity starting date precedes
the year in which the participant reaches age 70, the
applicable distribution period for the participant is the
distribution period for age 70 under the Uniform Lifetime
Page 20 of 27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
Table set forth in Section 1.401 (a)(9)-9 of the Treasury
regulations plus the excess of 70 over the age of the
participant as of the participant's birthday in the year that
contains the annuity starting date. If the participant's spouse
is the participant's sole designated beneficiary and the form
of distribution is a period certain and no life annuity, the
period certain may not exceed the longer of the participant's
applicable distribution period, as determined under this
Subparagraph (3)b., or the joint life and last survivor
expectancy of the participant and the participant's spouse as
determined under 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 calendar year that
contains the annuity starting date.
(4) Form of Distribution. 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 Subparagraphs (4)a., (4)b. and (4)c.
below. 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. Any
part of the participant's interest which is in the form of an individual
account described in Section 414(k) of the Code will be distributed
in a manner satisfying the requirements of Section 401 (a)(9) of the
Code and the Treasury regulations that apply to individual
accounts.
a. General Annuity Requirements. If the participant's
interest is paid in the form of annuity distributions under the
Plan, payments under the annuity will satisfy the following
requirements:
(I) the annuity distributions will be paid in periodic
payments made at intervals not longer than one year;
(II) the distribution period will be over a life (or
lives) or over a period certain, not longer than the
distribution period described in Paragraphs (2) or (3)
above, whichever is applicable, of this Subsection (c);
Page 21 of 27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
(III) once payments have begun over a period
certain, the period certain will not be changed even if
the period certain is shorter than the maximum
permitted;
(IV) payments will either be non-increasing or
increase only as follows:
(i) by an annual percentage increase that
does not exceed the annual percentage
increase in a cost-of-living index that is based
on prices of all items and issued by the Bureau
of Labor Statistics;
(ii) to the extent of the reduction in the
amount of the participant's payments to provide
for a survivor benefit upon death, but only if the
beneficiary whose life was being used to
determine the distribution period dies or is no
longer the participant's beneficiary pursuant to
a qualified domestic relations order within the
meaning of Section 414(p) of the Code;
(iii) to provide cash refunds of employee
contributions upon the participant's death; or
(iv) to pay increased benefits that result
from a Plan amendment.
b. Amount Required to be Distributed by Required
Beginning Date. The amount that must be distributed on or
before the participant's Required Beginning Date (or, if the
participant dies before distributions begin, the date
distributions are required to begin under Subparagraph
(2)a.(I) or (2)a.(lI), whichever is applicable) is the payment
that is required for one payment interval. The second
payment need not be made until the end of the next payment
interval even if that payment interval ends in the next
calendar year. Payment intervals are the periods for which
payments are received, e.g., bi-monthly, monthly, semi-
annually, or annually. All of the participant's benefit accruals
as of the last day of the first distribution calendar year will be
included in the calculation of the amount of the annuity
Page 22 of 27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
(d)
payments for payment intervals ending on or after the
participant's Required Beginning Date.
c. Additional Accruals After First Distribution Calendar
Year. Any additional benefits accruing to the participant in a
calendar year after the first distribution calendar year will be
distributed beginning with the first payment interval ending in
the calendar year immediately following the calendar year in
which such amount accrues.
(5) For purposes of this Subsection (c), distributions are
considered to begin on the participant's Required Beginning Date.
If annuity payments irrevocably commence to the participant (or to
the participant's Surviving Spouse) before the participant's
Required Beginning Date (or, if to the participant's Surviving
Spouse, before the date distributions are required to begin in
accordance with Subparagraph (2)a. above), the date distributions
are considered to begin is the date distributions actually
commence.
(6) Definitions.
a. Designated beneficiary. The individual who is
designated as the beneficiary under the Plan and is the
designated beneficiary under Section 401 (a)(9) of the Code
and Section 1.401 (a)(9)-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
pursuant to Paragraph (2) of this Subsection (c).
c. Life expectancy. Life expectancy as computed by use
of the Single Life Table in Section 1.401(a)(9)-9 of the
Treasury regulations.
(1) Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this Section, a
distributee may elect, at the time and in the manner prescribed by
Page 23 of 27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
the Administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by
the distributee in a direct rollover.
(2) Definitions
The following definitions apply to this Section:
a. 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:
(I) 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 10 years or more;
(II) any distribution to the extent such distribution
is required under Section 401 (a)(9) of the Code;
(III) the portion of any distribution which is made
upon the hardship of the member; and
(IV) the portion of any distribution that is not
includible in gross income (determined without regard
to the exclusion for net unrealized appreciation with
respect to employer securities), provided that a
portion of a distribution shall not fail to be an eligible
rollover distribution merely because the portion
consists of after-tax Employee contributions which are
not includible in gross income. However, such portion
may be transferred only to an individual retirement
account or annuity described in Section 408(a) or (b)
of the Code, or to a qualified defined contribution plan
described in Section 401 (a) or 403(a) of the Code that
agrees to separately account for amounts so
transferred, including separately accounting for the
portion of such distribution which is includible in gross
income and the portion of such distribution which is
not so includible.
Page 24 of 27
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
(e)
ill
(3) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in Section 408(b)
of the Code, an annuity plan described in Section 403(a) of the
Code, an annuity contract described in Section 403(b) of the Code,
a qualified trust described in Section 401 (a) of the Code, an
eligible plan under Section 457(b) of the 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 into
such plan from this Plan, or, with respect to distributions on or after
January 1, 2008, a Roth IRA (subject to the limitations of Code
Section 408A(c)(3)) that accepts the distributee's eligible rollover
distribution.
(4) Distributee: A distributee includes an Employee or former
Emplovee. In addition, the Employee's or former Employee's
surviving spouse and the Employee's or former Employee's spouse
or former spouse who is the alternate payee under a qualified
domestic relations order, as defined in Section 414(p) of the Code,
are distributees with regard to the interest of the spouse or former
spouse. Furthermore, effective January 1, 2007, a surviving
designated beneficiary as defined in Section 401 (a)(9)(E) of the
Code who is not the surviving spouse and who elects a direct
rollover to an individual retirement account described in Section
408(a) of the Code or an individual retirement annuity described in
Section 408(b) of the Code shall be considered a distributee.
(5) Direct rollover. A direct rollover is a payment by the Plan to
the eligible retirement plan specified by the distributee.
Notwithstanding any other provision of this Plan, the maximum
amount of any mandatory distribution, as defined in Section
401(a)(31) of the Code, payable under the Plan shall be $1000.
Compensation Limitations Under 401 (a)(17):
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, the
annual compensation of each participant taken into account under
the Plan shall not exceed the EGTRRA annual compensation limit
for limitation years beginning after December 31, 2001. The
EGTRRA annual compensation limit is $200,000, as adjusted by
Page 25 of 27
1 the Commissioner for increases in the cost of living in accordance
2 with Section 401 (a)(17)(B) of the Code. The cost-of-living
3 adjustment in effect for a calendar year applies to any period, not
4 exceeding 12 months, over which Compensation is determined
5 (determination period) beginning in such calendar year. If a
6 determination period consists of fewer than 12 months, the
7 EGTRRA annual compensation limit will be multiplied by a fraction,
8 the numerator of which is the number of months in the
9 determination period, and the denominator of which is 12.
10
11
12
13
14
15
16
17
18
19
(g)
Any reference in the Plan to the limitation under Section 401 (a)(17)
of the Code shall mean the EGTRRA annual compensation limit set
forth in this provision.
At no time prior to the satisfaction of all liabilities under the plan
with respect to members and their spouses or beneficiaries, shall
any part of the corpus or income of the fund be used for or diverted
to any purpose other than for their exclusive benefit.
20 Section 6. If any section, clause, sentence or phrase of this ordinance is for
21 any reason held invalid or unconstitutional by a court of competent jurisdiction, the
22 holding shall not affect the validity of the remaining portions of this ordinance.
23 Section 7. All ordinances or parts of ordinances in conflict with the provisions
24 of this ordinance are repealed.
25 Section 8. This Ordinance shall take effect upon adoption.
26
27 PASSED AND ADOPTED this __ day of ________ , 2013.
28
29
30 ATTEST:
31
32
33
34 CITY CLERK
35
APPROVED:
MAYOR
Page 26 of 27
1
2 151 Reading -
3 2 nd Reading -
4
5
6 READ AND APPROVED AS TO FORM:
7 LANGUAGE, LEGALITY AND
8 EXECUTION THEREOF
9
10
11
12 CITY ATTORNEY
13
Page 27 of 27
COMMISSION VOTE:
Mayor Stoddard:
Vice Mayor Liebman:
Commissioner Newman:
Commissioner Harris:
Commissioner Welsh: