(a) Effective July 1, 1987, there is established within the Los Angeles City Employees’ Retirement Fund a separate account for the purpose of paying benefits for sickness, accident, hospitalization and medical expenses, or any combination thereof provided under this Chapter (hereinafter, “Retired Employees Health and Welfare Programs”). 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 Los Angeles City Employees’ Retirement Fund. However, the assets of this account may be commingled for investment purposes only with the other accounts of the Los Angeles City Employees’ Retirement 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, their eligible dependents, and their qualified survivors.
(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 Los Angeles City Employees’ Retirement 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 Los Angeles City Employees’ Retirement 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. Annually it will be determined whether the twenty-five percent (25%) limit has been exceeded.
(c) Forfeitures are not to be allocated to any individual accounts under the Retired Employees Health and Welfare Programs established under Division 4, Chapter 11 of the Los Angeles Administrative Code, but shall be used to provide the defined health care benefits under the Retired Employee Health and Welfare Programs.
(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 Retired Employees Health and Welfare Programs for eligible retirees, their eligible dependents and their qualified survivors.
(e) At no time prior to the satisfaction of all liabilities under the Retired Employees Health and Welfare Programs 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 Division 4, Chapter 10 of the Los Angeles Administrative Code.
(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 section 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 City of Los Angeles will apply the interpretation that achieves compliance with those sections and preserves the qualified status of the Los Angeles City Employees’ Retirement System as a governmental plan under Sections 401(a) and 414(d) of the Internal Revenue Code.
SECTION HISTORY
Added by Ord. No. 182,629, Eff. 7-25-13.