(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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