Separate accounts, on the terms and conditions set forth in this section, may be established under a court order dividing community property in connection with a legal separation or a dissolution, provided that the order is entered prior to the member’s retirement. Separate accounts cannot be established by a court order entered after the member’s retirement.
(a) Court Order Required for Separate Accounts. When a court of competent jurisdiction orders the division of community property prior to the member’s date of retirement, the court may order that the accumulated contributions, plus regular interest and service credit attributable to periods of service during the marriage, be divided into two separate and distinct accounts in the name of the member and the nonmember, respectively. Any service credit or accumulated contributions that are not explicitly awarded by the court order shall be deemed the separate property of the member, in which the nonmember shall have no further interest.
The nonmember who is awarded a separate account under this section shall be required to make an irrevocable written election to either receive a refund of contributions or a separate account allowance, provided the nonmember must be eligible for the option that is elected. If said election is not timely made, the nonmember shall be deemed to have chosen a refund of contributions.
(b) Definitions. For purposes of this section, the following terms shall mean:
Nonmember means the spouse, former spouse, domestic partner, or former domestic partner of a member who, as a result of petitioning the court for the division of community property, has been awarded a separate account reflecting specific credited service and accumulated contributions.
Separate Account Allowance means the monthly amount remitted to a nonmember based on the division of community property, by a court of competent jurisdiction, into a separate account reflecting specific credited service and accumulated contributions, actuarially reduced to provide an annuity for life.
Final Monthly Average Compensation, for a nonmember only, is the monthly average of the member’s highest consecutive twelve (12) months of salary at the time of separation.
(c) Benefits Available to Nonmember Awarded a Separate Account.
(1) Refund of Contributions.
(i) A nonmember who is awarded a separate account shall have the right to a refund of the accumulated contributions plus regular interest in the separate account of the nonmember. A nonmember who elects a refund of contributions is deemed to have permanently waived all rights in this System and all rights to any future retirement benefits pertaining to the service credit, accumulated contributions, or both, when the refund becomes effective. The nonmember may not cancel a refund once it has become effective, nor may the nonmember redeposit a refund once it has been paid.
(ii) If, at the time of separation, the member does not have five (5) years of service credit in the System, the nonmember who has been awarded a separate account shall only receive a refund of the accumulated contributions and regular interest placed in the nonmember’s account.
(iii) A nonmember who has elected a refund of contributions, or whose only separate account right is to a refund of contributions, shall not have interest credited to the contributions in the nonmember’s separate account after the date of the member’s retirement or death, whichever occurs first. The nonmember’s right to receive a refund of all the contributions in the nonmember’s account on such date is a vested property right; provided, however, that, should the nonmember fail to request a refund within ten (10) years from the date of the member’s death or retirement, as applicable, said contributions shall be removed from the nonmember’s separate account and shall revert to the Retirement Fund, unless and until the Board of Administration receives a valid belated refund request, determined at the sole discretion of the Board of Administration, which shall be granted. If the nonmember attains age seventy and a half (70 1/2) with contributions still on deposit in the nonmember’s separate account, the nonmember’s contributions shall be subject to mandatory distribution, as required by the Internal Revenue Code, provided that, if such person cannot be located and paid such mandatory distribution and the Retirement System has followed Internal Revenue Service procedures to locate the beneficiary, such funds shall revert to the Retirement Fund, as provided above, unless and until the Board of Administration receives a valid belated refund request, determined at the sole discretion of the Board of Administration, which shall be granted.
(2) Separate Account Allowance.
(i) Unless the nonmember has elected to receive, or has received, a refund of contributions, a nonmember who is awarded a separate account shall be entitled to receive a Separate Account Allowance paid monthly for life, provided that a timely written election has been made and that both of the following conditions are met:
(A) On the date of separation the member had five (5) years of service credit in the System; and
(B) The member was eligible to receive a service retirement allowance on the date that the separate account allowance begins.
(ii) The amount of the Separate Account Allowance shall be based on the service retirement formula in effect on the date of separation applicable to the service credited to the nonmember by the employer and the effective date of the nonmember’s Separate Account Allowance, actuarially reduced to provide an annuity for life. The Separate Account Allowance shall be subject to all cost-of-living and discretionary increases.
(iii) The Separate Account Allowance shall consist of a pension and a life annuity, the latter of which shall be derived from the nonmember’s accumulated contributions. The Separate Account Allowance shall terminate upon the death of the nonmember.
(3) Election of Nonmember Benefits. The nonmember may make an irrevocable election, in writing, to receive the benefit provided under this section as either a refund of contributions or a Separate Account Allowance at any time after the entry of the court order and before the member’s retirement or death, whichever occurs first. A nonmember who elects a refund of contributions may request a refund of contributions at the time the election is made or any time thereafter. A nonmember who elects a Separate Account Allowance may request the allowance to begin at the time the election is made or at any time thereafter so long as the conditions set forth in Section 4.1079(c)(2)(i) have been met by the date the monthly allowance is to begin.
The nonmember shall be deemed to have elected a refund of contributions if an irrevocable written election is not made either prior to the member’s retirement or death, whichever occurs first, or within such period following the retirement or death as provided by Board rule.
The Board of Administration shall adopt rules establishing a limited period following the member’s retirement or death, as applicable, in which a nonmember who has not yet made an election may be allowed to make an irrevocable written election. If within the period established by Board rule the nonmember elects to take a separate account allowance, the allowance shall begin on the day prior to the member’s retirement or death, as applicable, so long as the conditions set forth in Section 4.1079(c)(2)(i) have been met by that date.
(4) Benefits Not Granted to Nonmember. A nonmember whose dissolution is final shall not be entitled to any disability retirement allowance, any basic death benefit, any special death benefit, any monthly allowance for survivors of a member or retired person, any insurance benefit, medical or dental subsidy, or retired member lump-sum death benefit. No survivor continuance allowance shall be payable to a survivor of a nonmember.
(d) Calculation of Member’s Service Retirement Allowance. A member whose retirement is divided under the provisions set forth above shall receive a monthly retirement allowance based on all service credit and the member’s final compensation at the date of retirement, as provided under the provisions of this Article, subject to reduction by the value of the separate account determined as follows:
(1) If the separate account was paid as a refund of contributions, the service credit and contributions awarded to the nonmember shall not be included in the calculation of the member’s retirement allowance except to the extent that the member has re-deposited funds as provided in Section 4.1079(f)(1).
(2) If the nonmember elected to receive a Separate Account Allowance, the service credit and contributions awarded to the nonmember shall not be included in the calculation of the member’s retirement allowance except to the extent that the member has paid to purchase service credit as provided in Section 4.1079(f)(2).
(3) If the nonmember has not elected to receive either a refund of contributions or a Separate Account Allowance prior to the member’s retirement, the service credit and contributions awarded to the nonmember shall not be included in the calculation of the member’s retirement allowance.
(e) Calculation of Member’s Disability Retirement Allowance. Members whose retirement is divided under the provisions set forth above shall receive a monthly disability retirement allowance as provided for in Section 4.1058, except that the portion of accumulated contributions credited to the nonmember will be treated as missed deductions in the member account.
(f) Buy Back of Funds Allocated to Nonmember.
(1) If a nonmember receives a refund of contributions and interest, the member may re-deposit these funds, together with any accumulated interest these funds would have earned if the refund had not occurred, to the System, subject to rules adopted by the Board of Administration, and receive full credit for the period of time represented by these funds.
(2) If a nonmember elects to receive a Separate Account Allowance, the member may purchase service credit not to exceed the years of service credited to the nonmember. The purchase of this service credit shall be the full actuarial cost and subject to rules adopted by the Board of Administration.
(g) Duties and Responsibilities of the Board of Administration. The Board of Administration shall adopt rules to administer separate accounts ordered by a court of competent jurisdiction and shall formulate benefits applicable to these separate accounts in such a way that no additional actuarial liability is incurred either by the System or by the City.
SECTION HISTORY
Added by Ord. No. 182,629, Eff. 7-25-13.