(a) Effective March 21, 1975, there is established within the respective General Pension Fund under each membership Tier (“Fund”) a separate account for the purpose of paying benefits for health, medical, hospital, or other medical plans as authorized under the programs established in this Chapter (“Health Care Plan”). The account is established pursuant to Section 401(h) of the Internal Revenue Code. The assets in this account shall be accounted for separately from the other accounts in the Fund. However, the assets of this account may be commingled for investment purposes only with the other accounts of the Fund. Investment earnings and expenses will be allocated on a reasonable basis. All assets in the 401(h) account shall be held in trust for the exclusive benefit of eligible retirees and their spouses and dependents.
(b) Effective October 3, 1989, contributions to the 401(h) account established by this Section shall be made from appropriations and any other sources. Contributions to the 401(h) account are subordinate to the contributions to the Fund. At no time shall contributions to the 401(h) account, plus any life insurance protection costs, be in excess of twenty-five percent (25%) of the total aggregate actual contributions made to the Fund for the traditional pension plan benefits (not including contributions to fund past service credits) and the 401(h) account plus any life insurance protection costs. The plan actuary shall annually determine whether the twenty-five percent (25%) limit has been exceeded.
(c) Forfeitures are not to be allocated to any individual accounts under the Health Care Plan, but shall be used to provide the defined health care benefits under the Health Care Plan.
(d) The assets of the 401(h) account shall only be used for the payment of health care coverage and medical benefits as provided in the Health Care Plan for eligible retirees, their eligible dependents, and their qualified survivors.
(e) At no time prior to the satisfaction of all liabilities under the Health Care Plan shall any assets in the 401(h) account be used for, or diverted to, any purpose other than providing the benefits under Subsection (d) of this section and the payment of administrative expenses. Assets in the 401(h) account may not be used for retirement, disability or survivor benefits, or for any other purpose under the Fire and Police Pension Plan.
(f) Upon the satisfaction of all liabilities under the law to provide benefits pursuant to Subsection (d) of this section, any assets in the 401(h) account, if any, that are not used as provided in Subsection (d) of this section shall be transferred to the City Fund, as required by Section 401(h)(5) of the Internal Revenue Code.
(g) It is the intent of the City of Los Angeles in adopting this amendment to comply in all respects with Sections 401(a) and 401(h) of the Internal Revenue Code, and regulations interpreting those sections. In applying this amendment, the Board will apply the interpretation that achieves compliance with those sections and preserves the qualified status of the Fire and Police Pension Plan as a governmental plan under Sections 401(a) and 414(d) of the Internal Revenue Code.
SECTION HISTORY
Added by Ord. No. 147,014, Eff. 3-21-75.
Renumbered and Relocated by Ord. No. 154,536, Eff. 11-30-80.
Amended by: Ord. No. 172,040, Eff. 7-3-98; Ord. No. 173,272, Eff. 6-25-00, Oper. 7-1-00.
Deleted by Ord. No. 179,538, Eff. 3-2-08.
Added by Ord. No. 182,628, Eff. 7-16-13.