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(1) Account. The individual account established to record the Member's Account Balance under the DC Plan. A Member's Account may consist of one or more subaccounts.
(2) Account Balance. The amount allocated to a Member's Account for the benefit of such Member under the terms of the DC Plan.
(3) DC Plan. The City of Philadelphia Employees Defined Contribution pension plan and all subsequent amendments thereto.
(4) Eligible Retirement Plan. 199 Any of the following: (a) an individual retirement account described in Tax Code Section 408(a); (b) an individual retirement annuity described in Tax Code Section 408(b); (c) an annuity plan described in Tax Code Section 403(a); (d) a qualified trust described in Tax Code Section 401(a); (e) an annuity contract described in Tax Code Section 403(b); and (f) an eligible plan under Tax Code Section 457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state, and which accepts the Member's Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution to the non-spousal or non-Life Partner beneficiary of a member, an Eligible Retirement Plan is an individual retirement account or individual retirement annuity.
(5) Eligible Rollover Distribution. Any distribution of all or any portion of the balance of a qualified plan described in Tax Code Section 401(a) or 403(a), an annuity described in Tax Code Section 403(b), or an eligible deferred compensation plan described in Tax Code Section 457(b) which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state. The above notwithstanding, an Eligible Rollover Distribution does not include: (a) any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the Member or the joint lives (or joint life expectancies) of the Member and the Member's beneficiary, or for a specified period of ten years or more; (b) any distribution to the extent such distribution is required under Tax Code Section 401(a)(9); (c) the portion of any distribution which consists of after-tax employee contributions; and (d) any distribution which is made upon the hardship of the member.
(6) 457 Plan. The City of Philadelphia Deferred Compensation Plan, an eligible deferred compensation plan established pursuant to Section 457(b) of the Tax Code for the purpose of investing Member Contributions. 200
(7) Fund. An investment vehicle maintained or offered under the DC Plan.
(9) Member Contribution. The voluntary contribution a Member makes to the 457 Plan Defined Contribution Subaccount. 202
(10) Normal Retirement Age. Attainment of age 50 for police and fire employees; attainment of age 60 for all other employees. 203
(11) Qualified Plan. Any retirement plan covering employees within the United States which is qualified under Tax Code Section 401(a) and whose assets are held by a trust exempt from taxation under Tax Code Section 501.
(12) Trust. The City of Philadelphia Employees Defined Contribution Pension Trust established in connection with the funding of the DC Plan.
(13) Valuation Date. The last day of each calendar quarter in the Retirement System Year and each other date as may be established by the Board as a valuation date for purposes of the DC Plan.
Notes
198 | Amended, Bill No. 161013 (approved December 9, 2016). |
199 | Amended, Bill No. 130224 (approved May 8, 2013). |
200 | Amended, Bill No. 161013 (approved December 9, 2016). |
201 | Amended, Bill No. 161013 (approved December 9, 2016). |
202 | Added and subsequent subsections renumbered, Bill No. 161013 (approved December 9, 2016). |
203 |
(1) Newly hired and elected employees, and certain electing employees. All members of Plan '10 and Plan 16 shall be Members in the DC Plan; provided that any Plan 16 member whose annual salary is equal to or less than the Stacked Hybrid Cap shall not be permitted to make any Member Contribution. 204
(2) Electing members of the Retirement System. If (a) a police or fire employee or (b) an employee represented by Lodge 5 of the F.O.P. who is an employee of the Sheriff's Office or the Register of Wills or (c) an employee represented by AFSCME, District Council 47, or AFSCME, District Council 33, or (d) a municipal employee not represented by a union or an elected official, is a member of any other plan within the Retirement System, such member may elect to participate in the DC Plan. In such case, any credited service rendered by the member, or compensation paid to the member, after the member is enrolled in the DC Plan shall apply solely to the calculation of the member's benefit under the DC Plan and Plan '10 and shall not be considered for purposes of determining the accrued benefit under the member's original plan. Credited service accrued by the member under the original plan shall not be considered for purposes of calculating the member's benefit under DC Plan and Plan '10. The above notwithstanding, in determining the member's credited service for vesting purposes under Section 22-1406, all credited service with the City shall be considered. An election to become a member of the DC Plan must be made within ninety (90) calendar days of the effective date of this Chapter or, with respect to fire employees, within ninety (90) calendar days of the effective date of the ordinance adding fire employees to this subsection or, with respect to municipal employees either represented by Lodge 5 of the F.O.P. who are employees of the Sheriff's Office or of the Register of Wills or represented by AFSCME, District Council 47, or AFSCME, District Council 33, and municipal employees not represented by a union, and with respect to elected officials, within ninety (90) calendar days of the effective date of the ordinance adding such employees to this subsection. Prior to enrollment in the DC Plan, the Board shall provide to the member an estimated calculation of the member's projected total pension and retirement benefits determined as of the member's minimum retirement age. Enrollment in the DC Plan is irrevocable. 205
Notes
204 | Amended, Bill No. 161013 (approved December 9, 2016). |
205 | Amended, Bill No. 100780 (approved February 8, 2011). See note 4 for effective date provisions. Amended, Bill No. 110836-A (approved December 21, 2011); amended, Bill No. 140205 (approved May 14, 2014). See note 37 for effective date provisions. Amended, Bill No. 140741 (approved November 14, 2014). See note 23 for effective date provisions. Amended, Bill No. 140743 (approved November 14, 2014). See note 28 for effective date provisions. Amended, Bill No. 150720 (approved December 1, 2015). |
(1) City Contributions. For each Retirement System Year, the City shall make a contribution to the Account of each Member equal to fifty percent (50%) of the Member Contribution for such year, provided that the Member Contribution is made prior to the date of the Member's separation from service, and provided further that an election pursuant to subsection 22-206(2) shall not affect contributions credited to the Account of a Member prior to such election. The above notwithstanding, in no event shall the City's annual contribution exceed one and one-half percent (1.5%) of such Member's annual Compensation. All such contributions shall be held in the Trust and administered and distributed in accordance with the terms of the DC Plan and the Trust. The City's contribution under this Section shall be offset by amounts allocated to the suspense account as provided in subsections 22-1405(3)(f) and 22-1406(2). 206
(2) Rollover Contributions. A Member may contribute a rollover contribution to the Trust, either by delivery of such contribution to the Board or by authorization of a contribution directly from the trustee of a Qualified Plan; provided that such Member submits written certification to the satisfaction of the Board that such contribution qualifies as an Eligible Rollover Distribution.
(a) A Rollover Contribution shall be considered as a part of the Account Balance of the contributing Member and shall be held in a subaccount separate from the subaccount that holds a Member's City contributions.
(b) Distributions from a Member's Rollover Contribution Subaccount shall be made at such time and in such manner as the distribution of other portions of the Member's Account in accordance with the provisions of the DC Plan.
(3) Qualified Military Leave Contributions. Notwithstanding any provision of this Plan to the contrary, a Member who takes a leave of absence on account of qualified uniformed services leave, as defined under USERRA or other applicable law, and who returns to employment with the City within the time that such reemployment rights are protected by such law, shall be entitled to all City contributions (without any adjustment for any investment gains or losses, or earnings or expenses) as required by Tax Code Sections 414(u) and 401(a)(37). With respect to a death occurring on or after January 1, 2010, if a member dies while performing qualified military service (as defined in Section 414(u) of the Tax Code), the survivors of the member are entitled to any additional benefits (other than benefit accruals relating to the period of qualified military service) provided under the Plan as if the member had resumed and then terminated employment on account of death pursuant to Section 401(a)(37) of the Tax Code. Service credit shall include the period of a deceased member's qualified military service for purposes of determining death benefits under the Plan. This Section shall be construed in accordance with Section 401(a)(37) of the Tax Code, Internal Revenue Service Notice 2010-15 and any superseding/subsequent guidance. 207
Notes
206 | Amended, Bill No. 161013 (approved December 9, 2016). |
207 | Amended, Bill No. 150235 (approved May 20, 2015), effective January 1, 2010. |
(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. 208
(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: 209
(.1) City contributions allocated to a member's account;
(.2) forfeitures;
(.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. 210
(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. 211
(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. 212
Notes
208 | Added, Bill No. 161013 (approved December 9, 2016). |
209 | Amended, Bill No. 150235 (approved May 20, 2015), effective January 1, 2010. |
210 | Amended, Bill No. 150235 (approved May 20, 2015). |
211 | Amended, Bill No. 150235 (approved May 20, 2015), effective January 1, 2010. |
212 | Amended, Bill No. 150235 (approved May 20, 2015), effective January 1, 2010. |
(1) Member and Rollover Contributions. Each Member's Rollover Contribution Subaccount shall be one hundred percent (100%) vested and, notwithstanding the provisions of Section 22-1302 (relating to Disqualification), non-forfeitable at all times.
(2) City Contributions. Each Member's City Contribution Subaccount shall be one hundred percent (100%) vested and, subject to the provisions of Section 22-1302 (relating to Disqualification), non-forfeitable upon completion of five (5) years of Credited Service. In the event that the Member separates from service prior to completion of five (5) years of Credited Service, the Member's City Contribution Subaccount balance shall be forfeited. Forfeited amounts shall be held in a suspense account and used to offset future contribution obligations of the City.
(3) Vesting Upon Death or Disability. In the event that a Member dies or becomes disabled while employed by the City but prior to completion of five (5) years of Credited Service, the Member's Account Balance shall become one hundred percent (100%) vested and, subject to the provisions of Section 22-1302 (relating to Disqualification), non-forfeitable.
(1) The Board shall designate one or more Funds for investment of the Members' Accounts. The Board may establish procedures for permitting each Member or Beneficiary to control and direct the investment of the Account and to allocate the investment returns attributable to such Member's or Beneficiary's directed investments to the Account of such Member or Beneficiary. In such event, the Board shall adopt reasonable procedures to provide Members and Beneficiaries with appropriate information concerning the Funds available under the DC Plan and to provide appropriate opportunities to change any investment elections as may be in effect from time to time.
(1) Determination of Account. In the event of a Member's separation from service, whether such separation shall occur by reason of death, disability, retirement, or other separation from service, then the amount credited to such Member's Account shall be determined as of the most recent Valuation Date preceding the distribution of benefits to the Member.
(2) Form of Benefit. The only form of benefit distributable under the DC Plan shall be a lump sum distribution, except where the Board determines that the distribution must be made in installments (not to extend beyond one calendar year) in order to provide for orderly processing of the distribution or to permit reasonable administrative procedures for the valuation of the Account being distributed.
(3) Timing of Distributions.
(a) Distribution Upon Member's Death. In the event of the death of a Member, the vested Account Balance of such Member shall be paid as soon as practicable after the Plan Administrator is notified of the Member's death. Distribution of death benefits must be completed within five years of the Member's date of death or over such other period as may be permitted without resulting in a violation of Tax Code Section 401(a)(9).
(b) Distribution Upon Member's Separation From Service. In the event of separation from service of a Member for any reason other than death, the vested Account Balance of such Member shall be distributed as follows:
(.1) If the vested Account Balance is one thousand dollars ($1,000) or less, the Account Balance shall be distributed as a direct payment to such Member as soon as administratively practicable after separation from service.
(.2) If the vested Account Balance is five thousand dollars ($5,000) or less, but more than one thousand dollars ($1,000), the Account Balance shall be distributed as soon as administratively practicable after separation from service, as follows:
(.a) Upon the written consent of the Member, by rollover to an Eligible Retirement Plan as directed by the Member (as provided in subsection (4) below) or by direct payment to the Member; or
(.b) In absence of the Member's written consent, by direct transfer to an individual retirement account maintained on behalf of the Member by a trustee designated by the Board.
(.3) If the vested Account Balance exceeds five thousand dollars ($5,000), it shall be distributed by direct payment to such Member (or by rollover to an Eligible Retirement Plan, as directed by the Member pursuant to subsection (4) below) as follows:
(.a) If the Member has attained Normal Retirement Age, it shall be distributed as soon as administratively practicable after separation from service.
(.b) If the Member has not attained Normal Retirement Age, it shall be distributed as soon as soon as administratively practicable after the Member attains Normal Retirement Age; or, if the Member consents to such distribution in writing, as soon as administratively practicable after receipt of such consent.
(c) Compliance with Tax Code Requirements. All forms of benefit distributions and required benefit commencement dates shall be subject to and in compliance with Tax Code Section 401(a)(9) and the regulations thereunder, including the minimum distribution incidental benefit requirement. The provisions of Tax Code Section 401(a)(9) and the regulations thereunder shall override any provision of the DC Plan inconsistent therewith.
(d) Account Balances of Separated Members. Amounts credited to the Account Balance of any Member who has separated from employment with the City shall continue to be held and invested along with all other assets of the Plan, subject to the same terms and conditions as apply to the Account Balances of active Members, including any provisions as may be in effect establishing a right of any Member to direct the investment of Account Balances maintained under the DC Plan.
(4) Direct Rollovers. Notwithstanding any provision of the DC Plan to the contrary that would otherwise limit a Member's (or Beneficiary's, if applicable) election under this Section and except as provided in subsection (3)(b)(.1) above, a Member (or Beneficiary, if applicable) may elect, at the time and in the manner prescribed by the Board, to have any portion of his or her distribution paid directly, as an Eligible Rollover Distribution, from the DC Plan to an Eligible Retirement Plan specified by the Member. Effective July 1, 2010, a non-spouse Beneficiary who is a designated Beneficiary within the meaning of Section 401(a)(9)(E) of the Tax Code may, after the death of the member, make a Direct Rollover of a distribution to an inherited individual retirement account (IRA) established on behalf of the designated Beneficiary; provided that the distributed amount satisfied all the requirements to be an Eligible Rollover Distribution other than the requirement that the distribution be made to the member or the member's spouse. Such Direct Rollovers shall be subject to the terms and conditions of Internal Revenue Service Notice 2007-7 and superseding guidance including, but not limited to, the provisions in Q&A-17 thereof regarding required minimum distributions. Effective January 1, 2010, the distributions described in this Section shall be subject to Sections 401(a)(31), 402(f) and 3405(c) of the Tax Code. 213
Notes
213 | Amended, Bill No. 150235 (approved May 20, 2015). |
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