(a) General rules.
(1) Distributions from the retirement system shall comply with the requirements of IRC § 401(A)(9) and the regulations thereunder. A member’s interest in the trust must begin to be distributed by the member’s required beginning date, being the later of (I) April 1 of the calendar year following the calendar year that the employee attains the age of 70-1/2, or (II) April 1 of the calendar year in which the member retires. With respect to distributions under the retirement system made for calendar years beginning on or after January 1, 2001, the retirement system will apply the minimum distribution requirements of IRC § 401(A)(9) in accordance with the regulations under IRC § 401(A)(9) that were proposed in January 2001, notwithstanding any provision in the retirement ordinance 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 under IRC § 401(A)(9) or such other date as may be specified in guidance published by the Internal Revenue Service.
(2) In the case of a distribution in the form of a joint and survivor annuity, if the survivor beneficiary is not the member’s spouse, the method of payment selected must assure that the periodic annuity payable to the survivor annuitant must not at any time on or after the member’s required beginning date, as defined above and in applicable Treasury Regulations, exceed the applicable percentage of the annuity payment payable to the member using the table prescribed in the applicable provisions of the Treasury Regulation § 1.401(A)(9)-6.
(3) Effective on September 8, 2009, the U.S. Department of Treasury issued final regulations under IRC § 401(A)(9) to permit a governmental plan to comply with the required minimum distributions rules of IRC § 401(A)(9) by using a reasonable and good faith interpretation of the statute. The retirement system shall be administered accordingly.
(b) Forfeitures.
(1) Upon a member’s termination date, the value of any forfeitable accrued benefit shall be forfeited by the member as of the termination date. The value of such forfeitures shall be used to reduce the employer’s future contributions under the plan in accordance with IRC § 401(A)(8). No forfeitures under the plan shall be applied to increase the benefits that any member or beneficiary would otherwise receive at any time prior to the time when the plan may be terminated. If a member whose employment has terminated does not retain a vested benefit under the plan, he/she shall no longer be a member or retain or earn credited service under the plan unless and until he/she again becomes an employee.
(c) Forfeitabhjty of accrued benefits.
(1) An employee’s right to his/her normal retirement benefit is nonforfeitable on the attainment of his/her normal retirement age as defined in IRC § 411(A)(8) and in accordance with Rev. Rul. 66-11 and IRC § 411(E)(2). The accrued financial benefits of each member and/or beneficiary of the retirement system shall be a contractual obligation thereof, and shall not be diminished or impaired as protected by Article IX, Section 24 of the State of Michigan Constitution. In the event of termination or partial termination of the plan, a member’s interest is nonforfeitable to the extent funded in conformity with applicable sections of the Code and Treasury Regulations.
(d) Prohibition against reversion.
(1) The retirement system and trust have been created for the exclusive benefit of the members and beneficiaries set forth herein. The funds thereof have been established for the benefit of the members and for the operation of the retirement system. No part of the principle and income of any of the funds of the system and trust shall revert to or be returned to the City prior to the satisfaction of all liabilities hereunder to all members, beneficiaries and anyone claiming by or through them.
(e) Vesting.
(1) A member shall be vested in his/her accrued benefit in accordance with IRC § 411(E) as in effect in 1974.
(f) Actuarial reports.
(1) Annually, or more frequently, the Board of Trustees shall obtain actuarial computations from an enrolled actuary as to the contributions necessary to fund the benefits provided by the plan on a reasonable basis in accordance with any applicable regulations, and such actuary shall certify such amounts to the employer. Contributions accumulated under the plan, along with the earnings thereon, will be distributed in accordance with the terms of the plan.
(g) Assignment of benefits.
(1) None of the benefits, payments, proceeds, claims, or rights of any participant or their beneficiary hereunder shall be subject to execution, garnishment, attachment, the operation of bankruptcy or insolvency law, or other process of law, nor shall any participant or beneficiary have any right to transfer, assign, encumber, or otherwise alienate any of the benefits or proceeds which the participant may expect to receive, contingently or otherwise under the plan, except as provided under a domestic relations order and in accordance with Public Act 100 of 2002, as amended, being MCLA §§ 38.1681 et seq., and Public Act 350 of 1994, as amended, being MCLA §§ 38.2701 et seq.
(h) Plan year.
(1) The plan year shall be the 12 consecutive month period commencing on July 1 and each anniversary thereafter.
(Ord. 3593, passed 6-24-2004; Ord. 3818, passed 2-16-2012)