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(1) Subaccounts. A Member's Account shall be comprised of the following subaccounts:
(a) City Contribution Subaccount – the portion of each Member's Account Balance resulting from City contributions under subsection 22-1404(1);
(b) Rollover Contribution Subaccount – the portion of each Member's Account Balance resulting from the Member's Rollover contributions under subsection 22-1404(2); and
(c) 457 Plan Defined Contribution Subaccount. The subaccount maintained with respect to the 457 Plan, to which any Member Contribution is remitted, and which reflects the portion of each Member's Account Balance resulting from any such contributions. 202
(2) Valuation of Accounts. As of each Valuation Date, all contributions to and income of the Trust for the period since the most recent Valuation Date shall be credited to, and all losses and expenses of the Trust for such period shall be charged to, the Accounts maintained by the Trustee for the Members and Beneficiaries. Such credits and charges shall be made in proportion to the value of the respective Member and Beneficiary Accounts as of the beginning of such period (after recording all credits and charges required to be made as of the last preceding Valuation Date).
(3) Limitation on Allocations. Allocations to Members shall not be made in excess of the limitations set forth herein. For these purposes, the limitations on allocations set forth herein are intended to comply with the limitations applicable to allocations imposed under Tax Code Section 415(c), all of which shall be determined by using the Retirement System Year as the "limitation year" as that term is used for purposes of Tax Code Section 415.
(a) In general, annual additions (as defined below) with respect to a Member's Account shall not exceed the lesser of:
(.1) Forty thousand dollars ($40,000) as adjusted for increase in the cost-of-living under Tax Code Section 415(d), or
(.2) One hundred percent (100%) of the Member's "compensation" defined below and within the meaning of Tax Code Section 415(c)(3) for the limitation year.
(b) For these purposes, the term "annual addition" means the sum of the following amounts credited to a member's account for any Retirement System year: 203
(.1) City contributions allocated to a member's account;
(.3) amounts allocated, after March 31, 1984, to an individual medical account, as defined in Section 415(l)(2) of the Tax Code, which is part of a pension or annuity plan maintained by the City;
(.4) amounts derived from contributions paid or accrued after December 31, 1985, in table years ending after such date, which are attributable to post-retirement medical benefits, allocated to the separate account of a key employee, as defined in Section 419A(d)(3) of the Tax Code, under a welfare benefit fund, as defined in Section 419(e) of the Tax Code, maintained by the City; and
(.5) allocations under a simplified employee pension.
Notwithstanding the foregoing, an annual addition shall not include a restorative payment within the meaning of Internal Revenue Service Revenue Ruling 2002-45 and any superseding guidance.
(c) A Member's "compensation" for these purposes means earned income, wages, salaries, and fees for professional services and other amounts received for personal services actually rendered in the course of employment with the City and including any elective deferral (as defined in Tax Code Section 402(g)(3)), and any amount which is contributed or deferred by the City at the election of the Member and which is not includible in the gross income of the Member by reason of Tax Code Sections 125, 132(f)(4) or 457, but excluding the following; (i) any distributions from a plan of deferred compensation; and (ii) other amounts which received special tax benefits, or contributions made by the City (whether or not under a salary reduction agreement) towards the purchase of an annuity described in Tax Code Section 403(b) (whether or not the amounts are actually excludible from the gross income of the Member). Effective July 1, 2010, the definition of Compensation includes payments made by the later of 2-1/2 months after severance from employment, or the end of the limitation year that includes the date of severance from employment, if, absent a severance from employment, such payments would have been paid to the employee while the employee continued in employment with the City, and are regular compensation for services during the employee's regular working hours, compensation for services outside the employee's regular working hours (such as overtime or shift differential), commissions, bonuses or other similar compensation. Effective as of January 1, 2010, pursuant to Section 414(u)(12) of the Tax Code, a member receiving differential wage payments (as defined in Section 3401(h)(2) of the Tax Code) shall be treated as an employee of the City and the Board may, in its sole discretion, treat differential wage payments as compensation for purposes of determining benefits under the Plan, in such manner to all members on reasonably equivalent terms, but shall treat such amounts as compensation for purposes of Section 415(c)(3) of the Tax Code and Treasury regulations Section 1.415(c)-2. This Section shall be construed in accordance with Section 414(u)(12) of the Tax Code, Internal Revenue Service Notice 2010-15 and any superseding/subsequent guidance. The definition of Compensation as set forth in this Section shall be the exclusive definition for purposes of applying the limitations of Tax Code Section 415. The definition of Compensation as set forth in subsection 22-105(9) shall not apply to this Section. 204
(d) Notwithstanding the preceding definition of compensation in subsection 22-1405(3)(c), compensation for a member who is permanently and totally disabled (as defined in Section 22(e)(3) of the Tax Code) shall mean the compensation such Member would have received for the limitation year if the Member had been paid at the rate of compensation paid immediately before becoming permanently and totally disabled. Prior to determining the Member's actual compensation for the limitation year, the Board may determine the maximum permissible amount for a member on the basis of a reasonable estimation of the member's compensation for the limitation year, uniformly determined for all members similarly situated. As soon as administratively feasible after the end of the limitation year, the maximum permissible amount for the limitation year shall be determined on the basis of the member's actual compensation for the limitation year. 205
(e) If a short limitation year is created because of an amendment changing the limitation year to a different 12-consecutive month period, the maximum permissible amount will not exceed the defined contribution dollar limitation multiplied by the following fraction: (number of months in the short limitation year) ÷ 12.
(f) Any correction methods for excess annual additions set forth in the Plan that were allowed pursuant to the version of Treasury regulations Section 1.415-6(b)(6) in effect with respect to any limitation year before July 1, 2007, shall not apply. However, the Plan may be eligible for self-correction under Internal Revenue Service Revenue Procedure 2013-12, 2013-4 I.R.B. 313 and any superseding guidance. Notwithstanding the foregoing, the Employee Plans Compliance Resolution System (EPCRS) shall be the only correction method for correcting excess annual additions. 206
Added, Bill No. 161013 (approved December 9, 2016).
Amended, Bill No. 150235 (approved May 20, 2015).