(A) Lifetime benefit. The normal form of retirement pension whether regular, early, disability or vested pension is the lifetime benefit with a modified cash refund as set forth in §§ 31.40(F) or 31.41(E). Payments shall be made in monthly installments, commencing on the date of retirement and ceasing with the last monthly payment prior to death. In any case, upon direction of the Retirement Board, an actuarial equivalent lump-sum payment shall be made in lieu of all benefits if any retirement pension is less than $120 per annum or has a present value of $5,000 or less. Notwithstanding the foregoing, effective March 28, 2005, the member's written consent shall be required for distributions with a present value of $1,000 or more.
(B) Husband and wife benefit. At or before retirement, a member or terminated vested member may elect to convert his or her lifetime benefit to an actuarial equivalent husband and wife benefit, which will pay a reduced retirement amount during the pensioner's life, with the provision that after his or her death either 100%, 66-2/3% or 50% of his or her retirement pension will be paid to the person designated by him, by written designation and duly acknowledged by the Retirement Board. Should both husband and wife die before the member's accumulated contributions have been paid out, then §§ 31.40(F) or 31.41(E) shall apply.
(C) Ten-year certain and life benefit. At or before retirement, a member may elect to convert his or her life benefit into an actuarial equivalent ten-year certain and life benefit, which will pay a reduced retirement amount during the pensioner's life, with a guarantee of 120 payments. Should a member die prior to receiving 120 payments, the payments shall continue to his or her designated beneficiary until a combined total of 120 payments have been made. Should both the member and designated beneficiary die before the member's accumulated contributions have been paid out, then §§ 31.40(F) or 31.41(E) shall apply.
(D) Beneficiary election. A member's beneficiary must have been designated by the member by written designation received by the Retirement Board prior to the member's death. A member may change his or her beneficiary by similar written designation received by the Retirement Board prior to receipt of written notification of the member's death.
(E) Required minimum distributions.
(1) Notwithstanding any provisions in this plan to the contrary, a member's benefits shall not commence later than the member's required beginning date which is April 1 of the calendar year following the later of:
(a) The calendar year in which the member attains age 70-1/2; or
(b) The calendar year in which the member terminates employment. In any case where a lump sum death benefit is payable to a deceased member's beneficiary, such benefit shall be paid no later than 60 days following the member's date of death.
(c) Requirements of Treasury Regulations Incorporated. All distributions required under this division will be determined and made in accordance with the Treasury regulations under Section 401(a)(9) of the Internal Revenue Code.
(2) The member's entire interest in the plan must be distributed over the life of the member or the lives of the member and a designated beneficiary, over a period not extending beyond the life expectancy of the member or the life expectancy of the member and designated beneficiary.
(3) When a member dies after distribution of benefits has begun, the remaining portion of the member's interest shall be distributed at least as rapidly as under the method of distribution prior to the member's death.
(4) When a member dies before distribution of benefits has begun, the entire interest of the member shall be distributed within five years of the member's death. The five-year payment rule does not apply to any portion of the member's interest which is payable to a surviving spouse payable over the life or life expectancy of the spouse, and which begins no later than the date the member would have reached 70-1/2.
(5) The benefits payable must meet the minimum distribution incidental benefit requirements of Section 401(a)(9)(G) of the Internal Revenue Code.
(6) If there is no designated beneficiary as of September 30 of the year following the year of the member's death, the member's entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the member's death.
(7) If the member's surviving spouse is the member's sole designated beneficiary and the surviving spouse dies after the member but before distributions to the surviving spouse begin, this division other than division (E)(1) will apply as if the surviving spouse were the member.
(8) Form of distribution. Unless the member'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 divisions (E)(9), (E)(10) and (E)(ll). If the member'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 Internal Revenue Code and the Treasury regulations. Any part of the member's interest which is in the form of an individual account described in Section 414(k) of the Internal Revenue Code will be distributed in a manner satisfying the requirements of Section 401(a)(9) of the Internal Revenue Code and the Treasury regulations that apply to individual accounts.
(9) Determination of amount to be distributed each year.
(a) General annuity requirements. If the member's interest is paid in the form of annuity distributions under the plan, payments under the annuity will satisfy the following requirements:
1. The annuity distributions will be paid in periodic payments made at intervals not longer than one year;
2. The distribution period will be over a life (or lives) or over a period certain not longer than the period described in division (E)(10) or (E)(11).
3. 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;
4. Payments will either be non-increasing or increase only as follows:
a. 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;
b. To the extent of the reduction in the amount of the member'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 described in division (E)(10) dies or is no longer the member's beneficiary pursuant to a qualified Domestic Relations Order within the meaning of Section 414(p) of the Internal Revenue Code;
c. To provide cash refunds of employee contributions upon the member's death; or
d. 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 member's required beginning date (or, if the member dies before distributions begin, the date distributions are required to begin under divisions (E)(1) or (E)(4) 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., bimonthly, monthly, semi-annually, or annually. All of the member'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 payments for payment intervals ending on or after the member's required beginning date.
(c) Additional accruals after first distribution calendar year. Any additional benefits accruing to the member 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.
(10) Requirements for annuity distributions that commence during member lifetime.
(a) Joint life annuities where the beneficiary is not the member's spouse. If the member's interest is being distributed in the form of a joint and survivor annuity for the joint lives of the member and a non-spouse beneficiary, annuity payments to be made on or after the member's required beginning date to the designated beneficiary after the member'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 member 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 member and a non-spouse 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 member'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 member's lifetime may not exceed the applicable distribution period for the member 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 member is the distribution period for age 70 under the uniform lifetime table set forth in Section 1.401(a)(9)-9 of the Treasury regulations plus the excess of 70 over the age of the member as of the member's birthday in the year that contains the annuity starting date if the member's spouse is the member'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 member's applicable distribution period, as determined under this division (E)(10)(b), or the joint life and last survivor expectancy of the member and the member'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 member's and spouse's attained ages as of the member's and spouse's birthdays in the calendar year that contains the annuity starting date.
(11) Requirements for minimum distributions where member dies before date distributions begin.
(a) Member survived by designated beneficiary. If the member dies before the date distribution of his or her interest begins and there is a designated beneficiary, the member's entire interest will be distributed, beginning no later than the time described in divisions (E)(1) or (E)(4) and except as otherwise provided in division (E)(4) over the life of the designated beneficiary or over a period certain not exceeding:
1. Unless the annuity starting date is before the first distribution calendar year, the life expectancy of the designated beneficiary determined using the beneficiary age as of the beneficiary birthday in the calendar year immediately following the calendar year of the member's death; or
2. 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.
(b) No designated beneficiary. If the member dies before the date distributions begin and there is no designated beneficiary as of September 30 of the year following the year of the member's death, distribution of the member's entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the member's death.
(c) Death of surviving spouse before distributions to surviving spouse begin. If the member dies before the date distribution of his or her interest begins, the member's surviving spouse is the member's sole designated beneficiary, and the surviving spouse dies before distributions to the surviving spouse begin, division (E)(ll) will apply as if the surviving spouse were the member, except that the time by which distributions must begin will be determined without regard to division (E)(1).
(12) Definitions.
(a) Designated Beneficiary. The individual who is designated as the beneficiary under § 31.39(D) and is the designated beneficiary under Section 401(a)(9) of the Internal Revenue Code and Section 1.401 (a)(9)-1, Q&A-4, of the Treasury regulations.
(b) Distribution calendar year. A calendar year for which a minimum distribution is required. For distributions beginning before the member's death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the member's required beginning date. For distributions beginning after the member's death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to division (E)(4).
(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.
(F) Return to employment after commencement of benefits.
(1) A retired member who returns to employment with the town after benefits have commenced shall have his or her benefit suspended for each month he or she is in the employ of the town, unless the member meets the following conditions:
(a) The member's application for active employment is approved by the Retirement Board; or
(b) In the case of a service employee, the member is regularly scheduled to work less than 20 hours per week; or
(c) The member is a guardian employee who is rehired as a service employee or the member is a service employee who is rehired as a guardian employee.
(2) A retired member whose benefits are suspended in accordance with this division shall have his or her pension amount recalculated to recognize the additional credited service earned during his or her period of re-employment.
(Ord. 435, passed 3-12-01; Am. Ord. 458, passed 6-3-02; Am. Ord. 538, passed 7-5-06; Am. Ord. 666, passed 12-7-15)